7 Terms for First-time Homebuyers

Buying your first home can be overwhelming. Here are some helpful terms you need to know as a first time buyer.

Appraisal

The appraisal is a professional analysis on the value of your home, conducted by a licensed appraiser. The lender will assign an appraiser once you are under contract on a home. In most cases, an appraiser will take pictures, measure the rooms of  property, inspect it to evaluate its condition, and prepare an analysis on the value of the home by comparing it to recent sales in the neighborhood. These other properties are called “comps”.

Closing Costs

Closing costs are the collective costs charged to buyers purchasing a home, outside of the mortgage itself. This includes but is not limited to, recording taxes and transfer fees for the state and/or county where you are purchasing, lender fees, pre-paid escrow fees, real estate fees, and title fees.

Credit Score

The credit score number is comprised of a score determined by multiple credit bureaus to determine your eligibility to finance a mortgage. Your credit score, along with your debt, income, and other assets, is what lenders use to evaluate your buying power and determine your interest rate for your mortgage.

Down Payment

Your down payment is the money you put down as collateral for the purchase of the property. It is applied to your mortgage balance, and is due when you close on the property. In most cases, it is between 3%-20% down.

Mortgage interest Rate

This is the rate that the lender charges you for the mortgage throughout the life of the loan. Keep an eye on rates over time. If you see a lower rate, contact your lender or real estate professional about suggestions for refinancing to a lower rate.

Pre-Approval Letter

This letter is issued to you when you are pre-approved for a mortgage, and communicates your purchasing power and ability to buy a home to a home seller. This letter is included with your purchase offer.

Real Estate Professional

This is your AGENT you hire who works on your behalf to negotiate, prepare offers, and help you navigate your real estate purchase. And guess what? In most, cases, Buyer agent commissions are paid by the seller! Yes, you read that right! In most cases, buyer commissions are paid by sellers to real estate companies who are cooperating in a broker relationship with buyer agents.

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