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House Buying Lingo: How Much Do You Know?

Buying a house can be pretty intimidating, especially if you’re not familiar with the terms used throughout the buying process. No problem, let’s run through some of the most commonly used terms so you can familiarize yourself.

An appraisal is a professional analysis of your home in order to determine it’s value. Appraisals are more than just interesting information that’s good to know. An appraisal is a necessary step in order to validate your home’s worth to you and a lender.

Closing Costs
All of the fees required in order to complete your real estate transaction. These are paid at closing and include taxes, title insurance, financing costs, and items that must be escrowed or pre-paid. You can always ask your lender for a complete list of closing cost items before you make a final decision.

Credit Score
This number is generated through an analysis of your credit history. Credit scores range from 300-850 and anything above 700 is considered “good.” Anything above 800 is considered “excellent.” This number helps lenders decide how likely you are to pay off future debts.

Down Payment
Most down payments are between 3-20% of the total purchase price of the home. There are also some 0% down payment programs available. Ask your lender if a program like this is available for your situation.

Mortgage Rate
The mortgage rate is the interest rate you pay when you borrow money to purchase a home. The lower the rate, the better for you and your wallet. Buying a home is an expensive process, even without a high mortgage rate.

Pre-Approval Letter
This is a letter from your lender that indicates you qualify for a mortgage of a specific amount. It is not a guarantee to lend, but this documented evidence shows both Realtors and sellers that you are serious in your pursuit of a property.

Real Estate Professional
That would be us! An individual or company that provides services in buying or selling homes. Real estate professionals are there to help you every confusing step of the way: the paperwork, finding the home that’s right for you, and negotiating the details, to name a few. The best way to ensure that you’re confident with your buying process is to find a real estate professional who will guide you through each and every aspect of your transaction while putting your needs first.

As proud members of the esteemed, small-knit Eden Prairie small business community, HP Real Estate Group are active participants in everything our area has to offer. Since 1995, we’ve been committed to earning the trust of our community. With over 4,500 homes sold in our region, we have the knowledge and experience you need when you are looking to list or buy a home in Eden Prairie. Give us a call today and experience for yourself how we became the #1 sales team in Eden Prairie.