Whether you are a total newbie or a seasoned pro at real estate here are some terms that you should review and or familiarize yourself with to aid in understanding the process better.
Preapproval: is the process needed to be able to obtain a loan from a mortgage lender/bank. You provide employment/income statements and debt balances. The ML/bank will do a soft pull (does not affect your credit score) to check your credit score and debt you owe.
Cost market analysis or comparables (comps): a tool used to estimate fair market value of a property by evaluating similar ones that have sold in the same area. Factors to consider are location, square footage, lot size, number of bedrooms, bathrooms, age, condition, features as well as conditions of the local and national markets that affect said value. I do this prior to listing or purchasing a property.
Appraisal: is conducted by an appraiser to create home valuations by which a lender/bank will use to determine how much money they will loan on any given property. Sidenote: a lender/bank will not finance any more than a property is appraised for.
Appraisal gap: is the difference between the appraisal and the amount you agree to pay for a property. If you have an appraisal gap of $5,000 with your offer of $200,000 and the appraisal for said property of $200,000 only appraises for $195,000 that means you will have to pay the $5,000 to cover the difference in price.
