If you’re thinking about buying a home, it’s important that you understand your contract and understand the terms used in the real estate world. If you don’t understand some of these commonly used terms, it may seem like everyone is speaking a foreign language. So take a minute and learn a few of the most common terms used in a real estate transaction.
1) Contingency – This is a condition set forth in the contract that, if not met, can void the contract and the deposit returned to the buyer. The most common contingencies are for financing or home inspection, but they may also be for other things outlined in the contract.
2) Disclosure/disclaimer – In most states, home sellers are required to provide a disclosure to the buyer to inform them about what they know about the property. The disclosure includes information about what is/is not located on the property or in the home, the condition of the property/home, defects, recent repairs, and more.
3) Earnest-money deposit – Upon completing a contract, buyers usually attach a check for their earnest-money deposit to their offer. The check is put into escrow once the contract has been approved by all parties and is used as part of the down payment at settlement.
4) Escrow – Escrow is handled by a title company, an escrow company, an attorney or a real-estate broker, depending on local practices. Once an escrow account is set up, the buyer’s financial portions are deposited into this account before, during and after the settlement. The term escrow also refers to prepaid amounts for homeowners insurance and property taxes that you pay with your mortgage bill each month. Your lender will keep these funds in an escrow account until the bills are due.
Now that you know some basic terms, it’s time to start searching for your dream home! Click here to get started!