If this is your first time investing in real estate, here is a glossary of 10 important real estate terms you need to know about.
Built-Up Area vs. Carpet Area
Built-up area refers to the total area of the property, including internal and external wall thickness and balcony area. The carpet area is the net area of the property that is usable.
Fair Market Value
Fair Market Value is an accurate representation of a property’s worth, the price for which the property can sell on an open market when the buyer and seller are both well-informed about the property and are not transacting under pressure.
Contingencies
These are certain terms and conditions you can put in place as a buyer that need to be met before you close the deal.
Title
A title represents legal ownership of a property and all of the rights that get transferred from the seller to the buyer.
Deed
The deed is a physical document that includes details of the property and is proof of transferring the title from the seller to the new owner.
Adjustable-Rate Mortgage
Adjustable-Rate Mortgage is a mortgage that does not have a fixed interest rate and can vary over time.
Fixed-Rate Mortgage
Loans that have a fixed interest rate that does not change during the course of the loan are fixed-rate mortgages.
Appreciation
Appreciation is the increase in the value of a property over time. Factors like location, high demand, and low supply, inflation, etc., can increase the value of the asset over time.
Escrow
Escrow is when a third party holds something of value for the buyer during a real estate transaction. After the contract has been negotiated and the deal has been closed, the third party releases the funds.
Closing Costs
Closing costs refer to all the fees and additional charges like insurance, taxes, etc., you pay at the end of your real estate transaction.