By Soniya Gaonkar on Dec 14, 2021 3:01:00 PM
Real Estate Glossary: All the Terms You Need to Know!
Buying a residential property is a very big decision in everyone’s life. Therefore, we all have to be very much clear and aware of various terms and aspects related to home buying. There are lots of terms connected with your Home Buying process such as stamp duty, booking amount, and so on. It is very much essential to be well-acquainted with various jargon and terminologies related to real estate as buying a property is a lengthy process with a lot of legal formalities. Make sure you are aware of all of these terms before taking a big decision to buy your dream home.
Following are Some Aspects and Terms Related to the Home Buying Process:
1. The Home Purchase Agreement:
The home purchase agreement is nothing but a document that contains various terms and conditions (T&C) which include a particular transaction, the conditions included in the agreement are agreed by both the parties (buyer and seller of the house). If any of the parties are not able to fulfill the mentioned conditions, then it automatically gives the right to the other party to terminate the contract as null and void.
2. Flat Booking Amount:
Flat Booking Amount is mainly some decided percentage (%) ratio of the total price of the home to “book” or reserve that particular flat for the respective buyer. It is usually 10% or 20% of the total price of the home. After some strict laws, apartments usually charge only 10% of the total price of the flat as the booking amount.
3. Stamp Duty on home Purchase:
It is the tax implied or imposed on the sale of a particular property or else property ownership by the state government of the respected state where the property is located. Stamp duty of the buying process is usually based on the monetary value of a particular house or property. Stamp duties differ from area to area, as it depends on the state where the property is located. The buyer or his solicitor is supposed to pay the stamp duty on the behalf of the buyer.
4. Closing Costs:
It is also known as the “settlement costs”, which are incurred while getting a mortgage amount. This also includes attorney fees, credit report charges, title insurance, and so on. These costs are mainly between 2 to 5% of the decided loan amount.
5. Down Payment:
Down payment of the home buying process usually includes the value or amount of money basically cash you can put towards the buying of your dream home. It basically includes the range of 3 to 20 % of the actual price of your house.
6. LE (Loan Estimate):
It usually includes the estimated value of the mortgage to help the consumer to set their budget for buying the procedure of their dream home. Mainly, all the lenders and loan providers use the same standard loan estimate which facilitates easy comparison and further mortgage processes.
7. Carpet Area:
The carpet area is the actual habitable area that is measured from the inner faces of walls of the particular property or house. It is mandatory for all developers and builders to disclose the real carpet area in all their brochures as well as on websites.
8. Per Square Foot Area:
Square foot is nothing but the deciding unit for the price of buying or selling of the particular property. Hence, the term “per square foot area” helps to decide the rate of the property on the basis of that parameter.
9. FSI – Floor Space Index:
Floor Space Index or FSI is defined as the ratio of the “total build-up area” and the actual property or the plot area which is permitted by the government. The more the FSI, the bigger is the build-up area of that particular property or home.
10. ARM – Adjustable Rate Mortgage:
It is defined as - “the mortgage loan” with an interest rate that fluctuates with respect to the designated indicator of the real estate market. To avoid various constant as well as drastic fluctuations in the real estate market, ARMs (Adjustable Rate Mortgage) basically limit how often as well as by how much the interest rate can differ. So basically, it provides the real estate market with the standard or adjustable mortgage rate for the particular property or house.
11. Credit Report:
The Credit report is referred to as a written document of account of the customer’s credit history which is usually prepared by the credit reporting agency. The credit report majorly includes various important information such as details about customers’ previous loans, their credit cards, other bills & payments, other accounts, and so on.
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12. Escrow Agent:
These are the main terms you should always know before buying the house and now your Real Estate Glossary is pretty much stronger.
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