When thinking about selling any type of property, one of the most intimidating things can be the abundance of terms that come up. This guide will prove helpful as you navigate the waters that are the world of real estate.
Appraisal – An appraisal is done by an appraiser and is a rough estimate the value of the property in question.
APR (Annual Percentage Rate) – An Annual Percentage Rate is a term that is all about interest on a loan. This rate is the rate of interest on a loan, and this rate accounts for all up-front fees as well.
Assessed Value – As opposed to an appraisal value, the assessed value of a property is the value placed on that property by an assessor and is used as the basis for the property’s property taxes.
Closing – The closing in a deal involving property is that point in time when the title of the property is actually transferred to the new owner in exchange for money. On the day of closing, the deal for the property is actually completed.
Conventional Loan – A conventional loan is a loan that is neither issued by nor insured by a government.
Deed – A deed is a document that is generally written and is used to verify that an individual has title to or interest in a piece of property.
Down Payment – This important term is the initial amount of money that is put down for a piece of property. This money is often put down in the form of cash and is regularly required to secure a loan. A down payment of 20% is common but can be as low as 5%
Equity – The equity of a property is simply the value of the property subtracting any debt on the property. Therefore, if the property is worth $200,000 and the mortgage balance on the property is $50,000 then the equity on the property is $150,000.
Lien – A lien is a decision made by a court to have a debtor pay their creditors out of their property. Information on liens can be found at any county clerk’s office, as liens are public information.
Loan Processing Fee – A loan-processing fee is a fee that is charged by a lender to cover the costs of the processing of a loan. This fee is often waved when a loan is received from a bank so it is important to ask your lender about their policy on loan processing fees.
Market Value – The market value of a property is the value of that property at a certain point in time. This value is an estimate based on the market conditions and the state of the property.
This is by no means a comprehensive list of terms and if you are looking into selling property make sure you do complete research on any terms that you come across that you do not understand.