If you're in the market to buy a home, there are a few words you should know that will help you understand the homebuying process a little better as you're going through it. As a real estate agent, I know sometimes we throw words around that you may not fully understand so I decided to give a little breakdown.
When you're looking to buy a home, you'll hear several words like offer, earnest money, contingent, title, etc., but may not have a full understanding of what you're hearing. In the beginning, when you find a home you want to buy, your realtor or real estate agent will say "we need to make an offer." An offer is an agreement between a buyer and a seller to purchase real estate. Also known as a sales contract. The sales contract is the form filled out by your real estate agent to present your, the buyer, offer to the seller to show interest in the home they're selling.
Next is earnest money. Earnest money is a deposit made to a seller showing the buyer's good faith in a transaction. Typically held in a trust or an escrow account. The earnest money deposit is normally made after an offer has been accepted by the seller. There's no set minimum amount to put down for an earnest money deposit, but can range anywhere from 1% to 10% of the sales price depending on the market.
Once you make an offer on a home, your offer may be contingent upon certain stipulations. A contingent offer on a home has been accepted , but the sale will be finalized after certain criteria is met. For example contingent upon the sell of your current home, home appraisal and/or inspection, or you securing a financing for the home. Contingency is basically you'll get to buy this home if these things are satisfied.
Speaking of home inspection, this is an examination of the property's condition. Usually performed by a qualified home inspector of your choice. Not to be confused with a home appraisal which is the an evaluation of the value of the home or land which is also performed by a qualified appraiser who determines the market value.
Homeowners insurance is what covers your home in the event of a natural disaster or fire etc., causes damage to your home. Choose your home owner's insurance and provide information to your mortgage lender. It's a good rule of thumb to get at least 3 quotes.
Title is a word you'll more than likely hear more so at your closing. A title is a bundle of rights to a piece of property. The title company will provide you with the preliminary title report to review before accepting the property. Title basically shows a list of prior owners. It's also good to get title insurance to protect you once you take ownership of the piece of property.
Next real estate word you need to know is signing. Whenever someone buys a home, they always feel like they're signing their life away, I know that's how I felt when I bought my very first home. Well, signing is when you receive an OK from your lender. This is when you will indeed sign your life away so that you can take ownership of the property. This process usually takes about an hour and if you're in Georgia, it's done by an attorney who is also a notary.
Here's one of the fun ones... closing costs. Often times I have seen where people think closing costs and down payments are one in the same, but they're not. Closing costs have to do with just that, the closing of the home and are fees paid at the end of the real estate transaction either by the buyer or the seller, or both. They include taxes, title, insurance and other expenses from the lender associated with closing the property.
The recording takes place the day after signing, the ownership of the property will be transferred to the buyer. This is the day you will receive your keys.
Be sure to check out the video below as well.
Happy home buying!
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