The Home Buying Process: Top 10 Terms to know
- Carly Slatton
- Mar 13, 2018
- 4 min read
Buying a home is a fun yet daunting process for new home buyers. Having the right mindset going in is important to make you, as a buyer, feel more confident. Knowledge of the real-estate terms ahead of time can be time-saving and give peace of mind to even the most reluctant home shopper! Naturally, picking the right agent is vital and having a great agent that will communicate any confusing terms effectively is a very important part of the process. Here are the top 10 terms to know when buying a home. Feel free to contact me if you are confused by any of these definitions or explanations and I’ll be happy to walk you through them!
1. Pre-Approval: Approval where the lender has informally committed to giving a loan to a borrower. Do not let this be confused with pre-qualification. Pre-approval is given after the buyer’s credit has been checked, income documents verified, and assets have been looked into.
2. MLS: The fun stuff! The Multiple Listing Service is a service provided by your realtor to find homes in real time. Unlike 3rd party websites that advertise homes that 90% of the time already have offers pending, this system is as up to date as it comes in the real estate market. The MLS can narrow down searches based on zip code, schools, one or two-stories (or more) and many many other features to help you cut through the masses of homes and find the true diamond that fits your life perfectly!
3. Seller’s Disclosure: The seller’s disclosure is the document filled out by the seller that has everything; the good, the bad and the ugly that they know of concerning the property. This document usually gives information such as if the roof was recently replaced and if there are any warranties connected to the property.
4. Option Fee: The option fee is the right to purchase property within a definite time at a specified price. There is no obligation to purchase, but the seller is obligated to sell if the option holder exercises the right purchase.
5. Earnest Money Deposit: An amount of money, deposited by a prospective buyer, as evidence of good faith under the terms of a contract that is to be forfeited if the buyer defaults, but applied on the purchase price if the sale is closed.
6. Escrow: The closing of a transaction through a third party called an escrow agent, who receives certain funds and documents to be delivered upon the performance of certain conditions outlined in the escrow agreement.
7. Home Inspection: A home inspection is done by a certified home inspector and can help you get to know the condition of the property you are about to buy or sell and give you the confidence you need to make an informed decision.
8. Appraisal: An appraisal is done to asses the fair market value of the property in question by a certified appraiser. The appraisal is done to make sure that you are not vastly over-paying for a property as well as to make sure there are no hidden corruptions in the structure of the home that can cause an extreme financial burden down the road and make the home not worth the investment being paid into it.
9. Final Walk: Before signing your closing documents and claiming the home as yours to move into and throw your welcome home party, you and your realtor should do a final walk. This is important and precautionary just in case the roof decided to cave in or a pipe decided to bust 2 days before closing and flood the entire shebang before signing the closing agreement and taking all of these problems on as yours. Once you sign for your home, if you’ve done a final walk there should be no hidden surprises on your move in day!
10. Closing (Closing Disclosure): This one is touchy as quite a few people LOVE to plan (and want to know exactly when and what time to call into work for closing!) This is handled in tandem by the title company and the loan officer and requires a 3 day waiting period once the CD is received by the buyer before closing can occur. Sometimes closing can be done earlier and sometimes it gets pushed back a few days, which requires an additional addendum to be signed. The home will be yours soon… this process occasionally has some final details that require everyone to be on top of their jobs (such as the title company, mortgage insurance company, etc) where if just one person isn’t doing their job correctly, can make the date slightly complicated to nail down to specifics until the final CD is received. Just be patient, this is the final piece of the paperwork puzzle (besides actually signing at closing) that everyone is biting their nails in anticipation of receiving and making sure comes in smoothly so the process can be complete and you can receive your keys!
I hope these terms and descriptions help you in your quest of finding the home of your dreams! If you live in the San Antonio, Texas area and are looking for an agent then please fill out a buyer or seller appointment consultation on my website and we can check your qualifications to start finding your dream home today. If there's still a little work that needs to be done, no worries! I can point you in the right direction to start climbing the ladder of home ownership with a step by step process on the best way to start moving forward into a better credit score and getting your finances established. There's nothing like holding the keys to your first home in your hands, let me help you take the reigns and get you there faster and leave the paperwork and negotiating up to me!
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