There is a lot that goes into buying a home and the process is far from simple. It gets even more confusing when you start hearing real estate jargon, which can sound intimidating. If you’re planning to buy a new—or your first—home, we’ve compiled some terms that are helpful for you to know, and should make you feel more at ease during your homebuying experience!
An important first step in the home buying process is to pre-qualify for a loan. In order to pre-qualify, you must choose a bank or lender that offers home loans and provide them with your financial information. Trumark has preferred lenders that are dedicated to each of our neighborhoods. This helps make the homebuying process smooth, from start to finish. Based on the information you provide, your lender will estimate how much you can afford to borrow for a home, and provide you with a financial quote for your loan.
This term refers to the repayment of your home loan over time. An amortization schedule shows the repayment of your loan via monthly payments that align with the length of your loan, i.e. 30 years, 15 years, 10 years, etc. It also shows you how much you are paying in interest each month. The best part about an amortization schedule is that it allows you to see the month and year when your loan is completely repaid and your home is all yours.
Earnest money (a.k.a. a good faith deposit) is money that is given by a prospective buyer to a neutral party, when a buyer and seller enter into a purchase agreement. The money is held in an escrow account until the deal is closed, and is applied to the purchase price of the home. In the event a buyer backs out of an agreement to buy a home due to a failed home inspection or another contingency noted by the contract, the buyer receives their earnest money back. However, if a buyer backs out of a deal for a reason that is not part of the original contract, the seller gets to keep the earnest money. The reason the seller gets to keep this money is because the seller takes their home off the market, and misses opportunities to sell their home, while participating in a purchase agreement with a potential buyer.
Before your home is officially yours, there must be a final inspection of the property, known as a walk-through. Here, buyers and their agents can check out the home for any last-minute issues that need to be addressed. These include confirming that everything—such as locks and outlets—are working properly. A walk-through is your last chance to request repairs be made before a settlement is reached.
Important events to look out for when shopping for a new home are phase releases. When a homebuilder schedules the sale of a select number of homes in a new neighborhood, it is known as a phase release. During a phase release, tours of the homes are typically available. Oftentimes phase releases are part of exclusive presale events in which pre-qualified buyers get a first look and the first opportunity to buy a home in a community.
In addition to property tax, you may have to pay what is called Mello Roos. This separate California-created tax helps communities pay for necessary services, such as fire stations, schools, and roadways. Mello Roos come with advantages and benefits, and ensure that recently-built communities have everything they need to thrive.
A Homeowner’s Association (HOA) is a private organization that oversees the management of a community. An HOA establishes a set of regulations for residents to follow, which helps keep the neighborhoods within a community running smoothly. Most HOAs charge homeowners a monthly fee in exchange for providing essential services such as trash pickup, security, landscaping, upkeep of community amenities, and more.
When you get ready to seal the deal on your new home, closing costs will be part of the transaction and can be paid for by the buyer, seller, or a combination of both parties. These expenses and fees are associated with the sale of a home, and include taxes, title insurance, appraisal fees, lender fees, and more. While paying fees is never fun, the good news is some closing costs are tax deductible.
A quick move-in (QMI) home is a newly-constructed home that is either complete or close to completion. A QMI is typically available between 30 and 90 days, which is a great benefit for those who prefer to skip the construction phase or who have a shorter moving timeframe. Potential buyers looking for QMIs can easily find a dream home with Trumark. Visit our site to explore the wonderful QMI choices we have available across our communities.
PRO-TIP: Don’t forget to lock in your rate! Instead of wondering what your loan will do over the course of several months, you might be able to lock in your interest rate sooner when you secure a QMI. This could potentially save you thousands of dollars over the life of your loan.
Escrow is a term that describes a legal arrangement in which a third party holds money or property until a condition has been met—such as the settlement of a purchase agreement. In the realm of home buying, an escrow account is used by a bank or lender to reserve funds from your mortgage payments to pay taxes and homeowner’s insurance throughout the life of your loan.
We hope understanding these terms will make your home buying process a little easier and prepare you to pursue your dream home with confidence. Of course, our New Home Specialists at Trumark are dedicated to helping you find and secure your future home, too. Contact our Sales Advisors today to get started!