So, you’re looking into the real estate market. Maybe you’re trying to find out what it would take to sell your house, or you are looking to buy. But as you look, you’re bombarded with terms like amortization and escrow.
If you’re like most other human beings out there, you hate it when people talk “over your head” in any circumstance, and you just want to know what you need to know. So if you don’t know all of the real estate lingo, it can be frustrating to navigate the market.
We know how you feel. That’s why we decided to take those frustrating terms and put them into words you can understand. Here are five terms you need to know:
Amortization:
The gradual paying off of a liability such as a mortgage. Specifically regular payments that cover both the principal and the interest until the liability is paid off (amortized).
Appraisal:
A written report of value (usually market value) for real property. This is used as the basis for price, mortgages, taxes, settling estates, and more.
Contingency:
In the dictionary, a contingency is an event that can neither be proved true nor proved false. In real estate, it’s a clause in a contract that specifies a condition that must be met before the contract is legally binding.
For example, a purchase contract for a property may have a contingency stating that the price agreed upon is not final until an independent, professional appraisal is completed. Or it may say that a home inspection report must be completed and deemed “acceptable” before the contract is binding.
Encumbrance:
A burden on a property that hinders the sale or transfer of a property. It may limit use of the property or diminish the property’s value. Liens, mortgages, easements, leases, private restrictions, and air and subsurface rights are all examples of encumbrances.
Escrow:
A document, money, or item of value kept in the custody of a neutral third party or account called until all conditions of a transaction are fulfilled.
We hope this is helpful! If there’s a term that you’d like a definition on, please leave us a comment, and we will define that for you. Keep looking back, as we will be covering more terms in the future.