There is a lot of technical terminology in Real Estate. It can be very confusing and overwhelming, especially if you are new to buying or selling a home.
🏘️ Below is a list of some of the most used real estate terms that you may want or need to know along your trek to real estate happiness.
But don’t worry, there won’t be a quiz. 😅
Frequently Asked Real Estate Questions:
Worried about rising mortgage rates? 
A 2-1 buydown could make a home purchase more affordable.
This type of financing agreement offers a lower interest rate for the first two years of the mortgage, typically a 2% discount in the first year and 1% in the second year.
For example, if you lock in a 6.5% 30-year mortgage with a 2-1 buydown, the first year’s rate might be 4.5%, while the second year’s rate would be 5.5%. After that, the rate would go up to 6.5% for the remainder of the loan.
Sometimes motivated home builders or sellers will offer to cover the cost of a 2-1 buydown as an incentive.
Interested in learning more about 2-1 buydowns and other homebuyer incentives we’re seeing in the market? Reach out for a free consultation!
An Active Property
The property is actively for sale and on the market. The sellers may have received offers but have not accepted any yet.
When an offer is accepted the property will become Pending the completed sale.
If the contract falls through, typically the property will go Active again.
What Does Active-Contingent Mean? 🤔
Along the same vein as a contingent offer, we often get the question about the meaning of “active contingent” in real estate.
Active contingent is one of a variety of status updates given to a home listing. If a property has an active contingent label, it means the seller has accepted an offer from a buyer. But the home sale has certain contingencies that need to be met, and the seller is taking backup offers in case the first deal does not go through.
Similar to contingencies being protection for the buyer, having the listing be active contingent offers protections for the seller.
Having a home be active contingent can influence a buyer to release contingencies prematurely, or when they shouldn’t be, just so the “other guy” doesn’t get the house. This would be a mistake!
Buying and selling real estate can be a very emotional time. Relying on your agent to guide you through the process is the best way to end in a result that you will be happy with!
————— EDIT THIS
Active contingent in real estate is a status of a property listing indicating that it is under contract, but that the sale is contingent on certain conditions being met.
These conditions may include the sale of the buyer’s current home, the receipt of satisfactory inspection reports, or the approval of a loan.
If the conditions are not met, the listing may revert to active status.
What is an Adjustable-rate mortgage (ARM)?
After an introductory period that could be 3, 5, 7, or 10 years, the interest rate on an adjustable-rate mortgage will be adjusted by the lender in accordance with current interest rates and your loan agreement.
For instance, a 5/1 ARM will have a fixed rate for the first five years, then the rate will vary based on a variety of factors. Your lender will explain the details before you accept the loan.
Typically, the interest rate on ARMs are lower for the fixed period which makes your payments more affordable during that period. However, the interest rate will generally go up along with your monthly payment after the rate is adjusted.
Homeowners consider ARMs riskier as you can’t predict what mortgage rates will be in the future.
What is Amortization?
Amortization of a mortgage refers to the process of paying off your home loan in regular monthly payments over a fixed period of time, usually 30 years.
Do you know what kind of mortgage you have? Do you know whether your payments are going to increase over time? 📈
“Amortization” is the term used for the schedule of mortgage installment payments over a period of time. Typically, a buyer’s amortization schedule is one payment per month over 15 or 30 years.
📢 Important:
📝 There are both adjustable and fixed-rate mortgages. With an adjustable rate, the lender can increase the rate on a predetermined schedule, which would impact your amortization schedule.
📝 With a fixed rate, your payments with remain the same for the life of the loan, unless you refinance or there are changes to taxes or insurance.
A professional analysis used to estimate the value of the home.
This is a necessary step in validating a home’s worth to you and your lender as you secure financing.
What does As-is mean?
A contract or offer clause stating that the seller will not repair or correct any problems with the property. Also used in listings and marketing materials.
What is an Assumable Mortgage?
A home loan that allows the buyer to take over, or assume, the seller’s mortgage at the original terms, including interest rate.
Mortgage rates have remained stubbornly high.
But did you know that homebuyers can take over certain types of mortgages from the seller—at their original interest rates? These loans are called assumable mortgages.
Many fixed-rate mortgages can be assumed; most variable-rate loans cannot.
If you have an assumable mortgage with a low interest rate, it could be a selling point for your home. However, there are some important factors to consider. Reach out for a free consultation to learn more!
What does Back on Market mean?
The property was under contract with another buyer and their contract fell through, so it is Active again.
What is a backup offer?
When an offer is accepted contingent on the fall through or voiding of an accepted first offer.
What is a BPO? 🤔
A Broker Price Opinion (BPO) in real estate is a professional estimation of a property’s value.
It’s an essential tool used by real estate brokers like me, providing an in-depth analysis of market trends and comparable sales data in a specific area.
This quick and cost-effective report greatly helps financial institutions, investors or property owners make informed decisions regarding potential sales, purchases, or refinancing.
Essentially, a BPO in real estate is a comprehensive snapshot of a property’s worth in the current market.
Banks and lenders who hold REO properties often hire a Realtor to perform a BPO on those properties. It usually is the first step in managing and selling the bank owned home.
What is a bridge loan?
This short-term financing option can help you bridge the gap between buying a new home and selling your old one. It enables you to tap into your existing home equity before you’ve sold.
However, there are some issues to consider before you apply for a bridge loan:
👉 The interest rates and fees are usually higher than typical home loans.
👉 The equity from your current home will be used to secure the loan.
👉 The credit requirements are often greater for bridge loans than for standard financing.
If you think you may need to “bridge the gap” between buying a new home and selling your current one, give us a call. We can discuss your options and refer you to a lender who can help.
📲 865-364-0200
📩 Libby@guthriegrouphomes.com
Buyer’s agent: The agent who shows the buyer’s property, negotiates the contract, or offer, and works with the buyer to close the transaction.
A canceled status on a multiple listing service (MLS) means that the listing agreement between the seller and the listing agent has been cancelled:
- The property is no longer available for showings 🏡
- The relationship between the seller and the listing agent ends 🙅🏼♀️
- The listing will not show up as expired in the future 👍🏼
- Also, the seller is free to relist the property with another broker 🏠
📜 To relist the property, the seller will need to get a new listing agreement with the broker.
A canceled listing differs from a withdrawn listing, so the listing contract is still in effect, but the property is not being marketed. A withdrawn listing can be for many reasons, including:
- The seller changed their mind 🤷🏼♂️
- The seller wants to make improvements to the home 🔨🔦
- Also, the seller may want a break from showing the home 😪
More About a Cancelled Listing
❎ When a real estate listing is cancelled, it means that the property which was previously available for sale is no longer on the market.
This could be because of a variety of reasons – the owner may have decided not to sell, the agreement with the real estate agent may have ended, or the property may have been taken off the market for improvements or repairs.
🚫 The cancellation implies that the property is no longer actively seeking potential buyers.
👩🏼Libby Says…
In my experience, the home seller may have unrealistic expectations about selling their home. They may expect more money than the home is worth. They may think the property will sell quickly without doing any repairs, staging or preparing the home for the market.
Having an agent that is honest with the seller is paramount to a fast sale for the most amount of money. I help sellers manage their expectations and have realistic goals for the sale of their property.
If you want honest advice about selling your home, give me a call right away. 🤙🏼
~ Libby
📲 865-364-0200
📧 Libby@guthriegrouphomes.com
Libby Guthrie, REALTOR
Keller Williams 865-966-5005
Guthrie Group Homes, Knoxville TN Real Estate
https://gghknoxville.com/
Capitalization Rate aka Cap Rate
An equation to estimate the potential return on an investment in the real estate market. Calculated by dividing net annual income by property market value.
Interested in investing in real estate? 
You’ll need to understand cap rates.
A property’s cap rate (or capitalization rate) is an estimate of its rate of return. To find a property’s cap rate, divide the net annual income you expect it to generate by its current market value.
Cap rates are a great tool for comparing properties, but they don’t tell the whole story! You also need to account for financing costs, management expenses, and more.
Are you searching for an investment property that will pay off? We can help! Contact us today for a free consultation.
The close of escrow is a critical final step in the real estate transaction process. Here’s how it works:
Offer and Acceptance
The process begins when the buyer makes an offer on a property and the seller accepts it. This agreement outlines the terms of the sale, including the purchase price and any conditions that need to be met.
Escrow Account
Once the offer is accepted, an escrow account is established. This is a neutral third-party account where funds related to the sale, such as the buyer’s earnest money deposit, are held securely. The escrow agent, often a title company or attorney, manages this account.
Due Diligence
During the escrow period, both parties perform due diligence. The buyer typically conducts a home inspection, secures financing, and reviews any disclosures provided by the seller. The seller works to satisfy any contingencies outlined in the purchase agreement.
Title Search and Insurance
A title search is conducted to ensure there are no liens or claims against the property. Title insurance is purchased to protect the buyer and lender against potential future disputes over property ownership.
Final Walkthrough and Closing Disclosure
Before closing, the buyer usually performs a final walkthrough to ensure the property is in the agreed-upon condition. The buyer also receives a Closing Disclosure, which outlines the final terms of the loan and the costs involved in the transaction.
Closing
The close of escrow involves signing the final paperwork, including the deed, loan documents, and settlement statement. The buyer transfers the remaining funds to the escrow account, and the escrow agent disburses the funds to the seller and other parties as necessary.
Transfer of Ownership
Once all documents are signed and funds are distributed, the title is recorded with the local government, officially transferring ownership to the buyer. The keys to the property are handed over, completing the transaction. 🔑
The close of escrow signifies the end of the buying process, making the buyer the official new owner of the property. 🍾
Closing: The end of a transaction where documents are signed, and funds are dispersed.
See also Close of Escrow.
Closing costs are the fees that the buyer and seller will owe associated with the home-buying process, such as the real estate brokerage commission and title insurance.
Most are paid by the buyer, but the seller pays for some.
The fees will vary with each transaction. Your lender or title rep will let you know what the fees are and how much you will need at the close of escrow.
The fees required to complete the real estate transaction include points, taxes, title insurance, financing costs, and items that must be prepaid or paid through escrow.
What are Comparable Sales? 🤔
Known in real estate as “comps,” comparable sales are the sales prices of similar homes and are based on the following:
☑️ Lot size
☑️ Condition
☑️ Age & Construction
☑️ Square footage
☑️ Close proximity
☑️ Time frame of the sale
When it comes to buying or selling, both place high importance on comps to determine a home’s value.
Contact our team for a ✨ free consultation ✨ to learn more about what homes are selling for in your area.
Comparative market analysis or competitive market analysis, aka CMA, compares the sales price of similar properties in the area to help determine the price of a property.
A CMA estimates a home’s price based on recently sold, similar properties in the immediate area. Real estate agents and brokers create CMA reports to help sellers set listing prices for their homes and help buyers make competitive offers.
If you need more details about CMAs, read “What Is Comparative Market Analysis (CMA) in Real Estate?“.
A condominium (condo) is a type of housing where several people own separate units in larger building or complex. Each unit is owned by an individual.
What is a conforming loan?
A conforming loan is one that is limited to $647,200 for most of the U.S., which means you may be able to avoid the stricter requirements of a jumbo loan.
Loan limits vary over time and by location so you should check with your lender or Realtor for the latest information.
Other loan types include jumbo loans, FHA, and VA.
What is a Contingency?
A provision of the contract that keeps the agreement from being fully legally binding until a certain condition(s) is met.
For example, the purchase of a home can be contingent upon the buyer selling their home first.
Common contingencies include loan approval, satisfactory inspections, and appraisal.
- An appraisal contingency gives the buyer the right to back out if a professional property appraisal comes in lower than a specified minimum, usually the asking price of the property.
- A financing contingency loan approval gives the buyer time to obtain a mortgage and the right to cancel if financing is denied.
- An inspection contingency gives the buyer the right to have the home inspected by a set date.
In real estate, a contingent offer is an offer made on a property, which says that certain conditions must be met in order for the sale to be completed.
In real estate, a contingent* offer is an offer made on a property, which says that certain conditions must be met in order for the sale to be completed.
These contingencies usually involve the home appraisal (the home value determined by an appraisal), home inspection, and receiving approval for your mortgage.
They may also include an offer contingent on the sale of the home the buyer (you) needs to sell before purchasing the new property.
Contingencies offer important protection for home buyers and are rarely waived.
Should I accept a contingent offer on my house?
If you are both buying and selling, should you take a contingent offer on the property you are selling? Typically, the answer is yes. But this is a decision you should discuss thoroughly with your Realtor®. Every situation is unique, so having an experienced agent is essential for determining if this is the right move for your situation.
* Contingent – occurring or existing only if (certain circumstances) are the case; dependent on.
A real estate contract is a legally binding agreement between two parties for the sale and purchase of a property.
It outlines the price, terms, and conditions of the sale.
What is a Conventional Loan?
A conventional loan is any mortgage loan that is not insured or guaranteed by the government. Conventional loans can be conforming or non-conforming.
Conventional sale: When the property is owned outright and has no mortgage.
Conventional sales are often smoother transactions than those that require financing as there is no dependence on the buyer receiving a loan to purchase the property.
A counteroffer is a response to a buyer’s original offer on a house to make changes that better fit a seller’s goals.
A counteroffer is one step closer to an accepted offer!
A counteroffer shows that the seller is willing to work with the buyer, but on slightly different terms (usually a change in the price or contingencies).
Here’s how your real estate agent can help you navigate a counteroffer:
☑️ Buyers, we negotiate on your behalf and provide guidance on how to get your offer accepted.
☑️ Sellers, we help you stay clear of red flags and make sure you accept the right offer.
Negotiation is a BIG part of what we do as real estate pros! Connect with our team to learn more about how we provide 5-star representation for our clients.
A number ranging from 300-850 that’s based on an analysis of your credit history.
Your credit score helps lenders determine the likelihood you’ll repay future debts.
You’ll need a score of 620 or better, but you’ll get better financing rates with a score of 720 or higher.
What is Curb Appeal? 🤔
Curb appeal is the attractiveness of a property viewed from the street, the exterior allure that grabs the attention of prospective buyers or tenants. It’s a crucial factor in real estate as it creates the first impression, invests the onlooker with a sense of expectation, and sets the tone for what’s to come. Curb appeal often lays the emotional groundwork that can significantly influence a potential buyer or tenant’s decision.
The concept of curb appeal goes beyond just a clean facade; it’s about a harmonious mix of multiple elements that together create a compelling and inviting outdoor space. This includes aspects like landscaping, exterior design, front entrance, lighting, driveway, and walkways, each carrying its own weight and contributing to the overall allure.
To create excellent curb appeal, focus on the following suggestions:
1. Landscaping: This is often the most noticeable aspect of curb appeal. A well-maintained lawn, fresh greenery, and vibrant flowers can drastically enhance your home’s appearance. Choose low-maintenance, native plants for sustainability and attractiveness.
2. Exterior Design and Maintenance: Ensure your home’s exterior is in good repair. Fresh paint, clean windows, and a well-maintained roof are essential. Opt for colors and design elements that complement the home’s style and surroundings.
3. Front Entrance: Make your front door inviting. Consider it as a focal point that grabs attention, from its color to its hardware to any surrounding elements like plants or decorations.
4. Lighting: Good outdoor lighting can provide a warm, welcoming ambiance while highlighting the home’s best features. Investing in professionally designed lighting not only attracts potential buyers or tenants at night but also amplifies security.
5. Driveway and Walkways: A clean, well-maintained driveway and walkways go a long way in boosting curb appeal. Opt for materials that complement your home and landscape.
6. Outdoor Elements: Details like a mailbox, house numbers or a creatively designed welcome mat can add additional charm to your home’s exterior.
7. Seasonal Decor: Occasional touches in sync with seasons or holidays can make the house appear cared for and loved, adding significantly to its allure.
Remember, curb appeal is about creating a sense of harmony and coherence, where every element is integrated seamlessly, leading to a compelling and inviting visual narrative that convinces the potential buyer or tenant about the value and potential of the property.
Days on market (DOM) means the number of days a home has been listed on the market.
The number of days the property has been on the market may reflect the desirability and/or pricing of the home.
If the home has been on the market too long, the property may be stale.
Debt-to-Income (DTI) Ratio is a financial term that compares a person’s recurring monthly debt payments (credit cars, car loans, etc.) to their gross monthly income.
Lenders use the DTI ratio to assess a person’s ability to manage the payments and repay the money they have borrowed.
It is generally calculated by dividing total recurring monthly debt by gross monthly income, and it is expressed as a percentage.
A lower DTI ratio is preferable as it shows you have a good balance between debt and income.
In real estate, a deed is a document that shows who owns a piece of property. When someone buys a house, they get a deed that shows they are the owners.
This is not the same as a Deed of Trust.
A Deed of Trust is like a mortgage. It is an agreement between a borrower (you) and a lender (a bank or other financial institution).
What is The Deposit 🤔
The Deposit is an amount of money from the home buyer to the home seller, paid in good faith to show dedication to purchasing the property. 🏡
IMPORTANT FACTS 👇🏼
💰The amount varies by market
💰Goes towards the purchase of your home
💰Protects the seller if a buyer backs out
💰A buyer may get this money back – due to failed inspections or contingencies
Our best advice? When it comes to buying in a low inventory, competitive market, it’s essential to partner with a Buyer’s Agent who understands how to make your offer stand out to sellers 🥊
Contact our team for a ✨ free consultation ✨ to learn more about how to write a winning offer!
What is a Disclosure Statement? 🤔
A legally binding document in which the seller reveals any potential flaws and issues the buyer needs to know about the property.
Also known as a “Seller’s Disclosure,” this is a legal document that outlines any known flaws that a home seller is aware of that could negatively impact the home’s value 🏡
💡 TIP: Buyers should scrutinize this document closely with their real estate agent to fully understand the condition of a home.
Our best advice? When it comes to buying a home, make sure you get an inspection to confirm what has been disclosed is accurate and discuss any potential deal breakers with your agent.
The three rules of this document are disclose, disclose, disclose.
What is a down payment?
The sum in cash that you can afford to pay at the time of purchase of a home or property.
A conventional loan down payment is usually 20% of the sales price, but other types of financing require as little as 3.5% to 15%. Some 0% down programs are also available.
A mortgage lender can tell you what types of loans you qualify for.
The representation of opposing principals (buyers & sellers) at the same time.
That is, one real estate agent represents both the buyer and the seller in one transaction (sale of a home).
What is Due Diligence?
When a homebuyer investigates facts about the physical and financial condition of the property and its area before they make an offer and after their contract is accepted.
When buying a home, it’s extremely important to do your “due diligence.” During this period, you’ll look into the condition of your chosen property and compare it to other homes like it to make sure it’s really a good fit.
Due diligence is reasonable steps taken by a person in order to satisfy a legal requirement, especially in buying or selling real estate.
As your agent, we’ll guide you through this process by pointing out and addressing any of the home’s red flags so you feel completely confident about your purchase.
What is Earnest Money? 🤔
A deposit made to a seller that represents a buyer’s good faith to buy a home. It’s typically around 1% – 5% of the sale price.
Earnest money is a deposit from the buyer to the seller, made in good faith to show dedication to purchasing the property 🏡
IMPORTANT FACTS 👇
💰 The amount varies by market
💰 Goes towards the purchase of your home
💰 Protects the seller if a buyer backs out
💰 A buyer may get this money back – due to failed inspections or contingencies
💡 TIP: In a seller’s market, you may consider making your earnest money non-refundable.
Our best advice? When it comes to buying in a low inventory, competitive market, it’s essential to partner with a Buyer’s Agent who understands how to make your offer stand out to sellers 🥊
What is an easement? 🔎🏡
A right to cross or otherwise use someone else’s land for a specified purpose.
The term often crops up after buyers have made an offer on a home that’s been accepted, at which point a title search brings up the easement—which is essentially the legal right for someone else to use the property, or part of the property for a specific purpose.
Say what? You bend over backward to buy a home and now you have to share?! Don’t worry, in most cases, it’s not as bad as it sounds.
Types of Easements:
📝 Right of way: This is where a neighbor may need to pass through the property via a driveway to access the main road, a neighborhood playground, or a community feature (like a lake).
📝 Utility maintenance: This easement is typically granted to utility companies to run power and cable lines on a property.
📝 HOAs/condos: If you live in a condo or home managed by a homeowners association, odds are these institutions own much of the property—while residents have rights to pass through.
The equity in a home or property is the difference between how much your home is worth and how much you owe on your mortgage.
So if your home is worth $500,000 and you owe $450,000 on your mortgage, your equity in the home is $50,000.
An escalation clause is a clause in a real estate contract that allows the purchase price of a property to increase if a certain condition is met.
For example, if the buyer’s offer is accepted but the seller receives a higher offer, the buyer can choose to increase their offer by a specified amount.
Escrow as it relates to real estate is a process of holding money and documents in a secure account while two parties complete a purchase.
Escrows are usually held by a Title and Escrow company.
This gives the buyer and seller peace of mind that the transaction is safe and that the buyer will not be able to take the money and run.
The escrow account ensures that the buyer has the necessary funds and that the seller will receive them when the transaction is complete.
What is an expired listing?
A real estate listing that has expired and is no longer active, usually because it didn’t sell in the amount of time agreed upon by the listing agent and the owner of the home.
Other reasons for a listing to expire are the asking price was not met, or there were other issues with the property.
If you see an Expired listing, the owner may still be interested in selling. Ask your agent about it.
FAQs or Frequently Asked Questions provide answers to the most commonly asked questions from Home Buyers and Home Sellers about Real Estate, on Guthrie Group Homes, Knoxville TN.
However, depending on the website you are on, the FAQs for that site will be about the content that site covers.
What is the FHA?
The FHA (Federal Housing Administration) is an agency of the US government that provides insurance for mortgages. The FHA also sets rules and standards for lenders.
What is an FHA Loan?
An FHA loan is a loan that is backed by the Federal Housing Administration. It is designed to help people buy a home who may not have the money to make a big down payment.
A FICO score is a type of credit score that indicates a person’s creditworthiness.
Named after the Fair Isaac Corporation, which created the scoring model, a FICO score ranges from 300 to 850.
Financial institutions use this score to determine the likelihood of a person repaying their debts.
The higher the score, the lower the perceived risk.
It is calculated based on various factors, including payment history, amounts owed, length of credit history, types of credit used, and new credit.
Maintaining a high credit score can help individuals secure loans at competitive interest rates.
What is a Final Walkthrough?
A final walkthrough in real estate is when a buyer goes through the property one last time before the closing.
The walk-through is one of the last steps in the homebuying process, but you shouldn’t rush it! Here are a few things to check during your final walk-through:
💡 Are all items included in the sale (e.g. light fixtures and appliances) in place and operational?
🚿 Are all major systems working properly?
⚒️ Have all requested repairs been completed?
🗑️ Has the seller removed all personal items and debris?
🚪 Was any significant damage done during the seller’s move out?
Want more expert guidance on the homebuying process? Reach out for a free consultation.
📲 865-364-0200
📧 libby@guthriegrouphomes.com
What is a fixed-rate mortgage?
This mortgage’s interest rate will never change, even if the term of the loan is 30 years.
Fixed-rate mortgages typically have a term of 15 or 30 years.
Homeowners prefer this type of loan as it has a lower amount of risk compared to variable-rate loans, and the monthly payment remains the same for the life of the loan.
What is a Foreclosure?
When the lender takes ownership of a property due to failed payments by the buyer.
A foreclosure is when the lender takes ownership of a property due to failed payments by the buyer. It’s a legal process that can be complex and time-consuming. If you’re facing foreclosure, it’s important to understand your rights and options.
What is an FSBO?
FSBO stands for “For Sale by Owner”. Often pronounced “fizbo” by real estate agents.
The owner of the home has it listed without an agent or brokerage representation.
The buyer’s agent can usually still show the home, as many FSBOs will agree to work with agents representing a buyer.
Be wary of FSBOs since rarely does the homeowner have the requisite knowledge, experience, and understanding needed to sell a property.
What is a HELOC?
A HELOC (Home Equity Line of Credit) is a type of loan that allows a homeowner to borrow against the equity in their home.
What is a Home Equity Loan?
A home equity loan — sometimes called a second mortgage — is a loan that’s secured by your home.
Unlike a HELOC, a home equity loan is a fixed amount. You receive a lump sum of money which is often used to purchase the home. It may also be used to consolidate other debt like credit card debt, at a lower interest rate.
What is a Home Inspection?
A home inspector examines your home for integrity – such as the HVAC system, electrical, plumbing, attic, flooring, foundation, etc.
What is a Homeowners Association (HOA)?
A homeowners association (HOA) is an organization that makes and enforces rules and guidelines for a subdivision, planned community, or condominium building.
Like many relationships, it’s complicated.
A homeowners association (HOA) is a non-profit organization that takes care of the common areas in a planned community.
HOA fees pay for things like landscaping, snow removal, and repairs to common areas.
A Homeowners Association is an organization made up of homeowners who live in a specific neighborhood or development. The HOA is responsible for maintaining common areas and enforcing rules and regulations.
When you buy a home in a development that has an HOA, you agree to the terms and conditions (rules) of the HOA. CC&Rs.
A homeowners association (HOA) is a private organization that manages and governs a residential community, such as a planned neighborhood, condominium building, or townhouse complex. HOAs are responsible for:
Creating and enforcing rules
HOAs establish rules and guidelines to maintain uniformity and protect property values. These rules can include requirements for yard items, door colors, and car storage.
Collecting fees
HOAs collect monthly or annual dues from residents to pay for common area maintenance and services.
Providing amenities
HOAs can offer amenities like swimming pools, gyms, snow removal, and security.
Running the community
HOAs are typically run by a board of directors made up of elected volunteers.
HOAs can be beneficial because they help maintain the neighborhood and preserve property values. However, some people find the rules to be overly restrictive. HOAs can impose fines on homeowners who don’t comply with the rules, and in extreme cases, they can even force foreclosure.
——————–
Cornell Law
Many HOAs have very particular guidelines like preventing any items being in the yard, requiring doors to be a specific color, requiring cars to always be in the garage, or even requiring flower beds to have specific flower colors. As such, it is very important that homeowners look at the CC&Rs for the property they potentially buy.
When homeowners break a restriction or do not pay fees, the HOA will have specific remedies set in the CC&Rs such as fines or even forcing the home to be foreclosed on in extreme circumstances, ranging widely among different HOAs. Some laws limit how HOAs can punish homeowners such as limiting foreclosure actions to when the homeowner acts unruly, but these laws vary greatly from state to state and city to city. Further, some federal and state laws may prevent the enforcement of restrictions by HOAs that become unconscionable or against public policy. For example, federal laws prohibit HOAs from banning homeowners from having a service animal. https://www.law.cornell.edu/wex/homeowners%27_associations_%28hoas%29#:~:text=Many%20HOAs%20have%20very%20particular,unconscionable%20or%20against%20public%20policy.
Investopedia
Bankrate
https://www.bankrate.com/real-estate/what-is-an-hoa/
Rocket Mortgage
If you know where you want to live, have a steady and secure income, and are ready for the responsibilities of homeownership, then it might be time to invest in a home.
Read “5 Questions to Ask Before Purchasing Your First Home” to learn more about determining if now is the right time to buy for you.
What are Inspections?
Real estate inspections are when a professional inspector looks at a property to make sure it is in good condition.
These may include home, pest, and roof inspections.
What is a Jumbo Loan?
Conforming loan limits are $647,200 for most of the U.S., so anything above this would be a jumbo loan.
Jumbo loan requirements are stricter and there are more requirements you will need to satisfy.
Find out more about jumbo loans here.
What is a Lender?
A (mortgage) lender is a bank or other financial institution that provides loans to people who want to buy a home.
Lenders include traditional banks, mortgage brokers, credit unions, and dedicated mortgage lenders like Rocket Mortgage®. We usually recommend using a mortgage broker as they can “shop around” for the best loan for your circumstances.
Banks like Wells Fargo or Bank of America can only lend money to you with their in-house loans and those loan program guidelines.
When Realtors talk about lenders, they are referring to mortgage lenders.
Sometimes the homeowner can be the lender where you make the morgage payements to the homeowner instead of a bank or mortgage lender.
Occasionally, the buyer can assume the mortgage from the current homeowner.
Lenders in general offer other loans like personal loans, business loans, etc.
They can be an individual, group, or financial institution that provides money to a borrower with the expectation that you will pay them back, plus interest and fees, in the future.
Lenders include banks, private lenders, insurance companies, government agencies, credit unions, or non-bank lenders.
What is a Listimate™?
A Listimate™ is a home value estimate based on our proprietary system of determining a home’s value, or the dollar value of a home if listed for sale at the time of the estimate.
We created this system based on over 30 years of experience in retail residential real estate resale properties.
We consider Listimates™ as the true current market value of a specific property. If you decide to list your home with Guthrie Group Homes, your Listimate™ will be the price we recommend you use as the asking price for your home.
How is a Listimate™ different from Zillow’s Zestimate?
We suggest you read our article “Comparative Market Analysis vs. Zestimate“.
How Accurate Is It?
Our track record speaks for itself. 99% of our listings sell at or above the asking price, and they sell fast!
What is a Listing?
In real estate, the word “listing” is typically used to refer to the for-sale home or property itself, although it technically means the agreement between the broker and the owner of the home to market and sell the property.
When you hire a Realtor to sell your house, that is referred to as “taking a listing”.
This is not the same as listing the property on the MLS (Multiple Listing Service), however, when an agent takes a listing, they usually list it on the MLS.
See also, Pocket Listing.
What is a Listing Agent?
The real estate agent who represents the home seller during a real estate transaction.
What is the market value of a home?
It’s the highest price in terms of dollars that a property will bring in a competitive and open market.
What is the MLS?
MLS stands for Multiple Listing Service. They collect, compile and distribute all information about homes listed for sale.
The MLS is the organization real estate brokers use to search for and list properties for their clients.
Membership isn’t open to the general public, although selected MLS data may be sold to real estate listing websites, like Realtor.com or our own MLS listing search where the public can search the MLS at no charge.
See also the term “listing“.
What does “Months of Supply” tell us about the market?
To break it down simply:
A Balanced Market = 6 to 7 months of supply
There are a relatively even number of buyers and sellers.
A Seller’s Market = Fewer than 6 months of supply
There are more buyers than homes for sale, thus sellers hold the upper hand.
A Buyer’s Market = More than 7 months of supply
There are more homes for sale than willing and able buyers, thus buyers have more negotiating power.
Have a question about current market trends? Reach out at any time! We’re here to help you decode the lingo and make the most of today’s market 
What is a Mortgage?
A mortgage is a loan that a person or persons take out to buy a house. The borrower pays the lender back over time with interest.
The interest rate on a mortgage loan you pay to borrow that money when buying a home.
The lower the rate, the better.
BTW, the “t” is silent, so pronounce it “morgage”.
What is a Natural Hazards Disclosure Report? 🤔
📃 A natural hazards disclosure report is a document that describes the risks associated with natural hazards for a particular property.
🔥It may include information about earthquake faults, flooding, fires, and other hazards that could affect the property.
📃 In some areas, including California, it is required by law to have a natural hazards disclosure report before a property can be sold.
📄 The report can be 43–60 pages long and covers a range of hazards, including:
Earthquakes, Floods, Landslides, Wildfires, Tornadoes, Hurricanes, Tsunamis, Radon gas, Airports, and Industrial hazards.
✋🏼Whoa! That looks overhwelming! Don’t worry, your Realtor will explain everthing to you. 🙆🏼♀️
🌊 And FYI, you probably don’t have to worry about Tsunamis in Knoxville. 😏
What is a non-conforming loan? 🤔
A non-conforming loan in real estate is a type of mortgage that does not meet the purchasing standards set by federal agencies such as Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation).
These standards involve size, the borrower’s credit history, debt-to-income ratio, and others.
Non-conforming loans typically have higher interest rates and may carry more risk, but they offer flexibility for borrowers who don’t qualify for conventional loans.
They are often used for luxury, high-priced, or investment properties.
Examples include jumbo loans which exceed the conforming loan limits established by federal regulations.
What is an Offer to Purchase in real estate? 🤔
When does it come into play? And what does it entail?
An Offer to Purchase – usually just referred to as an offer – is a written document submitted by a prospective buyer to a seller that outlines the terms of the sale.
You’ve probably heard someone say:
We just put in an offer to buy our first home.
The buyer’s agent will be the one to submit the offer to the seller’s agent. The seller’s agent will then bring the offer to the seller.
It can be submitted at any time during the negotiation process, but it usually occurs after the buyer has made an initial offer and the seller has accepted it.
The Offer to Purchase should include all of the terms of the sale, including the purchase price, the down payment, the closing date, and any contingencies.
Once the offer is accepted, you are “under contract” to purchase the home, pending any contingencies.
Below is an example of an Offer to Purchase Real Estate.
What is an Open House? 🤔
During an open house, a seller’s real estate agent or broker holds open hours during which the home is available for the public to view.
What does Pending mean?
With a property that is pending, the property owner has accepted an offer from a buyer and they are under contract with that buyer.
Their agreement may be subject to a variety of contingencies: inspections, appraisal, financing, and more.
The home is not sold just yet. Typically if the sale does not go through, the house will return to “Active” status.
Did you know that some properties are never listed publicly?
Known as pocket listings, these properties are sold “off-market.” The broker chooses who to share the listing with—usually an exclusive list of clients and agents.
Typically, pocket listings are used to enhance the seller’s privacy. They are especially popular for ultra-luxury listings or when the seller is a public figure.
However, not everyone supports the practice. In fact, the U.S.-based National Association of Realtors (NAR) requires its members to post listings on the MLS, in most cases—although the legality of NAR’s policy is currently being challenged in the U.S. judicial system.
Curious to find out what strategy we would recommend to sell your home in today’s market? Reach out for a free consultation.
What is a Pre-Approval Letter? 🤔
📄 It is a letter from a lender indicating you qualify for a mortgage of a specific amount.
Getting Pre-Approved
📃 You’ll fill out a mortgage application, provide documents, and bank statements, get a copy of your credit report, etc.
Getting pre-approved is what you need to do before starting a home search. The person selling your dream home will want to make sure you really are qualified to buy. Most sellers aren’t willing to accept your offer with only a pre-qualification.
What is getting Pre-Qualified? 🤔
You contact a lender, provide a bit of financial information to them, and they tell you about how much you can afford to buy. That’s about it. It’s usually done over the phone, and your credit report is not needed at this point.
WARNING! 🔥 It’s NOT a promise of a loan. You are not guaranteed any particular interest rate. And you are not ready to purchase a home. What you have is an idea of what you may be able to buy. It’s a starting point, and a good way to start planning.
You’ll want to get a Pre-Approval Letter from your lender before you start shopping for a home.
One of the first steps in purchasing a home is getting either pre-approved or pre-qualified for a mortgage. Unless of course, you’re buying with all cash. 😁
It’s very easy to get confused between the two things. So, should you get Pre-Qualified or Pre-Approved for a mortgage loan?
Without getting into too much detail, we’ll give you just the essentials in understanding the difference, not the complete procedure for each.
Pre-Qualified
This is the simpler of the 2 processes. You contact a lender, provide a bit of financial information to them, and they tell you about how much you can afford to buy. That’s about it. It’s usually done over the phone, and your credit report is not needed at this point.
WARNING! 🔥 It’s NOT a promise of a loan. You are not guaranteed any particular interest rate. And you are not ready to purchase a home. What you have is an idea of what you may be able to buy. It’s a starting point, and a good way to start planning.
Check out Investopedia for a more in-depth explanation if you’re curious. https://www.investopedia.com/articles/basics/07/prequalified-approved.asp
Pre-Approved
This one is where the rubber meets the road. Paperwork, and plenty of it. You’ll fill out a mortgage application, provide documents, bank statements, get a copy of your credit report, etc.
It takes more time and there are more questions. It’s best to start with plenty of time before you plan to start looking for a home. That way you can deal with finding the papers you thought were in that one file cabinet, get your updated investment info, and try to fix any credit issues you may have.
Getting pre-approved is what you need to do before starting a home search. The person selling your dream home will want to make sure you really are qualified to buy. Most sellers aren’t willing to accept your offer with only a pre-qualification.
Again find out more here. https://www.investopedia.com/articles/basics/07/prequalified-approved.asp
Conclusion
Save yourself some heartache, heartbreak, and hair-tearing-out. Get pre-approved before shopping for homes.
Better yet, call me, Libby Guthrie at 925-628-2436 and I’ll answer your questions about getting started, and if you like, I’ll connect you with the right lender for your situation.
Just so you know, before my 30+ years as a real estate agent and broker, I spent 15 years in mortgage banking. I know what I’m talking about and I love to share my expertise with you and your family.
Contact me today, share this article with a friend, and please, share on your favorite social site. Thanks!
The term “Principal” in real estate usually refers to the original amount of money invested or borrowed, excluding any interest or dividends.
In real estate, the term “Principal” refers to the original amount of money borrowed in a mortgage before interest is applied. It is the base amount upon which the lender calculates the interest for the loan. The principal is typically repaid over the term of the loan through a series of scheduled payments, gradually reducing the outstanding debt. When a borrower makes a mortgage payment, it typically includes an allocation for both principal and interest.
Alternatively, the term “Principal” refers to the main party involved in a transaction, which could be the buyer, seller, landlord, or tenant. In a brokerage agreement, the principal is the individual who has authorized the real estate agent or broker to act on their behalf in a transaction. This can include the selling, buying, or leasing of a property. The principal entrusts the agent or broker with certain responsibilities and makes the ultimate decision in the transaction. The term can also refer to the amount of money that is originally borrowed in a mortgage loan, excluding interest or additional fees.
What is Private Mortgage Insurance (PMI)? 🤔
This is insurance that helps protect lenders if the borrower doesn’t pay back their loan. 💰
You usually need PMI when you put a down payment that is less than 20% for a regular home loan. 🏡
PMI lets lenders give loans with smaller down payments. However, it costs the borrower more money each month for their mortgage.
How Much Does Private Mortgage Insurance (PMI) Cost?
The cost of this insurance can vary depending on factors like the amount of your down payment and your credit score.
Generally, PMI costs between 0.3% to 1.5% of the original loan amount per year. So, for a $500,000 loan, the cost would be between $1,500 and $7,500.
This cost is usually divided into monthly payments and added to your mortgage payment.
Do I have to Pay PMI forever?
No! Your mortgage lender will stop charging you for PMI automatically.
This happens either after you’ve paid off half of your loan term, or when you’ve built up enough equity in your home — meaning you own at least 22 percent of it, or when your LTV (loan-to-value) ratio drops to 78 percent.
If your lender doesn’t automatically cancel the PMI, you can simply request them to do so.
A property survey (sometimes called a land survey) is a professional assessment of a property’s boundaries and characteristics.
A property survey can help you protect your real estate investment.
Professional surveyors are often called upon when:
Buying or selling property
Settling boundary disputes
Building or making improvements
Applying for zoning permits
Subdividing land
Identifying easements and hazard areas
Are you in need of a property survey? Reach out for a list of our recommended surveyors!
What are Property Taxes?
Property Taxes are a levy or tax imposed by a municipality (city, town, or county) on real estate and personal property. The amount of tax varies depending on the property value.
Property taxes are an annual tax that local municipalities collect each year, based on the assessed value of your property (not on the appraised value of your home). These funds help pay for services that benefit the community, such as schools, roads, maintenance, etc.
First-time homeowners often forget to factor property taxes into the overall cost of their new home, which can come as a nasty shock come tax season. So let this be a reminder to all homeowners to calculate property taxes into their annual budget!
💰 BONUS TIP: If you own a rental property, your property taxes may be tax-deductible 💰
The written contract between the buyer and seller that outlines the terms of the sale.
Buying a home is one of the most important purchases you’ll ever make. We’re here to help you understand the home-buying process so you know what to expect. Today, we’re talking about what you need to do before you even begin.
What can I afford?
Figuring out what you can afford will determine the course of your home buying process. This all depends on a few different factors including how much you make a year, how much you pay towards your debt every month, and how much of a down payment you expect to make.
Other things to consider are your debt-to-income ratio, property tax, loan term and interest rate, home insurance, and possibly monthly Home Owners Association (HOA) dues. All of this can add up!
Zillow has a good home affordability calculator that can get you started.
What do I want?
Make a list of your wants and work from there. Maybe you have young children and want a friendly neighborhood with kids that play on the street. Perhaps you are older and enjoying retirement and want to walk out to the golf course.
Ask yourself what’s important to you and the way you live and work. Do you want good schools? Nice parks? Lots of shopping with great restaurants? Questions like these will help you narrow down what you’re looking for.
How’s my credit?
Unless you’re going to be buying your home for cash, you are going to need to finance. It’s important to pick the right lender, but even before all that, you need to review your credit situation. After all, your lender will look at your credit and so should you!
You can start the process on your own by getting a copy of your credit report. There are a lot of different ways to do this. Credit Karma is a popular free website that gives you an updated credit report every month. This is a great way to keep track of precisely what is going on with your credit.
Once you have the credit report, take a good look at it. Make sure that everything is correct and up to date. If you notice anything wrong, work to correct those immediately. If your credit isn’t great, there are ways to improve it.
Remember: the better your credit, the better your mortgage rates will be. A reasonable mortgage rate can save you a lot of money in the long run.
Need more help? Give me a call! I’m an expert on credit and mortgage information and may be able to help you better understand your situation.
What is a Real Estate Agent? 🤔
A licensed professional who represents a buyer or seller in a real estate transaction. The agent may or may not be a Realtor.
What is a Real Estate Broker (or just Broker)? 🤔
A real estate broker is a licensed professional who helps people buy or sell property. They are more experienced than real estate agents and have a broker’s license.
Define Real Estate Professional.
An individual who provides services in buying and selling homes.
Real estate professionals are there to help you through the confusing paperwork, find your dream home, negotiate any of the details that come up, and so you know exactly what’s going on in the housing market.
There are several types of real estate professionals including Realtors®, real estate agents, and real estate consultants.
REALTOR® is a registered trademark of the NATIONAL ASSOCIATION OF REALTORS – used only by its members. Not every real estate agent is a Realtor.
A Realtor is a licensed real estate agent who is also a member of the NAR (National Association of Realtors).
Pronounced real-tor. There’s no “I”.
What is Realtor Speak? 🤔
The faux language that Realtors use to describe their listings, real estate terms, and to buy and sell homes.
Refinancing a home is the process of replacing an existing mortgage with a new one that has more favorable terms. The purpose of refinancing is to achieve one or more goals, such as:
- Lowering interest rates
This can reduce monthly payments and the overall cost of the home. Refinancing can be especially worth it if the interest rate can be lowered by 0.25%, 0.5%, 1%, or more. - Consolidating debts
Refinancing can allow debts to be consolidated into one loan at a lower interest rate. - Changing the length of the loan
Refinancing can shorten the term of the loan, such as moving from a 30-year loan to a 15-year loan. - Switching between fixed-rate and adjustable-rate mortgages
Refinancing can allow a homeowner to switch from a fixed-rate mortgage to an adjustable-rate mortgage (ARM) or vice versa. - Accessing home equity
Refinancing can allow homeowners to tap into their home equity to raise funds for home improvements, repairs, financial emergencies, or large purchases.
What does REO stand for in real estate and what does it mean? 🤔
REO stands for Real Estate Owned. Apparently banks are not very creative. 😁
An REO, known in full as Real Estate Owned, is a class of property owned by a lender—typically a bank, government agency, or government loan insurer—after an unsuccessful sale at a foreclosure auction.
This situation occurs when a homeowner defaults (can’t or won’t pay) on their mortgage payments, leading the lender to initiate a foreclosure, which is a legal process that allows them to sell the home and recover as much of the outstanding loan balance as possible.
Upon default, the bank or lender will attempt to sell the property at a foreclosure auction, if the auction does not result in a sale—usually because the minimum bid is not met— the property is tagged as REO.
The lender now takes full control of the property. Post-foreclosure, the lender is responsible for the maintenance of the property and any necessary repairs. The lender will also cover any tax liens, evicting occupants if necessary, and settle homeowner’s association dues.
As the property is now actually costing the lender, they will often list the property for sale in an effort to recoup their investment.
The bank or lender often hires a Real Estate Agent that specializes in dealing with and selling REO properties.
REOs typically present opportunities for investors or home buyers who are in search of discounted homes and are not averse to repairs or renovations, as these properties are often sold “as is”.
What is a Reverse Mortgage?
A financial agreement in which a homeowner relinquishes equity in their home in exchange for regular payments, typically to supplement retirement income. This type of loan is for adults ages 62 and older.
Should you get a reverse mortgage?
While it can be a great way to supplement your retirement income, there are some things to watch out for:
⚠️ High fees
To get and finalize your reverse mortgage, you’ll be paying a range of fees that can add up quickly.
⚠️ Variable or high-interest rate
The interest rate is often higher than that of a standard mortgage. It may also be variable, rather than fixed, which means it can increase in the future.
⚠️ Less money for your heirs
The remaining amount of your estate will need to be repaid when you’re no longer here, usually in a specific period of time, which can be costly and stressful for your family.
This is why, in some cases, downsizing can be a better option. If you’re deciding between the two, contact us to discuss your options and make the best choice for your needs.
Here are 6 questions and answers about looking for your first home to buy.
What should I do when I see a house online that I like?
Call the agent you are working with to find your home. It’s best that you work with one real estate agent throughout your search because that person learns what you like and dislike and will invest a lot of time vetting properties for you. That person also represents your best interests only. When you call the agent advertising the home, you are dealing with the seller’s agent, so, while they can assist you, they are also trying to get the best price for the seller.
Can you show me a house if it’s not your listing?
Yes, I can show you any house listed in our MLS system. As mentioned above, working with me as your agent ensures that your interests are protected.
How do we write an offer?
When you find the property you want to make an offer on, I will run a Comparative Market Analysis (CMA) to help you determine a fair offer amount. I will also guide you through the additional terms of the contract, such as the escrow amount, closing date, and any additional terms you want to be added to the offer. I will write the offer on a contract form and submit it to the seller’s agent.
What if I want to back out of a contract?
You always have the right to back out of the purchase, but you may lose your escrow deposit. If the contract is contingent on a property inspection, you usually have the right to cancel for any reason during the inspection period. Once the inspection period has passed, you cannot back out and keep your deposit unless the seller agrees, or an additional term has not been met.
That said, the ability to back out of a contract will depend on the details of the offer and the specifics of the contract. We will discuss these details before submitting an offer.
What happens if there are other offers on the house I love?
If a seller receives multiple offers on their home, usually their agent will inform the buyer’s agent that multiple offers have been received and the buyers have another opportunity to alter their original offer to present their “highest and best” offer.
Keep in mind that many factors may influence the seller in addition to the offer price, such as the down payment amount, closing date, and inspection terms.
What happens when my offer gets accepted?
Once both parties have agreed on all terms and signed the contract, your escrow deposit must be made and you should schedule the home inspection. Your lender will receive a copy of the contract and will begin processing your mortgage application.
Your agent will further discuss the full process with you at that time.
What are Seller Concessions?
Incentives to motivate buyers to purchase a home.
What is a Seller Disclosure?
Information about the property like major renovations, water damage, pest, etc.
What is a Settlement Statement (aka HUD-1)? 🤔
A settlement statement, also known as a HUD-1, is a document that lists all the costs associated with buying or selling a home.
What is a short sale?
The sale of a home sold for less than what’s owed on the mortgage to prevent foreclosure.
A “short sale” is a home sold at a discounted price. But why would someone want to sell their home for less than it’s worth? 🤔
Homeowners struggling to make payments on their mortgage are faced with the option to foreclose on their property, which can severely damage their credit.
But a short sale can leave less of a negative impact, and some sellers can qualify for other home loans once the short sale closes.
If you’d like to learn more about short sales in our area (how they work, if they’re in your best interest, or how to take advantage of them if you’re a buyer), send us a message 📲
The property is Sold
The property has been sold and is off the market. The transaction has been completed and the new buyers own the home.
The property is no longer available to purchase or take offers on.
Time to look for another home to buy. 😉
What does Temporarily off the market (TOM) mean?
The owner has decided to take the listing off the market for an undetermined amount of time. Typically, this is because work is being done, or the home is unavailable for showings at the time.
Usually, the home will be back on the market in the near future. If not, the listing status will go to Cancelled.
Title, also known as a title deed, is a document that shows who owns a piece of property. When someone buys a house, they get a title deed that shows they are the owners.
What is Title Insurance?
An insurance policy that protects a mortgage lender’s or owner’s interest in real property from assorted types of fraudulent claims of ownership. This is typically paid for by the buyer.
Even though you’ll pay for this policy only once, your coverage will last as long as you own your home.
Learn more about title insurance here.
What is a Title Search?
A property title search examines public records on the property to confirm the property’s rightful legal owner.
A townhouse is a type of housing where several people own separate units in a larger building or complex. Each unit is owned by an individual.
A townhouse is a type of residential dwelling, typically multistoried, characterized by its shared walls with adjacent homes in the series. This form of housing offers a blend of the features found in detached single-family homes and condominiums. Like a single-family home, a townhouse owner typically owns the land the house stands on, whereas, like a condo, it offers close community living often with shared amenities such as swimming pools or gyms. It appeals to those desiring a home with less maintenance, enhanced security, and a sense of community, while still providing the ownership perks of land and building. The architectural design of townhouses often leans toward urban aesthetics, making them common choices in densely-populated areas.
Once you have made your offer and the offer is accepted by the seller, the following questions may arise.
What does “under contract” mean?
Under contract means that all parties have agreed on terms, have signed the contract, and the signed contract has been delivered to both buyer and seller. Payment of the escrow deposit is expected but is not a requirement to make a binding contract.
What is escrow?
The escrow money, escrow deposit, or good faith deposit is money that is included with an offer, or as soon as an offer is accepted, to show the seller that you are serious about moving forward with the purchase of the home.
Because you forfeit this deposit if you back out of the purchase for any reason not allowed for in the contract, the larger the escrow deposit, the more seriously your offer is taken.
This is not the same as the down payment.
Do I need an inspection?
We always recommend that you have a home inspection done. In the grand scheme of things, paying a few hundred dollars to have peace of mind that there are no hidden dangers or problems is well worth the money.
The inspections you may need or want will vary depending on the home you are buying and the contract terms. Your agent will thoroughly discuss the inspections with you once your offer is accepted.
How much are inspections?
The cost of the home inspection depends on the size of the house and additional inspections requested, such as swimming pool, septic tank, termite/pets report, insurance, four-point (HVAC, plumbing, roof, and electrical,) wind mitigation, and radon. An average home inspection, without additional inspections, is about $300.
I will give you my recommendations for inspectors, but you can choose your own if you wish.
What if my loan doesn’t get approved?
If you have gone through the pre-approval process and have been forthcoming with all the information requested by your lender, it’s unlikely you will be turned down, but it does happen.
Make sure you do not change jobs, purchase big-ticket items on credit, take out a car or boat loan, or open any other new credit accounts while your mortgage is being processed.
If your loan does fall through, talk with your lender about changing to a different loan type.
When can I start moving?
When you have the keys! When you are financing your purchase, it takes four to six weeks for your loan to be processed. Once the lender gives the all-clear, closing is scheduled. You will sign your loan documents and both parties will sign documents transferring ownership to you.
Unless other arrangements have been agreed upon by both parties, the sellers should have completely vacated the home when they sign the closing papers. You can have your belongings ready to move, and a moving company scheduled before you go to closing.
At closing, you will receive the documentation you need to provide utility companies with proof of your new residence.
The phrases “underwater” and “upside down” refer to a situation when the amount owed on a mortgage loan is greater than the value of the property.
What is a VA Loan? 🤔
A VA Loan is a specific type of mortgage designed for American veterans, active duty service members, and select military spouses. 🎖️
Private lenders provide this loan, which the U.S. Department of Veterans Affairs partially backs. 🪙
The main advantage is that it enables eligible individuals to purchase a home without a down payment and without needing private mortgage insurance (PMI), typically mandated in conventional loans for down payments under 20%.
🏡 Furthermore, VA Loans frequently feature competitive interest rates and more flexible qualification criteria than traditional .
Veterans can also use these loans to refinance an existing mortgage or undertake home improvements. 🏚️
A Vantagescore is a credit scoring model used by some banks and lenders to assess the creditworthiness of individuals.
It one of the most commonly used credit scoring systems alongside FICO scores.
What is a variable-rate mortgage? 🤔
A type of short term loan (3-10 years) where the interest rate changes periodically.
See Adjustable Rate Mortgage (ARM).
What does Withdrawn mean? 🤔
🏠 The home listing was withdrawn from the market by the owner. This could be for various reasons: The owners may have decided they do not want to sell anymore, or maybe they didn’t like the offers they received.
A More In Depth Definition 🕳️
In real estate, “withdrawn” refers to a status that a listing can assume when a property is no longer actively marketed for sale.
This may happen for a variety of reasons, such as the property owner deciding to pause or stop the selling process, the real estate agent and client ending their agreement, or because of legal or compliance issues.
🪳 It can also happen because the homeowner discovers serious issues with the home after having inspections, such as a roof inspection, foundation inspection, or termite inspection.
❗The crucial aspect is that while the property is considered withdrawn, it remains under a contract with the brokerage or real estate agent.
❌ This differs from a “cancelled” listing, where the contract with the brokerage or agent is terminated.
Can a Withdrawn Listing Become Active Again? 🙋🏼♂️
A “withdrawn” listing can return to “active” status if the property owner decides to resume the selling process. At that time, the home is back on the market for sale.
📝 It should be noted that while a listing is in “withdrawn” status, it is typically not visible to the public on main real estate platforms, although it still appears in some real estate databases accessible to professionals in the industry.
🫸🏼 As such, a “withdrawn” status can serve as a temporary pause in the marketing efforts for a property, rather than a permanent cessation.
In my experience, the home can also be withdrawn from the real estate market because they are not happy with the Listing Agent they hired. I know! That’s hard to believe! 😏 Of course, that’s never happened to me. 😁
If you want more information about this or have any other question about real estate, just call me. 🤙🏼
~ Libby
📲 865-364-0200
📧 Libby@guthriegrouphomes.com
Libby Guthrie, REALTOR
Keller Williams 865-966-5005
Guthrie Group Homes, Knoxville TN Real Estate
https://gghknoxville.com/
Here are 5 common questions asked by homebuyers about getting their first mortgage loan.
How much do I need to save up for a down payment? 🤔
A conventional loan down payment is usually 20% of the sales price, but other types of financing require as little as 3.5% to 15%. A mortgage lender can tell you what types of loans you qualify for.
How do I know if I qualify for a loan and how much I can afford? 🫰🏼
Contact a mortgage lender to get pre-approval for a loan. The lender will ask you some basic questions about your income and debts and can tell you what amount you can be approved for, and how much your mortgage payments will be. Ask me for my lender recommendations!
What does the lender need from me to give me a loan? 💁🏼♀️
Usually, you are asked to provide your last two tax returns to show proof of income. You should also provide recent bank and credit card statements and proof of your current pay rate. You will also be asked for your social security number so they can run a credit check.
🏦 The lender may want to meet with you before asking for this documentation, or they may provide you with a list of which documents you need at your first appointment.
❗In my experience, you should be prepared to provide all the financial information you can. This can be a sticking point for many, as you need to trust a complete stranger with your most confidential info. But complete honesty on your part will get you the best mortgage at the best rate in a timely manner.
What if I’m Self-Employed? 🧑🏼🦰
⚒️ As a self-employed person looking for a mortgage, you may need to prepare several types of documentation to verify your income and financial stability for potential lenders.
- Tax Returns: Lenders will want to see your personal and business tax returns for the past two years to verify your income.
- Profit and Loss Statements: Also known as an income statement, this document shows your business revenue, costs, and expenses over a certain amount of time. It will give lenders an idea of your business’ profitability.
- Balance Sheet: This document provides a snapshot of your financial standing by showing your assets, liabilities, and equity.
- Bank Statements: Lenders will want to see your personal and business bank statements to better understand your cash flow and ensure you have the funds to make your mortgage payments.
- Business Licenses: If applicable, you will need to show proof of your business license to verify that your business is legal and operational.
- A List of your Debts and Assets: This includes all of your current debts, such as credit card debt, car loans, student loans, and other mortgages, as well as assets like savings, investments, and property.
- Credit Report: Though you won’t provide this, lenders will pull your credit report to evaluate your creditworthiness.
- In certain cases, you might also need a letter from your accountant verifying that you’re in business for yourself.
🧠 Keep in mind that the specific documentation required can vary between lenders, so it’s important to ask your mortgage provider what they need from you specifically.
What’s the difference between pre-approved and pre-qualified?
❓While often used interchangeably, these terms don’t mean the same thing. Pre-qualification is an estimate of what you may be approved for based only on the verbal information you provide. Pre-approval means the lender has verified your income and debt information and run a credit check.
📙 Also, read “Pre-Qualified vs Pre-Approved” for more details about the difference between pre-approved and pre-qualified.
How do I know which mortgage option is right for me? 🤷🏼♀️
Your mortgage lender is the best person to advise you on this question. Their products and qualifications change from time to time, so they would know best what products are available to meet your needs.
❗Just so you know, a mortgage, a home loan, and a bank mortgage mean the same thing.
That said, you can always ask me if you want a second opinion or just want to chat about it with your trusted friend. I began my career in real estate as a mortgage lender, so I know. 🤙🏼 Call me anytime.
~ Libby
📲 865-364-0200
📧 Libby@guthriegrouphomes.com
Libby Guthrie, REALTOR
Keller Williams 865-966-5005
Guthrie Group Homes, Knoxville TN Real Estate
https://gghknoxville.com/
