You are buying a home, they are selling a house or a building.
A home buyer has sentiments attached to a new property which he/she is buying to have a roof over ahead. Homebuyers look at the real estate property with all emotions and are not aware of the technical terms involved in buying and selling real estate property.
In contrast to this, a real estate company – a business entity involved in the purchasing, selling, and managing of real estate properties use many technical and legal terms related to the real estate industry.
There are some important real estate terms that a buyer should also know before buying a house. This article underlines Some Important Real Estate Terms That You Should Know Before Buying A house.
Buyers Agent or Listing Agent
Real estate agents or real estate brokers refer to those professionals who act as a bridge between the buyer of the property and the seller of the property. This means they connect the buyer and seller. In general terms, we call them real estate agents or brokers, but, they can also be called buyers agents. Interestingly, the listing agent is a term used for the seller agent.
Assessed Value refers to the overall value of the property provided by the public assessor or examiner for the purpose of tax calculation. This is a property management term that reflects the total value of the property as per the public assessor who calculates the property value keeping the taxation purpose in the centre.
Closing costs refer to the additional charges which are borne by the buyer to meet all expenses and fees levied by lenders and third parties. Closing cost includes insurance charges, taxes, brokerage, etc. It is usually a one-time payment.
In real estate terms, a pre-approval letter refers to the estimate of loan approval given by the lenders to the buyers after a thorough evaluation of documents, civil score, loan eligibility, etc. This is not a final approval but just an estimate of the amount of loan that could be availed by the buyer.
Cash reserves refer to the additional money which is left after the payment of the down payment and closing costs. It must be noted that cash reserves are not required by all lenders. Unlike, down payment and closing costs, cash reserves is not a mandatory cost required for the closure of a property deal, it is simply a remaining cost that can be kept as a reserve for future expenses.
This is quite a simple term. Interest is the amount that a buyer needs to pay over a time to the lender. This is paid at a certain rate on the amount borrowed under a mortgage that is the principal amount.
In simple terms, interest refers to a certain percentage of the total borrowed amount that a buyer has to pay in his/her EMIs.
Adjustable-Rate Mortgage refers to the loan where the interest rates are not stable and they keep on fluctuating during the whole tenure. This means the interest would not be the same as the initial rates and they may rise or get low based on the prevailing market condition.
- ARMs are also known as variable-rate mortgages or floating mortgages.
- An ARM is a type of mortgage in which the interest rate applied to the outstanding balance differs during the entire tenure of the loan.
Unlike Adjustable-Rate Mortgage, Fixed-Rate Mortgage refers to the loan where the interest rates remain the same during the whole tenure, irrespective of conditions prevailing in the market.
- It is the most preferred kind of financing because of the predictability and stability it offers.
- In comparison to adjustable-rate mortgages, or ARMs, Fixed-Rate mortgages have a higher interest rate.
Private Mortgage Insurance
Private Mortgage Insurance or PMI refers to an additional fee that is required to be borne by the buyer when the down payment paid by him/her is lesser than 20% of the total cost of the property.
- Borrowers need to pay PMI to the lender when they can’t afford to pay a 20% down payment on a home.
- PMI is usually paid in the monthly payment and costs around 0.5-1% of the mortgage yearly.
- Once the borrower pays enough amount of principal mortgage amount, PMI can be removed.
House buyers are highly dependent on mortgages to purchase their dream house. They do not have to save a lot of money and wait for n number of years when they get a loan to purchase a house. Depending on the stability of the income, home-buyers opt for the best suitable among different kinds of mortgages available to them.
One must note that loans can be easily availed on RERA approved properties. Best Real Estate Companies like BullsEstate in Mohali, Punjab, DLF Ltd. in Delhi offers only verified properties along with pre and post-sale guidance to the buyers.
The leading real estate agents ease the understanding of real estate terms for new home buyers and give them thorough information on every step and aspect involved in the buying and selling of real estate properties.
If you are searching for RERA-approved best 2/3/4 bhk apartments in Mohali, Punjab then considers GMADA-IT City, GMADA – Aero City, and many other upcoming projects by BullsEstate. Alongside the best real estate properties, they provide all the necessary information in a detailed manner that a home buyer can purchase a property like a pro without getting stuck in technical real estate-related terms.