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Pen on a open notebook for terms to know when buying a new home.

Important Terms to Know When Buying a New Home

August 5, 2020

McArthur Homes is offering an array of gorgeous new homes across Utah County. If you are new to the world of home buying, defining various real estate terms can help you understand the purchasing process.

Amenity An aspect or feature of a residential property that makes it more attractive and valuable to potential buyers.

Annual Percentage Rate The rate of interest charged to borrowers and paid to investors on a yearly basis. This rate is set by the cost of the funds which are used as collateral in the business model of a financial institution.           

Appraisal The estimation of the current market value of a residential property as determined by a licensed appraiser. This figure is determined by comparing the selling price of recently purchased homes in the area. It is required by lenders to ensure that the dollar amount being lent to the buyer is an accurate reflection of the market value of the home.

Blueprint  An architectural design, often in white lines on a blue background which represents how a structure will be built and how the interior and exterior spaces will be defined and used.

Builder Warranty The section in a home service warranty that explains the period of time and to what extent the builder guarantees the materials and workmanship in the construction of the home.

Building Codes – A set of laws recognized by state, county and city governments which define the consumer safety standards of construction and design for residential properties.

Certificate of Occupancy A document issued for a home that has recently undergone renovation or construction which grants permission for tenants to live there.

Change Order A change in the details of a construction contract, agreed upon by two principal parties, typically the property owner or future buyer and either a builder, a subcontractor or a seller.

Contingency A condition or set of circumstances that must be met by one or more parties in order for a real estate contract to become legally binding.

Deposit A sum of money paid up front to the seller of a house by the buyer to demonstrate good faith. Also known as earnest money, the deposit is typically placed once both parties enter into a sales contract.

Elevation The design of the front, back and sides of the exterior of a property.

Floor Plan – A technical drawing, rendered to scale from an aerial viewpoint, which shows the dimensions of a building, wall lengths, room sizes and other physical properties of a structure. McArthur’s new home communities in Utah County offer a variety of floor plans to fit family needs.

Homeowners’ Association An organization common among new home communities that oversees general guidelines for the residents and their properties. These regulations are intended to preserve the integrity of the community.

Homeowners Insurance – An insurance policy which covers damage to a home and property loss should an accident or a disaster occur.

Pre-Approval – Qualification for a mortgage based on credit score, assets and income. It defines the maximum amount of money a financial institution is willing to lend to a buyer.

Punch List – A list created by the buyer of a home prior to closing which outlines specific features that need to be addressed such as electrical outlets, plumbing, paint and drywall.

Sales Contract – A legal agreement between the seller and buyer of a house defining the purchase price, settlement and move-in date.   

Settlement – Also known as “closing,” this process transfers ownership of the property from the seller to the buyer through a series of signatures on legally binding paperwork.

Spec Home – A brand new home that is in the builder’s inventory that is finished (or near complete). Features and finishes have been selected by the builder so that the home is move-in ready. Check the McArthur Homes for move-in ready spec homes – perfect for families in a hurry to move.

Walk-through – The final inspection of a home just before settlement when the buyer checks for any problems that must be addressed before closing.

Many individuals who are searching for a new home, especially first-time buyers, the process can seem complicated. Understanding real estate terms will help prepare you for buying a home. In addition, the sales counselors at McArthur Homes will guide you through the process and make it a pleasant experience every step of the way.

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This post was written by Paige Giles

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