If you are a beginner in the world of real estate investing, you will no doubt agree with the following. Learning the language can be a huge learning leap and challenge. Real estate isn’t just simply buying and selling pretty homes. You will be working with homeowners, realtors, appraisers, bankers, and the list goes on. This is why it is so important to make sure that you know your “lingo”. It is not a great feeling to be working on a deal and have no clue what they are talking about. Here are some of the key real estate terms that you should have a good grasp on.
1) Pre-Approval Lender Letter
This is a letter from a lender stating that a potential buyer has approval to borrow a stated amount of money from his firm based on having documented all the personal information needed. Final approval is subject only to the lenders receiving a copy of a contract to purchase real estate, a satisfactory appraisal of that real estate, and its underwriting departments review of all pertinent information. In other words, the buyer qualifies so long as the property does and no changes occur.
2) Pre-Qualification Lender Letter
A letter from a lender stating that a potential buyer is able to get a loan in a named amount. It typically states the price of real property to be purchased, and what information the lender had when forming his opinion. When a lender has pulled a borrowers credit file, his opinion is worth more than if he just based it on what the borrower told him.
3) Septic System
This is a self contained means of disposing of sewerage which tends to intimidate city dwellers. The simple version is a holding tank in which enzyme and bacterial action decomposes the waste material and buried lines in a drainage field which uses soil to strain out what remains. This works very well in soil which percolates well (water drains through it quickly). More elaborate septic systems are often needed in areas with heavy, clay soil and in areas with a high water table. Some properties are totally unsuited for septic systems and cannot be built on until public sewer is available.
4) Title Insurance insurance
An insurance which will compensate the insured for the value of his ownership or collateral position in real property if a person not thought to be a current owner materializes as an owner. (I’ve seen this come into play when property was owned by many heirs a generation or two ago.)
A single family attached dwelling unit with common walls.