Packing and moving to Okemos Michigan for a better job and looking for a place to live with your family in Greater Lansing Michigan? Without knowing essential real estate words and phrases, you might be caught off guard when your realtor or lender asks you questions about finances and how to get pre-approved for a home loan. You need to be understand the process if you’re going to buy a house for sale in Eaton Rapids, Charlotte MI, Potterville, Haslett or any surrounding city in Mid-Michigan. There are many ‘fancy’ words and terms used by agents in the real estate field. Let’s get you familiar with some of those terms:
As you likely know, a mortgage is a loan repaid at a fixed pace over time. When you’re buying a home with borrowed money, you are the mortgagor, and your lender is the mortgagee. Fun fact: mortgage is from Old French, and translates literally to “death pledge.” Hopefully you’ll pay yours off quicker than that!
Getting preapproved will make you a more attractive candidate to sellers, because you’re already guaranteed to have the money. For preapproval, you’ll fill out an actual mortgage application and submit to a financial background check that will grant you tentative approval for a maximum loan amount and give you an idea of your likely interest rate. If you’re just casually starting to look at homes but aren’t necessarily ready to buy, you could instead opt for a prequalification, which is an informal quote for what a bank or mortgage lender would be willing to loan you based on information you provide about your assets, debts, and income.
Short for private mortgage insurance, PMI essentially guarantees the lender’s money in the event that you’re unable to make your payments. Annually, it costs about 1% of the home’s value and is typically only required if you make a down payment of less than 20%, but it varies by lender.
Also known as documentary stamps, state stamps are taxes on deeds. Stamp amounts and requirements differ by state.
In real estate law, restrictive covenants are deed provisions that limit the use of the land, much like zoning laws do. These legally enforceable restrictions are often used to limit a neighborhood’s development, for example by determining the size, height, or density of buildings on the land. Some covenants strictly bind the new owner to follow the regulations, but others “run with the land” and will hold all subsequent owners to the same regulations, which often affects the property’s marketability as an encumbrance on the title.
Unlike most insurance policies, title insurance is a one-time payment in your closing costs that covers the history of a title rather than the future. Although a title search (a step in the closing process) should turn up any liens, encumbrances, encroachments, or any other event that could impact the validity of the title that will soon be yours, some events can surface later. When you’re purchasing title insurance, you’re essentially paying for the peace of mind someone will defend you in court if the title is ever questioned and to compensate lost equity if the case doesn’t go your way. If you’re purchasing with a mortgage, your lender will need title insurance as well.
Questions? Contact RE/MAX Dewitt Real Estate Realtors at 517-669-8118. We’ll get you in touch with the best award winning agents!