7 Real Estate Terms New Buyers Should Know

When you’re buying your first home, you may encounter an array of terminology that you’ve never heard before. This can make the process extra confusing. To help you out, we’ve compiled a list of some of the most common and important real estate terms.

1. Adjustable Rate Mortgage

One type of mortgage you can take out is an adjustable rate mortgage (ARM). With this kind of loan, the amount you pay back in interest changes in accordance with a particular market indicator. However, fluctuations don’t tend to be too dramatic or frequent because there are limits as to how much and how often interest rates can vary.

2. Fixed Rate Mortgage

The other type of mortgage is fixed rate. With these loans, interest rates stay the same throughout the lifetime of the mortgage (which is typically 15 or 30 years) — it doesn’t matter how the markets change.

3. Offer

When you find a home you want to purchase, you need to present an offer to the seller. In Alberta, this is a formal document with details including your name, the amount you want to pay, how much you’re able to deposit immediately, what you want to be part of the purchase, and when you want to take possession of the house.

4. Counteroffer

If the seller rejects the offer, you may receive a counteroffer with different terms to what you proposed. In most cases, a seller will use a counteroffer to ask for slightly more than you proposed. The counteroffer voids your original offer. If you sign it, you’ll begin the contract.

5. Escrow

The funds and documents you’ll use to purchase the house can be held by a third party (such as an attorney) leading up to the closing of the sale. This is called escrow. The person who holds the funds and documents is the escrow or title agent. Typically, you pay a fee to this agent as part of the closing. There is also a document called escrow instructions that specifies the steps that need to take place before the deal can close. Both the buyer and seller need to sign this document.

6. Title

You receive ownership of the property with a title. Evidence of this comes in the form of a deed, which you can order through Alberta Registries Spatial Information System (SPIN2) or a registry agent.

7. Title Report

A lender will only finance the purchase of a property after you present a title report. This is an analysis of the real estate title search and features information including a description of the property, the name of the titleholder, any encumbrances, and any real estate taxes due.

Learning terminology is useful, but it is still difficult to understand everything on your own. The solution is to work with an expert. An expert in Sherwood Park real estate is Damon Bunting. Our team knows all the neighbourhoods around — from Spruce Grove to Beaumont. We’ll work with you to help you purchase the ideal home for your family. Contact us now.