Real Estate Terms To Know Before Buying A Home in the Twin Cities

When looking at homes for sale in the Twin Cities, you will come across new words and phrases. To look informed and prevent people from underestimating you, it’s best to learn the jargon. Here are some real estate terms to know before buying a home in the Twin Cities.

Adjustable-Rate Mortgage (ARM) – An adjustable-rate mortgage is a mortgage with an interest rate that can change after the initial fixed period. The interest will fluctuate based on the interest rate index attached to the mortgage. While interest can go down, this option can fluctuate without warning.

Appraisal – An appraisal is a number put on the property by a professional. This number will help ensure that you get a fair price.

As-Is – As is means that the buyer is selling the house as it is without any repairs or changes. You will not be able to go back to the seller and complain about any problems you run into. It’s not recommended to buy a home “as is.” If you do, get a thorough examination.

Closing Costs – It costs money to complete the sale of a home. On top of the cost of the house, you will pay closing costs (2 – 5% of the price of the home).

Contingency – A contingency is something that must be done by the owner of the home before the sale can be completed. For example, the buyer may put in a bid with the contingency of a new asphalt roof.

Escrow – When finds are “in Escrow,” this means that the funds have been verified by a third party, and the sale is almost finalized.

Fixed-Rate Mortgage (FRM) – A fixed-rate mortgage means that the mortgage rates stay the same for the duration of the loan. According to American Lifestyle, 75% of people opt for a fixed-rate mortgage.

Homeowners Association (HOA) – A HOA manages a neighborhood or condominium complex. They handle landscaping, decorations, and events. Of course, this is an additional fee for the privilege of the HOA. This fee is not negotiable, and you can get foreclosed on for not paying it.

Private Mortgage Insurance (PMI) – Most loan companies require 20% down in order to get a loan. However, that’s a large amount of money. A Federal Housing Administration (FHA) loan allows people to buy a home without the complete 20% down. However, you need to get private mortgage insurance (PMI) to cover the loan in case you can’t pay it.

Real estate jargon can get complicated, but you will pick it up in time. The more you learn, the more experienced you look. Plus, your real estate agent won’t have to explain it to you later.