There is a lot of terminology that is used in the real estate industry. Whether you are buying a home for the first time, or you are just unsure of something, we compiled a list of terms and their definitions.
Adjustable Rate Mortgages vs. Fixed Rate: interest rates with an adjustable rate mortgage can fluctuate, and will usually start at a lower rate than fixed rate mortgages. Fixed rate mortgages are set when you take out a loan.
Amortization: a system of paying off a mortgage that combines interest and principal for your payments, instead of paying off the interest first
Appraisal: an estimate of the home's value based on comparable area homes and an investigation of the property (required by your lender)
Buyer's Agent vs. Listing Agent: There are typically two agents involved in a home purchase. When you are buying home, the "buyer's agent" represents you, and the "listing agent," who represents the home seller.
Closing: completing the sale of a property by meeting, signing documents, and exchanging funds
Closing costs: fees associated with purchasing a home. (typically 2-5% of the purchase price of the home, not including the down payment)
Contingencies: conditions that must be met before your deal can go through (financial contingencies, appraisal contingencies, inspection contingencies)
Contracts & offers: when you find a home that fits your needs, you place an offer. A contract is made when the offer is accepted.
Earnest money: a refundable deposit given with an offer; a payment to the seller to show that you are serious about buying the home.
Equity: the amount of your home you actually own, the difference between the home's market value and the unpaid balance of the mortgage
Home warranty: fee paid to protect against future problems (heating, plumbing, other maintenance)
Inspection: an examination of a home's plumbing, electrical, walls, foundation, HVAC, appliances, and etc. An inspection is scheduled after you make an offer, and typically costs between $500 - $800.
Listings: homes that are currently for sale
MLS: Acronym for Multiple Listing Service. It is an organization that gathers and distributes home and property information to its private members.
Pre-approval: a letter from the bank that provides an estimate of how much they will lend you. You should obtain this before you even look for a home.
Private mortgage insurance: premium paid by the buyer to protect the lender if you cannot pay your mortgage.
Real estate agent: a professional who has earned a real estate license. Agents work under the supervision of a broker. View the Tennessee requirements here.
Real estate broker: a real estate agent that has passed a state broker's exam, and has met the minimum transaction amount required by their state
REALTOR®: a real estate agent that is a member of the National Association of REALTORS®. REALTORS® uphold standards and the code of ethics set out by the organization.
Title insurance: an insurance policy that protects owners and lenders against loss or or damage
Do you have questions about real estate? Are you looking to buy or sell a home? Maybe you are even looking to start a new career! We would love to hear from you. Reach out to us, 615.815.1295