Questions and Answers
What is a loan to purchase real estate called?
mortgage
What is a rejection of an original offer with a listing of what terms would be acceptable called?
counteroffer
What are the expenses incurred in transferring ownership from buyer to seller in a real estate transaction?
closing costs
What is the real estate marketing service in which agents pool their home listings and agree to share commissions?
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What is a formal document that expresses interest in entering into a real estate contract called?
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What is the value given by a real estate appraiser called?
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What value is used for computing property taxes owed against a home?
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What type of loan is a mortgage agreement offered through a commercial bank or mortgage broker without government backing?
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What is the process of searching public records to check for ownership and claims to a piece of property?
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What are conditions that limit a buyer's liability in case one or more of them are not met?
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What do real estate agents earn for their work, which is a percentage of the home sale price?
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What type of mortgage has an interest rate that does not change during the term of the loan?
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What is the highest price that a property will bring to the market called?
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What is the formal agreement to the terms of the buyer's offer called?
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What is a financial claim against property called?
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What protects the buyer from any claims arising from a defective title?
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What type of mortgage has an interest rate that changes in response to the movement of interest rates in the economy?
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What is the legal document that transfers ownership of real property?
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The interest you pay on your home loan, along with the property taxes, are deductible.
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Renting or owning real estate is a type of tax shelter.
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The most common source of down payment money is a bank.
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Each loan payment you make decreases your debt and increases your equity.
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A lien is a right or privilege one person has to use the land of another person.
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The multiple listing service gives people wanting to buy a home greater exposure to available homes.
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When a seller accepts an offer exactly as stated, this is called a counter offer.
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The seller pays the real estate agent's commission.
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Most lenders require that the borrower buy title insurance.
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If you and the seller have agreed on the transaction, the house will be taken off the market until the deal is completed.
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What is a legal document that establishes ownership?
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What financial advantages does home ownership offer?
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How is the cost of homeownership lowered?
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What percentage do real estate agents typically earn from a home sale price?
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What does earnest money protect?
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What will be checked when you apply for a mortgage?
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What must a borrower do to qualify for a conventional loan to purchase a home?
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What must you do to finance your purchase of a house?
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Study Notes
Key Concepts in Home Buying
- A mortgage is a loan specifically used to purchase real estate.
- A counteroffer is a rejection of an original offer, listing the acceptable terms.
- Closing costs are expenses involved in transferring ownership from the buyer to the seller.
- The Multiple Listing Service (MLS) is a marketing platform where agents share listings and commission agreements.
- An earnest money offer is a formal document indicating interest in a real estate contract.
- The appraised value represents the worth determined by a real estate appraiser.
- The assessed value is used to calculate property taxes owed on a home.
- A conventional loan lacks government backing and is offered through banks or mortgage brokers.
- A title search involves reviewing public records to verify ownership and claims on a property.
- Contingencies are conditions that limit a buyer's liability if unmet.
Financial Considerations
- Real estate agents earn commission income, typically a percentage of the sale price, commonly between 6% and 8%.
- A fixed-rate mortgage maintains a constant interest rate throughout the loan's term.
- The market value of a home indicates the highest price it can command in the marketplace.
- A seller’s acceptance is the formal agreement to the buyer's offer.
- A lien is a financial claim against property.
- Title insurance safeguards the buyer from claims due to defective titles.
- An adjustable-rate mortgage has an interest rate that adjusts with economic conditions.
- A deed is the legal document that transfers ownership of real property.
Truth Statements and Myths
- Interest on home loans and property taxes are tax-deductible.
- Renting or owning real estate does not qualify as a tax shelter.
- The most common source of down payment is not a bank.
- Each mortgage payment reduces debt and increases equity.
- A lien is not a right to use someone else's land.
- The MLS enhances home buyers' exposure to available listings.
- A seller accepting an offer as stated is not a counteroffer.
- The seller is responsible for paying the real estate agent’s commission.
- Lenders typically require buyers to obtain title insurance.
- Once an agreement is reached, the property is taken off the market until the deal finalizes.
Ownership and Financial Benefits
- Title establishes ownership of a property.
- Homeownership offers financial advantages, quality of life benefits, and tax savings.
- Tax deductions can lower the cost of homeownership.
- Earnest money serves to protect the seller during negotiations.
Mortgage Application Process
- Mortgage applications require checking references, credit history, and income.
- To qualify for a conventional loan, a borrower must have a good credit score.
- Financing a home purchase involves having funds for the down payment, meeting lending requirements, and selecting a mortgage type.
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Description
Test your knowledge on key terms related to buying a home with these flashcards from Finance Chapter 13. Learn essential definitions such as mortgage, counteroffer, and closing costs to enhance your understanding of real estate transactions.
