Regardless of whether you have decided to invest in a property or sell your home, there are a few words that you should be aware of. This technical jargon, if you will, is used in the real estate market quite frequently and it is better if you have adequate knowledge about it before you begin with any property-related transactions. It will also help you engage with the best real estate professionals such as Paul Ognibene. Having a capable and effective strategy in place, aware of what market you’re stepping into, will always yield the best results.
Without much ado, let’s begin:
- Property Appraisal
This is one of the most basic terms that you should be aware of. An appraisal is done to evaluate the value of your real estate or property during any given time period. The lender, for instance, is going to send out an appraisal expert also known as an appraiser to get an opinion about your property and its value. If you have applied for a loan, the lender is going to follow this process to ascertain whether you qualify for that amount of loan or not.
- Blind Offer
This is exactly what it sounds like. When a potential buyer of your property makes an offer on your building or home without even having seen it, it is called a blind offer. There could be several reasons for the potential buyer not seeing the property. It could be that he is in a different city. Perhaps he is not able to travel. The most common reason is that your property is located in a highly competitive area and that the quality or standards of construction that you are providing is more or less similar to what the competitors are offering. In such a situation, there is little to no need to visit the property or evaluate the real estate in the first place. It is automatically assumed that the offering is of a certain quality which helps speed up the transaction significantly.
- Debt To Income Ratio
The debt-to-income ratio is also known as DTI. It is a number that is used very frequently by mortgage lenders. It is used to determine the total number of debt expenses and your monthly housing payment. This number is divided by your gross monthly income and then multiplied by 100. This is how any lender determines how capable a borrower is of paying back their monthly mortgage payment. If you can pay at least 28% or less of your entire monthly income on housing and at least somewhere around 36% of your income on debt payments, a reputable lender might be more willing to qualify you for a loan.
This is probably the most heard of and used terminology in the real estate industry. Equity is the investment you, as a homeowner, have in your home. To calculate your equity, you will have to take the market value of your home and then subtract any mortgages or liens that you have against your property from it. The amount that you get after that is your equity in the home. As years pass by, it becomes more important to build equity as a homeowner. You can leverage this financial asset to obtain loans in the future for several purposes such as home repairs, education of your children, securing the future of your family, and many more.
- Days On Market
Sounds familiar? No? You are not the only one not aware of this obvious terminology. Days on market which is also known as DOM is the number of days that your property has been up for sale in the market. So, your local real estate broker probably has multiple listing services. He is going to let you list your property on their list for all potential buyers to see. If you intend on selling home to investor, you must have been a part of this drill already. So, DOM means days on market which is the duration that your property has been up for sale and probably open for any potential buyer to visit and evaluate.
- Hard Money Loan
A hard money loan is a kind of loan for which you don’t use any traditional lenders. Any hard money lender is going to finance your loan based solely on your property. They’re not going to analyze your credit score or any other criterion. The repayment method is a little different though because they require a large down payment and a short repayment schedule.
- Fixed-Rate Mortgage
As the name suggests, if you opt for a fixed-rate mortgage, your interest rate is going to stay the same for the entire duration of the loan. A fixed-rate mortgage is quite easily available for 10, 15, 20, and 30 years. The most popular time durations are 15 and 30 years. These account for about 75% of all loans taken out in the US.
- Mortgage Pre-Approval
Haven’t you ever received a mortgage pre-approval letter in your email? Yes, those are, for the most part, promotional by nature. However, when you do get a mortgage pre-approval letter for real, it means that the lender has identified the various terms and conditions, the type of loan, and the loan amount that you qualify for. The lender has already checked your debt-to-income ratio along with the cash on hand and your credit history. So, if you intend to apply for a loan, a mortgage pre-approval works in your favor a lot.
- Loan Contingency
To put it in the simplest of words, a loan contingency is a clause contained in an offer or contract that allows the buyer to back out of the deal. They can keep the deposit if they are not able to secure a mortgage with the terms that have been specified in that agreement during any fixed period of time.
The real estate scenario in the country as well as across the globe keeps on changing. It is a dynamic sector and many times it is as unpredictable as the weather. If this is your first time dealing in property or real estate, it is always better to keep yourself well aware of the technical jargon and terminology that is most commonly used in this industry. Remember, it never pays well to come off as an amateur.