Whether you are buying your first home in the Central Valley or bought a home in the past, you may be rusty on your real estate terms. When visiting new home communities to tour models or talking to your realtor about the Central Valley real estate market, various real estate terms will come up. According to an article by Redfin, everyone should know certain real estate terms before they start their search. If you are looking for single-family homes in Central California, you can expand your real estate vocabulary as well as your imagination with this easy guide.
A move-up buyer or step-up home buyer is someone who has owned a starter home in the past, but wants to upgrade. Move-up buyers often have equity in the home they sold, which helps them afford a larger or more expensive property. Some first-time buyers buy in the same neighborhoods by putting down a larger down payment or due to their excellent income and credit. A report by CNBC points out the real estate market depends on move-up buyers to sell their older, starter homes to younger buyers.
Fixed rate mortgage
When it comes to financing your new construction home, you need to choose a mortgage unless you pay with cash. A fixed rate mortgage means you will have the same interest rate for the entire length of the loan. In contrast, an adjustable rate mortgage can fluctuate depending on changes to the prime rate set by the Federal Reserve. If you plan to stay in a home for less than 5 years, you can get an ARM (adjustable rate mortgage) that provides a fixed rate for five years before converted to an adjustable rate. This practical guide to understanding mortgage options will help you decide what is best for your particular situation.
An approval letter
Most new home sales consultants expect you to have a pre-approval letter from a lender to start the process of buying a home. However, you are free to tour new home models and get an idea of what you want before seeing a lender. When your lender grants you a pre-approval letter, it means you have a general idea of your budget based on what the lender will let you borrow. Soon after deciding on the home you want, you should become pre-qualified by a lender, according to an article by Realtor.comabout the frustrations of falling in love with a home you can’t afford.
Just as you go to a closing when you buy a resale home or existing property, you also go to a closing to buy a new construction home. Closing costs often cost 2 to 5 percent of the purchase price of a home. A good faith estimate from your lender should detail the closing costs such as loan processing fees, title insurance and taxes. After closing, you officially own the home.
When you get a mortgage, you will likely see separate amounts for the mortgage itself versus the property taxes and home owners insurance. An escrow account is separate from the mortgage even though it’s often included on the same bill. The escrow pays for expenses that fluctuate. Your property taxes and insurance can go up or down each year, which changes your monthly payment. This article by Bankrate goes over the pros and cons of setting up an escrow account for a new home.
San Joaquin Valley Homes, a local homebuilder based in Visalia, builds inspired homes throughout the Central Valley. For more information about our communities or to get on an interest list, please contact us.