Buying a house will likely be the biggest purchase of your life and that alone can make the process a little bit intimidating. Add in the elements of a whole new language and the concept of a 30 year mortgage, and intimidating goes to a whole new level… let's call it, daunting.
Understanding the important key terms thrown around by your Realtor and lender will empower you during the home buying process. Here's a list of key phrases and words to help you become the most educated buyer on your (soon to be) block.
The pre-qualification process is completed with your lender and determines whether or not you are qualified for a home loan. The loaner will consider your credit history and financial status to make this determination. If qualified, the lender will issue a Pre-Qualification letter outlining the amount of money you are able to receive.
A document that pledges the property to the lender as collateral for the loan needed to purchase the home.
A type of Mortgage with a rate that does not change over the life of the loan.
A percentage of the purchase price that the buyer will pay in cash to obtain the loan. The amount usually ranges between 3-20%.
The Multiple Listing Services. This services is where brokers share their listings with other brokers. Most home sales are linked to an MLS listing, however, some properties are also sold off market or for sale by owner.
An item of value that is permanently attached to/or part of the property. These items can include carpet, light fixtures or landscaping. Occasionally, these items can become a point of negotiation between the buyer and seller.
This refers to the obligation your real estate agent has to act solely in your best interest. This includes disclosure, loyalty and confidentiality.
Certificate of Title:
This document is proof that the property is indeed owned by the seller. It also proves that no other party or institution has any claims to be addressed.
The Deed is a legal document that transfers ownership of a property from seller to buyer.
In Seattle's Real Estate market, it is typical for buyers to hire a licensed inspector to complete a high level inspection prior to submission of an offer. The information found during the Pre-inspection is utilized by the buyer to formulate an offer which does not include an inspection contingency. This allows the buyer to be competitive among other buyers who are doing the same.
Once you have submitted an offer and the terms have been accepted by the seller, the buyer and seller have a mutually accepted agreement.
Purchase & Sale:
Upon mutual acceptance, the contract between the buyer and seller becomes "The Purchase and Sale Agreement". This contract defines all terms required to fully execute the sale of a property.
If changes or additions are added to the Purchase and Sale Agreement, they will be added to the contract by way of an addendum which is signed by the buyer and seller.
Some housing developments and condo buildings have a Home Owners Association (HOA) that oversees the budget, rules and maintenance for the community. The HOA can be run by members of the community or may be hired out to an independent management company.
The Resale Certificate is a document that is typically prepared by the HOA, which outlines the building or communities financials, rules and restrictions, past meeting minutes and many other important pieces of relevant information. The buyer is provided the resale certificate document by the seller to review. This gives the buyer an opportunity to make an informed decision on whether or not to proceed with the sale.
Escrow refers to the time period between mutual acceptance and closing. The Escrow company, a neutral third party, will execute the transaction per the terms outlined in the purchase and sale agreement, as well as transfer funds from buyer to seller. They will also record the home sale with the county.
Comps or comparable properties are used to determine the fair market value of a given home.