Real Estate a Foregin Language to you?
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If you’re thinking about buying or selling a home in Hawaii, it’s important to be familiar with the commonly used real estate, escrow, and lending terms in the local market. Understanding these terms can help you navigate the complex process of buying or selling a home, and ensure that you make informed decisions throughout the process.
In Hawaii, there are also unique terms and concepts that are specific to the local culture and geography. For example, the terms “Mauka” and “Makai” are commonly used to describe the location of a property in relation to the mountains or the ocean. Similarly, the concept of “ohana” and “hanai” can refer to the cultural practice of extended family and community relationships, which can impact how properties are bought and sold.
In this blog post, we’ll provide a glossary of commonly used real estate, escrow, and lending terms in Hawaii, as well as explanations of some of the unique concepts and terminology that you might encounter when buying or selling a home in this beautiful state.
Real Estate Jargen
Appraisal: The process of estimating the value of a property.
Closing: The final step in a real estate transaction where the buyer and seller sign the necessary paperwork to transfer ownership of the property.
Closing costs: Fees associated with closing a real estate transaction, such as loan origination fees, title search fees, and appraisal fees.
Contingency: A condition that must be met before a real estate transaction can be completed, such as a satisfactory inspection or the buyer securing financing.
Earnest money: A deposit made by the buyer to demonstrate their serious intent to purchase the property.
Escrow: A neutral third party that holds onto funds and documents during a real estate transaction until all conditions have been met and the transaction can be completed.
Homeowner’s association (HOA): An organization made up of homeowners in a particular community that enforces rules and regulations related to the use and upkeep of the property.
Inspection period: The period of time during which the buyer can have the property inspected to ensure there are no major issues or defects.
Listing: A property that is for sale and listed with a real estate agent.
Mortgage: A loan used to purchase a property, typically with a fixed interest rate and repayment period.
Pre-approval: The process of obtaining approval from a lender for a mortgage before beginning the home search process.
Property taxes: Taxes paid by the property owner to the local government based on the assessed value of the property.
Title: The legal documentation that proves ownership of a property.
Title search: An examination of public records to ensure that the seller has a clear and marketable title to the property.
Under contract: A term used to describe a property that has a signed contract between the buyer and seller, but has not yet closed.
Hawaiian Words
Ali’i: A Hawaiian term for royalty or nobility.
Ahupua’a: A traditional Hawaiian land division that extends from the mountains to the sea.
Aina: The Hawaiian word for land or earth.
Aloha: A Hawaiian word that is commonly used as a greeting or farewell, but also conveys love, affection, and compassion.
Hui: A Hawaiian term for a group or organization, often used in the context of a real estate investment group or association.
Kama’aina: A Hawaiian term for a long-time resident of the islands.
Kapu: A traditional Hawaiian concept of sacredness or taboo, often applied to certain areas or activities.
Lei: A garland of flowers or other materials that is commonly used as a symbol of love or friendship in Hawaiian culture.
Mahalo: A Hawaiian word for thank you or gratitude.
Makai and Mauka: Two Hawaiian terms that refer to directions. Makai means towards the ocean, while mauka means towards the mountains.
Ohana: In the context of real estate, Ohana refers to an attached living space in a single-family home that is designed for extended family members, guests, or rental income. It is similar to a mother-in-law suite or accessory dwelling unit, and typically includes a separate entrance, living area, bedroom, bathroom, and kitchenette. The term “Ohana” comes from the Hawaiian word for family, reflecting the idea of creating a space for extended family to live together while maintaining some degree of privacy and independence.
Pono: A Hawaiian concept of righteousness, balance, and harmony.
Hanai: A Hawaiian term for informal adoption or fostering, often used in the context of family and community relationships. In the context of real estate, “Hanai” may refer to a non-blood relative or friend who is allowed to live on or use a property without being the legal owner or tenant.
Puka: A Hawaiian word for a hole or opening, often used in the context of a passageway or entrance.
‘Ohia: A type of Hawaiian tree that is highly valued for its hardwood and beautiful red flowers.
Descriptions
Acre: A unit of land area equal to 43,560 square feet.
Boundary: The edge or limit of a property.
Easement: The legal right to use another person’s property for a specific purpose, such as access to a road or utility lines.
Encroachment: The intrusion of a structure or object onto another person’s property.
Legal description: A written description of a property that is used in legal documents and records.
Lot: A portion of land that is designated for a specific use, such as residential or commercial.
Metes and bounds: A system of land description that uses physical features, such as trees and rocks, to define the boundaries of a property.
Plat: A map that shows the layout of a subdivision, including the location and size of individual lots.
Right of way: The legal right to pass through another person’s property, such as a driveway or access road.
Section: A square of land that is one mile by one mile, typically used in government land surveys.
Survey: The process of measuring and mapping the boundaries and features of a piece of land.
Title insurance: Insurance that protects the buyer and lender against financial loss due to defects in the title of a property.
Township: A square of land that is six miles by six miles, typically used in government land surveys.
Zoning: The regulation of land use by local governments, typically through the designation of zones for specific uses, such as residential, commercial, or industrial.
Escrow terms
What is escrow?
In real estate, “escrow” is a financial arrangement where a neutral third party holds funds or assets on behalf of two parties involved in a transaction, until certain conditions are met. In the context of a real estate purchase, the buyer typically deposits the earnest money into an escrow account, which is held by a third-party until the transaction is completed or terminated. The escrow holder is responsible for ensuring that all of the conditions of the sale are met, such as the completion of inspections, the payment of taxes and fees, and the transfer of ownership. Once all of the conditions have been met, the escrow holder will release the funds to the appropriate parties, and the sale will be completed. Escrow can provide a level of security and protection for both the buyer and the seller, by ensuring that all aspects of the transaction are properly documented and verified before the funds are released.
Escrow Agent: A neutral third party who is responsible for holding and managing funds and documents related to a real estate transaction.
Escrow Agreement: A legal document that outlines the terms and conditions of the escrow arrangement, including the parties involved, the amount of funds being held, and the conditions for release.
Escrow Analysis: A review of the borrower’s escrow account to ensure that the correct amount of money is being collected for taxes and insurance, and to determine if any adjustments need to be made.
Escrow Closing: The final stage of a real estate transaction, where the escrow agent disburses funds and transfer ownership of the property.
Escrow Disbursement: The release of funds from the escrow account to pay for fees, taxes, and other expenses associated with the transaction.
Escrow Holdback: An agreement to hold back a portion of the sale proceeds until certain conditions are met, such as repairs being made to the property.
Escrow Instructions: The written instructions from the parties involved in the transaction that outline the specific terms and conditions of the escrow arrangement.
Escrow Officer: The individual who oversees the escrow process and ensures that all of the conditions of the transaction are met.
Escrow Payment: The amount of money that is deposited into the escrow account by the buyer as a sign of good faith and to show their commitment to the transaction.
Escrow Statement: A summary of the activity in the borrower’s escrow account, including payments, disbursements, and any changes to the account balance.
papakeacollection
March 15, 2023Lending/Lenders
In a real estate transaction, a lender is a financial institution or individual who provides financing to a borrower for the purchase of a property. Lenders can include banks, credit unions, mortgage brokers, and private lenders.
The lender’s role in a real estate transaction is to evaluate the borrower’s creditworthiness and ability to repay the loan, and to provide financing in exchange for interest and fees. This process typically involves a review of the borrower’s credit history, income, assets, and liabilities, as well as an appraisal of the property to be purchased.
Once the borrower has been approved for a loan, the lender will provide the funds necessary to complete the purchase of the property. The lender will then hold a lien on the property, which gives them the right to foreclose on the property if the borrower fails to make the required loan payments.
Throughout the life of the loan, the lender will typically collect monthly payments from the borrower, which include both principal and interest. The lender is responsible for managing the loan, including processing payments, managing escrow accounts, and providing statements and other communications to the borrower.
In summary, the lender plays a critical role in the real estate transaction by providing the financing necessary for the purchase of a property, and by managing the loan throughout its life.
Lending Terms
Amortization: The process of paying off a loan over a set period of time, typically through regular payments that include both principal and interest.
APR (Annual Percentage Rate): The total cost of a loan, expressed as a percentage of the total amount borrowed, including interest and any fees.
Appraisal: A professional assessment of the value of a property, used to determine the amount of a loan that a lender is willing to offer.
Closing Costs: Fees associated with closing a loan, including appraisal fees, title fees, and other expenses.
Collateral: Property that is pledged as security for a loan, such as a home or car.
Debt-to-Income Ratio: A measure of an individual’s debt load compared to their income, used by lenders to determine their ability to repay a loan.
Equity: The difference between the market value of a property and the amount owed on any outstanding loans.
Interest Rate: The percentage charged by a lender for the use of their money, typically expressed as an annual percentage rate (APR).
Loan-to-Value Ratio (LTV): The ratio of the loan amount to the appraised value of the property, used to determine the risk associated with a loan.
Mortgage: A loan used to purchase a property, where the property serves as collateral for the loan.
Pre-Approval: The process of obtaining approval for a loan before making an offer on a property, based on an initial assessment of the borrower’s financial situation.
Principal: The amount of money borrowed on a loan, excluding interest and other fees.
Refinance: The process of taking out a new loan to pay off an existing loan, typically to take advantage of lower interest rates or better terms.
Term: The length of time over which a loan is repaid, typically expressed in years.
Underwriting: The process of evaluating a loan application to determine the borrower’s creditworthiness and ability to repay the loan.
