Buying a home is one of the biggest financial decisions most people will ever make in their life. That’s why it’s critical to hire an experienced and professional real estate agent to help you navigate through the homebuying process. At American Dream Realty in Woodland Hills, we understand how intimidating it can be trying to understand the real estate process on your own. That’s why, in this blog, we’re going to look at some common real estate terms that every homebuyer should know.

  • Acceleration Clause – This is a provision in a mortgage that gives the lender the right to demand payment of the entire principal balance. This often occurs when a monthly payment has been missed.
  • Fair Market Value – This is the highest price that a homebuyer would pay (willing but not compelled to buy). It is also the lowest amount of money a seller would be willing to accept.
  • Foreclosure – This is a legal process by which a borrower, in default under a mortgage, is deprived of his or her interest in the mortgaged property. It also involves a forced sale of the property at a public auction, with a proceeds of the sale being applied to the mortgage debt.
  • Acceptance – When someone puts in an offer on a home and the seller accepts, this is known as acceptance. This gives the offeree consent to enter into a contract where they will be bound by the terms of the offer.
  • Hazard Insurance – This is a type of insurance that compensates for physical damage to a property from fire, wind, vandalism, and other hazards.
  • Adjustable-Rate Mortgage – Also known as ARM, an adjustable-rate mortgage is a mortgage that permits the lender to adjust its interest rate periodically.
  • Amortization Schedule – This is a timetable for payment of a mortgage loan. An amortization schedule will show the amount of each payment applied to interest and principal. It will also show the remaining balance after each payment has been made.
  • Annual Percentage Rate – Also known as an APR, the annual percentage rate is the cost of a mortgage loan at a yearly rate. This includes things like interest, mortgage insurance, and loan origination fees.
  • Appraisal – An appraisal is a written analysis of the estimated value of a property, most often prepared by a qualified appraiser. This is normally done once an offer has been written and accepted by the seller.
  • Appreciation – This is an increase in the value of a property due to changes in the market conditions.
  • Assessed Value – This is the valuation placed on a property by a public tax assessor for the sole purpose of taxation.
  • Balloon Mortgage – A balloon mortgage is a mortgage that has level monthly payments. These will amortize over a state term, which provides for a lump sum payment to be due at the end of an earlier specified term.
  • Bill of Sale – This is a written document that transfers the title to personal property.
  • Broker – This person can be brought into the real estate process for a commission or fee. A broker brings parties together to assist in the negotiation of contracts between them.
  • Building Codes – These are local regulations that control design, construction, and other materials used in the building of a home. These codes are based on safety and health standards.

At American Dream Realty in Woodland Hills, we understand how difficult it can be trying to buy or sell a home on your own. Contact our California Realtors today!

  • Home Inspection – This is a thorough inspection that is used to evaluate the structural and mechanical condition of a property. More often than not, a satisfactory home inspection is included as a contingency by the purchaser.
  • Cash-Out Refinance – This is a unique refinance transaction in which the amount of money received from the new loan exceeds the total amount of money that is needed to repay an existing first mortgage, closing costs, and more. This type of refinance transaction occurs when the borrower receives additional cash that can be used for any purpose.
  • Closing Costs – These are expenses that are often incurred by buyers and sellers in transferring ownership of a property. Closing costs typically include an origination fee, an attorney’s fee, taxes, and charges for obtaining title insurance. These costs vary from city to city, and a real estate agent is often the one to provide estimates of closing costs to prospective homebuyers.
  • Commission – This is a fee that is charged by a broker or real estate agent for negotiating a real estate or loan transaction. It is normally the percentage of the price of the property or loan.
  • Construction Loan – This is a short-term, interim loan used for financing the cost of construction. The lender often makes payments to the builder at periodic intervals as the work progresses.
  • Homeowners’ Association – This is a nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project.
  • Covenant – This is a clause in the mortgage that either obligates or restricts the borrower. If violated, it can result in foreclosure.
  • Credit Report – This is a report of an individual’s credit history that is often prepared by a credit bureau. It is used by a lender in determining a loan applicant’s creditworthiness.
  • Depreciation – This is the decline in the value of a property.
  • Earnest Money Deposit – This is a deposit made by the potential home buyer to show that he or she is serious about purchasing a house.
  • Eminent Domain – This is the right of a government to take private property for public use, upon payment of its fair market value.
  • Encroachment – This is an improvement that intrudes illegally on another person’s property.
  • Equity – A homeowner’s financial interest on a property. Equity is the difference between the fair market value of a property and the amount still owed on its mortgage
  • Eviction – This is the lawful expulsion of an occupant from a real estate property.
  • Homeowner’s Insurance – This is an insurance policy that combines both personal liability insurance and hazard insurance coverage for a property and its contents.

In part two of this blog, we’ll discuss some other common real estate terms you should know. If you need assistance buying or selling a home in California, contact American Dream Realty today!