S2 Ep13 - Real Estate Lingo - a podcast by Brian Cook And Kindra Cox

On Season 2, Episode 13 of The Brian and Kindra Show, they discussed some lingo and terms in real estate. 

Often buyers will hear terms like short sale and foreclosure.  A foreclosure is when the mortgagee (Lender) has taken ownership of the property through a foreclosure process when a mortgagor (borrower) has defaulted on the payments.  The term short sale is not as identifiable as foreclosure.  A short sale is when a mortgagee is willing to accept less than what the mortgagor owes to release the mortgage. Each mortgage company has their own criteria, but usually, the mortgagor must be in default on their loan. This can happen BEFORE the foreclosure process has been completed and can be a little less damaging to the mortgagors credit score.  

Buyer’s Market and seller’s market are very common terms, but even those get confused occasionally.  A Buyer’s Market is a term used to describe a scenario where there are a surplus of homes for sale and few buyers, thus a benefit to buyers.  This means the homes tend to sell at lower prices than one might expect AND offers the buyers more options.  The Seller’s Market is the opposite.  Many buyers and few homes for sale can increase home prices and become a benefit to the seller.  

Many Realtors are a part of a Multiple Listing Service (MLS).  This service is a cooperative the many real estate associates subscribe to agreeing to cooperate with other agencies. This gives realtors freedom to show properties that other agencies have listed and vice versa.  This also means that a listing is being promoted to more real estate agents than in the office holding the listing, thus a greater marketing reach for the seller and more options for buyers!

Debt-to-income ratio - When you go in for a loan they will ask you for this. It is the ratio between your expenses per month and your income per month. If you make 10K a month and 8K of that goes out on expenses, you have an 80% debt-to-income ratio. 

There are many terms and fees associated with a loan when purchasing a home.  Two common terms that are often used interchangeably are pre-qualification and pre-approval.  These two items are actually different in that a pre-qualification is a basic assessment of a buyer that says the buyer should likely be able to qualify for a loan.  A pre-approval is more in depth,  with the lender assessing the buyer’s income, assets and other information in order to determine the loan and price point in which they will qualify.  One of the pieces of information the lender researches is the “debt to income ratio” which is a ratio comparing the home buyer’s expenses to their gross income.  

Closing costs is a general term used to alert buyers and sellers both that there are costs associated with the sale or purchase of a home. These expenses can be quite costly and take a buyer by surprise.  

Brian and Kindra hope this information has been helpful to you. As always, if you have any questions or need help, please feel free to reach out to your local real estate professional.

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