If you're a first-time homebuyer or haven't bought or sold in a while, this blog is for you, I'm going to be covering seven common terms you need to know about during the home buying process. These are terms you might have heard but just not too sure about.
#1 Realtor, Real Estate Agent, Real Estate Professional
Realtor, Real Estate Agent, Real Estate Professional, they're all the same thing, and they all refer to somebody who helps buy and sell properties. Conducts walkthroughs, do market evaluations, list properties, puts deals together make sure it's all legal, correct and basically someone that helps you through the whole process of buying or selling real estate.
#2 Pre-Approval or Pre-QualifiedThis is where it gets a little bit confusing because these terms can be used quite often interchangeably. But they can mean vastly different things. So what I classify as a pre-approval, pre-qualification is when you've been to your bank or your mortgage broker, they've taken a credit report, they've taken all your credit history, and they've done their math, put it into the system, and they're giving you an official pre-approval, pre-qualification of what you can qualify to borrow from a lender.
Sometimes people use pre-approval when they talk to somebody a bank or a broker, don't do any homework on what your credit history is, and they just said, oh yes, you can afford this. That's not really worth anything. What you need really is a full pre-qualification or a pre-approval from a mortgage broker or a lender at a bank.
#3 Mortgage Rate
This is referring to the amount of interest you're going to pay on the money you've borrowed from the lender to purchase the property.
#4 Down PaymentDown payment not to be confused with deposit. So the down payment in Canada is minimum of 5% percent of the purchase price, and this down payment will form parts of your mortgage agreement.
#5 DepositOften, this can be confused with down payment, the deposit forms part of the contract when you're negotiating a deal. And that deposit goes towards showing the seller that you're really serious about buying.
For example if you put $100,000 down, but your down payment which forms part of your mortgage agreement, is less than that, whatever is left comes back to you.
#6 Credit ScoreThis is a great one. This is a number generated by your credit history that banks and lenders will use to let them know how likely you are to repay the debt.
#7 Closing Costs (very important)These are the costs associated with completing the real estate transaction at the end. Paying taxes, paying your lawyer etc.
So there you go, 7 common terms you'll hear throughout the buying and selling of real estate. It's always good to know when you hear people speaking, and you hear these little buzz words, what they're actually talking about.