A REAL ESTATE GLOSSARY: TERMS HOMEBUYERS SHOULD KNOW

When it comes to buying or selling your home, there’s no denying that it can be a complicated process. But it doesn’t have to be – especially when you trust the experts at RE/MAX Professionals North! We’re here to help you, and that starts with simplifying the approach.

To make that happen, let’s explore some important terms.

Adjustable Rate Mortgage (ARMs): as the name aptly suggests, this type of mortgage rate does not remain unchanging. Instead, both the interest rate and mortgage payment change depending on market conditions. 

Amortization: refers to repaying your mortgage in full over a period of time.

Appraisal: offers the current value of your home.

Assessed Value: reveals a property's worth and is determined by a governing authority for tax purposes.  

Assumption Agreement: allows the seller of a home to bestow their mortgage on the buyer of the property, effectively allowing them to take over the responsibility of said mortgage.

Buyer’s Agent: refers to the agent that represents the homebuyer. 

Seller’s Agent: refers to the agent that represents the seller. 

Broker: a broker is a real estate agent that can start their own brokerage or hire other agents, as opposed to a regular agent who does not possess the same qualifications. 

Blended Payment: when you repay a loan in set monthly payments, blending principal and interest over a predetermined period of time. 

Closing Costs: once you have officially become the new homeowner, you have to pay the closing costs for the finalized transaction, which include legal fees for example.

Conditional Offer: is an offer that is dependent on a set of specified conditions.

Counteroffer: is the offer that the seller makes in response to your offer as they might not accept all the conditions outlined. 

Conventional Mortgage: this form of mortgage is not backed by a government agency.

Deed: more broadly, a deed is a legal document related to ownership of a property and legal right to that property.

Downpayment: is the amount of money the buyer needs to be able to put forward in order to qualify for a mortgage, which typically ranges from 5 to 20 percent of the price of the home. 

Equity: this is the portion of money that the homeowner actually owns, calculated by the total amount of the mortgage loan/interest minus what is still owed.

Fair Market Value: is the hypothetical value a buyer and seller would agree upon for your home, under normal conditions. 

Market Value: by contrast, market value refers to the price a property actually sells for. 

Fixed Mortgage Rates: this mortgage rate remains the same throughout the term of your mortgage and market conditions don’t affect your rate. 

Freehold: gives you full ownership of a property for an indefinite amount of time.

Leasehold: is when you buy the right to occupy the land/building for an agreed upon regular payment to the land owner. It's usually a much longer period of time than a typical rental lease, 40+ years rather than 1 or 2.

Lien: is a legal claim against a property owner for unpaid debts, like not repaying your mortgage, for example.

Maturity Date: this is the date that your mortgage ends, so you must have the loan paid in full or must establish a new agreement for your mortgage. 

Offer to Purchase: is the contract established for buying a home between you and the seller which outlines terms and conditions you must abide by.

Home Inspection: is the inspection of a home that occurs prior to the sale becoming finalized to establish the condition of the home.

Listing: an agreement for the real estate agent or broker to sell your property for a fee. 

Sales Contract: the contract established between buyer and seller that determines the conditions for the sale. 

If you'd like to learn more about the home buying process, please contact the experts at RE/MAX Professionals North and they'll help you on your journey for a new home.