Terms to Know When Buying a Home
Have you heard these phrases mentioned by a seller or realtor (or even on this blog) during your home search? Here’s what they mean.
Offer to Purchase: the official letter your agent will present to the seller when you make an offer to buy a home.
Purchase and Sale: the agreement that your attorney and the seller’s attorney will create, outlining specific terms of the sale of your home.
Inspection contingency: the clause in the Offer to Purchase that states that depending on the results of the home inspection, the purchase agreement can be cancelled and the deposit returned to the buyer.
Mortgage contingency: the clause in the Offer to Purchase that states that if the buyer doesn’t secure a mortgage within a specified period of time, the purchase agreement can be cancelled. This protects the monies paid at P&S, which is typically 5% of the purchase price.
Mortgage points: (also called “discount points”) prepayments you can make on your mortgage to lower your interest rate.
Prepaid items: the initial payment of interest on your mortgage loan, from your closing date through the last day of the month.
Credit report: a check on your finances that your mortgage lender may require to determine if you are a good candidate for a loan.
Escrow account: Where money–such as your deposit and payment for insurance or taxes–is held until transactions are finalized.
HUD sheet or Closing Document: a standard document that explains how the money that will be paid during closing will be distributed between the seller, the attorney, and anyone else involved in the sale of the home.
For more info about title search, title insurance, homeowners insurance, lender mortgage insurance and more read my post on Costs and Fees to Keep in Mind.