Being a first-time home buyer can seem challenging. These are important words you need to know that will help you when buying your first home in the Lowcountry.
Important terms you need to know:
Credit Score - In terms of homebuying, a credit score helps potential loan officers determine the risk level of providing a mortgage to a potential client. The higher your credit score, the more likely you are to have better options as a homebuyer. You need a 680 Credit Score to qualify for a FHA loan.
Pre-Approval vs Pre-Qualification - These terms are closely related but are still different. Pre-Qualification is essentially a less formal version of a pre-approval process. Pre-qualification asks for estimated information such as income, debts, and recurring payments that you will give to your lender, which helps them determine if you are a viable candidate for a loan and for how much.
Once pre-qualified, pre-approval is the next step. Pre-approval is far more involved and will require verified documentation of your financial history.
Escrow – is a process when another party holds the funds used in a real estate transaction. For instance, when the buyer writes an earnest money check (see below), that check will be deposited into escrow to be held and not to the seller.
Earnest Money - Earnest money is a sum (usually $1,000) paid from the buyer to the seller and held by an attorney that represents the buyer’s serious intention to buy the home.
If the buyer backs out of the sale the money will not be returned and goes to the seller. If the sale goes to closing the earnest money will be used for closing costs or down payment.
Closing Cost – Cost associated with the sale and closing of the property. These fees may be related to insurance fees, survey fees, or attorney’s fees (if applicable). These costs will vary. Be mindful of these fees before putting an offer on a home, to ensure you have the extra funds to cover any surprise costs.
Down Payment - A down payment is a portion of the sales price you will be required to pay to close on the sale of the property. The down payment must be paid at the time of settlement (closing). Purchasing a home does not require the entire sale price to be provided upfront. This is where the loan comes in.
Christopher H. Curry is a licensed South Carolina Realtor ® with Keller Williams Lowcountry
Chris.Curry@KW.com @CurryTheRealtor Cell – 843.949.0249