If you’ve ever bought or sold a piece of Real Estate, you know there are plenty of questions that you have to ask. One question you may be thinking, but never ask is: “What does this word mean?” Real Estate “lingo” has evolved and expanded over the course of time. Agents are used to throwing around these terms from day to day and can sometimes overlook the consumer’s need for an explanation. Although the list goes on and on, here are a few terms that you should learn for your real estate transaction:
Closing Costs: A fee or amount that a home buyer must pay at closing for a single service, tax, or product. Closing costs are made up of individual closing cost items such as origination fees and attorney’s fees. Many closing cost items are included as numbered items on the HUD-1 statement. Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney’s fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country.
Closing Statement/HUD 1: The final statement of costs incurred to close on a loan or to purchase a home.
Earnest Money Deposit: A deposit made by the potential homebuyer to show that he or she is serious about purchasing the property.
FSBO (pronounced FIZBO): A For Sale By Owner Listing. The seller has chosen to have no representation while selling their home.
Good Faith Estimate: An estimate of charges that a borrower is likely to incur in connection with a settlement.
Lock Period: The amount of time that a lender will guarantee a loan’s interest rate. Once you’ve locked in the interest rate on a loan, the lender will guarantee that rate for a certain period of time, usually for 30, 45 or 60 days.
Private Mortgage Insurance: Insurance provided by nongovernment insurers that protect lenders against loss if a borrower defaults. Fannie Mae generally requires private mortgage insurance for loans with loan-to-value (LTV) percentages greater than 80%.
Title Insurance: Insurance against loss resulting from defects of title to a specifically described parcel of real property.
Selling or buying a home in Louisville KY or Southern IN? Call us today at 502-371-1155.