The top real estate terms that every buyer should know
Buying a home can be complicated, especially when you come face-to-face with all the new jargon. When searching for a home or applying for a mortgage, you may hear an estate agent or lender use any of the terms or acronyms below.
Keep this four-part guide handy — soon you’ll be fluent in the language of home buying before you know it.
When searching for a home
Buyers market: Market conditions that exist when homes for sale outnumber buyers. Homes sit on the market a long time, and prices drop.
Sellers market: Market conditions that exist when buyers outnumber homes for sale. Bidding wars are common.
Listing/asking price: The price of a home, as set by the seller.
When you’re applying for a mortgage
Lending institutions: Banks, savings and loans, and credit unions. These institutions underwrite as well as set home loan pricing in-house.
First time buyer: This is someone who is buying their first residential property. Lender normally require a 10% deposit from First Time Buyers (FTB) while they ask 20% from others.
Cash buyer: A person who is able to buy a property without needing to take out a mortgage or loan to do so.
Loan-to-value ratio (LTV): The amount of the loan divided by the price of the house. Lenders reward lower LTV ratios.
Pre-approval: A thorough assessment of a borrower’s income, assets and other data to determine a loan amount they would qualify for. A real estate agent will request a pre-approval or pre-qualification letter before showing a buyer a home.
Underwriting: A process a lender follows to assess a home loan applicant’s income, assets and credit, and the risk involved in offering the applicant a mortgage.
When choosing a mortgage
Mortgage broker: A licensed professional who works on behalf of the buyer to secure financing through a bank or other lending institution.
Mortgage interest rate: The price of borrowing money. Each institution sets its own interest rate so it's best to shop around.
When sale agreed on a home
Stamp Duty: This is normally 1% of the sales price of the property and must be paid as sale closes.
Surveyors report: A structural report of the home that can identify any serious issues, such as damp.
Home insurance: A policy that protects the structure of the home, its contents, injury to others and living expenses should damage occur.
Walkthrough: A buyer’s final inspection of a home before closing.