If you're a first-time homebuyer on the hunt for your dream home, odds are you're about to enter a land flush with real estate lingo. Being familiar with basic real estate terminology can help you keep up with your realtor when they start speaking the language of their people.
Here, you'll find a collection of real estate terms to know that will keep you from looking like a deer in the headlights. These definitions will provide you with context throughout the home-buying process, as well as give you an overview of what to expect.
Meaning: Amortization makes your mortgage a lot more predictable by allowing you to pay the same amount each month, no matter what your balance is. Without it, you'd be stuck paying off both the principal on your loan and the interest on whatever your new balance is each month. While your payments would eventually go down, they'd be huge for the first few years until you were able to pay down your balance significantly.
Amortization is accomplished by a lot of math that basically takes your payment and applies some of it to your principal and some of it to your interest. The percentages going to each change over time, but they balance out in such a way that you don't have to worry about it because your monthly payment always stays the same.
Use It In A Sentence: "Thank God for amortization or I'd never be able keep up with my mortgage payments."
Meaning: Though it may sound fancy, this basically refers to how much your home is worth. It's based on the assessment of a public tax assessor who calculates it to see how many taxes the government can hit you up for.
Use It In A Sentence: "When we considered the difference in the house's market vs. assessed value, we weren't afraid to make a lower offer."
Meaning: As you may have guessed, a bad title is not a good thing. More or less, a bad title means that the previous owner has screwed up somehow, either by not paying their taxes, violating business codes, or committing some other unsavory deed. As a result, they can no longer legally sell the property in question, and you won't be able to buy it from them until they get things cleared up.
If you're looking to buy a house, your mortgage company is going to run a search to make sure the property you're interested in isn't marred by a bad title.
Use It In A Sentence: "We found a place we really loved, but it turned out to be a bad title."
Meaning: Closing is the moment when the house officially becomes your new abode. It usually takes place in the form of a meeting where you and the sellers sign any final documents. Then you hand over your down payment and closing costs. After you've closed on a property, the purchase is a done deal.
Use It In A Sentence: "After all that house hunting, we're finally closing on a great place next week."