When preparing to purchase your first home, you’ll likely come across many words and phrases that are being used in a new context or that might even seem completely foreign. Here at Main Line Homes, we appreciate that specific real-estate terms can be confusing. In fact, it’s precisely why we’ve created this series — as a guide to help people who are looking for a new home to navigate through the new terminology they encounter. Let’s take a look at the first installment of “Learning the Lexicon.”
An appraisal is an estimate of a property’s value based on the written analysis from a qualified appraiser. Before a bank issues a loan, they typically require an appraisal to make sure that the estimated cost of a property exceeds the amount that will be borrowed.
A buyer’s agent is a real estate agent who specifically represents the interests of people buying homes. If a buyer’s agent completes coursework and proves their experience with representing buyers, they can qualify for accreditation and become an ABR (Accredited Buyer’s Representative). The ABR accreditation is awarded by the Real Estate Buyer’s Agent Council (REBAC)
Before a real estate transaction is completed, certain conditions must be met. These include home inspections, financing contingencies, or contingencies that state a buyer must first sell their current home. Generally speaking, the fewer contingencies that are required of a seller, the stronger a buyer’s negotiating position is in terms of getting the best price.
Loans that are insured by the FHA (Federal Housing Administration) often have attractive finance rates and less strict lending requirements than conventional bank mortgages. For buyers with low credit scores, FHA loans can be very appealing as they also offer smaller down payments. However, they require two types of mortgage insurance: an annual premium and an upfront premium. The monthly premium is included in the monthly mortgage payments.
In real estate terminology, a home inspection is a professional examination (funded by the buyer) that will evaluate the mechanical and structural condition of a property. This includes the foundation, electrical, plumbing, HVAC systems, and roofing. If any issues are identified by the inspector that will be too expensive to resolve, they can be discussed with the seller in detail before proceeding to the final negotiations of a sale.
Keep an eye out for the next part in our “Learning the Lexicon” series to further examine some of the most commonly used real estate terms and what they mean. For additional information or to discuss the property market in Philadelphia, contact us today!