Closing to Escrow: Real Estate Terms Every Aspiring Agent Must Know

Are you looking for a new career?

There’s really never been a better time to follow your heart and look for a job that’s both challenging and rewarding. And when it comes to industries that fit these criteria, few careers offer more than real estate.

It’s important to keep in mind that real estate is always a smart investment, thus a career as a real estate agent is one of the best moves you can make. The key is to become educated on the most common real estate terms you will use every day.

Here we take a look at a list of real estate terms to know whether you are a newbie or an old pro. Keep reading to learn more about real estate terminology.

Appraisal

When a home is for sale, the mortgage lender will send out an appraiser to the property to determine the current value of the property. This is an important part of the process because the lender will need to use the property value to calculate the risk in approving a home loan to the buyer.

Closing

This is the process of completing the sale of a home. All parties involved in the real estate transaction will be required to sign the mortgage documents, all monies will be conveyed, and the lender will approve the purchase.

There are also closing costs involved, which can be paid by either party at the time of closing or rolled into the home.

Equity

Equity is the amount the homeowner has invested in their property. It’s calculated by subtracting the remaining mortgage amount from the current market value of the home. The remaining amount is your equity.

Negative Equity

In the most basic terms, negative equity is not your friend. This is when you actually owe more on your property than what it’s worth. In other words, negative equity is when your mortgage balance is greater than the property’s current market value.

Here’s a resource where you can learn more about negative equity on a house.

Loan Contingency

When a buyer makes an offer on a home, their offer can include a loan contingency clause. This is an addendum to the offer that enables the buyer to back out of the deal if they’re unable to secure a mortgage based on the purchase price of the home.

Pre-Approval

Getting pre-approved for a loan means that the buyer has been pre-qualified for a home loan by their lender. This is a great way to speed up the buying process.

For example, when a buyer is pre-approved for a mortgage of $300,000, they are then free to look for a home at that price point or below.

A Realtor’s Guide to Common Real Estate Terms

You don’t have to be a genius to understand that getting into real estate is a great career move. Fortunately, this guide to common real estate terms will help give you the foundation you need to launch your career.

Please continue exploring the library of wide-ranging articles on our blog to discover more content providing unique and useful lifestyle-oriented tips and advice.