Shopping for a new home is exciting and overwhelming at the same time. Whether you’re in the market for new modern homes or one that was previously owned, it’s important to look past a curb appeal to avoid extra expenses and disappointments after you’ve unpacked.
Certificate of Eligibility – To get a VA loan, the veteran must first obtain one of these documents from the Veterans Administration that proves the veteran is eligible fr a VA loan.
- Example: If you are a veteran and want to purchase a home using a VA loan, the first step should be to get a certificate of eligibility which will show that you are qualified to purchase a home using a VA loan.
Errors and Omissions Insurance (E&O Insurance) – Insurance that protects a real estate broker or salesperson from mistakes, errors or omissions that may occur during a transaction.
Example: If a real estate broker mistakenly fails to disclose that a roof is leaking and the buyer brings a suit against the broker, the broker will be
Voluntary Lien – A monetary encumbrance that a homeowner willingly places on their property.
- Example: A mortgage or deed of trust is a voluntary lien.
Real Estate Investment Trust (REIT) – A corporate entity that exists for the sole purpose of investing in real estate.
- Example: REIT’s or Real Estate Investment Trusts can be privately or publicly held companies and they must distribute 90% of their taxable income to their investors. Therefore they are popular investment vehicles for investors who want to invest in real estate.
Commission – A fee earned by a broker, agent, facilitator or salesperson for facilitating a transaction.
- Example: Real estate brokers are paid by commissions they earn when transactions close.
Convertible ARM – A mortgage that starts out as an adjustable rate mortgage but allows the borrower to convert it to a fixed rate loan for a specified period of time.
- Example: A borrower who wants to take advantage of lower initial payments but still have the long term protection of a fixed rate loan can use a convertible ARM.
Chain of Title – An analysis of the transfers of title to a piece of property over the years.
- Example: When purchasing a property, a buyer should always check the chain of title to make sure the seller is who they say they are and that there are no unidentified liens against the property.
Assumption – When a new borrower takes over a loan from a previous borrower. This must be allowed by the lender in the loan documents.
- Example: When a different borrower takes over a loan from the original borrower the process is called assumption.