Rags 2 Riches Consulting
Know your terms
Know your terms
There's a lot of terminology that you will hear during your consultation. These are not even half of the words that could be used, but we felt it was necessary to give you some free knowledge on some of these words.
Education is key!
REAL ESTATE TERMS
Seller's Agent: Is the real estate agent or REALTOR® who represents the person who wants to sell their property.
Buyer's Agent: A REALTOR who represent the buyer during the home buying process. This person has the buyer's best interest and shows judiciary duties.
Buyer: Someone in the market to purchase a new home
Contract: is a written and signed document of agreements between 2 parties
Due Diligence: Time period you have from accepting an offer that allows you to be able to legally get out of a contract.
Closing Date: Date set to have all paperwork and funds to be exchanged in return for the new home.
Earnest Money: Usually 1% of the offer price of the home to let sellers know you're serious about your purchase.
Broker: The owner of the company a Realtor works under to be able to perform real estate transactions
Home Inspection: A service a buyer pays for to assure that the property they are in contract with has no major issues before they make their purchase.
Appraisal: A report ordered by the bank to assure the house is worth the amount that is being asked to borrow from the buyer.
Open House: A service provided by a Realtor to let other buyers and Realtors know a home is for sale and to come visit the property on a specific day.
Down Payment: A particular amount of money used towards the purchase price of a home that depends on which type of loan you will use to make the home purchase.
Closing Cost: Total expenses the buyer pays at the time a real estate transaction is completed. Application fees, underwriting and loan-origination fees, title work, homeowners insurance, title insurance, etc..
Sellers Market: When there are more buyers than there are homes for sale.
Buyers Market: When there are more buyers looking for homes than there are home for sale
Interest Rate: A percentage that plays a part in how much money your payment will be every month
Bidding War: When there are several people who have offers in on the same home and you normally give the highest and best offer by a certain date.
Bi-Weekly Mortgage: A mortgage loan that requires a payment every two weeks instead of 12 monthly payments. The loan is amortized faster using a bi-weekly mortgage and you pay less interest.
Counter-Offer: Typically an offer from the seller that follows a buyer's initial offer.
Debt Ratio: Used by lenders to approve loan applicants. Debt ratio equals combined monthly debt payments divided by gross monthly income.
Consultation: When you have a discussion with someone about a particular situation or service sometimes resulting in you purchasing the services offered.
Credit Report: A document that tells a lender your worthiness on paying back a loan. If you have any previous derogatory or unpaid bills, liens, judgments, etc. or if you pay your bills on time.
Adjustable-rate mortgage (ARM): A type of mortgage loan in which the interest rate paid on the outstanding balance varies according to a specific benchmark.
Bankruptcy: A proceeding in U.S. Bankruptcy Court that may legally release a person from repaying debts owed. Credit reports normally include bankruptcies for up to 10 years.
Charge-Off: Balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt.
Collection Account: Attempted recovery of a past-due credit obligation by a collection department or agency.
Creditor: Lender, or someone to which you are financially indebted. It can be either an institution or individual. Institutional creditors include banks, credit card companies, and bond investors.
Emergency Fund: Also called a rainy-day fund. It is your pool of savings that is parked in a safe and liquid savings instrument (perhaps even under the mattress) so that you can access the funds in an emergency. Financial planners recommend that you have an emergency fund that is equal to between three and six months of your salary. Major reasons for tapping your emergency fund include losing a job or incurring large and unexpected medical expenses.
FICO Scores: Credit bureau risk scores produced from models developed by Fair Isaac Corporation are commonly known as FICO Scores. FICO Scores are used by lenders and others to assess the credit risk of prospective borrowers or existing customers, in order to help make credit and marketing decisions. These scores are derived solely from the information available on credit bureau reports.