Real Estate Lingo 101

Whether you are a first time home buyer or a seasoned buying or selling veteran, it is likely that at some point, all of the real estate lingo and jargon that gets thrown around can start to sound like Greek to you. What is the difference between an ARM and a fixed rate mortgage loan? What are closing costs, and who pays them? The questions can add up quickly.

Let’s take a closer look at some of the real estate lingo you are likely to hear on a regular basis when you are buying or selling a home.

Brush Up on Your Real Estate Lingo

Adjustable Rate Mortgage

An adjustable rate mortgage, or ARM, is a mortgage loan that carries an interest rate that regularly fluctuates in relation to a designated indicator in the real estate market, such as a weekly average of US Treasury Bills, over the entire lifespan of the loan. In an effort to avoid dramatic and continuous fluctuations, however, adjustable rate mortgages are typically limited to how often the interest rate may vary, and also by how much.

Appraisal

An appraisal is a process to determine the worth of value of something, whether it be stocks, jewelry, or – in this case – the home you are considering for purchase. A professional real estate appraiser will take a close examination of the property to make an estimate of the home’s worth, taking into consideration the initial purchase price and comparing it to recent home sales of similar properties in the area.

This is an important step, since your bank will require the appraisal in order to determine value of the home for their lending purposes. The appraisal process has been known to derail a sale, as the lender can deny the loan if the appraisal amount comes in at less than the loan amount.

Balloon Mortgage

A balloon mortgage is a mortgage that is not completely paid off over the term of the loan (e.g., 7 years, 10 years), which leaves a balance at the end. At the end of the loan term, the borrower must either refinance the loan or pay off the remaining balance.

Closing Costs

Closing costs are all transactional or settlement charges, or any charges above and beyond what the actual cost of the property is, that will need to be paid at the close of escrow or when the property is transferred. Typically, these costs will include lender’s fees, a prorated share of the property taxes, credit check fees, transfer taxes, deed filing fees, real estate agent commissions, and more.

Depending on the stipulations of your individual contract agreement, these closing costs may be paid by the buyer or the seller, or as a split amount between both parties.

Fixed Rate Mortgage

A fixed rate mortgage is a mortgage that has an interest rate that remains constant throughout the entire term of the mortgage (e.g., 30 years).

Multiple Listing Service

The Multiple Listing Service, or MLS, is a computer-based service that gives real estate professionals access to detailed listings of most of the homes that are currently on the market.

About Orlando Realtor Chris Quarles – Chris Quarles Properties

If you have any questions about real estate lingo, or if you are in the market to buy or sell a home, we would love to help. We are a dynamic boutique real estate firm, specializing in all types of Florida real estate. When you’re ready to get started, give us a call or connect with us online. We look forward to hearing from you!