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Buying or selling a home is complicated enough, between navigating the paperwork and staying on top of changing laws governing the transaction process, to understanding the terminology, the real estate business doesn’t make it easy, and can be very intimidating. However, once you familiarize yourself with the common terms used by REALTORS®, brokers and others involved in the industry, you can feel more in control during the process.
Appraisal: A professional analysis used to estimate the value of a property.
Comparables or Comps: An abbreviation for “comparable properties,” which are used as a comparison in determining the current value of a property being appraised.
Market Value: The current value of your home based on what a purchaser would pay.
Qualifying Ratios: Calculations used in determining the qualifying loan amount for a borrower.
Earnest Money Deposit: The deposit to show that you’re committed to buying the home.
Escrow: An item of value, money or documents deposited with a third party to be delivered upon the fulfillment of a condition.
Points: One percent of the amount of the mortgage loan.
Contingency: A condition that must be met before a contract is legally binding.
Closing Costs: The upfront fees charged in connection with a mortgage loan transaction, paid by the buyer and/or seller.
Knowing the language and feeling comfortable with the terms used by real estate professionals can give you the confidence you need to protect your interests and successfully navigate the process. For a comprehensive glossary of terms, visit the Federal Trade Commission site at Ftc.gov