Wednesday, March 11, 2015

Real Estate Jargon - Explained!

Real estate jargon, while not in a different language, can still be difficult to understand. There are two types of real estate slang: the acronyms used in ads and the daily jargon used by the real estate industry professionals in their daily business. These are some things you might hear from a real estate agent that you might not understand.

Contingency: A clause in the contract that puts off the terms of the contract until another event occurs. Think of it as "this contract is not enforceable unless X occurs by Y date". Common contingencies include the sale of your current home, obtaining financing, the home appraising for at least the loan amount, and acceptable inspection results.

Closing Costs: The fees paid at the closing of a real estate transaction. These costs vary, and some are negotiable and may be paid by the buyer, seller or both.

CMA: Comparative Market Analysis. This is a report compiled by a real estate agent that analyzes the past sold homes in an area to determine what a home is worth in today's market.

Escrow Impound Account: Buyers will be asked to prepay taxes and insurance upon the closing on a home. This money goes into an escrow impound account, and is used to ensure that these bills are paid on time. Not all mortgages require an escrow impound account, and if your loan-to-value ratio is 80 percent or less, you may be able to have this requirement waived and sometimes the lender will charge your for this.

FHA and HUD: The Federal Housing Administration (FHA), is an office overseen by the U.S. Department of Housing and Urban Development (HUD). Many assume that "FHA Loans" are loans actually granted by this agency. They are not. The FHA guarantees the repayment of the loan granted by a conventional lender.

GFE: Good Faith Estimate. A form supplied by the lender that itemizes the terms and costs of the loan given to a buyer.

HOA: Homeowners Association. This is the governing body of a common interest neighborhood. It is made up of a board of directors, elected by the homeowners. Not every neighborhood has an HOA.

HOI: Homeowners Insurance. This is required by the lender and it protects the property from hazards such as theft and fire. It also covers your liability or legal responsibility for any injuries on your property, including those caused by pets that live in the home.

HUD Settlement Statement: An itemized list of services and fees charged to the borrower by the lender. By law, the borrower is given at least 24 hours before closing to inspect the HUD.

MLS: Multiple Listing Service. A database where listing agents share information about properties for sale with other agents. The information contained in the MLS is typically not available to the general public.

PITI: Pronounced "Pee-Tee", this acronym stands for Principal, Interest, Taxes and Insurance. Combined, these make up your monthly mortgage payment.

PMI: This acronym stands for Private Mortgage Insurance. Lenders typically require PMI when the down payment on a home is less than 20 percent of the total loan amount. This is paid for by the borrower, and can usually be removed once the borrower has paid off 80 percent of the loan amount.

REALTOR: Many consumers assume that all real estate agents are Realtors. This isn't true. A real estate agent must be a dues-paying member of the National Associate of Realtors to legally use the term Realtor. 

Title Insurance: There are two types of title insurance policies. One covers a buyer's interest in real property. The second type protects the lender. Title insurance is necessary to protect your interest from other claims of ownership.

Seller's Property Disclosure: Sometimes referred to as a Transfer Disclosure Statement. This form is filled out by the seller and given to the buyer as part of the disclosure process. This form contains a list of questions that must only be answered by the seller (not by the listing agent). Some of these questions are about the condition of the home and whether or not the seller has knowledge of any major repairs made to the house and items on the property, such as alarm systems, sump pumps and even rain gutters.

VA Loan: A mortgage offered to U.S. service members, veterans and sometimes spouses that is guaranteed by the U.S. Department of Veterans Affairs.

Zero-Lot Line: When a home sits right on the lot's boundary, with little or no space between homes, it is said to have a zero-lot line.

Lisa Southern Real Estate is located at 15 E. Martin Street, Raleigh, NC 27601 and specializes in the Downtown Raleigh real estate market. If you are interest in living, investing, renting or selling in Downtown Raleigh, Cary, Apex, Morrisville, Holly Springs or Fuquay Varina, contact us today at 919-800-0800 or to start your home search, visit our website!