Planning to buy a house in Okemos, Dewitt, Grand Ledge, East Lansing MI or Holt Michigan? When you’re on the house buying market, it’s easy to feel like you’ve been asked to learn an entirely new language. Unless you work in property law, it’s unlikely that you typically utter the words “restrictive covenant” or “documentary stamp.” You don’t need to be able to define “escheat” off the top of your head. (For the record, it’s what the government does if you die without leaving provisions for your property in your will.) But it’s important to feel grounded in the industry’s vocabulary, so that you’re comfortable making one of the largest financial transactions of your life. Here are 5 terms that you should know:
An offer to purchase, or a binder, is a tentative, limited-time agreement between a buyer and a seller. Secured with earnest money, the binder guarantees purchase terms for a set amount of time.
Chronologically speaking, this is one of the last things that you’ll need to worry about, but you’ll need to be financially prepared. What goes into closing costs can be a bit murkier than the name implies. The individual amounts vary, but Realtor.com says your buyer closing costs should cover a loan origination fee, credit report, loan underwriter, home inspection and appraisal, title search (like a background check for your home’s ownership), survey fee, and taxes, often referred to as documentary stamps. Check SmartAsset’s handy calculator for what your closing costs could add up to, but it’s typically 2% to 5% of the home’s value.
A house deed is different than a title, though they both connote ownership. The title is the actual document that proves ownership of the property, and the deed is the document that transfers the title from the previous owner to you.
Earnest money — or “good faith money” — shows the seller that you’re a serious buyer. It typically accompanies an offer, and precedes a down payment. The total is usually 1% to 3% of the home’s value, and it’s customary to hold it in escrow until the purchase is finalized, at which point it applies to the down payment.
An easement is a type of encumbrance claim that grants the holder access and use to a property that he or she doesn’t own. The party that benefits from the easement is the dominant estate, while the property-holder to whom it applies is the servient estate. So, for example, if your driveway technically passes through your neighbor’s land, and you’re granted an easement to use it, then you are the dominant estate, and your neighbor is the servient estate.
RE/MAX Real Estate Dewitt Michigan sponsored a guest blogger, Sam Radbil, who is a contributing member of the marketing and communications team at ABODO, an online apartment marketplace. ABODO was founded in 2013 in Madison, Wisconsin. And in just three years, the company has grown to more than 30 employees, raised over $8M in outside funding and helps more than half a million renters find a new home each month.
Blogs to Read:
Top Home Repair and Maintenance Handymen in Greater Lansing
12 more Real Estate Terms to Learn for Homeowners in Grand Haven and Mid Michigan
Why do you need a Home Inspection when Buying a House in the Midwest or on Lake Michigan?