If you’re a first-time homebuyer, chances are you’ll come across some terms you’re not familiar with. And that can be overwhelming, especially while going through one of the most significant purchases of your life.

The good news is you don’t need to be an expert on real estate jargon. That’s your agent’s job. But knowing these basic terms will help you feel more confident.

Terms Every Homebuyer Should Know

Once you’re familiar with this terminology, you’ll better understand important details – from contracts to negotiations. So, when those big conversations happen, you’ll feel informed, in control, and able to make the best decision for your unique situation. As Redfin puts it:

“Having a basic understanding of important real estate concepts before you start the homebuying process will give you peace of mind now and could save you a fortune in the future.”

According to the Federal Trade Commission (FTC) and First American, here’s a breakdown of a few key real estate terms and definitions you should know.

Appraisal: A report providing the estimated value of the home. Lenders rely on appraisals to determine a home’s worth, so they don’t lend more than it’s worth.

Contingencies: Contract conditions must be met within a specific timeframe or by a specified date. For example, a home inspection is a common contingency. While you can waive these to try and make your offer more competitive, it’s generally not recommended.

Closing Costs: A collection of fees and payments to the parties involved in your home purchase. Ask your lender for a list of closing cost items, including attorney’s fees, taxes, title insurance, and more.

Down Payment: This varies by buyer, but is typically 3.5-20% of the home’s purchase price. There are even some 0% down programs available. Ask your lender for more information. Chances are, unless specified by your loan type or lender, you don’t need to put 20% down.

Escalation Clause: This is typically used in highly competitive markets. It’s an optional add-on in a real estate contract that says a potential buyer is willing to raise their offer on a home if the seller receives a higher competing offer. The clause also includes how much a buyer will pay over the highest offer.

Mortgage Rate: The interest rate you pay when you borrow money to buy a home. Consult a lender to learn how this can impact your monthly mortgage payment.

Pre-Approval Letter: A letter from a lender that shows what they’re willing to lend you for your home loan. This, plus understanding your savings, can help you decide on your target price range. Getting this from a lender should be one of your first steps in homebuying, before you even start browsing homes online.

Bottom Line

You don’t need to memorize all these terms, but a little knowledge goes a long way. Brushing up on the basics now means fewer surprises later and more clarity when you buy a home.

What unfamiliar real estate term or phrase have you come across that wasn’t on this list?

Let’s connect and discuss it so you have a solid understanding of what it means and where it may appear in the homebuying process.

If you’ve been house hunting lately, you’ve probably felt the sting of today’s mortgage rates. And it’s because of those rates and rising home prices that many homebuyers are starting to explore other types of loans to make the numbers work. And one option that’s gaining popularity? Adjustable-rate mortgages (ARMs).

If you remember the crash in 2008, this may bring up some concerns. But don’t worry. Today’s ARMs aren’t the same. Here’s why.

Back then, some buyers were given loans they couldn’t afford after the rates adjusted. But now, lenders are more cautious, and they evaluate whether you could still afford the loan if your rate increases. So, don’t assume the return of ARMs means another crash. Right now, it just shows some buyers are looking for creative solutions when affordability is tough.

You can see the recent trend in this data from the Mortgage Bankers Association (MBA). More people are opting for ARMs right now (see graph below):

While ARMs aren’t right for everyone, they do have their be,nefits in certain situations.

How an Adjustable-Rate Mortgage Works

Here’s how Business Insider explains the main difference between a fixed-rate mortgage and an adjustable-rate mortgage:

“With a fixed-rate mortgage, your interest rate remains the same for the entire time you have the loan. This keeps your monthly payment the same for years . . . adjustable-rate mortgages work differently. You’ll start off with the same rate for a few years, but after that, your rate can change periodically. This means that if average rates have gone up, your mortgage payment will increase. If they’ve gone down, your payment will decrease.”

Of course, things like taxes or homeowners’ insurance can still impact a fixed-rate loan, but the baseline of your mortgage payment doesn’t change much. Adjustable-rate mortgages don’t work the same way.

Pros and Cons of an ARM

Here’s more information on why some buyers are giving ARMs another look. They offer some pretty appealing upsides, like a lower initial rate. As Business Insider explains:

“Because ARM rates are typically lower than fixed mortgage rates, they can help buyers find affordability when rates are high. With a lower ARM rate, you can get a smaller monthly payment or afford more house than you could with a fixed-rate loan.”

On the flip side, remember, your rate will change over time if you have an ARM. As Barron’s explains, there’s the potential for higher costs later:

“Adjustable-rate loans offer a lower initial rate, but recalculate after a period. That is a plus for borrowers if rates come down in the future, or if a borrower sells before the fixed period ends, but can lead to higher costs if they hold on to their home and rates go up.”

So, while the upfront savings can be helpful now, you’ll want to consider what could happen if you’re still in that home when your initial rate ends. While projections show rates are expected to ease a bit over the next year or two, no forecast is guaranteed.

That’s why it’s essential to talk with your lender and financial advisor about all your options, whether an ARM aligns with your financial goals, and your comfort with risk.

Bottom Line

For the right buyer, ARMs can offer some significant advantages. But they’re not one-size-fits-all. The key is understanding how they work, weighing the pros and cons, and thinking through whether they’d be something that would work for you financially. And that’s why you need to talk to a trusted lender and financial advisor before you make any decisions.

Maybe you’ve heard the number of homes for sale has reached a recent high. And it might make you question if this is the start of another housing market crash.

But the data proves that’s not the case. In most areas, more inventory isn’t bad news. It signifies the market returning to a more stable, healthy place.

What’s Going on With Inventory?

According to the latest data from Realtor.com, inventory just hit its highest point since 2020, shown by the white line in the graph below.

But what you need to realize is, at the same time, inventory levels still haven’t returned to pre-pandemic norms (shown in gray):

That means there are more homes for sale now than in quite some time.

While inventory is up significantly compared to the last few years, the number of homes on the market is still well below typical levels. That’s important context.

Why This Isn’t the Problem A Lot of People Think It Is

Some people hear inventory’s rising and immediately think about 2008. Because back then, inventory spiked just before the market crashed. But today’s situation is very different.

Here’s the key reason why. We don’t have a surplus of homes; we have a deficit to climb out of. We’re dealing with a long-term housing shortage – and it’s a big one.

The red bars in the graph below show all the years when housing started (new builds), but it didn’t keep up with household formation, going back to 2012. The deeper the bars in the graph, the more the housing deficit grew (see graph below):

One of the reasons this housing shortage kept growing was that new home construction didn’t keep up with the number of people needing to buy homes. The U.S. is short millions of homes, and it will take years to overcome that gap. Realtor.com says:

“At a 2024 rate of construction relative to household formations and pent-up demand, it would take 7.5 years to close the housing gap.”

That means, in most areas, there isn’t a risk of having too many houses on the market right now. It’s quite the opposite – a vast majority of homes.

Which is why, even though inventory is rising, it’s not a problem on a national scale. It’s just helping to fill a gap that’s been growing for years.

Bottom Line

Don’t let the headlines scare you. Rising inventory isn’t a sign of a crash. It’s a step toward a more normal, stable housing market.

When buying a home, you’re probably thinking about mortgage rates, home prices, your down payment, and maybe even your closing costs. But you may not be thinking about homeowners association (HOA) fees. While you won’t necessarily have these, you should know it’s possible, depending on where you decide to live.

A homeowners association is an organization that oversees a housing community (including shared spaces) and sets and enforces rules for things like upkeep. Some buyers love the perks that come with an HOA, while others may see the fees as an extra expense. The key is knowing what they cover and whether the benefits outweigh the costs.

The Benefits of Having an HOA

Think about this. If you’ve fallen in love with a home because of how beautiful the community is – maybe it’s the landscaping, the well-maintained streets, or the overall curb appeal – there’s a good chance the HOA is one of the reasons why it looks so good. Here are some of the biggest perks:

• Neighborhood Maintenance: Many HOAs cover landscaping, snow removal, and common area upkeep, which helps maintain the neighborhood’s overall appearance.
• Amenities: Depending on the neighborhood, an HOA could also include access to perks like a pool, clubhouse, fitness center, or even private security. In these cases, while you have to pay an HOA fee, you’re also saving money in some ways because you don’t need to have separate gym or pool memberships anymore.
• Property Value Protection: Since HOAs enforce community standards, they prevent homes from falling into disrepair. So, you don’t have to worry about nearby eyesores hurting your property value.
• Less Personal Upkeep: In some communities, HOAs even take care of exterior maintenance, roof repairs, or other shared responsibilities, reducing the work for homeowners.

HOA Fees: More Common, Especially in Newer Neighborhoods

Does every house have HOA fees? No, not all homes have them. But they are common, especially in newer communities. In fact, over 80% of newly built single-family homes are now part of an HOA, according to the Wall Street Journal (see graph below):

But it’s not just new builds that have homeowners associations. Homes that were previously lived in may have an HOA fee, too. According to Axio, roughly 4 out of every 10 homes had an HOA in 2024.

HOA Fees and Your Home Search

Ask your agent which homes do and do not have HOA fees as part of your search, and how much the fees are. Some neighborhoods have quarterly dues, some have monthly, some don’t have any at all. To give you some baseline, though, the median HOA fee rose last year to $125 per month, based on a report from Realtor.com.

But remember, the costs vary, and sometimes these fees give you access to great perks. As Danielle Hale, Chief Economist at Realtor.com, explains:

“When considering a home with an HOA, buyers should work to understand what benefits it provides like maintenance, security, or communal amenities, and how the HOA fees factor into their overall budget.”

Bottom Line

Before buying a home in an HOA community, review the rules and fees to understand exactly what’s included, how that fits into your overall budget, and what restrictions may apply.

Would you rather pay an HOA fee for added perks, or skip it and have complete control over your property? Let’s talk about what’s best for you.

If you’re a homeowner, chances are you’ve built up much wealth by living in your house and watching its value grow over time. And that equity? It could help change your child’s life.

Since affordability is still a challenge, many first-time buyers struggle to buy a home in today’s market. Even if they have a stable job and a solid plan, buying can still feel out of reach. But that’s where your equity could make all the difference.

According to Cotality (formerly CoreLogic), the average homeowner with a mortgage has $311,000 worth of equity. That’s significant. Some parents are using a portion of their equity to help their children become homeowners, too.

According to Bank of America, 49% of buyers between 18 and 26 got money from their parents to use toward their down payment (see chart below):

Even though the data doesn’t specify how many parents used their equity, the wealth they’ve built through homeownership may have helped make it possible, especially given how much equity the average homeowner has today.

While what’s right for each person’s situation will vary on a case-by-case basis, that’s a powerful legacy. It helps younger people buy a home, build equity, and begin the next chapter of their lives with a little less financial stress and a lot more stability. And for those parents, it’s a way to turn what they’ve built into something deeply meaningful.

This isn’t just about money. For many homeowners, it’s about being the reason their child gets to say, “We got the house.” And giving them the head start they might’ve only dreamed of at their age. And here’s the part that sticks. Compare the Markets:

“Of those who did receive monetary aid from parents and grandparents to buy a house, 45% of Americans said they would not have been able to purchase a house without financial support from parents and grandparents.”

Bottom Line

Your equity could be the thing that makes homeownership possible for your children when they might not be able to do it on their own. So, here’s the question.

If helping your kids buy a home was more feasible than you thought, would you want to explore that option?

Talk to your lender and a trusted financial advisor if you want to learn more or find the best way to make it happen.

You’re probably hesitant to let that go if you have a 3% mortgage rate. And even if you’ve toyed with the idea of moving, this nagging thought may hold you back: “Why would I give that up?”

But when you ask that question, you may put your needs on the back burner without realizing it. Most people don’t move because of their mortgage rate. They move because they want or need to. So, let’s flip the script and ask this instead:

What are the chances you’ll still be in your house 5 years from now?

Think about your life for a moment. Picture what the next few years will hold. Are you planning on growing your family? Do you have adult children about to move out? Is retirement on the horizon? Are you already bursting at the seams?

If nothing’s going to change, and you love where you are, staying put might make perfect sense. But if there’s even a slight chance a move is coming, even if it’s not immediate, it’s worth considering your timeline.

Because even a year or two can make a big difference in what your next home might cost you.

What the Experts Say About Home Prices over the Next 5 Years

Each quarter, Fannie Mae asks more than 100 housing market experts to weigh in on where they project home prices are headed. And the consensus is clear. Home prices are expected to rise through at least 2029 (see graph below):

While those projections aren’t calling for significant yearly increases, it’s still an increase. And sure, some markets may see flatter prices, slower growth, or even slight dips in the short term. But look further out. In the long run, prices almost always rise. And over the next 5 years, the anticipated increase, however slight, will add up fast.

Here’s an example. Let’s say you’ll be looking to buy a roughly $400,000 house when you move. If you wait and move 5 years from now, based on these expert projections, it could cost nearly $80,000 more than it would now (see graph below):

That means the longer you wait, the more your future home will cost you.

If you know a move is likely, it may make sense to rethink your timeline. You certainly don’t have to move now. But financially, it may still be worth conversing about your options before prices increase. While rates are expected to come down, they are not by much. And if you’re holding out in hopes we’ll see the return of 3% rates, experts agree it’s just not in the cards (see graph below):

So, the question isn’t: “Why would I move?” It’s: “When should I?” – When the real numbers, waiting, may not be the savings strategy you thought it was. And that’s the best conversation you can have with your trusted agent.

Bottom Line

Keeping that low mortgage rate is smart–until it starts holding you back.

If you are likely to move, even if it’s a few years down the line, it’s worth thinking through the numbers now so you can plan ahead.

What other price point do you want to see these numbers for? Let’s have that conversation, so I can show you how the math adds up. That way, you can make an informed decision about your timeline.

Don’t Let Student Loans Hold You Back from Homeownership

Did you know? According to a recent study, 72% of people with student loans think their debt will delay their ability to buy a home. Maybe you’re one of them and you’re wondering:

• Do you have to wait until you’ve paid off those loans before you can buy your first home?
• Or could you still qualify for a home loan even with that debt?

Having questions like these is normal, especially when considering a big purchase. But you should know that you may unnecessarily put your homeownership goals on the back burner.

Can You Qualify for a Home Loan if You Have Student Loans?

In the simplest sense, you want to know whether you can still buy your first home if you have student debt. Here’s what Yahoo Finance says:

” . . . student loans don’t have to get in your way when it comes to becoming a homeowner. With the right approach and an understanding of how debt impacts your home-buying options, buying a house when you have student loans is possible.“

And the data backs this up. An annual report from the National Association of Realtors (NAR) shows that 32% of first-time buyers had student loan debt (see graph below):

While everyone’s situation is unique, your goal may be more doable than you realize. Many people with student loans have qualified for and bought a home. Let that reassure you that it is still possible, even as a first-time buyer. And just in case it’s helpful, the median student loan debt was $30,000. As an article from Chase says:

“It’s important to note that student loans usually don’t affect your ability to qualify for a mortgage any differently than other types of debt you have on your credit report, such as credit card debt and auto loans.”

Homeownership can still be within reach if your income is steady and your overall finances are solid. So, having student loans doesn’t necessarily mean waiting to buy a home.

Bottom Line

Having student loans doesn’t mean buying a home is off the table. Before you count yourself out, talk to a lender to get a clearer picture of what you can afford and how close you are to taking the first step toward homeownership.

Especially in areas where inventory is rising, homebuilders and sellers are sweetening the deal for buyers with things like paid closing costs, mortgage rate buy-downs, and more. In the industry, this is called a concession or an incentive.

What Are Concessions and Incentives?

When a seller or builder gives you something extra to help with your purchase, that’s called either a concession or an incentive.

• A seller gives up or agrees to a concession to reach a compromise and close a deal.
• On the other hand, an incentive is a benefit a builder or seller advertises and offers up front to attract and encourage buyers.

Today, some of the most common ones are:

• Help with closing costs
• Mortgage rate buy-downs (to temporarily lower your rate)
• Discounts or price reductions
• Upgrades or appliances
• Home warranties
• Minor repairs

Getting these things thrown in can be a big deal for buyers, especially if you’re working with a tight budget. As the National Association of Realtors (NAR) says:

“. . . they can help reduce the upfront costs associated with purchasing a home.”

Builders Are Making It Easier To Buy

It’s not just one builder willing to toss in a few extras. A lot of builders are using this tactic lately. As Zonda says:

“Incentives continued to be popular in March, offered by builders on 56% of to-be-built homes and 74% of quick move-in (QMI) homes, which can likely be occupied within 90 days.”

They don’t want to sit on inventory for too long. They want it to sell. And according to the National Association of Home Builders (NAHB), one of the strategies many builders are using to keep that inventory moving (and not just sitting) is a price adjustment (see graph below):

Around 30% of builders lowered prices each of the first four months of the year. While that also means most builders aren’t lowering prices, it shows some are willing to negotiate with buyers to get a deal done.

This isn’t a sign of trouble in the market; it’s an opportunity for you. The fact that the majority of builders offer incentives and roughly three in 10 are lowering prices means that if you’re looking at a newly built home, your builder will probably try to make it easier for you to close the deal. 

Existing Home Sellers Are Offering More, Too

More existing homes (one that someone has lived in before) have been hitting the market, too, which means sellers face more competition. That’s why over 44% of sellers of existing homes gave concessions to buyers in March (see graph below):

And, if you look back at pre-pandemic years on this graph, you’ll see 44% is pretty much returning to normal. After years of sellers having all the power, the market is balancing again, which can work in your favor as a buyer.

But remember, concessions don’t always mean a significant discount. While more sellers are compromising on price, that’s not always the lever they pull. Sometimes it’s as simple as the seller paying for repairs, leaving appliances behind for you, or helping with your closing costs.

And considering that home values have risen by more than 57% over the past five years, small concessions are a great way for sellers to make a house more attractive to buyers while still making a profit.

Bottom Line

Whether you’re looking at a newly built home or something a little older, there’s a good chance you can benefit from concessions or incentives.

If a seller or builder offered you something extra, what would make the most significant difference to help you move forward?

Let’s discuss it and see if it’s realistic based on inventory and competition in our local market.

Home Projects That Boost Value

Whether you’re planning to move soon or not, it’s smart to be strategic about which home projects you take on. Your time, energy, and money matter – not all upgrades offer the payoff you might expect. As U.S. News Real Estate explains:

“. . . not every home renovation project will increase the resale value of a home. Before you invest in a swimming pool or new addition, you should consider whether the project will pay itself off by getting prospective buyers in the door when it’s time to sell.“

That’s why, be your first step should be talking to a local agentore you pick up a power tool or call a contractor, yoanning Pays Off

If you plan to move relatively soon, you’ll want to get a jump start on your to-do list. And even if moving isn’t on your radar yet, life can change quickly, and a new job, a growing family, or shifting priorities can fast-track your plans. If your timeline changes, you don’t want to scramble to fix your home.

Smart updates now = fewer headaches later.

By planning, you can spread the work over time, which is easier on your wallet and stress levels. Plus, you’ll enjoy the upgrades while you’re still living there and have the peace of mind that your house is ready to impress when it’s time to list.

What Buyers Want (and What’s Actually Worth Doing)

If you’re unsure which projects are worth your time and money, here’s some information that can help. A study from the National Association of Realtors (NAR) shows which upgrades typically offer the best return on your investment (ROI) (see graph below):

If an update you’re already thinking about overlaps with those high-ROI upgrades, great. Oddly, save that it’ll improve your quality of life and your home’s value later.

But don’t take this list as law. This is based on national data and is the sort of thing that’s going to vary based on what’s most sought-after where you live. That’s where your agent comes in. As an article from Ramsey Solutions says:

“The best way to gauge what you can expect in terms of resale value on home improvements—especially if you’re planning to sell soon—is to talk to a real estate agent who is an expert in your market. They’re sure to know the local trends, and they can show you how other homes with the features you want to add are selling. That way, you can make an educated decision before you start ordering lumber and knocking down walls.”

You’ll want to make sure you don’t overdo it. Too many high-end updates can make your home the priciest in the neighborhood. That might sound great, but it can turn buyers away if it’s outside their expected price range for the area. The right agent will help you make smart updates that buyers will love, without going overboard.

Whether the project is big or small, it pays to be strategic. And an agent is a key piece of that strategy.

Bottom Line

It doesn’t matter whether you plan to move soon or not; it can still pay off to make strategic updates that’ll help you love your home now and stand out later.

What’s one upgrade you’ve been thinking about and wondering if it’s worth it? Let’s make sure it’ll pay off when the time comes.