Real Estate Dictionary, Pre-House Hunting Edition
Every industry has their own language. There terms they throw around like everyone knows what they're talking about but no one outside the industry really does. In most cases it's okay. I don't need to know what megabits and RAM are as long as my computer works. But in Real Estate, it's your money and your home we're talking about, so a little education can go a long way.
There are a LOT of Real Estate terms, so I'll break them down by category. Here are a few pre-house hunting terms to get you started.
Realtor (Pronouced Reel-tor)
According to the National Association of Realtors, "REALTOR® is a federally registered collective membership mark which identifies a real estate professional who is member of the NATIONAL ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics."
In reality, a Realtor is someone who sells your home in record time, finds your dream home and solves problems you never knew existed!
Pre-qualification v. Pre-approval
The process of getting qualified for a home loan by a lender in order to purchase a home. Pre-qualifying is the first step and gives you an idea of how much of a loan you may qualify for. Pre-approval is the second step, and is a conditional commitment to actually grant you the mortgage.
Debt to Income (DTI)
The total amount of debt that a borrower has against his or her income. Used by lenders to assess the borrower's ability to repay a loan.
Gift Money and Letters
Money given as a gift and not a loan. A gift letter accompanies, explaining who gifted the funds and the relationship to the recipient. The letter must include the amount, date and the fact that it will not be required to be repaid.
Interest Rates
The amount of interest due per period, as a proportion of the amount lent, borrowed or deposited.
FHA (Federal Housing Administration)
That's right, despite popular belief FHA it has nothing to do with firstime homebuyers. FHA sets standards for construction and underwriting and insures loans made by banks and other private lenders for home building.
Buying and selling your home can be stressful but knowing a few terms can help make the process feel so much less intimidating. If ever you need to know more, just refer to my other Real Estate Dictionary posts. Or better yet, ask your friendly neighborhood Realtor!
There are a LOT of Real Estate terms, so I'll break them down by category. Here are a few pre-house hunting terms to get you started.
Realtor (Pronouced Reel-tor)
According to the National Association of Realtors, "REALTOR® is a federally registered collective membership mark which identifies a real estate professional who is member of the NATIONAL ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics."
In reality, a Realtor is someone who sells your home in record time, finds your dream home and solves problems you never knew existed!
Pre-qualification v. Pre-approval
The process of getting qualified for a home loan by a lender in order to purchase a home. Pre-qualifying is the first step and gives you an idea of how much of a loan you may qualify for. Pre-approval is the second step, and is a conditional commitment to actually grant you the mortgage.
Debt to Income (DTI)
The total amount of debt that a borrower has against his or her income. Used by lenders to assess the borrower's ability to repay a loan.
Gift Money and Letters
Money given as a gift and not a loan. A gift letter accompanies, explaining who gifted the funds and the relationship to the recipient. The letter must include the amount, date and the fact that it will not be required to be repaid.
Interest Rates
The amount of interest due per period, as a proportion of the amount lent, borrowed or deposited.
FHA (Federal Housing Administration)
That's right, despite popular belief FHA it has nothing to do with firstime homebuyers. FHA sets standards for construction and underwriting and insures loans made by banks and other private lenders for home building.
Buying and selling your home can be stressful but knowing a few terms can help make the process feel so much less intimidating. If ever you need to know more, just refer to my other Real Estate Dictionary posts. Or better yet, ask your friendly neighborhood Realtor!
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