The Language of Homebuying: Terms You Need To Know

Every industry has its own lingo or language, and the real-estate sector is no exception. As you embark on a homebuying journey, you’ll encounter many different terms. Discover the basic definitions behind the language of home buying so that you can feel confident during every step.

1. Home Inspection

When you’re seriously considering a home for sale, a home inspection is ordered from an unbiased, third party. These inspectors give you a detailed report on household items that require repairs, such as leaking plumbing or faulty wiring. Every buyer should be present for this process.

2. Closing Costs

This term refers to the fees associated with drawing up paperwork, securing titles, and other details necessary for a real estate transaction. All homes for sale in New Castle will have some closing costs associated with them. In many cases, however, the sellers cover these fees.

3. Adjustable-Rate Mortgage

Buyers take out a mortgage when they purchase a home. An adjustable-rate means that the loan will have varying interest based on the current economic conditions. Many ARMs start out with low rates and rise over time.

4. Fixed-Rate Mortgage

In contrast, a fixed-rate loan has a locked-in interest rate. It won’t change unless you refinance or sell the property. These rates can be higher than ARMs, but they give you a stable payment for the loan’s lifespan.

5. Down Payment

The down payment is the amount you put on the property to pay down part of the cost. Most people try to offer between 10 and 20 percent down on the overall cost. You’ll pay less interest over time with a lower payment each month as a result of a higher downpayment. Save up for a solid, down payment to keep your financing at a reasonable amount.

6. Contingencies

Contingencies are requests made between the seller and buyer. A sale might depend on the seller fixing a leaking pipe found during an inspection, for instance. This request is referred to as a contingency. Many sales fall through when they aren’t met by either party.

7. Private Mortgage Insurance

PMI is an additional fee to your monthly mortgage if you offer less than 20 percent down on the property. The insurance is meant to protect the bank from any default on your end. Ideally, put at least 20 percent down on the home in order to avoid any PMI charges.

8. Good-Faith Deposits

Your real estate agent might suggest you put earnest or good-faith money toward a particular home. This deposit might be $500 or $1,000, which tells the seller that you’re extremely interested in the property. This amount can be withdrawn if the purchase doesn’t go through or applied to the down payment when the paperwork is drawn up.

Remember to lean on your real estate agent for guidance. This professional is there to help you through the purchasing process. Ask as many questions as necessary because it’s important for you to know what you’re signing for as the final documents roll in. Buying a home is a major transaction, which requires your full attention to the details.