Buying a home should be an exciting event, not a stressful and confusing time. With so many different factors attached to the purchase process, many home buyers seem overwhelmed and even unsure. As your premier agent specializing in NOTL real estate, I would like to share the following key real estate terms that will help you better understand all the facets of the home buying process and give you ownership from start to finish.
Key Real Estate Terms
Appraisal – An assessment of the value of a property that is based on a variety of factors, including similar home prices in the neighbourhood.
Closing – A final meeting where ownership of the property is transferred from the seller to the buyer. Typically, the buyer, seller and both real estate agents attend the closing.
Closing Costs – A set of fees attached to the purchase of a property. These are due before ownership is transferred. Costs include all lawyers’ fees, title searches and home inspections. These fees are anywhere from 1% – 3% of the property’s original purchase price.
Days on Market – The number of days a specific property has been listed on the real estate market.
Escrow – A time period (30 days or more) after an offer has been accepted by the seller. During the time in escrow, the property is inspected and appraised.
Foreclosure – A property that has been repossessed by the bank because the owner has defaulted on their mortgage payments.
Gentrification – Renewal and rehabilitation projects in an urban area that changes the demographics. These areas typically see property values rise.
Home Inspection – An inspection of the various systems of a property (pipes, structure and electrical etc.). This inspection takes place when the home is in escrow.
Homeowners’ Insurance – A policy that protects the owner’s contents, belongings and structure of the home.
Listing Price – The price of the property set by the seller.
Multiple Listing Service (MLS) – A database used by real estate agents that lists homes for sale.
Property Taxes – A tax that is based upon the value of the property. This tax is a municipal one that helps fund services such as sewer, water and garbage collection.
Walkthrough – The final inspection of a property done before the final closing date.
Key Purchasing Terms
Down Payment – A percentage of a homes’ purchase price that the buyer must pay. A down payment is not part of the mortgage.
Equity – The percentage of the home’s overall value that the homeowner has paid off. The bank (lender) owns the rest.
Interest Rate – The cost attached to borrowing money (the mortgage). The interest rate of a mortgage is set by the lender.
Mortgage – The type of loan that is used to secure payment of a home. A mortgage is paid off over a specific period through set payments.
Mortgage Broker – A lender who works for the buyer to secure a loan (mortgage) either through a bank or another lending institution.
Pre-Approval – The total amount of money (mortgage) the buyer is approved for. This amount is based upon the borrower’s credit score, their assets and the borrower’s income.
Principal – The outstanding balance of the loan (mortgage). With each payment, the mortgage’s principal is reduced.
By understanding the language associated with purchasing a home, you will be able to be an active agent throughout the entire process. If you have any questions or would like clarification on any of these terms, please call or stop by. I would love to help you find your perfect home and have a large inventory of exciting real estate options available in the NOTL region. I look forward to working with you soon.