On this page, we review and define real estate vocabulary, from the common to the complicated, and if you have any questions about these terms and whether they apply to you, then please contact us.

Amortization

The process of gradually paying off a mortgage loan through regular payments, which include both principal and interest.

Appraisal

An assessment conducted by a professional appraiser to determine the value of a property.

Lenders require an independent assessment of the value of the home you are buying before agreeing to finance the purchase.

Closing Costs

The fees and expenses paid by the buyer and seller during the final stages of a property sale, including but not limited to loan origination fees, appraisal fees, title insurance, and legal fees.

Simply defined, these fees are paid at the time of closing to complete a real estate transaction.

Often, we are asking “What will my closing costs be?” This is where it is important to speak to your agent and lender for updated information on this. No two closings are the same! If you have bought or sold, what was part of your closing costs?

Closing Disclosure

A document provided to the borrower before closing that details the final terms of the mortgage, including loan terms, closing costs, and other financial aspects.

Contingencies

Conditions that must be met for a real estate transaction to proceed, such as home inspections, loan approval, or the sale of an existing property.

Contingent Offer

A purchase offer that is dependent on certain conditions being met, such as the sale of the buyer's existing home or the completion of satisfactory inspections.

Deed

A deed is the official “proof of ownership” document in the real estate world. It’s a legal agreement that transfers the property rights from one party to another. So, when you purchase a property, you’ll receive a deed that confirms you’re now the proud owner.

The deed includes vital information, such as the names of the buyer and seller, a detailed property description, the purchase price, and the date of transfer. It’s an essential piece of paper that protects your rights and interests as a homeowner.

Down Payment

The initial payment made by the buyer towards the purchase of a home, typically expressed as a percentage of the total purchase price.

Earnest Money

A deposit made by the buyer to demonstrate serious intent to purchase a property, typically held in escrow until closing.

Equity

The value of a homeowner's interest in a property, calculated by subtracting the outstanding mortgage balance from the property's market value.

Escrow

Escrow is a legal arrangement in which a third party temporarily holds money or property until a particular condition has been met (such as the fulfillment of a purchase agreement).

It’s used in real estate transactions to protect both the buyer and the seller throughout the home buying process. Throughout the term of the mortgage, an escrow account will hold funds for taxes and homeowner’s insurance.

Fiduciary Duty

A fiduciary duty is a legal and ethical obligation that requires real estate professionals, such as agents and brokers, to act in the best interests of their clients. This responsibility includes duties of loyalty, care, disclosure, obedience, and confidentiality, ensuring that the professional prioritizes the client’s needs and protects their interests during transactions.

Fiduciary duty helps to establish trust and transparency between clients and real estate professionals.

Gap Loan

A gap loan is a financial term that refers to a type of short-term loan designed to bridge the gap between two larger financial transactions, typically in the context of real estate.

The loan uses the equity in the current home as collateral to provide the necessary funds for the down payment or other expenses. Once the existing property is sold, the proceeds are used to repay the gap loan.

Home Inspection

A professional assessment of a property's condition, including its structural integrity, systems, and potential issues, conducted before the purchase.

Homeowners Association (HOA)

An organization that sets and enforces rules and regulations for a community or condominium complex, with associated fees for maintenance and communal amenities.

HUD

HUD stands for the U.S. Department of Housing and Urban Development, which is a federal agency responsible for overseeing various housing and community development programs in the United States. The department plays a crucial role in ensuring there is access to safe and affordable housing options and promoting community development initiatives.

By promoting affordable housing, supporting community development, and ensuring fair housing practices, HUD plays a vital role in improving the quality of life for individuals and communities across the United States.

Inspection Fee

A fee paid to determine the present physical condition of the home, required by the lender in order to supplement the information contained in the appraisal report.

The inspection fee might seem like an extra expense, but it’s a small price to pay for peace of mind. A professional inspection can uncover hidden issues, saving you money and headaches in the long run.

Joint Liability

Joint liability refers to a legal arrangement commonly used when two or more individuals decide to purchase a property together, such as a house or commercial building.

You all share both the benefits and risks equally. Whether it’s the mortgage payments, property taxes, maintenance costs or any legal issues, everyone involved is accountable for fulfilling these responsibilities together.

Kit Home

A kit home is an innovative and cost-effective housing solution that offers a DIY approach to home construction. Also known as prefab or pre-cut homes, these beauties come with pre-manufactured building components. Think of it as a giant puzzle where all the pieces fit perfectly together to create your dream abode.

Lien

A lien is like a legal claim that someone has over a property, usually due to an unpaid debt or obligation. It’s a way for creditors to ensure they have a right to the property’s value if the owner doesn't fulfill their financial commitments. Liens can impact property sales, making it important to clear them before transferring ownership.

Mechanics’ Lien

Here’s the lowdown on how it works: When a property owner fails to settle outstanding payments for work done, a Mechanics’ Lien can be filed against the property. This lien becomes a public record, which can make selling or refinancing the property more challenging for the owner. It’s a way to ensure that all parties involved in the property’s improvement are rightfully compensated.

Mortgage (Adjustable-rate)

A type of mortgage loan with an interest rate that can change over time based on market conditions, often resulting in fluctuations in monthly mortgage payments.

Mortgage (Fixed-rate)

A mortgage loan with a constant interest rate throughout the entire term, ensuring predictable monthly mortgage payments.

Note

In the realm of real estate financing, a “Note” is essentially a written promise. It’s a legally binding document that spells out the terms of the loan agreement between a borrower (that’s you, the homeowner-to-be) and the lender.

Origination Fee

An origination fee is a common term in mortgage lending. It’s essentially a fee charged by a lender to cover the cost of processing a loan application. Think of it as the cost of getting your mortgage up and running.

Pre-approval

A lender's initial assessment of a borrower's creditworthiness and ability to obtain a mortgage loan.

A pre-approval is like your golden ticket to the world of home-buying. It’s a crucial step where a lender evaluates your financial situation and determines how much they’re willing to lend you for your home purchase.

A pre-approval isn’t a guarantee of a loan; it’s a conditional commitment based on your current financial status. Be mindful of your financial decisions during your home search!

Private Mortgage Insurance

Insurance that protects the lender in case the borrower defaults on the mortgage and is typically required for borrowers with a down payment of less than 20%. Private mortgage insurance is also referred to as PMI.

Quitclaim Deed

A Quitclaim Deed is a legal document used to transfer interest in real property from one party (the grantor) to another (the grantee). What sets it apart from other deeds is that it makes no guarantees about the grantor’s ownership interest or any potential liens or encumbrances on the property. It essentially says, “I’m giving up any claim I have on this property – no warranties included.”

Rate Lock

A Rate Lock is like a financial shield. It’s an agreement between you and your lender that locks in your interest rate for a set period (usually 15, 30, 45 or 60 days). Even if rates change, yours stays put!

Second Mortgage

A second mortgage lets you tap into your home's equity to access extra cash for big dreams, like renovations! How it works:
• You borrow against the equity you've built up in your home.
• Flexible repayment options.
• Potential tax benefits!

Title

A legal document that establishes ownership of a property.

Title Search

A title search is like peeling back the layers of history on a property. It's the process of investigating the chain of ownership and legal history associated with a piece of real estate. This means digging into public records to uncover crucial information such as past owners, liens, mortgages, easements, and any other claims or restrictions that might affect the property.

Underwriting

Underwriting is the meticulous investigation conducted by lenders or investors to determine the financial viability of a real estate deal. Think of it as Sherlock Holmes donning a magnifying glass, scrutinizing every detail to ensure a deal is solid and secure.

Valuation

Valuation is like the heartbeat of real estate. It’s the art of determining the market worth of a property. It helps you make informed decisions - whether you’re buying, selling or investing. It sets the stage for negotiations, loans and even your overall financial strategy!

Walk-Through

The Walk-Through is your chance to make sure everything’s A-OK before sealing the deal on your new home. You’ll ensure that the property is in the same condition as when you made the offer.

As June and National Home Ownership Month wind down, we want to spotlight our team’s dedication and commitment to unlocking this goal for our clients.

Buying a home is one of the biggest financial decisions you’ll ever make. It’s natural to feel anxious or uncertain about the process.

Are you thinking about buying a home this year? Do you know the steps you can take now to put home ownership in your future...

• Getting your finances and credit score in order and saving for a down payment and hidden costs

• Determining your buying budget and pre-approval with a lender

• Meeting with a real estate agent (and home-buying partner)

Our team can give you advice on any of these first steps and connect you with a trusted lender, too. From the home search to offers to closing, we’ve got you covered.

We are your local experts and can help cut through the noise of today’s headlines so you can move forward with confidence this year. We’ll give you accurate answers to the tough questions (about home sales, affordability and inflation) that face buyers and sellers right now.

Working with a member of our team also means you’ll receive a real-time, accurate outlook on the Vermont real estate market — and listings available in the area.

Contact us today at 802-585-1150 or info@stowearearealty.com.

S.100 Weakened, VAR Gains Concession

S.100 – Housing Opportunities for Everyone (HOME) On Monday May 1, the House Environment and Energy Committee passed their strike all amendment of the first 25 sections of the bill and approved their portion of S.100.  These sections will be combined with the work of the House General and Housing Committee who approved several programs with financial impacts. Next up will be a review of the entire bill by the House Appropriations Committee, who will likely remove several programs based on the financial implications. Combined, the changes to S.100 will weaken the impact on housing we had hoped for. VAR expects that this bill will move to the House floor during the week of May 1 for approval.  Once this occurs, there will be a Committee of Conference (three members from the House, three from the Senate) to reach consensus on the two different versions of the bill. The committee will likely reach agreement and send the final version of the bill to the Governor for signature. VAR has identified several priorities that would encourage the development of housing in Vermont.  While our opinion is that the reforms in S.100 do not go far enough, we are pleased that several of our legislative priorities were addressed in this bill. One of VAR’s priorities was the elimination or modification of the 10/5/5 definition in Act 250. The bill passed by the House Environment and Energy Committee expands this definition to 25/5/5 in Downtown Neighborhood Development Areas and Growth Center designations. VAR testified that this expansion would only apply to 34 distinct communities and should be expanded to the 138 towns with permanent zoning and sub-division bylaws. VAR and its coalitions were successful in advocating for the 25/5/5 expansion, which has been added to Village Center Designations that have permanent zoning and sub-division bylaws.  Overall, S.100 will require municipalities to standardize their local zoning to encourage more housing, minor modification to Act 250 and funding for some financial programs to support rental and homeownership development.     H.483 – An act relating to accountability and oversight of approved independent schools that are eligible to receive public tuition. VAR has been following this bill and can report that the Education Department is instructed to not approve any new Independent Schools this year in the Senate Budget bill. While the Senate Education Committee is continuing to consider this bill, it seems destined to roll over to next year.   S.5 – The Affordable Heat Act This highly debated bill authorizes the creation of a carbon marketplace to allow fuel providers to offset fossil fuel sales with improved weatherization and electric heat conversion. Our members have been vocal about the increased cost in heating should this bill pass.  As a result of concerns over increased heating costs, the final version of this bill directs the Public Utility Commission to design a program in the next year and submit it for approval by the 2025 legislative session. This will allow the legislature to understand the parameters of the program as well as the cost.  The Governor has indicated that he will veto this bill. However, the legislature feels that they have the votes to override the veto on this issue.   Budget Bill The Senate passed its $8.5 billion budget with significant changes to the House version of the bill. As a result, a Committee of Conference will have to work out the differences.  Both bodies have increased funding for Vermont State Colleges, human services, and childcare. The Senate did not include funding for paid family leave but did provide funding to match federal infrastructure grants.  The administration has already expressed disapproval of the budget as passed out of the House and continues to express concern regarding the funding required to meet the expanded services proposed by the legislature. Once the Committee of Conference has settled on a final budget, the Governor will have to decide whether to approve the work of the legislature.   Peter Tucker VAR Advocacy & Public Policy Director (802) 229-0513 peter@vermontrealtors.com Advocacy Report courtesy of the Vermont Association of Realtors

Selling your home before buying a new one has several advantages (and can be a smart financial move), including:

1. Knowing your budget: When you sell your current home first, you will know exactly how much money you have to put towards your new home. This can help you avoid overextending yourself financially and ensure that you buy a home that fits within your budget.

2. Avoiding the risk of carrying two mortgages: If you buy a new home before selling your old one, you may end up carrying two mortgages at once, which can be a significant financial burden.

3. Having more negotiating power: When you are a cash buyer, you may have more negotiating power when it comes to buying your new home. This is because sellers prefer cash buyers who can close quickly and don't have to worry about financing falling through.

4. Reducing stress: Selling your current home before buying a new one can help reduce the stress and uncertainty that comes with juggling two transactions at once. It can also give you more time to find the perfect new home without feeling rushed or pressured.

•••

Selling your home before finding your next home can also create logistical challenges. Here are some steps you can take to make the process smoother:

1. Determine your financial situation: Before you sell your home, it's important to understand your financial situation. This includes how much equity you have in your current home, how much money you need to buy your next home, and how much you can afford to spend on temporary housing if needed.

2. Prepare your home for sale: To sell your home quickly and at the best price, you should take the time to prepare it for sale. This may involve cleaning, decluttering, and making any necessary repairs or upgrades.

3. Work with a real estate agent: A good real estate agent can help you navigate the home selling process and provide valuable advice on pricing, marketing, and negotiating with buyers. They can also help you find temporary housing if needed.

4. Consider temporary housing options: If you sell your home before finding your next one, you may need to find temporary housing. This could include staying with friends or family, renting an apartment or house, or using a short-term rental service like Airbnb.

5. Be prepared to move quickly: When you sell your home, you may need to move out quickly to accommodate the buyer's timeline. This means having a plan in place for packing, moving, and storing your belongings if needed.

Overall, while there are some risks associated with selling your home before buying a new one, it can often be the best strategy for homeowners who want to minimize their risk; but it requires careful planning and preparation to ensure a smooth transition. Working with a qualified real estate agent can help you navigate the process and make the most of your home sale.

Information courtesy of Keller William Realty New England Region

When interest rates are higher, the cost of borrowing money to purchase a home increases, which means that the monthly mortgage payments will also be higher. However, there are still several reasons why someone might choose to buy a home when interest rates are higher:

1. To lock in a fixed rate: When interest rates are higher, buyers may want to lock in a fixed rate on their mortgage to protect themselves from future rate increases.

2. To take advantage of the market: While higher interest rates may make buying a home more expensive, they can also mean that there are fewer buyers in the market, which can create an opportunity for buyers to negotiate a lower price.

3. To invest in the future: Buying a home is often seen as a long-term investment, and buyers may be willing to pay a higher interest rate in order to own an asset that is likely to appreciate in value over time.

4. To enjoy the benefits of homeownership: Homeownership offers many benefits, such as the ability to customize your living space, build equity, and establish roots in a community.

Ultimately, whether or not it makes sense to buy a home when interest rates are higher depends on a variety of factors, including your financial situation, your long-term goals, and the state of the real estate market. It is important to carefully consider all of these factors before making a decision.

Information courtesy of Keller William Realty New England Region

S.100 Amendment Fails Without Significant Act 250 Revision

S.100 – S.100 Housing Opportunities for Everyone (HOME) S.100 passed the Senate floor on Friday afternoon. VAR thanks the Realtor® members who responded to our call to action earlier in the week urging senators to support a floor amendment proposed by Senator Thomas Chittenden (Chittenden County) to extend the Act 250 waiver to 138 towns with permanent zoning and subdivision bylaws. Our call to action resulted in 376 emails to Senators on this issue. Of those, 200 of the messages included personalized stories from members.

S.100, as passed out of the Senate Committee on Economic Development, Housing and General Affairs Committee, was a balance between municipal zoning standardization and statewide Act 250 reforms. As we have previously reported, the Senate Natural Resources and Energy Committee amended the bill, limited Act 250 revisions to downtowns, Neighborhood Development Areas, and growth centers in 34 communities. These revisions do not apply to 219 towns in Vermont. Ultimately, support for this amendment eroded without significant Act 250 revision. This concept has been pushed to another study to be reported in 2024. This leaves a housing bill that relies on statewide regulation of municipal zoning to allow for duplex’s anywhere, 5 units per acre where municipal water or wastewater is available, and eliminates appeals based on “character of the area.” S.100 now moves to the House where we expect to receive a positive reception in the General and Housing Committee. The debate on Act 250 reform will continue with the House Committee on Environment and Energy. This committee has historically opposed any changes to the development portion of Act 250. We expect the same approach with this bill. VAR will ask Realtor® members to reach out to the members of this committee once they take up the bill sometime in mid-April.   H.276 – The Rental Registry Bill H.276 passed the House floor this week after a strike-all amendment by the House Ways and Means Committee moved this discussion to a summer study committee. As previously reported, the committee was concerned that there was no financial analysis of the costs of this program and the revenue impact. When this bill moves to the Senate, it will be assigned to the committee on Economic Development, Housing and General Affairs. VAR will keep you posted on its progress.   H.483 – Independent School Funding Members in St. Johnsbury and southern Vermont have expressed concern about H.483. Their concerns center around how the proposed legislation could negatively affect the good independent schools that provide service for towns generally without a high school. This bill has passed the House. It will now be taken up in the Senate by the Committee on Education.     H.480 – An Act Relating to Property Values and Reappraisal Most towns in Vermont have not gone through a reappraisal since 2014 or earlier. With the annual increases in market values, most towns have assessed values that are far less than current market values. This bill addresses the reappraisal process by providing authorization and funding to the department of taxes to develop a statewide statistical and full reappraisal process to assist municipalities and provide a more consistent schedule of reappraisal. This bill has passed the House and is headed for the Senate.   Peter Tucker VAR Advocacy & Public Policy Director (802) 229-0513 peter@vermontrealtors.com Advocacy Report courtesy of the Vermont Association of Realtors

Owning a home instantly increases your net worth and it can grow from there. That’s where we come in! 

We’re hosting a FREE Virtual First Time Home Buyer’s Seminar on Saturday, March 25, at 10:00 a.m., in partnership with Movement Mortgage.

No matter what the market looks like, buying your first home will always be the right choice when you have the proper tools and guidance, including how to find the right house, shop lenders and loan options, submit an offer, negotiate a closing, and more.

If you’re a first-time home buyer, tune into this helpful seminar for more information and materials on taking these initial steps.

Whenever you decide to make a move, the team at Hickey & Foster Real Estate is here for you.

To register: https://form.jotform.com/230644285314049

(Register by Friday at 3:00 p.m. You will get an email on Friday with Zoom instructions.)

Hickey & Foster Real Estate is a proud supporter of the Realtors Political Action Committee (RPAC). This organization is active on a local, state and national level with the goal of advancing public policies and candidates that build strong communities, protect property interests and promote a vibrant business environment. 

Through RPAC and the state-lead Government Affairs Committee, which includes our own Steven Foster, Realtors are involved in helping shape the landscape of legislative policies in Vermont.

Here is a breakdown of some of the proposed legislation that may affect your property:

S100 - Omnibus Housing Bill

• Changes to zoning bylaws that would allow for duplexes in any residential zone 
• Changes to zoning bylaws that would require denser development in areas that are served by municipal sewer and water 
• Changes to Act 250 including easing restrictions on development of 25 units or less  

H276 - Rental Registry

• Testimony given on the proposal to create a statewide registry of all rental properties

S5 - Affordable Heat Act

• Would require heating fuel providers to encourage improved winterization of homes