Acronyms of Real Estate: What Homebuyers Need to Know

Real estate is a regular smorgasbord of acronyms – everything from APR to REO. Here’s a list of the ones you’re likely to run into and what they mean when you’re buying or selling a house:

Acronyms You’ll Hear Associated with Real Estate Professionals

Real estate agents, builders and most other realty-related professions have numerous professional designations, all designed to set them apart from those who haven’t taken advanced courses in their fields. These designations don’t mean that professionals without letters after their names are not as experienced or skilled, but rather only that they haven’t taken the time to further their educations.

Read: How to Build Your Real Estate Team

Let’s start with the letter “R,” which stands for Realtor. A Realtor is a member of the National Association of Realtors, the nation’s largest trade group. NAR says it speaks for homeowners, and it usually does. But in that rare occasion when the interests of its members and owners don’t align, it sides with those who pay their dues.

Read: A Timeline of the History of Real Estate

NAR embraces a strict code of ethics. There are about 2 million active and licensed real estate agents nationwide, and 1.34 million can call themselves Realtors.

NAR members sometimes have the letters GRI or CRS after their names. The Graduate, REALTOR® Institute (GRI) designation signifies the successful completion of 90 hours of classroom instruction beyond the continuing education courses required by many states for agents to maintain their licenses. After the GRI, an agent may become a Certified Residential Specialist (CRS) by advancing his or her education even further.

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Builders can obtain the GBI – Graduate Builder Institute – designation by completing nine one-day classes sponsored by the educational arm of the National Association of Home Builders. Those who pass more advanced courses become Graduate Master Builders, or GMBs. Remodeling specialists with at least five years of experience can be Certified Graduate Remodelers, or CGRs. And, salespeople can be CSPs, or Certified New Home Sales Professionals.

In the mortgage profession, the Mortgage Bankers Association awards the Certified Mortgage Banker (CMB) and Accredited Residential Originator (ARO) designations, but only after completing a training program that may take up to five years to finish. To start the process, CMB and ARO candidates must have at least three years’ experience and be recommended by a senior officer in their companies.

Acronyms Associated with Mortgage Lending

When obtaining a mortgage, you will be quoted an interest rate; however, perhaps the more important rate is the annual percentage rate, or APR, which is the total cost of the loan per year over the loan’s term. It measures the interest rate plus other fees and charges.

An FRM is a fixed-rate mortgage, the terms of which never change. Conversely, an Adjustable Rate Mortgage (ARM) allows rates to increase or decrease at certain intervals over the life of the loan, depending on rates at the time of the adjustment.

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A conventional loan is one with an amount at or less than the conforming loan limit set by federal regulators on Fannie Mae and Freddie Mac, the two major suppliers of funds for home loans. These two quasi-government outfits replenish the coffers of main street lenders by buying their loans and packing them into securities for sale to investors worldwide.

Other key agencies you should be familiar with are the FHA and the VA. The Federal Housing Administration (FHA) insures mortgages up to an amount which changes annually, as does the conforming loan ceiling. The Veterans Administration (VA) guarantees loans made to veterans and active duty servicemen and women.

LTV stands for loan-to-value. This important ratio measures what your are borrowing against the value of the home. Some lenders want as much as 20% down, meaning the LTV would be 80%. But in many cases, the LTV can be as great as 97%.

Private mortgage insurance (PMI), is a fee you’ll have to pay if you make less than a 20% down payment. PMI covers the lender should you default, but you have to pay the freight. Fortunately, you can cancel coverage once your LTV dips below 80%.

Your monthly payment likely will include more than just principal and interest. Many lenders also want borrowers to include one-twelfth of their property tax and insurance bills every month, as well. That way, lenders will have enough money on hand to pay these annual bills when they come due. Thus, the acronym PITI (principle, interest, taxes, and insurance).

Real-estate owned (REO) properties are foreclosed upon by lenders when borrowers fail to make their payments. When you buy a foreclosure, you buy REO. Short sales are not REO because, while they are in danger of being repossessed, they are still owned by the borrower.

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Acronyms You’ll Hear During an Appraisal

There is no acronym for an appraisal, which is an opinion of value prepared by a certified or licensed appraiser (though sometimes other types of valuation methods are used in the buying and selling process).

A Certified Market Analysis (CMA) is prepared by a real estate agent or broker to help determine a home’s listing price. A Broker Price Opinion (BPO) is a more advanced estimate of the probable future selling price of a property, and an automated valuation model (AVM) is a software program that provides valuations based on mathematical modeling.

AVMs are currently used by some lenders and investors to confirm an appraiser’s valuation, but they are becoming increasingly popular as replacements of appraisals, especially in lower price ranges.

Other Terms to Know

If you hear the term MLS, you should know it stands for multiple listing service. An MLS is a database that allows real estate brokers to share data on properties for sale, making the buying and selling process more efficient. There are many benefits to both homebuyers and sellers utilizing an MLS, for more information on how to get your home available through an MLS, work with a real estate professional when selling.

Read: What Buyers and Sellers Need to Know About Multiple Listing Services

Did you know? Homes.com has some serious MLS partnerships, no joke! When you start your home search on Homes.com, you’ll see accurate property information quickly so you’ll never have to wonder if a home is actually available.

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However, not all properties for sale are listed on the MLS. A home may be a for-sale-by-owner (FSBO), if the owner is selling his or her property without an agent and bypassing an MLS listing. In addition, some agents fail to enter their listings in the MLS for days or weeks at a time in hopes of selling to a list of preferred clients.

Read: Advantages of Buying With or Without an Agent

Finally, you may find yourself buying into a homeowners association (HOA) when you purchase a house or condominium apartment. HOAs are legal governing bodies that establish requirements everyone must adhere to in order to keep the community it oversees running smoothly and ensure property values are maintained.


Lew Sichelman

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Syndicated newspaper columnist, Lew Sichelman has been covering the housing market and all it entails for more than 50 years. He is an award-winning journalist who worked at two major Washington, D.C. newspapers and is a past president of the National Association of Real Estate Editors.

Source: homes.com

Can You Buy a House if You Owe Taxes?

January 23, 2020 &• 4 min read by Chris Birk Comments 16 Comments

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Looking for the perfect home on the real estate market? Unfortunately, it can be tricky if you have unpaid taxes. Failing to pay your federal income taxes can lead to the Internal Revenue Service placing a lien on your property or your assets. These legal tools protect the government’s ability to get its money. They also set off alarm bells for lenders.

Can you buy a house if you owe taxes? The good news is that federal tax debt—or even a tax lien—doesn’t automatically ruin your chances of being approved for a mortgage. But you do usually have to take steps to resolve the issue before a lender will look favorably upon your mortgage application.

Can You Buy a House If You Owe Taxes?

It’s still possible, but you could have to actively work on the tax debt before a bank will approve a home loan. It might be best to pay off the lien before you fill out a loan application. But if that’s not something you’re able to do, you still might be able to forge ahead, provided you’ve actually tried to make a dent in that debt.

The specific details of your situation come into play, though. And lenders typically have slightly different requirements and documentation needs, so you’ll need to work closely with your bank or mortgage lender. If you know you have tax debt you can’t pay immediately, be honest about it so the lender can let you know what you may need to accomplish to be approved.

Can You Get an FHA Loan If You Owe Back Taxes?

Yes, you may be able to get an FHA loan even if you owe tax debt. But you’ll need to go through a manual underwriting process to make this happen. During this process, the lender looks for proof that you have a valid agreement to repay the IRS. It also requires that you have made on-time payments on this agreement for at least the last three months.

Obviously, FHA loans aren’t only contingent upon your tax debt status. You’ll also have to meet any other requirements, including those related to income and credit history.

Can Military Borrows with a Tax Lien Get a Home Loan?

Lenders can view liens differently depending on the loan type and other factors. But in general, military borrowers with a tax lien may be able to obtain VA mortgage preapproval if:

  • They have an acceptable repayment plan with the IRS and have made on-time payments for at least the last 12 consecutive months.
  • They can satisfy all debt-to-income ratio requirements with that monthly tax repayment included.
  • They note their outstanding tax lien on the standard loan application.

Can You Buy a Home If You Owe Other Types of Tax Debt?

If you owe state taxes or property taxes, you could also put your dreams for homeownership at risk. The rules vary slightly for each situation, but any type of debt you owe can cause your lender to consider you a higher-risk applicant. Even if you’re approved for the mortgage, your interest rate may be higher.

The best bet with any type of tax debt is to pay it off as quickly as possible. And if you can’t resolve it before you apply for a mortgage, at least reach out to the agency you own to make arrangements.

Research and Preparation Are Important

Whether you want to buy a home while you owe federal taxes or you’re certain your credit report is squeaky clean, take time to prepare before applying for a mortgage. You may be surprised by an error or negative item on your credit report, for example. It’s better to fix credit issues before you try to buy a home than be side-swiped by them during the process.

After taking steps to pay off or make three to 12 timely payments on your taxes, check your credit reports. Then, use your score and other information to find out what types of mortgage rates you might qualify for. This helps you understand whether or not it’s the right time to apply for a loan and buy a new home. If you’re in the market for a mortgage loan, look at the options available from the lenders on Credit.com.

The Bottom Line on Buying a Home When You Have Tax Debt

So, if you’re a prospective homebuyer with a tax lien, a good first step is making sure your track record shows at least a year’s worth of on-time payments. Pay it off in full if possible, but if that’s a tall order, know that you might have diminished purchasing power and a rockier road until the slate is clean.

In the meantime, you should also be keeping tabs on your overall financial progress by checking your credit reports regularly. You can get these reports free once a year from each of the three major credit reporting agencies, and you can get your free credit score from Credit.com.

Monitor your credit scores for increases or drops. Taking an active role in your credit can help you get on track to buy a home, especially when you’re facing certain financial hurdles such as a tax lien.


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Source: credit.com

6 Ways to Summer-Proof Your Home

With summertime comes scorching temperatures which can wreak havoc on a home. But, it’s not just record-breaking temperatures that can cause problems with your home in the summer. From hurricanes to deferred safety measures, there are many items homeowners should address to adequately summer-proof their home!

Read: How to Keep Common Summer Pests Away from Your Home

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Protecting Your Home From Summertime Heat

In many parts of the country, extreme heat is a common problem during the summer. Heat can not only cause health problems; it can cause home problems. There are several ways to protect a home from extreme temperatures:

Have AC Unit Professionally Serviced

It always seems like if the air conditioning is going to go out, it does it on the hottest day of the year! To prevent that from happening, have a licensed HVAC technician service your AC unit, inspect for low freon or identify any other potential problems. Staying ahead of any maintenance problems can be less expensive and definitely more convenient.

Add Insulation

Did you know the insulation in your attic may not be adequate? Many areas offer free or reduced energy audits to homeowners through their utility companies. Having an energy audit done will not only identify areas where air may be “leaking,” but it also typically includes additional blow-in attic insulation service—at no charge! Even if your area does not provide this free service, contacting an energy auditing service can be a minimal expense that will save in the long run! In fact, you can save up to $600 annually in energy costs just by adding insulation to your attic.

Seal Decks and Railings

As you can imagine, your deck and railing receives blazing direct sunlight for most of the day. The hours of direct sunlight and heat can fade, warp, and damage a deck. By adding a sealant with UV protection, a homeowner can prolong the life of their deck.

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Read: Six Things to Check for the Safety of Your Deck

Protecting Your Home For Summertime Safety

It’s common that people spend more time outside enjoying warmer temperatures. You want your home and backyard oasis to be a safe haven, so it’s important not to defer safety measures!

Add A Swimming Pool Alarm

Not surprisingly, one of the most common accidents in summer months is drownings. While swimming pools can be a welcomed asset, they can also be a liability. In fact, according to the CDC, on average 10 people per day die in accidental drownings. Protect your family, and reduce the risk, by installing a swimming pool alarm. These simple devices can activate if motion is detected in a swimming pool and have the potential to save lives. In fact, some cities even require that an alarm be installed.

Read: Can Adding a Pool Increase Your Home Value?

Properly Extinguish Fire Pits and Grills

Backyard dining with fresh steaks from the grill or smores from your newly added fire pit is a great way to enjoy long summer days, but it’s also an opportunity for disaster. Anytime an open flame is present there is a risk for fire. In fact, between 2014-2018, over 10,000 house fires were attributed to grills, and July has the highest percentage for grill fires. Routine care and cleaning of a grill is critical to safely operating it. Before grilling, follow as safety measures listed in the manual, and always keep a fire extinguished close at hand. When finished grilling, make sure the flame is entirely extinguished and the grill is in the off position.

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Read: 8 New Products to Transform Your Backyard this Summer

Protecting Your Home From Extreme Weather

As many coastal natives know, summertime is also the beginning of hurricane season. Properly protecting your home before a hurricane can help to prevent damage. Prior to hurricane season, make sure you have adequate insurance coverage, including flood and wind damage coverage. During hurricane season, make sure your home is properly protected. To see some simple steps homeowners can follow to protect their home during a hurricane, click here.

Summer is a time to enjoy long days and warm temps at home—which is even more accurate now that COVID is here. By addressing routine maintenance and safety items, homeowners can enjoy their backyard oasis even more!


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Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

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Good Financial Cents, and author of the personal finance book Soldier of Finance. Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.