Buying a Home in Summit County
When you’re buying a home in Breckenridge, or anywhere for that matter, you’ll come across some legal terms you should be familiar with. Perhaps this is your second home, and if that’s the case, it’s time for a quick refresher of the Real Estate Terms for Buyers that you’ll see in emails and contracts. Or, if you are helping new family members with their first investment, this blog is an excellent place to send them to see a list of commonly used terms, as well as a link to a more complete list from Freddie Mac. There are too many on there to include in one blog post here, so we’ll cover the basics and the most important ones we wanted to bring up.
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Real Estate Terms for Buyers
- Annual Percentage Rate (APR) – How much a loan costs annually. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay.
- Appraisal – A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties.
- Closing Costs – The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs, items that must be prepaid or escrowed and other costs. Ask your lender for a complete list of closing cost items.
- Credit Score – A computer-generated number that summarizes your credit profile and predicts the likelihood that you’ll repay future debts.
- Down Payment – A portion of the price of a home, usually between 3-20%, not borrowed and paid up front.
- Earnest Money Deposit – The deposit to show that you’re committed to buying the home. The deposit will not be refunded to you after the seller accepts your offer, unless one of the sales contract contingencies is not fulfilled.
- Fixed-Rate Mortgages – A mortgage with an interest rate that does not change during the entire term of the loan.
- Home Inspection – A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.
- Mortgage Rate – The cost or the interest rate you pay to borrow the money to buy your house.
- Points – 1% of the amount of the mortgage loan. For example, if a loan is made for $50,000, one point equals $500.
- Pre-Approval Letter – A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer.
- Pre-Qualification Letter – A letter from a mortgage lender that states that you’re pre-qualified to buy a home, but does not commit the lender to a particular mortgage amount.
- (Primary) Mortgage Insurance – Mortgage Insurance (MI or PMI): Insurance needed for mortgages with low down payments (usually less than 20% of the price of the home).
- Real Estate Professional – An individual who provides services in buying and selling homes. The real estate professional is paid a percentage of the home sale price by the seller. Unless you’ve specifically contracted with a buyer’s agent, the real estate professional represents the interest of the seller. Real estate professionals may be able to refer you to local lenders or mortgage brokers, but are generally not involved in the lending process.
- Learn more terms from the Freddie Mac website.
Obviously this list is not a full list. Click “learn more” at the end of the list above to go to the complete list of terms and definitions. We hope this helps you get a strong hold of the vocabulary that will be used during the buying process. If you don’t understand anything that’s listed here, or have further questions, please contact us so that we can call you to discuss your concerns. We appreciate your time and know how important the purchase of a home is, and that’s why we’re starting with the basics. We look forward to assisting you along the home buying journey.
Featured image on this blog courtesy of Kay Beaton of Beaton Photography.
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