When you are ready to purchase your first home, you are probably excited about actually getting out there and seeing what's for sale in your preferred area. You also might be a bit confused by all the weird real estate terminology that you keep hearing. Realtors and other related professionals tend to use some of the following terms, and this is what they really mean.
We all have heard the word escrow, but it is quite possible that a first-time home buyer won't really understand what this means. Technically, escrow refers to an account that is opened by a third party once the seller and buyer agree on a sales price for a house. An escrow company will hold a check from the buyer in an escrow account, and this basically declares that the seller and buyer are serious about making the deal. Often, the period of time between opening the escrow account and the day you take possession of your new home is simply known as being "in escrow."
Once you get a loan and close escrow and take possession, now your main focus will be paying off your mortgage and caring for your home. There are quite a few types of mortgages, and you will hear the words "fixed," "ARM" and "adjustable" thrown around. A fixed mortgage just means that the percentage of interest you pay will never change. An adjustable-rate mortgage or ARM usually is fixed for a few years, and then the level of interest can go up or down. This means your monthly payments can go up or down and sometimes substantially.
Closing costs are yet another interesting term you will hear. These are the expenses relating to the closing of an escrow account. There are quite a few items that must be paid for during the escrow process and this includes appraisals, title insurance, recording fees, notary fees and commissions to the realtors. Typically, the sellers pay the real estate commission, which is the biggest chunk of closing costs, but buyers are responsible for paying for many of these expenses.
Appraisals and inspections are going to become important words in your vocabulary. An inspection is pretty easy to understand, and the buyers will pay for one or more inspections to ensure that the property is in good condition. Buyers also pay for a home appraisal, and this is done in order to secure your loan. The appraisal must show that the home is worth what you are paying for it. So, if you are purchasing a home for $400,000, but the appraisal comes back at $385,000, the bank might not lend you the money for the home, because it simply looks like a bad deal to them. If you have the same purchase price, but the appraisal comes back at $400,000, you will be fine, and if the appraisal is even higher, then you probably are getting the home for an excellent price.
Of course there are plenty of other confusing terms you will hear, and that's why it's great to have an experienced real estate agent on your side. The realtors at Nixon Real Estate, for instance, not only can help you find a great piece of Fredericksburg real estate or Texas Hill Country real estate, they can also clear up many of the mysteries that accompany the process of buying your first home.
We all have heard the word escrow, but it is quite possible that a first-time home buyer won't really understand what this means. Technically, escrow refers to an account that is opened by a third party once the seller and buyer agree on a sales price for a house. An escrow company will hold a check from the buyer in an escrow account, and this basically declares that the seller and buyer are serious about making the deal. Often, the period of time between opening the escrow account and the day you take possession of your new home is simply known as being "in escrow."
Once you get a loan and close escrow and take possession, now your main focus will be paying off your mortgage and caring for your home. There are quite a few types of mortgages, and you will hear the words "fixed," "ARM" and "adjustable" thrown around. A fixed mortgage just means that the percentage of interest you pay will never change. An adjustable-rate mortgage or ARM usually is fixed for a few years, and then the level of interest can go up or down. This means your monthly payments can go up or down and sometimes substantially.
Closing costs are yet another interesting term you will hear. These are the expenses relating to the closing of an escrow account. There are quite a few items that must be paid for during the escrow process and this includes appraisals, title insurance, recording fees, notary fees and commissions to the realtors. Typically, the sellers pay the real estate commission, which is the biggest chunk of closing costs, but buyers are responsible for paying for many of these expenses.
Appraisals and inspections are going to become important words in your vocabulary. An inspection is pretty easy to understand, and the buyers will pay for one or more inspections to ensure that the property is in good condition. Buyers also pay for a home appraisal, and this is done in order to secure your loan. The appraisal must show that the home is worth what you are paying for it. So, if you are purchasing a home for $400,000, but the appraisal comes back at $385,000, the bank might not lend you the money for the home, because it simply looks like a bad deal to them. If you have the same purchase price, but the appraisal comes back at $400,000, you will be fine, and if the appraisal is even higher, then you probably are getting the home for an excellent price.
Of course there are plenty of other confusing terms you will hear, and that's why it's great to have an experienced real estate agent on your side. The realtors at Nixon Real Estate, for instance, not only can help you find a great piece of Fredericksburg real estate or Texas Hill Country real estate, they can also clear up many of the mysteries that accompany the process of buying your first home.
About the Author:
Pammy McGrath loves reading about real estate blogs. If you are searching for licensed Texas Hill Country real estate agents, or to find homes for sale in Fredericksburg TX, please check out the Nixon Real Estate website now.
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