Real Estate Terms to Know

Many people begin their search for their dream home without first doing any research. Whether you are a first time home buyer or this is not your first go around, there are various terms used in the real estate world that a potential buyer might not know of, but your real estate agent, Dennis Mahafkey, certainly knows them backward and forward, but here is a small list of common terms used in real estate that you may want to know:

● Adjustable Rate Mortgage or (ARM)- an adjustable rate mortgage is a type of loan program with variable interest rates that can change throughout the life of the loan. It is a mortgage that provides for periodic changes in the interest rate that is based on changing market conditions.
● Annual Percentage Rate (APR)- This is a value created according to a government formula which is intended to reflect the true annual cost of borrowing that is expressed as a percentage. This is the annual rate of interest — the total interest to be paid in a year divided by the balance due.
● Appraisal- Appraisal is a written justification of the price paid for a property, which is primarily based on an analysis of comparable sales of similar nearby homes. It is an estimate of value, as for sale, assessment, or taxation; valuation.
● Balloon mortgage- A mortgage loan that requires the remaining principal balance to be paid at a specific time — e.g. a loan may be amortized as if it would be paid over a thirty year period, but requires that at the end of the tenth year the entire remaining balance must be paid.
● Bankruptcy- By filing in federal bankruptcy court, an individual or individuals can restructure or relieve themselves of debts and liabilities. Bankruptcies are of various types, but the most common for an individual seem to be a “Chapter 7 No Asset” bankruptcy which relieves the borrower of most types of debts. A borrower cannot usually qualify for an “A” paper loan for a period of two years after the bankruptcy has been discharged and requires the re-establishment of an ability to repay debt.
● Deed-in-lieu- Short for “deed in lieu of foreclosure,” this conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The lender may or may not cease foreclosure activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the lender accepts the deed-in-lieu, the avoidance and non-repayment of debt will most likely show on a credit history. What a deed-in-lieu may prevent is having the documents preparatory to a foreclosure being recorded and become a matter of public record.
● Escrow- An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.

There are many, many terms in the real estate world, and listing them all would easily amount to a fully bound book, but here are a few of the mostly used terms. If some are still a bit unclear, Dennis Mahafkey can show you the way, as he is a professional real estate agent!

You can find out more about — Dennis Mahafkey, DennisMahafkey