5 Terms to Help You Navigate the Home Buying Process

If you’re a homebuyer, there are five terms you need to know
that will help you understand the home buying process far
better.





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Here are five terms that will help you navigate the home buying
process by understanding what they mean: 

1. Appraisal: This is a professional valuation of a property
done by an appraiser. If you’re obtaining a loan to purchase your
home, they’ll be hired by your lender. If you’re purchasing the
home with cash, you can also hire the appraiser yourself. The
appraisal will determine the proper value of the home by pulling
comparable properties.

2. Closing costs: This is a bulk term for all the costs
you’ll need to close your loan and get to the closing table. The
lender’s fee, tax costs, and insurance costs are examples of what’s
included in the closing costs. There may be other costs involved,
too. If you’re buying a property within a homeowners association,
for example, there may be a fee to transfer your name into
ownership. 

3. Down payment: This is how much money you’ll put down in
order to purchase the home. The more you put down, the less of a
risk you represent to the lending institution giving you your loan.
Some people pay 5% to 10% down, while others go as high as 20% in
order to avoid mortgage insurance. Certain FHA loans allow you to
put down as little as 3%, and if you’re a veteran, you can qualify
for a VA loan and put no money down. There are many programs out
there that can help first-time homebuyers get into a
home. 

4. Credit score: This is another way a lender can examine
your credit history and determine how likely you are to repay the
loan they give you. A credit score can range anywhere from 350 to
850. Only about 55% of loans used to purchase a home are for scores
lower than 750. Don’t worry, though—if your score isn’t above 750,
you can still get a great loan. 

5. Pre-approval letter: This is a letter you provide to the
seller stating that you’ve already been approved by a lender. In
order for you to be approved, a lender will look at your assets and
income and, more importantly, they’ll start collecting data. The
more information you can give to a lender before you start house
hunting, the more successful you will be. 

“

The more information you can give to a lender before you start
house hunting, the more successful you will be.

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If you have any questions about these terms or you’re
thinking of buying a home in our Denver market, don’t hesitate to
reach out to me. I’d be happy to help you.