Real estate can be tricky to understand whether you’re a novice or experienced. From moving into your first apartment or buying your own house, there’s a plethora of approvals and procedures one must go through. Often, the unique and complex real estate terminology can be confusing in itself. When you’re familiar with some of the basic terms, you may find that real estate is not so scary after all. Being well-versed in the real estate world can help you better navigate the waters on the way to your new home.
If this is your first time in real estate or just want to brush up on your terms, check out the list of common terms below.
- HOA (Homeowner Association) – an organization in a neighborhood, condo building or other similar community that creates and enforces rules for its properties and residents. HOA members are fellow residents and they collect annual fees to pay for operational and maintenance costs of the community’s facilities.
- CDD (Community Development District) – manages the construction and development of a community. CDD fees cover for the cost of any new roads, improvements, schools, etc.
- FHA (Federal Housing Administration) Loan – a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration. This loan is designed for individuals with low-to-moderate income and requires lower qualifications to receive approval.
- Pre-Qualification – the estimate of a future loan given by a lender based on information provided by the borrower. Lenders use this to attract potential customers by showing them the amount they could receive when choosing their institution.
- Pre-Approval – a preliminary evaluation a mortgage lender completes of a borrower by a to determine whether they qualify for a loan. A pre-approval follows the pre-qualification and is a good indication that the borrower meets all requirements to be eligible for a mortgage.
- Earnest Money Deposit – a deposit made to a seller that represents a buyer’s good faith to buy a home. This money shows a seller that a buyer is serious. It also provides the buyer additional time to secure financing and conduct an appraisal and inspection before closing.
- Adjustable-Rate Mortgage (ARM) – a mortgage where interest rates can change over the life of the loan, resulting in a change of payment.
- Amortization – the process of paying off a loan by making regular and scheduled payments to the lender. Mortgage amortization occurs when the borrower sufficiently pays the required amount to the bank and officially becomes the homeowner.
The world of real estate can be confusing to some while simple to others. Investing in a new home or property blindly can pose a series of problems if you don’t know what you’re getting yourself into. It’s important to do your homework and have a basic understanding of real estate. This allows you to feel comfortable in your endeavor and puts any fears you have about paying a mortgage at ease. Feel free to reach out to the Kelly Perkins team at 904-626-1551 for help with your next real estate journey.