When I first began researching real estate, the overload of jargon made me feel like the market was practically inaccessible. This list is designed to help those who have minimal knowledge of real estate navigate their way through a purchase by learning
Annual Percentage rate (APR): this is a phrase that everyone has heard, but not many really understand. APR refers to the amount that you, the purchaser, will pay each year in interest on your loan (mortgage, etc.). APR does not include compound interest
Compound interest: compound interest is calculate based on both the initial loan amount AND the interest itself. This means that the interest itself gathers interest. Mortgages are often compounded, and are paid off through an amortization schedule.
Amortization schedule: this refers to the schedule by which a mortgage or other such loan is paid off. These generally follow a monthly plan (“amortized” means something that is regularly and gradually paid off, rather than being paid in full).
Appraisal: the appraised value of a property determines how much it will be listed for, which determines how the purchaser and seller bargain. The appraisal is an estimate of the value of the property based on neighborhood and surrounding property
values, location, home condition, renovation needs, and so on. Generally, the seller will attempt to set the price at or above the appraisal value.
Closing costs: the closing costs of a property refers to the fees paid when purchasing a home. These is not included in the down payment, and includes things like excise taxes and title insurance.
Excise taxes: this tax is usually paid by the seller of the property, as it is paid in order to transfer ownership of a property to the buyer. The state of texas does not have a real estate transfer fee!
Title insurance: title insurance protects the buyer against fraudulent claims on, or defects in, the validity of a seller’s claim on the property. It assures the buyer that, if it is found that the seller was not within their legal right to sell
the property, the buyer will not accrue any extra costs.
Bill of sale: the bill of sale is the document that officially transfers ownership of a property from seller to buyer – a very exciting document for buyers!!!
Need more help navigating a real estate purchase? Contact one of our agents at 512-360-9061.