What? You don't speak realtor-ese?
It's easy to get lost in the jargon of the real estate world. Here are some definitions you might find helpful...
Earnest Money (or Good Faith Deposit)
You will pay an earnest money deposit when you reach mutual acceptance on your home purchase. Earnest money is typically 1% of the home's price. The amount you pay in earnest money will be subtracted from your closing costs — reducing the total amount you owe at closing.
Private Mortgage Insurance (PMI)
Private mortgage insurance is required if your down payment is less than 20%. FHA and VA loans may also require you to pay an upfront fee for private mortgage insurance at closing in exchange for allowing you to have a lower down payment. Private mortgage insurance is typically included as part of your monthly loan payment. However, some loans will allow you to pay your private mortgage insurance upfront as a one-time fee at closing. It's up to you to decide if you want to pay more at closing or a higher mortgage payment each month.
Similar to any warranty, sellers and buyers can pay a fee to protect the home against future issues, like plumbing or heating.
Title insurance is a one-time fee paid as part of your closing costs. As the homebuyer, it's common for you to pay for the lender and your own title insurance policies.
All of the miscellaneous expenses and fees paid by the buyer (and sometimes seller) when a deal closes. Some examples of these expenses include commissions, mortgage fees, recording fees, title insurance, and more.Typically, closing costs will amount to 2-5% of the purchase price of the home.
CMA (Comparative Market Analysis)
Sometimes these are also referred to as ‘comps.’ This is a report of similar homes in the area that were recently sold or are currently on the market. This is used to help determine an accurate value for your home.
A clause in an agreement that keeps things from being legally binding unless a condition is met. The most common contingencies on a purchase contract are the right to have a home inspection before buying the home or obtain acceptable financing from a lender.
While we've tried to give you a lot of information already, you probably have a few more questions before diving into the home buying process. If it's not answered below, please schedule a consultation with one of our knowledgeable REALTORS and they'll guide you along the way.