The ABC of Real Estate
A Appraisal: An estimation of a home’s market value by a licensed appraiser based on comparable recent sales of nearby homes.
B Backup offer: A secondary offer on a home that is under contract and becomes active if the primary contract falls through.
C Contingent offer: An offer is accepted by the seller, but certain conditions must be met before the sale is final.
D Down payment: The percentage of the home purchase price (usually between 5% and 20%) paid upfront in cash.
E Escrow: A neutral third party that holds funds from the buyer and distributes them when all conditions have been met.
F Federal Housing Administration (FHA): The government agency that insures loans designed for low- to moderate-income borrowers.
G Good Faith Estimate (GFE): Provided by a lender to a borrower, GFE was an estimate of fees due at closing. New mortgage rules in 2015 replaced this form with one called a Loan Estimate.
H Homeowners Association: A management organization within a community, subdivision or neighborhood that creates and enforces rules for properties within its jurisdiction.
I Inspection: An examination of a property and its systems performed by a qualified professional, usually before the sale of a home.
J Jumbo mortgage: A mortgage that exceeds the conforming-loan limit, commonly used for luxury home purchases.
K Key rate: An interest rate set by the federal government that determines the cost to borrow money—in this case, a mortgage to buy a new home.