Make your buying experience easier
Take the confusion out of buying a home by understanding the lingo
Buying a home can be both exciting and scary. You know your budget, and you know what type of home you want, but whats next? Buying a home involves mortgages, contracts, and a lot of paperwork that can be confusing when you are not familiar with the terminology used.
The Multiple Listing Service of Hilton Head Island (HHIMLS) strives to help both buyers and sellers understand all the information placed in front of them to make the best decision possible. Here is a list of 10 words all homebuyers should be familiar with before purchasing a home:
1. An adjustable-rate mortgage (ARM) is a loan that changes periodically throughout the life of the loan. Generally, the initial interest rate for a set period is lower than a fixed-rate mortgage. Once the initial time period ends, the interest rate and your monthly payments can either be lower or higher.
2. A home appraisal is a home estimate based on its location, structural condition, amenities, and similar local properties. Appraisals determine the market value of the home and are usually paid for by the buyer and are needed for loan purposes.
3. A home assessment is conducted every five years and is used to determine a property’s tax value. Once the assessor determines a home’s worth, the assessor takes the value of the house and multiplies it by the assessment rate percentage that the tax jurisdiction sets to determine how much property taxes will be.
4. Closing costs for a home typically are two to five percent of the purchase price. Closing costs can include lender fees, appraisal fees, title searches, title insurance, taxes, credit report charges, and homeowner fees.
5. Contingencies are clauses in purchase agreement contracts that specify conditions for the buyer and seller to agree upon for the sale to happen. Contingencies are important to buyers because they help protect themselves if they are unable to complete the purchase. There are various types of contingencies: Attorney Review Contingency, Appraisal Contingency, etc.
Considering a move to the Hilton Head area? Our Members access the latest Real Estate data, inventory, and tracking trends to help you find your perfect piece of the Lowcountry. By utilizing the most advanced tools in the industry, we make the process smooth and simple for buyers and sellers. Turn to an HHIMLS member to make South Carolina your home today.
6. A conventional loan is a loan that is not formally backed or insured by any government agency such as the Federal Housing Administration (FHA), Department of Veterans Affairs (VA) or U.S. Department of Agriculture (USDA).
7. An FHA loan is a mortgage offered through the Federal Housing Administration that has less strict rules than conventional loans regarding credit score, down payment and loan term. This loan is typically good for first-time homebuyers or low-to-moderate income individuals desiring a low down payment.
8. A fixed-rate loan is a mortgage where the interest rate does not fluctuate throughout the loan term. The rate may be initially higher than an ARM loan, but borrowers never have to worry about the rate increasing once it is set.
9. Homeowners Association (HOA) fees, if applicable, are due monthly or annually and are in place to uphold and enforce the community’s covenants. HOAs enrich property value by keeping the overall community looking nice and maintaining the common areas.
10. Private mortgage insurance (PMI) is mortgage insurance required if you put less than 20 percent down on the home purchase with a conventional loan. Lenders require this insurance to protect themselves in case you end up in foreclosure.
No matter which loan you decide on, or whether you decide to live in an HOA community, these terms are very important to know during the homebuying process.
To learn more about the homebuying process or to find a knowledgeable agent near you to help you navigate the buying and selling process, go to www.hiltonheadmls.com.
The Lowcountry has been our backyard for more than 40 years. Making the real estate market work is what we do. We are the MLS of choice for the area’s top real estate professionals as evidenced by facilitating more than $3.9 billion in real estate transactions annually. Our members have access to the most up-to-date and accurate listing information available, helping you make the most informed decision. When it comes to buying and selling in the Lowcountry, work with a Hilton Head Island MLS real estate professional.