Today, I have a list of seven important terms that every homebuyer should know.

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When you buy a home, there are a few important terms that you need to understand.

1. Appraisal. The appraisal is when you put a house under contract and the bank sends out a third-party appraiser to find a value for the property.

2. Closing costs. Closing costs are extra fees included in the purchase price such as taxes, insurance, any points on the interest rate, the appraisal fee, and any processing fees that the lender might charge. Closing costs are not the same as the down payment.

3. Credit score. The majority of lenders look for a score over 600. The better your score is, the lower your interest rate will be.

“An earnest money deposit shows you are serious about buying the home.”

4. Down payment. The down payment can be anywhere from zero to 20% of the purchase price. Some USDA loans and VA loans allow you to buy a home for no money down.

5. Escrow/earnest money. When you buy a home, you make some sort of escrow or earnest money deposit down. Earnest money shows the seller that you are serious about buying that property.

6. Interest rate. Obviously, the lower the interest rate, the cheaper it is to borrow the money—and the lower your monthly payment will be.

7. Pre-approval letter. The pre-approval shows that you are ready to purchase a property. Most sellers won’t even look at an offer these days unless you provide a pre-approval letter.

If you have any other questions about buying a home in today’s market, just give me a call or send me an email. I would be happy to help you!