Words You Should Know If You Want To Learn How To Invest in Property

Andy Bell
Published on: 29th March 2016
When it comes to any market, it will help you to know the inside lingo regardless of whether you are a buyer or seller. An enthusiastic property investor who learnt everything he knew through online learning once told us knowing words like zero down, walk through inspection, servient tenement and riparian rights helped them get the best deal while trying to buy their house. It also let them work it through the lawyers, banks and local council. So, when you are trying to make a deal, knowing more could get you a long way towards getting the best price for your precious property.
So, here is a list of the most important real-estate terms that you must understand if you want to get the best deal possible.

Multiple Listing Service (MLS): Multiple listing service was used by brokers and agents to find houses on a database that were all up for sale. Now with the internet they are less relevant, but they still exist and many professionals across the country use them in their search.

Addendums: You will sign an initial agreement once you decide to sell a property, and any changes to this agreement in the future is called an addendum. It implies that changes have been made and some requirements have been added or ‘amended’ in the final copy. Please make sure you have legal consult when considering addendums.

Additional Security Fee
Fee charged by some lenders to protect them against the borrower defaulting. Also known as Mortgage Indemnity Guarantee and Mortgage Indemnity Premium. The fee is usually a one-off that the buyer pays when the mortgage ratio is more than 75% of the value of the property. This is a fee that protects the lender from repayment defaults. It is also known as MIG (Mortgage Indemnity Guarantee), Indemnity Premium or Indemnity Guarantee Premium.

Adjustable rate mortgage (ARM): Some mortgage rates allow you to adjust them at regular intervals. This means you can take advantage of rates when they are low, but will also have to pay a higher mortgage interest payment when the rate rises. These adjustments depend on the time interval between changes. These types of mortgages are Adjustable rate mortgage.

Alienation: The legal transfer of an owner’s title from the seller to the buyer is called alienation.

Arrangement fees
These fees cover the arrangement of loans on certain products. They usually apply to loans for which a special rate of interest applies; for example fixed or capped rates.

Annual percentage rate (APR): For all the interest rates to be comparable, it makes sense that you compare them to what it would cost over a whole year. That’s called the annual percentage rate when it comes to anything from your credit card to mortgage.

Assumable mortgage: If the seller has a mortgage outstanding, but can pass it onto the buyer when the deal is closed, it is called an assumable mortgage. The buyer can ‘assume’ the mortgage as part of the deal and adopt it as part of the overall property. This is not possible for all mortgages.

Arbitration: Although it is rare, disputes may sometimes disrupt the transaction between a buyer and seller of a property. Arbitration is governed by statute and involves a specialist arbitrator getting involved to resolve the issue between the two parties. The arbitration is legally binding and the decision is final. All the evidence presented before the arbitrator is considered in the case and the verdict can only be appealed in court when there are procedural irregularities or other legal objections. This way of resolving disputes is really fast and that is what makes it so popular.

Basic variable mortgage rate
This is the standard rate of interest charged by a mortgage lender, who, taking into consideration any influential economic conditions, may, at times, increase or decrease this rate accordingly. Also see Adjustable Mortgage Rate. Closing Cost: All the costs the buyer and seller will have to pay when the deal is closed. This includes the payment to the broker, the taxes, appraisal services, credit report fee and origination fee. Keeping a track of the closing fees and costs will help you value the property for what it is worth more accurately.

Down Payment: The money you have to pay upfront to get your mortgage and house. In some cases the down payment is relatively small. In the UK the loan-to-value ratio depends on a number of factors such as the value of the property, your credit history and the mortgage lender’s risk appetite.

Earnest Money Deposit: This is a sort of deposit made by the buyer to show they are serious about getting the deal done. The money is a percentage of the final amount and is usually held in escrow. If the deal doesn’t go through, the buyer is refunded this cash.

Appraisal: An appraisal basically involves an appraiser coming over to your place and figuring out how much the property is worth. The most qualified and trustworthy
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