Decoding Real Estate Language
Have you ever talked to someone about real estate and wondered if you are even speaking the same language? If so, you are not alone. We thought it might be good to explain a few terms to help with any confusion. Hopefully this will help us all get on the same page.
Closing- This has a different meanings in different states. In some states, a real estate transaction is not considered "closed" until the documents record at the local recorders office. In others, the "closing" is a meeting where all of the documents are signed and money changes hands.
Closing Costs- Closing costs are seperated into what are called "non-recurring closing costs" and "pre-paid items". Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they mush issue to the borrower within three days of receiving a home loan application.
Earnest Money Deposit- A deposit made by the potential home buyer to show that he or she is serious about buying the house.
Rate Lock- A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost.
Real Estate Agent- A person liscensed to negotiate and transact the sale of real estate.
Realtor- A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Associaton of Realtors.