If you’re currently shopping for a home, then you’ve probably ran across a couple of words or abbreviations that were a little confusing to you. All of the real estate verbiage can be a little hard to keep track of – but you’ve come to the right place!
Check out some of the common real estate vocabulary below, and their simple definitions.
- AMC (Appraisal Management Company) – This is a company that worked independently from a lender. Once notified by a lender, they will order a home appraisal.
- Appraisal: This is an impartial opinion of the value of a home, prepared by a licensed and certified appraiser. They come to the conclusion based on data about comparable homes in the area, as well as their own walk-through of the home.
- Back-End Ratio: This is one of two debt-to-income ratios that a lender will analyze to determine a borrower’s eligibility for a home loan. This ratio compares the borrower’s monthly debt payments to gross income.
- Closing: a meeting which ownership of a home is transferred from seller to buyer. This usually includes the buyer, seller, real estate agents, and the lender. (psst..and us!).
- CD (Closing Disclosure): This document is sent to the buyer three days before closing. The document lists all terms of the loan – the amount, interested rate, monthly payment, mortgage insurance, monthly escrow amount, and closing costs.
- Contingencies: These are written into a home purchase contract that protect the buyer if any issues come up with financing, home inspections, etc.
- Earnest Money: A security deposit made to the seller of the buyer’s intent to purchase.
- In Escrow: This period of time takes place after a buyer has made an offer on a home and the seller has accepted. During this (may take 30 days or longer) the home is inspected and appraised, and the title searched for liens.
- Tax Lien: This is the government’s legal claim against property when the homeowner fails to pay a tax debt.
- Title Insurance: This protects the buyer and lender if any person or entity steps forward with a claim that was attached to the property before the seller transferred legal ownership of the property. (psstt..hey – we do this!).
These are just some of the few real estate vocabs you might run across along your home purchasing journey. But this list is a great jumping off point to gain the confidence you need to keep on shopping!
For more real estate guides, stop by AmeriTitle’s Blog.