Buying a home, especially for first-time buyers, can be both an exciting and confusing time. There are so many things to keep in mind. Plus, so much of the conversations around purchasing a home contain terms and lingo that buyers may not understand.
With that in mind, at Raleigh Cary Realty, we are here to break down and define some of the top lingo every homebuyer should know:
- Real Estate Agent or Broker: An agent or broker is a person who legally represents others (called principals) and from whom they derived implied authority. In real estate, there are usually two agents—a seller’s agent and a buyer’s agent.
- Due Diligence Deposit: In North Carolina, this is a deposit written to the seller that they keep and deposit into their account for an agreed amount of time while their home is under a Due Diligence period. This is the period where buyers do their inspections, appraisal, confirm financing and all of their due diligence before purchasing. This money goes into the purchase of the home and is the seller’s to keep no matter what unless they are the reason the sale cannot be closed.
- Earnest Money: This is a deposit paid by the buyer to the seller and is held in an Escrow account to show good faith and intentions of buying the property. This deposit is not considered the sellers money until the Due Diligence period has expired and can be returned to the buyer if the sale is terminated with in an agreed upon Due Diligence period. This money also goes into to the purchase of the home.
- HUD: The Department of Housing and Urban Development is a federal agency. Among its departments is the Federal Housing Administration (FHA). The FHA does not lend money. Instead, it provides mortgage insurance and sets standards for insurance underwriting and housing construction.
- Fannie Mae and Freddie Mac: Both are private, stockholder owned companies. Fannie Mae is the nation’s largest mortgage investor. Freddie Mac supports the secondary market in mortgages.
- Market Value: This is the basis for the listing price of a home and comes from the medium price that buyers and sellers have agreed on with similar homes in the past few months if able.
- MLS: The Multiple Listing Service is provided by the Board of Realtors and provides access to all real estate listings of properties for sale or lease.
- Escrow: This is money held in an account to pay property taxes and insurance. At the origination of a mortgage, a portion of the down payment is held in an escrow account.
- Pre-qualification: Realtors and homebuyers will work together using an informal calculation based on income and debt to determine how much a buyer can afford to spend on a home. Realtors then focus their search on homes in that price range.
- Pre-approval: Buyers can apply for mortgage loans before searching for a home. Once they have a written pre-approval, they can assure sellers their offer is valid. It also quickens the closing process.
There are many more terms involved in the home buying process. The experienced pros at Raleigh Cary Realty know all of the ins-and-outs. Contact us today, and we will gladly guide you through the entire process.