25 Essential Real Estate & Construction Terms You Should Know When Building a Custom Home

Every industry has its own unique jargon that can seem like a foreign language to someone unfamiliar with it. The construction and real estate worlds are no different, and if you’re about to embark upon building and/or purchasing a home you’ll want to brush up on the following terminology to help you better understand the processes relating to both.

Real Estate and Loan Terminology

• APR (Annual Percentage Rate)
  The APR refers to the interest rate of a mortgage.
• Gross/Net Income
  Gross income is your total amount of income before any taxes or deductions. Likewise, net income is your total amount of income after taxes and deductions are removed.
• Down Payment
  A down payment is an upfront (cash) payment of a portion of the property’s overall cost.
• Closing Cost
  Closing costs are the fees of ownership transferal, such as lender’s fees, property taxes, etc.
• Fixed and Adjustable Rate Mortgages
  A fixed rate means you pay the same amount on your mortgage every month. An adjustable rate means that the payments fluctuate.
• Pre-approved and Pre-qualified
  The pre-approval process determines a specific amount of money a buyer can borrow, and provides formal documentation of such. Pre-qualification is an informal process that determines how much the buyer might be able to borrow, based upon credit score.
• Principal
  This is the amount of money your lender allows you to borrow.
• Homeowner’s Warranty
  This is the warranty received through the builder (on a new-build) that insures (or protects) you against systems failing within the home. Warranties vary from builder to builder.
• Private Mortgage Insurance
  PMI is a protective policy that lenders require of buyers who pay less than 20% for their down payment. Typically, the cost is added into your monthly mortgage payment.
• Title
  The title is the paper proof of property ownership.
• Qualifying Ratios
  This determines whether or not a buyer is able to obtain a loan on their mortgage.

Construction Terminology

• Building Codes
  These are construction rules and regulations set by the governing municipality, required to be met for home and building safety.
• Building Permit
  This is the formal permission obtained by the builder from the governing municipality, required to begin construction.
• CO (Certificate of Occupancy)
  This certifies that the construction of the home has met all building codes, passed all inspections, and is safe for occupants.
• Backsplash
  This is tile work on kitchen, bathroom, and wet bar walls, typically in back of the sink area and sometimes referred to simply as “splash.”
• Acre
  An acre is a unit of measure: 43,650 square feet.
• Elevation
  The elevation is the way the building looks from the outside. Typically, one house plan will have two or three different front elevations.
• Framing
  This is the structured support of the building, and the skeletal outline of the rooms within.
• Fixtures
  This refers to permanent goods, such as lighting and plumbing.
• Fenestration
  This is the design for openings in the home, such as windows and doors.
• Floor Plan
  The floor plan is the design or layout of how the home will be set up (rooms, hallways, etc.).
• Insulation
  Insulation prevents loss of heat/AC as well as protects the building from exterior elements.
• Slab
  This is the concrete base of the home placed directly on the dirt/ground.
• Flatwork
  Concrete flatwork refers to poured concrete patios, sidewalks, garages, basements, etc.
• Siding
  Siding is the exposed, decorative (painted) exterior walls on a house.
• Truss
  The truss is the support for the roof of the house.

Understanding this terminology is the first step towards successful home building. Sheffield Homes is dedicated to providing homeowners and home builders with outstanding service and quality construction that transcend the mainstream. We serve homeowners in the Denver metro area and northern Colorado. If you are interested in learning more about this process, or if you have further questions regarding your custom home, contact us today.