efinitions to help you understand the real estate process

TROY Realty enjoys helping their clients. Here's a few key real estate terms defined for your easy understanding—of course please feel free to contact our agents if you have any questions

Closing costs

Closing costs are an accumulation of charges paid to different entities associated with the buying and selling of real estate. For buyers they are usually about 4-6% of the total sales price of a property. Some of the closing costs you might encounter are:

• Application fees

• Appraisal fee

• County taxes

• Credit report

• Discount points

• Documentation fee

• Escrow fees

• Homeowners' association fees

• Loan fees

• Mortgage insurance

• Origination fees

• Tax registration

• Title insurance premium

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Earnest money

When you make an offer, you will need to put up an earnest money deposit as a sign of good faith that you are seriously interested in buying a home. that deposit becomes a part of the purchase price and is held in a trust account until there is full acceptance of the offer. Typically, an earnest money is 3-5% of the offer amount.

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Home inspections

What is a home inspection—There are numerous types of inspections. An inspection is meant to evaluate, at minimum, the structural and mechanical condition of a property. It is not the same as an appraisal which evaluates the market value of a property. Persons involved in real estate transactions need unbiased information about the physical condition of property they plan to buy or sell and your contract should include a contingency that you obtain a satisfactory inspection report. Talk with our agent about the types of inspections available.

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Home Inspectors vs Engineers

Home Inspector—A person who examines any component of a building, through visual means and through normal user controls, without the use of mathematical sciences.

Engineer—Analysis or design work requiring extensive preparation and experience in the use of mathematics, physics, chemistry and the engineering sciences.

Finding a qualified inspector

• Local consumer affairs office

• REALTOR® Association of NorthWest Chicagoland (RANWC)

• Referral from a local real estate agent or mortgage company

• Referrals from satisfied customers

• Yellow Pages under "Building Inspection Services"

Ask if she/he is a member of the American Society of Home Inspectors (ASHI). ASHI has established standards including specific services, limitations and exclusions that can be expected from private home inspectors.

What the inspection includes at minimum

Every inspection should include, but not be limited to, an evaluation of at least the following:

• Ceiling, walls and floors

• Common areas (in condominiums)

• Doors

• Foundations

• Hazardous materials concerns

• Heating and air conditioning systems

• Insulation

• Plumbing and electrical systems

• Roof

• Ventilation

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Point

One point is equal to 1% of the new loan amount. Whenever government regulation, state usury laws and/or competitive practices prohibit the lender from charging a rate of interest that would make the real estate loan competitive with other fields of investments, the lender must seek some method of increasing the yield for the investors. By charging "points," the lender can bring the real estate loan up to those other investments.

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Pre-approved

Your credit, employment and funds have been approved by the lender.

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Pre-qualified

You have determined, with a loan officer, what price you can afford based on the down payment, your debts and the amount the mortgage company will approve for your mortgage. Being "pre-qualified" is only a determination of your probable credit.

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Title insurance

Title insurance protects the named insured against loss because of defects, liens, encumbrances, adverse claims or other matters not shown or disclosed to the new owner that attach before date of policy.

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VA or FHA financing unfair to sellers

FHA and VA loans provide purchasers the opportunity to buy homes with minimal cash investment and at lower interest rates. The result is a larger market for sellers, who also benefit by receiving all cash for their equity.

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