Sometimes you can get lost with all of the real estate terminology when you're talking to your agent, reading an article or looking through the various homes on the MLS® System. There are quite a few terms that a layman may not have run into before and the three most important ones that need to be explained are median, benchmark and average prices.
If you were to take all of the sales within a given time period and put them in a list that ranged from the lowest price to the highest one, the median price would be the price value that is found right in the middle. Half of the real estate sales would be lower-priced and half would be higher.
This price is found by taking the total dollar sales volume and then dividing this number by the total amount of sales. This number can sometimes be biased if a lot of lower-priced homes or higher priced ones have been sold within this certain time period.
When the sale price is predicted in a certain area for a general property this is called the benchmark price. The Housing Price Index determines the benchmark price and it is given based on criteria that is commonly found in other properties in the same area. This could be considered a typical sale price and by no means does it take the lower end or higher end properties into account.
If you have any questions about these terms or any other ones be sure to contact your real estate agent. It's important that you know and understand everything about a home sale or purchase before making a final decision and don't be afraid to interrupt your agent if he uses any words that you cannot define.
Are You Financially Prepared to Buy a Home?
In order to be financially prepared to buy a home, a buyer must have a down payment, money for relocation expenses, funds to cover closing costs and money to make changes to the house once they've moved in. In addition to these up-front costs, homeowners must also have money to make their monthly mortgage payment after moving in.
Buyers who aren't sure if they have enough can work with their lender to determine what their monthly mortgage payment will be. This amount will depend a lot on the price of the house, so it's important for home buyers to have this conversation with a lender before making an offer.
In addition to these expenses, homeowners must be prepared to pay for home insurance, property taxes, and sometimes mortgage default insurance. A stable income and relatively few debts is very important for a person who is considering purchasing a home.
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