If you are buying or selling a home, all the real estate terms and definitions might be confusing. To help you out, the team at Professional Home Buyers is here with this quick guide on important real estate terms you should know and understand.
Down payments are the initial cost you pay the mortgage broker to get a loan. Typical wisdom is to pay 20% of the total value of the house, though that is not a requirement. Note that down payments are different from an earnest money deposit, which is a gesture of good faith to the property owners.
To calculate the ratio of your debt to your income, divide the total amount of monthly debt payments by your monthly income. Lenders look at this ratio when determining whether to issue loans. The fair credit reporting act dictates how businesses get this kind of financial information.
A mortgage that has a set interest rate that doesn’t change. That means every month you will make the same monthly mortgage payment. You can contrast a fixed-rate mortgage with an adjustable-rate mortgage, where interest rates can change between payment periods. Generally, your mortgage payment also includes property taxes.
Mortgage lenders are the people who issue mortgages and the ones who receive mortgage payments. The collateral of the mortgage loan is the property itself, so private lenders can seize properties if buyers default on their loans.
Mortgage insurance is a policy that will pay the lender the remainder of the cost of your mortgage if you go into default. FHA loans might require you to get private mortgage insurance before you can get your money.
Fair Market Value (FMV)
The FMV of a house is simply the purchase price that both the buyer and seller agree upon. FMV is not the appraisal value and it is not the amount the property owner lists the home for. As such, it is possible for the FMV of a house to change over time depending on the specific real estate transaction and the current market landscape.
Real Estate Broker
Real estate brokers are entities that employ real estate agents and facilitate buying and selling properties. In other words, a broker is basically a real estate business that employs real estate professionals. An individual real estate agent must be employed by a broker to buy and sell property.
The closing cost is meant to cover all additional fees and costs that might accrue during real estate transactions. Typically, the closing cost is anywhere between 2% and 6% of the total cost of the house and typically goes to the buyer’s agent.
Sell Your Home Today!
Now that you know these key real estate terms, it’s time to take the next step. Professional Home Buyers makes it easy to sell your home with as little hassle as possible.
Fill out our online form or give us a call today at (316) 202-1628 to get a free cash offer today!