Homebuying Process Key Terms

Dated: December 12 2020

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If this is your first time buying a home, the process can feel overwhelming in the beginning. That's why it's imperative to have a real estate professional who you are confident will guide you through every aspect of the transaction by putting your needs first and teaching you along the way. Here's a list of some of the most common terms in the homebuying process to get you started.

Real Estate Professional

An individual who provides services in buying and selling homes. 

  • Real estate professionals are there to help you through the confusing paperwork, find your dream home, negotiate any of the details that come up, and so you know exctly what's going on in the housing market.

Pre-Approval Letter

A letter from a lender indicating you qualify for a mortgage of a specific amount.

  • This is a critical step in today's competitive market.

Mortgage Rate

The interest rate you pay to borrow money when buying a home.

  • The lower the rate, the better.

Down payment

Down Payments are typically 3-20% of the purchase price of the home. Some 0% down programs are also available. 

  • As your lender for more information

Credit Score

A number ranging from 300-850 that's based on an analysis of your credit history.

  • Helps lenders determing the likelihood you'll repay future debts. If you know your number is not where it should be for your desired rate, start working to improve your credit 6-12 months before you plan to buy.

Closing Costs

The fees required to complete the real estate transaction. Paid at closing, they include points, taxes, title insurance, financing costs, and items that must be prepaid or escrowed.

  • Ask your lender for a complete list of closing cost items.

Appraisal

A professional analysis used to estimate the value of a home.

  • A necessary step in validating a home's worth to you and your lender as you secure financing.

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