If you’re new to the real estate world–whether it’s your first time buying or selling, or you’re trying to break into the industry–there are a lot of terms out there that may be confusing for some. What does “home equity” mean, or “pending”? And what’s the difference between pre-approval and pre-qualification?
Here are just a few of the most common terms you’ll see in real estate conversations, and why these terms are important!
What is a Mortgage?
A mortgage is a type of loan used to purchase or maintain a home, land, or other types of real estate. The borrower agrees to pay the lender over time, typically in a series of regular payments that are divided into principal and interest. The property then serves as collateral to secure the loan.
A borrower must apply for a mortgage through their preferred lender and ensure that they meet several requirements, including minimum credit scores and down payments. Mortgage applications go through an underwriting process before they reach the closing phase. Mortgage types vary based on the needs of the borrower, such as conventional and fixed-rate loans.
Pre-Qualified vs. Pre-Approved
Pre-approval is one of the most important steps you can take when getting ready to buy a home. Pre-approval can save you time and heartache by helping you eliminate houses during your search that are likely outside of your price range.
Pre-qualification tends to refer to less rigorous assessments, while a pre-approval can require you to share more personal and financial information with a creditor. As a result, an offer based on a pre-qualification may be less accurate or certain than an offer based on a pre-approval. Don’t set yourself up for the disappointment of falling in love with a house only to discover that you don’t qualify for the necessary loan amount – get pre-approved!
What is Home Equity?
Equity is the difference between what you owe on your mortgage and how much your home is currently worth. Do you know how much equity you have in your home? A licensed professional like a realtor can help you determine that value and evaluate whether now is a good time to sell your home.
What Does it Mean When a Listing is “Pending”?
A pending sale in real estate simply means that the seller has received and accepted an offer on their home. However, the deal is not yet finalized — hence “pending” and not simply “sold.” If you’re interested in a pending property, your agent should consult with the seller’s agent to learn more about the status.
What is “Staging”?
Put simply, staging means preparing the home for a potential buyer — or “setting the stage,” if you will. It involves redecorating, rearranging furniture, cleaning and other aesthetic strategies to present the home in the best possible light.
Staging is about showcasing a move-in ready home that creates an emotional connection with the buyer. 82% of buyers’ agents said staging helped their clients to visualize the property as their home. Sellers should try to define each room with a purpose, maximize each space, ensure the home is well lit and neutral, and maintain any outdoor spaces. Staging a home helps maximize selling price and minimize days on the market.
Are you still looking for more information? Or maybe you’re ready to buy or sell a home? I’d love to help! Take the first step toward your real estate goals by giving me a call today!