6 Important Real Estate Terms Every Home Buyer in Victoria, TX Should Know

People who are looking to buy a home near Victoria, TX may struggle to make sense of the plethora of new terminology that comes with the experience. Jumping into the world of real estate can feel a bit like entering into foreign territory, but understanding some of the terms associated with home buying will boost your confidence and keep the process going smoothly.

6 Important Real Estate Terms Every Home Buyer in Victoria, TX Should Know

1. Adjustable Rate Mortgage (ARM)

As the term suggests, ARMs have interest rates that will fluctuate during the life of your loan, depending on certain market indicators. Loans typically have a limit on how often and how much the interest rate can adjust.

3. Escrow

Whether or not you will need to open an escrow account will vary on your loan and lender. Escrow helps your mortgage holder collect your interest and principal payments each month and will also facilitate the payment of your taxes and insurance.

3. Appraisal

Before closing on a home, a licensed appraiser will evaluate the property and determine the current value of the home. This usually involves comparing recent sales of similar properties in the area. This evaluation is used by lenders to decide the amount of money that they will lend you to purchase that property.

If there is a large discrepancy between the loan amount and the appraisal value, then the deal may fall through. The bank will not lend you more money than what the house is worth.

4. Closing Costs

Closing costs include the various fees and taxes that are to be paid in cash, meaning not paid through the loan, at the time of closing. Some costs may be recurring, such as homeowner's insurance or property taxes, while others are non-recurring, like title insurance and appraisal fees. These costs will be clearly laid out before closing on your home.

5. Contingencies

A contingency is an area of the contract that serves to protect either the seller or the buyer. Contingencies serve to release the protected party from any liability if certain terms are not met. For example, including an inspection contingency will allow the buyer to negotiate for any repairs or back out of the deal if there is an unfavorable home inspection.

6. Earnest Money Deposit

An earnest money deposit is also called a Good Faith Deposit, which serves to assure the seller that the buyer has an intent to purchase. This money is held safely in escrow until the home is sold to the intended buyer.

There are dozens of terms that you will become familiar with during the home buying process, which makes it important to find an agent that you can trust to guide you through every step and keep things simple. Learning these new terms on your own will help you gain confidence, but having a competent and trustworthy agent is imperative. Contact us today at Greg Spears Realty and our team of experts will help you find your dream home.