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Important Terms to Know when Buying a Home

If you are considering buying a new home, there is a good chance you have encountered various bits of legal jargon in a short amount of time. Buying a home is an exciting step, however, it can also be quite complicated. Fortunately, you can make it an easier experience if you take the simple step of reading up on what these real estate terms mean. Some of the most common bits of real-estate jargon are as follows:

Appraisal: This is an informed, well-documented opinion of a home’s value, prepared by a certified, licensed appraiser. These appraisals are based on data regarding comparable homes in the area and the appraiser’s calculations.

Closing: This is a fairly short meeting wherein the sellers transfer the ownership of the home to the buyer. Generally, the lender, seller, buyer, and their real estate agents will attend the closing. Usually, the closing costs will include fees for the appraisal, the home inspection, a title search, a pest inspection and more.

Conventional loan: A home loan not guaranteed by a government agency, like the VA or FHA.

Down payment: A minimum portion of the home’s purchase price that a buyer is required to pay upfront. This percentage is dictated by the type of loan.

Equity: The percentage of the home’s value owned by the homeowner.

Foreclosure: A property repossessed by a bank because the owner failed to make mortgage payments.

Homeowner’s insurance: An insurance policy that protects a home’s content, structure, living expenses and injury to others should any damage occur.

Listing price: The seller’s asking price for a home.

Mortgage interest rate: A base rate set by the Federal Reserve and then adapted to each borrower based on their credit score, down payment, property type and point the buyer pays to lower the rate.

Private mortgage insurance: A borrower is charged with this fee after making a down payment that is less than 20% of the home’s value. The fee, which is 0.3% to 1.5% of the yearly loan amount, may be canceled in certain situations when the borrower reaches 20% equity.

Tax lien: The government’s legal claim against a property when a homeowner fails to pay a tax debt.

Transfer taxes: Fees issued by the state, county, or municipality upon the transfer of title.

VA home loan: This is a home loan partially guaranteed by the U.S. Department of Veteran Affairs and is offered by private lenders, like mortgage companies and banks.

Walkthrough: A buyer has the right to one final inspection of their home before closing, known as a final walkthrough.

Contact Our Experienced New Jersey Firm

Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 25 years. If you need experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.