Buyers Agent (Realtor): The licensed real estate professional who represents the home buyer in a transaction. Home buyers are not charged any upfront fees to work with a buyers agent. They are often paid by the seller after closing.
Listing Agent (Realtor): The licensed real estate professional who represents the home sellers in a transaction.
Loan Officer/Mortgage Consultant: The licensed mortgage professional who communicates with the borrower to help them understand their options in the current market.
Processor: The person who works with the borrower to ensure all of the needed documentation is in place for the mortgage loan to close.
Underwriter: A licensed mortgage underwriter assesses the risk involved with the mortgage loan by reviewing the credit, collateral, and capacity to repay the loan of each transaction.
Title Company: A title company makes sure that the title to a piece of real estate is legitimate and then issues title insurance for the property. This ensures the buyer can be confident that once he buys a property, he is the rightful owner of the property.
The Housing Market
Market value: The value of the home determined by a licensed appraiser, and submitted to the mortgage lender.
Buyers Market: When the housing market trend shows low demand and buyers are able to buy homes below market value or have more flexibility to negotiate.
Sellers Market: When the housing market trend shows home values being raised due to high demand
Contracts and Contingencies
Pre Qualified: An evaluation by a lender that determines the qualification of a borrower for a mortgage loan and the amount for which they qualify.
Pre Approval: One step further than pre qualification, a pre approval has the additional endorsement of an underwriter.
Offer: The initial contract proposal given to the seller.
Ratified Contract: Once the seller accepts the terms of an offer, the signed offer becomes a ratified contract. This document needs to be sent to your mortgage lender as soon as possible to begin the official mortgage application.
Earnest Money: The amount of money the buyer gives the seller when the contract is ratified, to demonstrate their earnest desire to purchase the home. When the buyer completes the contract by closing on the mortgage, the earnest money is applied to the down payment or closing costs.
Contingencies: Conditions that are agreed upon in the contract that could potentially void the contract if they are not met. The most common contingencies involve home inspection, appraisal, financing, title, and the sale of a current home.
Appraisal: The fair market value of a home as determined by a licensed appraiser, by an in person examination of the property. An appraisal is required by and ordered by the lender.
Home Inspection: The detailed examination and report of the condition of the home, safety concerns, needed repairs, and any existing code deficiencies. The home inspection is ordered by the buyer’s agent with the buyer’s permission.
HOA: Home Owners Associations act as regulatory organizations for neighborhoods and provide additional amenities to residents. Annual, semi-annual, or monthly dues are typically required in neighborhoods with an HOA.
The Mortgage Terms
The Mortgage Process: The process of collecting, verifying, and documenting the information needed to complete a mortgage loan for a real estate transaction.
Conventional-not backed by the government
FHA-loan insured by the Federal Housing Administration
VA-loan guaranteed by the Veterans Administration
Down Payment: The amount of money you pay directly towards the purchase of the home.
Closing Cost Credit (Seller Concessions): A credit given to a buyer at settlement (usually by the seller) to help the buyer cover costs associated with closing.
ARM: An adjustable rate mortgage has interest rates that are periodically updated to reflect the current market interest rates.
Fixed Rate: A static or non-non-variable interest rate.
Mortgage Insurance (PMI or MIP): A required insurance program for home buyers who pay less than 20% on the down payment and protects the bank in the event of a foreclosure.
Taxes and Insurance
Escrow: An account established by the mortgage company to pay property taxes and insurance for the term of the mortgage.
Homestead Tax Exemption: In the state of Maryland, homeowners can apply for this tax exemption to lower their local property taxes. To qualify, the property must be the primary residence of the home owners. The exemption application must be filed before January 1st of the first full year of ownership.
Home Owners Insurance: Combined property and liability insurance designed to protect residential property owners.