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General Real Estate Terms We All Need To Know

Posted Sunday, August 28, 2011

Making a good decision requires having all the facts in place and this is very true when buying real estate. Whether it is the first time buying a property or an expert in the sector, it is important to understand what terms mean and more vital is how these terms impact you.

Loan Commitment – this is something most potential home owners may want to have in place before they start shopping for a home. A loan commitment is a confirmation from a lender that they will lend you a specific amount of money provided that you meet certain terms. This is important; unless you are buying your home with cash, you will need financing. Having a loan approved before going shopping is great since you will know how much you can buy.

Something to think about when asking yourself the question, "Can we buy houses ?" is the cost of the Mortgage Insurance Premium (MVP) Borrowers who have less than a 20% down payment will need to have their mortgage insured against default; otherwise, lenders will not finance. Usually, the FHA will insure these mortgages provided the borrower meets specific financial conditions.

Once a home has been lined up when you want to make an offer on a property, there will be forms to fill out. Sellers will need to receive some Earnest Money Deposit. This deposit is a token of your commitment to move forward with the transaction. This offer can have conditions added to it such as provided you can secure financing, the home passes a satisfactory home inspection. Any condition you want to add and the seller accepts is binding on both of you. However, if any of the conditions are not met then the Earnest Money Deposit will be refunded.

Something any home owner should consider when thinking "sell my house," is that Rent with Option may be a viable process. This program allows homeowners to rent the property out to a tenant while generating cash flow then after a specific period of time the renter can make an offer to buy the property.

Whether thinking of "Can we buy houses" or "sell my house," it is very important to learn all the terms and be certain the understanding is clear. Also, do not sign any documents that are not clear to you, real estate documents are legally binding and ignorance is not an excuse after the fact of signing a document. Buying a home is the best investment anyone can make.