Buying a home is a big step, and it can feel like you're learning a whole new language! The world of real estate has its own set of terms and jargon, which can be confusing for homebuyers, especially those new to the process. At Blue Coast Realty in Sarnia Lambton, we want to make sure you're comfortable and confident every step of the way. This blog post will help decode some of the most common real estate terms you'll encounter when buying a home in Ontario, so you can navigate the market with ease.
General Real Estate Terms
- Buyer’s Agent/Listing Agent: A buyer's agent, also known as a selling agent, is a licensed real estate professional who represents the buyer and negotiates on their behalf to get the best possible price and purchasing scenario. A listing agent, also known as the seller’s agent, represents the seller, marketing their property and negotiating to secure the best price and selling scenario. Both agents are fiduciaries for their respective clients.
- Closing: This is the final step in the home buying process, where all the paperwork is signed, money is transferred, and the property's ownership is officially changed. In some areas, the final step of closing is recording the deed with the county clerk’s office. After all of these steps, the buyer can move into the property.
- Closing Costs: These are the various fees and expenses you'll need to pay at the time of closing, in addition to the price of the home. These can include fees for the lender, title company, lawyers, insurance, and more. Closing costs can include fees charged by taxing authorities, homeowner’s associations, and real estate agents.
- Days on Market (DOM): This refers to the number of days a property has been listed for sale on the Multiple Listing Service (MLS). A low average DOM indicates a strong market that favors sellers, while a high average DOM signals a weak market that favors buyers.
- Multiple Listing Service (MLS): The MLS is a database where real estate agents and brokers share information about properties for sale. When a home is listed, it is added to the local MLS. Buyer’s agents often check the MLS to see what’s available and what similar homes have sold for.
Financial & Mortgage Terms
- Debt-to-Income Ratio (DTI): This is the ratio of your total monthly debt payments to your gross monthly income. Lenders use this number to determine how much you can afford to borrow and if you qualify for a loan
- Fixed-Rate Mortgage: With a fixed-rate mortgage, the interest rate stays the same for the duration of the loan. These are available for various terms, such as 10, 15, 20 and 30 years.
- Mortgage Pre-Approval Letter: This letter from a lender shows how much they are willing to lend you based on your credit history, debt-to-income ratio, and cash on hand. Many sellers will require a pre-approval letter with any offer.
- Pre-Qualification: This is a lender's estimate of how much you might be able to borrow for a mortgage. It’s a quick assessment based on information a buyer provides and not based on any verifications.
- Principal: This is the original amount of money you borrowed for your mortgage, not including interest.
Property & Listing Terms
- As-Is: When a property is listed "as-is," it means the seller is usually not willing to make any repairs. If the property’s condition changes between when the offer was written and the closing time, the seller should return the property to its original “as is” condition or release the buyer from their obligation to purchase.
- Conventional Sale: This type of sale occurs when the property is owned outright, or the owner owes less on their mortgage than the market value.
- Land Lease: This means you own the home, but you rent the land it is on.
- Subject to Inspection: This means the seller won't allow the property to be viewed without an accepted offer. However, you will still have an inspection period during which you can cancel the sale without penalty.
- Short Sale: This is when a property is sold for less than what is owed on the mortgage, requiring approval from the lender.
- Trust Sale: A trust sale occurs when a home is sold by a trustee of a living trust, often after the original homeowner has passed away.
Offers & Contingencies
- Appraisal: This is a professional assessment of a property’s value, usually required by lenders to ensure the loan amount is in line with the market value.
- Appraisal Contingency: This clause allows a buyer to back out of a purchase agreement if the home’s appraised value is less than the sale price.
- Contingency: These are conditions in an offer that must be met for the sale to proceed. Common contingencies include a home inspection, appraisal, or financing.
- Home Inspection: A home inspection is when a professional inspector evaluates the condition of a property and provides a report on its structure and any needed repairs. An inspection can help buyers identify issues before finalizing the purchase.
- Home Sale Contingency: This means that a buyer’s ability to purchase a property depends on their ability to finalize a close on their current property, typically referred to as SOPP.
- Inspection Contingency: This clause allows buyers to perform necessary inspections during a set period of time after an offer is accepted.
- Loan Contingency: This is a clause that allows a buyer to back out of a deal if they are unable to secure a mortgage with specified terms during a set time frame.
Understanding these terms is crucial for anyone buying a home in Sarnia Lambton, Ontario. The Canada housing market can be competitive, so it's important to be well-informed. Whether you’re a first-time homebuyer or looking to sell a home, knowing these terms will help you navigate the process more smoothly. At Blue Coast Realty, we can guide you through the specific market conditions in Sarnia and Sarnia Lambton, providing expertise that is tailored to our local area.
Ready to start your journey? Contact Blue Coast Realty today for expert guidance and support in buying or selling a home in the Sarnia area! We are here to help you achieve your real estate goals in Ontario!
