Buying a New Townhome, Patio Home or Single-Family Home in Rochester, NY?
Wegman Companies, Inc. Explains Common Real Estate Terms
Whether you’re looking for a townhome, condo, or single-family home in Rochester, NY, you’re sure to encounter several terms specific to the real estate industry. If you’re looking to understand more about the real estate industry before buying a home, Wegman Companies, Inc. has you covered. When you’re stuck on a real estate term, check out our homebuyers’ glossary or ask our friendly staff for clarification.
People and Organizations to Know
When you’re thinking about purchasing a new home, familiarize yourself with a few important people and organizations:
- Buyer— Also referred to as the “borrower,” this refers to the individual buying the home. In general, we use “buyer” when talking about purchasing the home and “borrower” when referring to the loan.
- Department of Housing and Urban Development (HUD) – This governmental department oversees and regulates the mortgage lending industry.
- Lender – The bank that lends you the funds to buy a home.
- Mortgage Broker – This company goes to competing lenders to find the best deal on a mortgage for the buyer.
- Seller – Also called the “owner,” “seller” refers to the person or organization selling the home.
- Real Estate Agent – These individuals represent a buyer or seller. It’s important to note that not all real estate agents are realtors.
- Realtor – A REALTOR® has similar training to a real estate agent but has additional certification from the National Association of Realtors.
- Title Company – The company responsible for the transaction between the buyer and seller.
Documents to Purchase Your New Home
You’ll also encounter many different documents during the buying process for your Rochester, NY single-family home. It’s beneficial to be familiar with the following:
- Contract – The agreement between the buyer and the seller.
- Deed– Transfers ownership of the home from the seller to the buyer.
- Disclosure– A document that states all known physical problems with the home. This must be submitted before closing.
- Good Faith Estimate (GFE)– An estimate of closing costs given by the lender.
- Settlement Statement– Official document that explains the sales transaction along with closing costs.
Types of Loans for Real Estate
Before you purchase a Rochester, NY home, you’ll likely need a loan. Here’s a quick explanation of the most popular loans:
- Conventional– The standard type of loan.
- FHA Loan– In this type of loan, the federal government insures the lender in case the buyer does not pay and forecloses on their home.
- VA Loan– These are much like FHA loans, except they involve no insurance premiums and no down payments.
Sorting through the Homebuying Process
Wegman Companies, Inc. realizes that the different phases of the homebuying transaction can get confusing. Here’s a brief overview of some of the processes involved:
- Appraisal– An estimate of the home’s value as evaluated by a professional appraiser.
- Assumption– The buyer assumes the responsibility to pay the mortgage from the seller.
- Closing– The purchase transaction.
- Qualifying– Applying for a loan and gaining approval from the bank.
Making Payments on Your New Home in Rochester, NY
You’ve placed the winning bid on your dream home; now it’s time to start making payments. Learn the following financing terms to better understand the payment processes for your home:
- Amortization– A payment plan that allows for periodic payments.
- Closing Costs– A 2 to 5% fee you’ll pay associated with closing the transaction.
- Down Payment– A payment you make in cash upfront.
- Earnest Money– A deposit you put down at the signing of the contract to show you’re serious about the transaction.
- FICO Score – Used interchangeably with credit score.
- Financing – The mortgage loan that allows you the funds to buy a home.
- Mortgage – A bank loan used to purchase a new home for sale.
- Premium – The fee for an insurance policy.
- Prepayment – The part of the loan that you pay upfront in order to save on interest.
- Principal – The current balance to be paid on your loan.
Taking Care of Extra Fees When Paying for Your Home
In addition to the larger payments, you’ll likely be subject to several of the following extra fees when buying a home from Wegman Companies, Inc.:
- Interest– Extra fees you pay the bank over time for borrowing money.
- Option Fee– An optional amount you can pay the seller that allows you the right to back out of the contract within a stated time period.
- Origination Fee– A fee paid to the lender for making the initial loan.
- Private Mortgage Insurance (PMI)– Insurance that you’ll need to purchase that protects the bank in the event the buyer can’t make payments.
- Property Taxes – Taxes paid to the government each year on your property.
- Points – Fees paid to a lender so you can secure a lower interest rate.
Other Important Terminology in the Homebuying Process
Some terms associated with home buying don’t fit into tidy categories. Wegman Companies, Inc. recommends that you be familiar with the following jargon as you continue your Rochester, NY home search:
- Debt Ratio– A way to compare your debt with your income that banks use to determine how much money they can lend you.
- Equity– The value of your home, minus the remaining loan amount.
- Escrow– An optional service in which your lender builds taxes and insurance into your monthly payment.
- Foreclosure– When the lender takes over the property as a result of the buyer’s inability to pay.
- Property– The land the home occupies.
- Seller Take Back– The seller offers partial financing.
- Term– The number of years your mortgage spreads across.
Ask Wegman Companies, Inc. Your Homebuying Questions
Although some of these terms are commonplace in everyday language, some homebuyers may struggle to sort through the jargon used by real estate agents and home builders. Wegman Companies, Inc. understands that not everyone is a real estate expert. If you find yourself with any questions about the home buying process or our housing communities, feel free to get in touch with our Rochester, NY team. From single-family homes to patio homes and townhomes, we’re always happy to help in your search.