Real Estate Word of the Day: Lender

A lender is a financial institution or individual that provides funds to borrowers with the expectation that the money will be repaid, typically with interest. In real estate, lenders provide the capital needed to purchase properties. These can include banks, credit unions, mortgage companies, and even private lenders.

The primary role of a lender in real estate is to finance the purchase of property. When you apply for a mortgage, the lender assesses your financial situation to determine your ability to repay the loan. This involves evaluating your credit score, income, debt-to-income ratio, and other financial metrics. Based on this assessment, the lender will offer you a loan amount, interest rate, and…

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Real Estate Word of the Day: Grantee

A grantee is the individual or entity that receives an interest in property from another party. This transfer of interest typically occurs through a legal document known as a deed. The person or entity transferring the interest is called the grantor. Therefore, in a real estate transaction, the grantor gives, and the grantee receives.

When a property is sold, a deed is prepared to document the transfer of ownership. The grantor signs the deed, indicating their intention to transfer the property to the grantee. Upon signing the deed, the grantee receives the title to the property. The title signifies legal ownership and the right to use and enjoy the property. To make the transfer official and public, the deed is…

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Real Estate Word of the Day: Fixture

A fixture is any piece of property that is physically attached to the land or a building in such a way that it is considered legally part of that property. Essentially, fixtures are items that were once personal property but have become part of the real property due to their attachment.

Common examples of fixtures include built-in appliances or built-in furniture, lighting, plumbing, landscaping. For Sellers: If there are items you want to take with you, clearly communicate this to potential buyers and ensure these items are excluded in the contract. For Buyers: When touring a home, ask about which items are considered fixtures and will remain with the property. Ensure that these items are listed in the purchase…

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Real Estate Word of the Day: Fair Market Value

Fair market value (FMV) is the estimated price at which a property would change hands between a willing buyer and a willing seller, both having reasonable knowledge of the relevant facts and neither being under any compulsion to buy or sell. It represents an accurate and objective valuation of a property under normal market conditions.


Key Factors Influencing Fair Market Value
  • The location of a property significantly affects its value. Properties in desirable neighborhoods with good schools, low crime rates, and proximity to amenities such as shopping centers, parks, and public transportation tend to have higher market values.
  • The condition of the property is another critical factor.…

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Real Estate Word of the Day: Equity Loan

An equity loan, often referred to as a home equity loan or second mortgage, allows homeowners to borrow money against the equity they have built up in their property. Equity is the difference between the current market value of your home and the outstanding balance on your mortgage. Essentially, it's the portion of your home that you truly own. For example, if your home is valued at $400,000 and you owe $250,000 on your mortgage, you have $150,000 in equity. An equity loan enables you to tap into this $150,000 for various financial needs.

An equity loan provides a lump sum of money that is repaid over a fixed term, typically with a fixed interest rate. The amount you can borrow depends on several factors,…

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Real Estate Word of the Day: Depreciation

Depreciation is an accounting method that allows investors to spread out the cost of an asset over its useful life. For real estate, this typically means spreading out the cost of a building (excluding the land) over a specified period. Depreciation is crucial for property owners because it can provide significant tax advantages by reducing taxable income.

In real estate, depreciation applies primarily to income-producing properties, such as rental buildings, commercial properties, and other structures used for business purposes. The land itself is not depreciable because it does not wear out or become obsolete. However, buildings, improvements, and certain property components do. The Internal Revenue…

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Real Estate Word of the Day: Conventional Loan

A conventional loan is a type of mortgage that is not insured or guaranteed by any government agency, such as the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), or the USDA Rural Housing Service. Instead, these loans are backed by private lenders, and their guidelines are established by Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy and guarantee mortgages.

Conventional loans typically require a down payment of at least 3% to 20% of the home's purchase price. A larger down payment can often lead to better loan terms and a lower interest rate. If your down payment is less than 20%, you will typically need to pay for PMI. This insurance protects…

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Real Estate Word of the Day: Contingency

A contingency is a condition or requirement that must be met for a real estate contract to become binding. Think of it as a safety net, allowing either the buyer or the seller to back out of the deal without penalty if certain conditions aren't satisfied. Contingencies protect both parties by ensuring that specific criteria are met before finalizing the sale.

Contingencies are a vital part of the real estate process because they provide security and flexibility for both buyers and sellers. For buyers, contingencies offer peace of mind, ensuring they are protected if something goes wrong. For sellers, while contingencies might seem like potential obstacles, they actually help in moving serious and qualified…

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Real Estate Word of the Day: Closing Costs

Closing costs are the fees and expenses that buyers (and sometimes sellers) incur during the finalization of a real estate transaction. These costs are typically paid at the closing of the transaction, which is when the title of the property is transferred from the seller to the buyer. Closing costs can vary significantly depending on various factors, including the property's location, purchase price, and the specifics of the loan.

These costs typically include loan origination fees, appraisal fees, inspection fees, title insurance, attorney fees, escrow fees, recording fees, prepaid fees, transfer taxes, and more.

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Real Estate Word of the Day: Certificate of Title

A Certificate of Title is an official document that serves as proof of ownership for a property. It details the legal owner's name, describes the property, and lists any encumbrances or liens against it. Think of it as the property's identification card, establishing who holds the rights to the property and any legal interests or restrictions that might affect it.

The Certificate of Title is the ultimate proof that you are the legal owner of the property. Without it, establishing ownership can become a complex and contentious issue. This document provides a clear history of the property's ownership. It includes details of previous owners and any transfers of ownership, ensuring transparency and…

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