Home Buyers Glossary

 

Appraisal — An estimate of the market value of a property based on comparable recent sales of homes nearby. It is done by a licensed appraiser for a lender. . 
 

Closing costs — The expenses and fees associated with the purchase and sale of a home, such as taxes, title insurance, appraisal fees and lender fees. 
 

Closing— Settlement of Transaction.
 

Closing Disclosure — A final statement of loan terms and closing costs. The buyer must receive it three business days before closing. Replaced the old HUD-1 form. 
 

Commission — A fee charged by a real estate agent for his services. In many cases, the seller pays the commission to his agent as well as the buyer’s agent. 
 

Contingency — A condition that must be met before a sale can close. Common contingencies include home inspection, financing and home appraisal.
 

Counter offer— An offer made in response to a previous offer. Example: after the buyers presents their first offer, the seller may make a counter-offer with a slightly higher sale price.
 

Earnest money deposit — A partial payment by a buyer when submitting a contract that demonstrates the buyer’s commitment to the deal. The money, which is held in an escrow account, goes toward closing costs. 
 

Escrow — A neutral or third party who handles the exchange of money and documents on behalf of two other parties before the closing of a sale.
 

Home Inspection—A professional inspection of a home to determine the condition of the property. The inspection should include an evolution of plumping, heating and cooling systems, roof, wiring, foundation and pest infestation.
 

Pre-approved — A buyer completes an application, pays a fee and supplies the necessary documentation to the lender who performs an extensive financial background check. The lender will issue a conditional commitment in writing for an exact loan amount. Pre-approval does not guarantee a loan. 
 

Pre-qualified — An informal estimate of how much a buyer can afford to borrow for a mortgage. It does not include an analysis of a buyer’s credit report or an in-depth look at his ability to purchase a home. 
 

Title insurance — Compensates the buyer or lender if title defects, liens or competing claims of ownership on a property arise after closing. Under contract — A seller has accepted the buyer’s offer, but any contingencies have yet to be met. 
 

Walk through— A final inspection of the property by the buyers and the buyer’s agent, to determine that the property is as described in the purchase agreement. The walk-through typically is conducted right before closing.