The real estate industry, like any other, is marred with a plethora of words that are often misinterpreted. Everything from the addendum to foreclosure may seem like a bewildering jumble of terms for those unfamiliar with the industry.
Before you get into the real estate industry, familiarize yourself with the following terminology and meanings.
Real estate deals must explicitly communicate both parties' agreements, yet there are many steps between accepting an offer and completing the deal. Your broker will submit an addendum if anything has to be changed inside the current contract.
Real estate agent
During every property transaction, a real estate agent should represent their clients and work for their best interests.
Real estate broker
A broker is an agent who has passed the Provinces broker's examinations and completed a certain number of deals. These brokers may operate alone or employ their own agents.
Realtors are agents who work under the supervision of CREA (Canadian Real Estate Association). A member of CREA must follow set standards and a code of ethics.
Fixed-Rate and AMR (Adjustable Mortgage Rate)
A fixed-rate mortgage has a predetermined rate for the entire loan term, which is often 15 or 30 years. On the other hand, an adjustable-rate mortgage is flexible, and the most typical terms are 5 or 10 years.
The word "amortization" relates to the process of scheduling the paying off of a mortgage through a certain period of installments. A common buyer's amortization plan in real estate is a single payment monthly for 15 or 30 years.
The (market) value of your real estate property minus the amount due to the lender is the owner’s equity.
An appraisal is a procedure for determining the fair market value of the real estate. A lender may often demand a third-party assessment in a real estate transaction to verify that the loan amount sought represents the building's fair market worth.
Contingency for appraisal
An appraisal contingency is a provision in a purchase agreement that enables a purchaser to back out if the appraised value of a property is less than the selling price.
The house is appraised by an appraiser appointed by the buyer's lender to verify that an acceptable home value backs the loan. A lender often wants to make sure they aren't paying too much for a home.
Letter of Pre-approval
A pre-approval letter from a bank which is an approximation of how much they'll give you) should be obtained before you apply for a mortgage or even begin searching for a house. This letter will assist you in determining what you can afford and reassure property sellers that you can get financing if necessary.
The disclosure includes any less desirable facts about the asset, which may lower its value. Buyers usually want to know if there're any structural problems on the property.
These kinds of problems are costly to repair and sometimes too dangerous for a buyer to take on.
When a person misses monthly repayments, the lender attempts to recoup the loan amount by foreclosing on the property.
Lease of land
Sometimes, when you buy a house, you get both the house and the ground it's constructed on. Sometimes, you may be required to sign a land lease, which indicates you will own the home while paying the rent for the land.
A short sale occurs when a real estate property is sold for less than the total amount owed on the mortgage.
This phrase refers to the criteria that must be fulfilled before a property purchase may be completed. They are also referred to as conditions or subjects.
When you refinance your home loan, you're swapping your previous loan with a whole new one with different repayment plans and interest rates.
To conclude, this is a complete list of real estate words to be familiar with, although there are many more to learn. If you comprehend these fundamental words, you'll be able to understand others when they arise.
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