Understanding real estate terminology is key when you’re planning to buy a home. The more familiar you are with these terms, the easier it will be for you to make informed decisions. This guide introduces important terms you’re likely to encounter when interacting with a Vancouver real estate agent.
Common Real Estate Terms
Appraisal
An appraisal is an evaluation of a property’s value made by a professional appraiser. Appraisals are based on data like the condition of the property, the value of similar homes, and market conditions.
Closing Costs
Closing costs are fees paid at the end of a real estate transaction. These can include title insurance fees, appraisal fees, and loan origination fees.
Contingency
A contingency is a condition that must be met for a real estate contract to be binding. Common contingencies include home inspections, financial approval, and appraisal meeting the selling price.
Equity
Equity is the difference between the value of a home and the amount of money you owe on the mortgage.
Escrow
Escrow is a period when the buyer and seller have agreed to terms but the deal is not yet complete. It often includes an escrow account, where money is held by a third party until specified conditions are met.
Loan-Related Terms
Preapproval
Preapproval is a written guarantee by a lender stating that a buyer can obtain a mortgage up to a certain amount.
Principal
The principal is the amount of money borrowed for a loan. A portion of monthly mortgage payments goes toward paying down the principal.
Interest
Interest is the fee charged by a lender for borrowing money. Each mortgage payment includes some amount of interest.
Amortization
Amortization is the process by which loan principal decreases over the life of a loan. With each mortgage payment, a portion of the payment goes toward reducing the principal and the rest goes toward paying the interest.
Understanding Is the First Step to Buying
Learning these real estate terms is an important first step toward buying a property. This knowledge will make you confident and informed when collaborating with your Vancouver real estate agent to buy your next home.