First-Time Homebuyers: Know These 10 Common Real Estate Terms

Are you ready to buy your first North County San Diego home? How exciting! Buying your first home is a major milestone that you’ll remember for the rest of your life. But it can also be a stressful and confusing time when you’re new to the real estate market. You’re sure to come across words and terms that you’ve never heard before that can shroud the process in mystery. One of the best things you can do is educate yourself. It will make the process much less intimidating. Here are the ten most common real estate terms that you should know when you’re buying a home.

Appraisal

For those who are purchasing a home with a mortgage, your lender will require you to get an appraisal of the home. An appraisal is an evaluation of the home that determines its value. An appraiser will look at the home’s size, condition, interior, and exterior to arrive at the fair market value.

Closing

You’ll hear a lot about closing during the process of buying a home. It’s the last step of the real estate process where all the paperwork is signed. You can also call this the finish line. It’s when the buyer officially acquires the title to the home.

Contingency

When you draw up the sales contract for a home, it may contain certain provisions or “contingencies” in order for the sale to proceed. Common contingencies include the appraisal, major repairs, or the buyer completing the sale of their current home.

Earnest Money

When you make an offer on a home, you will include earnest money as part of that offer. It is considered a good faith deposit and is usually one or two percent of the purchase price. Your earnest money will be deposited in escrow and will be applied to the down payment during closing. If you back out of the contract for any reason that is not explicitly stated in the contract, you will forfeit your earnest money.

Escrow

When you enter into an agreement with a seller, the home will be “in escrow.” This means that a neutral third party will hold all money until all the requirements of the contract are met and you are closing on the home.

FHA Loan

FHA loans are loans that are insured by the federal government. The government does not lend money. Instead, they commit to covering losses that might be incurred by a lender in case you default on your loan.

HOA

If you’re buying a home in a planned community or condo development, then it is most likely governed by an HOA or homeowners’ association. As a resident of this community, you will pay HOA fees for the maintenance of shared spaces and will be required to follow any rules laid out by the HOA.

Preapproval

If you want to be considered a serious buyer, then you should get preapproval for a mortgage before making an offer. Lenders will gather preliminary financial information about you and write a letter stating how much money they will lend to you.

Title Search

The title is generally the document that provides evidence of who owns the rights to a property. When you’re buying a home, a title company will perform a title search to determine if there are any outstanding claims on the title.

VA Loan

Like an FHA loan, a VA loan is a type of loan that is guaranteed by the federal government. Only active and retired members of the military or their eligible spouses may apply for this loan. This type of loan often offers a low- or no-cost down payment.

Contact the Clark & Gilman Team

If you’re serious about buying your first North County home, then work with a team that has decades of experience to help you through the process. Contact the Cristine Clark & Jamie Gilman Team at 760-758-1211 or [email protected]. We are available to answer all your questions and would be delighted to help you realize your dreams of homeownership!

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