Understanding Terminology in Wilmington NC Real Estate
If you are considering buying a home in Wilmington NC real estate, you need to understand the terminology being used.
Check out our guide to buyers lingo so you can feel like a pro, even if you’re a first-time buyer! Whether you’re looking at homes for sale in Wilmington NC, or planning to sell a house fast, this guide will help you make informed decisions.
Common Real Estate Terms Explained
Abstract of Title
This will basically give you a full paper trail of the property’s ownership. It will include property transfers, inheritances, liens, encumbrances, and conveyances.
Adjustable Rate Mortgage
Usually comes at a lower cost; however, the interest rate will vary depending on the market. Considered less stable than a fixed-rate mortgage.
Amortization Schedule
A table that shows your mortgage payment schedule, outlining your principal and interest payments.
Appraisal
Done by a professional to help determine the value of your house.
Assessed Value
This is the value of your home as determined by the county for tax purposes.
Balloon Mortgage
A mortgage in which the final balance is due in one large payment at the end of the loan term.
Bridge Loan
A loan to cover a period of time in between two transactions, typically the period between buying and selling a home.
Capital Gains Tax
A tax levied on the profit from the sale of a property. Important for sellers to consider when listing homes for sale Wilmington NC.
Caveat Emptor
Latin for “Let the Buyer Beware.” Basically, at the end of the day, you are assuming any risk involved in the transaction.
Chain of Title
A list of successive owners of a specific property.
Closing Costs
Miscellaneous charges you will need to pay in addition to your downpayment. This might include loan origination fees, title fees, fees from the city to record the deed, surveyors, etc.
Closing Disclosure
A document provided to buyers three days before closing, outlining final loan terms and costs.
Closing Statement
This is a legally required document that itemizes credits and debits to both the buyer and seller.
Comps
A list of comparable sales in your area. Considered one of the best ways to determine a home’s actual value and used by agents to create a Comparative Market Analysis.
Contingency
A provision in the contract canceling the sale should a certain event occur. For example, a house not appraising high enough to satisfy a lender.
Contingent Offer
An offer to buy a home that is dependent on certain conditions being met (e.g., home inspection, financing).
Conventional Mortgage
This type of mortgage is not guaranteed by the federal government. They can be fixed or adjustable-rate.
Conveyance
The transfer of property from one person to another.
Debt-To-Income Ratio
A comparison of what you owe each month to what you earn.
Deed
A legal document that transfers ownership of a property from the seller to the buyer.
Dual Agency
When one real estate agent represents both the buyer and seller in a transaction.
Due Diligence
The period when the buyer investigates the property before finalizing the sale.
Earnest Money Deposit
Often used when a buyer needs more time to secure financing. It shows good faith and is typically held in a joint escrow account by the buyer and seller.
Equity
The market value of a property, minus any liens (including your mortgage balance).
Escrow
When an impartial third party holds the deed or funds.
Escrow Account
A third-party account where funds (like taxes and insurance) are held during a real estate transaction.
FHA Loan
Issued by a federally qualified lender and backed by the Federal Housing Administration. Requires a lower down payment compared to a conventional mortgage.
Good Faith Estimate
Also called a GFE, is provided by your lender when you are shopping for a loan. It breaks down the loan terms and fees.
HELOC (Home Equity Line of Credit)
A revolving credit line that allows homeowners to borrow against the equity in their home.
Homeowners Association (HOA)
An organization that manages a community and enforces rules. Often applies to condos and some subdivisions.
Inspection
A service provided by a licensed inspector during the sale of a home. They inspect the foundation, plumbing systems, electrical work, sewage system, heating/cooling systems, and the roof.
Loan-to-Value Ratio
A term commonly used by banks and lenders to show the value of the loan vs. the value of the home.
Negative Amortization
This is an increase to the principal balance of the loan caused by making payments that do not cover the loan’s interest.
Origination
The process of applying for a loan, all the way to the disbursement of funds.
Pre-Approval vs. Pre-Qualification
- Pre-Approval: A lender has verified your financial background and is willing to lend you a specific amount.
- Pre-Qualification: An estimate of how much you might be able to borrow, but not a guarantee.
Probate Sale
A sale that occurs when the homeowner has passed away and the property must go through probate court.
Refinancing
Getting a new mortgage to replace an old one. Usually done to provide a better interest rate to the buyer.
Sale the House
A term sometimes used in Wilmington NC real estate when referring to closing a home sale quickly.
Seller Contribution
Instead of discounting the price of the home, a seller will directly contribute to your costs or downpayment.
Seller’s Market vs. Buyer’s Market
- Seller’s Market: Demand exceeds supply, making it easier to sell a home quickly.
- Buyer’s Market: More homes available than buyers, meaning buyers have more negotiating power.
Short Sale
A home sale in which the seller owes more on the mortgage than the home’s current value and negotiates with the lender to accept a lower amount.
Title Insurance
This protects property owners and lenders from damage and loss. It is required if you have a mortgage on the home.
Underwriting
Determines the amount of risk a lender is taking on.
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