New Home Building Glossary

Amortization: The process of gradually reducing a debt over a given period through regular payments. This term is central to understanding how new home construction perm loans are structured.

Appraisal: An expert’s estimation of a property’s market value based on its condition, the sales of comparable homes nearby, and other factors. A professional appraiser performs this crucial part of the home buying process in Washington DC.

Architect: A licensed professional who plans, designs, and reviews the construction of buildings. Architects in the Washington DC area are knowledgeable about local zoning laws and building codes.

Assessed Value: The value of a property according to a public tax assessor. Assessed values in Washington DC are used to calculate property taxes and may not reflect the current market value.

Blueprints: Detailed plans for a building. Blueprints are vital in a design and feasibility assessment for new home buyers in Washington DC.

Broker’s Price Opinion (BPO): An estimate of a property’s value as determined by a real estate broker. In Washington DC, BPOs can be a less expensive alternative to a full appraisal.

Builder’s Warranty: A written statement by the builder guaranteeing the condition of the property. New home buyers in Washington DC should inquire about a builder’s warranty as it can impact future costs.

Building Codes: Rules and regulations about the standards for construction. Washington DC has specific building codes that new home buyers should understand.

Building Permit: A legal document issued by a governmental entity that allows for the construction or renovation of a building on a specific lot. In Washington DC, building permits are required for new constructions on tear-down lots.

CAD: Computer-Aided Design. This technology automates the drafting and design process, making it easier for architects and builders to create detailed and accurate designs for luxury custom homes.

Closing Costs: Fees and expenses, over and above the price of the property, that buyers and sellers normally incur to complete a real estate transaction. These costs can include fees related to appraisal, loan processing, and escrow.

Comparative Market Analysis (CMA): An evaluation of similar, recently sold homes (called comparables) in the same area to determine the current value of a property. Real estate agents in Washington DC often provide a CMA to help sellers determine a selling price.

Condominium Fee: A fee paid by condominium owners for maintaining common areas. If the property being appraised in Washington DC is a condominium, this fee should be factored into the total cost of ownership.

Construction Loan: A short-term loan used to finance the construction of a new home, typically converted into a traditional mortgage after construction is complete. This is one financing option for new home buyers in Washington DC.

Construction Manager: A professional who oversees the entire construction process, from initial planning to completion. A skilled construction manager ensures your Washington DC luxury custom home is built on time and within budget.

Contingencies: Conditions that must be met for a real estate contract to be legally binding. In Washington DC, contingencies such as home inspections and loan approval can impact the total cost of a new home.

Cost Approach: One method appraisers use to value property, where the value of a property is derived by estimating the replacement cost of the physical structure and deducting depreciation.

Credit Score: A numerical expression of a person’s creditworthiness. A high credit score can improve your chances of securing a new home construction perm loan in Washington DC.

Curb Appeal: The attractiveness of a property when viewed from the street. While this term is often associated with houses, it also applies to lots. A tear-down lot with good curb appeal in a desirable Washington DC neighborhood can attract more potential buyers.

Custom Home: A unique house specifically designed and built to suit a client’s tastes, lifestyle, and location. In the Washington DC area, luxury custom homes often feature high-end finishes and innovative technology.

Deed: A legal document that conveys ownership of a property.

Design Consultation: A meeting between a client and a design professional to discuss the project’s design and feasibility. This is a key service offered to new home buyers in Washington DC. And if you would like a new home design consultation go here.

Down Payment: The upfront payment made by the buyer toward the purchase price of a new home. The down payment is a significant part of the total cost for new home buyers in Washington DC.

Easement: A legal right to use someone else’s land for a specific purpose. Easements can impact property values in Washington DC, as they might limit how a property can be used or modified.

Eco-Friendly: A method of building that minimizes harm to the environment and often includes energy-efficient systems and sustainable materials.

Elevation: An architectural drawing that shows a building’s exterior from different angles, including front, side, and rear views. Check out some new home front elevations here.

Energy Efficiency: A measure of how well a home’s systems use energy. Energy-efficient custom homes in the Washington DC area may include features like solar panels, energy-saving appliances, or advanced insulation.

Escrow: A third party that holds funds during a real estate transaction, released upon completion of agreed conditions. For new home buyers in Washington DC, escrow ensures that funds are distributed correctly at closing.

Fair Market Value: The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Feasibility Study: An analysis of the viability of a project. For new home buyers in Washington DC, a feasibility study can assess factors like cost, zoning restrictions, and potential construction issues.

Fixed-Rate Mortgage: A type of mortgage with an interest rate that remains the same throughout the loan period. It provides stability in budgeting for new home buyers in Washington DC.

General Contractor: A professional or company responsible for day-to-day oversight of a construction site, vendors, and trades.

Green Building: An approach to home building that minimizes environmental impact by using sustainable materials and energy-efficient systems. Washington DC luxury home builders often incorporate green building techniques into their projects.

HVAC: Heating, Ventilation, and Air Conditioning. A crucial system in any luxury custom home, responsible for maintaining indoor comfort and air quality.

Home Inspection: A comprehensive examination of the condition of a home, often performed before purchase to avoid costly surprises. In Washington DC, home inspections can uncover potential issues that might affect the property’s value.

Homeowner’s Insurance: Insurance coverage that protects homeowners from financial losses related to their home. In Washington DC, homeowner’s insurance is a necessary part of owning a new home.

Income Approach: A real estate appraisal method which allows investors to estimate the value of a property by taking the net operating income of the rent collected and dividing it by the capitalization rate.

Infill Development: The process of developing vacant or underused parcels within existing urban areas. Tear-down lots in Washington DC often become sites for infill development.

Interest Rate: The cost of borrowing money, expressed as a percentage of the loan amount. For new home buyers in Washington DC, the interest rate significantly impacts the cost of a new home over time.

Interior Design: The art and science of enhancing the interior of a building to achieve a healthier and more aesthetically pleasing environment. New home buyers in Washington DC might consider interior design services to personalize their home.

Interior Designer: A professional who plans, researches, coordinates, and manages projects to create aesthetically pleasing and functional interior spaces.

LEED Certification: A globally recognized symbol of sustainability achievement and leadership. Many luxury custom homes in Washington DC aim for LEED certification to highlight their commitment to green building practices.

LEED: Leadership in Energy and Environmental Design, a widely used green building rating system.

Land Survey: A graphic depiction of a property, identifying boundaries, elevation, and other characteristics. In Washington DC, a land survey is part of the feasibility process for new home buyers.

Landscaping: The design and creation of outdoor spaces. Landscaping in luxury custom homes often includes gardens, patios, outdoor kitchens, and other features to create a beautiful and functional exterior living space.

Listing: A written agreement between a property owner and a real estate broker authorizing the broker to sell a specific property. Listings for tear-down lots in Washington DC typically include information like size, location, and price.

Loan-to-Value Ratio (LTV): A financial term used by lenders to express the ratio of a loan to the value of an asset purchased. This ratio is used by lenders in Washington DC to assess risk before approving a mortgage loan.

Lot: A piece of land that is owned, rented, or otherwise occupied. Tear-down lots in Washington DC offer the opportunity to build a new home in a highly desired location.

Luxury Finishes: High-quality materials and fixtures used in the construction and design of luxury custom homes. These may include hardwood floors, granite countertops, designer lighting, and high-end appliances.

MLS (Multiple Listing Service): A tool that real estate brokers use to establish contractual offers of compensation and accumulate and disseminate information to enable appraisals.

MLS: Multiple Listing Service. A service used by real estate brokers to distribute information about properties for sale. Buyers searching for tear-down lots in Washington DC often use the MLS to find potential properties.

Market Value: The price at which a property would sell under normal conditions. Market value can be influenced by factors such as location, home size, condition, and local housing market trends.

Master Plan: A long-term planning document that provides a conceptual layout for guiding future growth and development.

Mortgage Insurance: A policy that compensates lenders for losses due to the default of a mortgage loan. In Washington DC, mortgage insurance may be required for new home construction perm loans with a high LTV ratio.

Mortgage Pre-Approval: A process where a lender provides a potential borrower with an estimate of how much they could borrow based on their creditworthiness. This is often the first step for new home buyers in Washington DC before looking at properties.

Mortgage: A loan secured by a property, typically paid in installments over a set number of years.

Perm Loan: Also known as a permanent loan, it’s the loan used to pay off the construction loan after a home is built. In Washington DC, perm loans often have terms of 15 or 30 years.

Pre-Approval: A lender’s assessment of whether you qualify for a loan and how much you can borrow. Pre-approval can simplify the process of obtaining a new home construction perm loan in Washington DC.

Prefabricated: A building method where parts are manufactured off-site and then assembled on site.

Principal: The amount borrowed or the amount still owed on a loan, separate from interest. Understanding how principal payments work is key to managing a new home construction perm loan in Washington DC.

Property Liens: A legal claim on a property due to the owner’s unpaid debt. A title search during the feasibility process can uncover any liens for new home buyers in Washington DC.

Property Line: The legal boundaries of a property.

Property Survey: A process where a professional surveyor measures a lot to determine its exact boundaries. This is important for potential buyers of tear-down lots in Washington DC to avoid any future property line disputes.

Property Tax: An annual or semi-annual tax paid by property owners to local governments. In Washington DC, property taxes are calculated based on the assessed value of the property.

Real Estate Agent Fees: Typically, the seller pays the real estate agent’s commission, but in some cases, the buyer may be responsible for these fees. In Washington DC, these fees can affect the total cost of a new home.

Real Estate Agent: A licensed professional who represents buyers or sellers in real estate transactions. A real estate agent can assist new home buyers in Washington DC with finding properties and negotiating deals.

Real Estate Owned (REO): Properties that have been foreclosed upon and are currently owned by the bank or financial institution.

Refinance: Replacing an existing loan with a new loan that has different terms. Refinancing can be a strategy for managing the costs of a new home construction perm loan in Washington DC.

Renovation: The process of improving a damaged, broken, or outdated structure. New home buyers in Washington DC may consider the cost and feasibility of renovations in their decision to buy.

Rezoning: The process of changing the zoning designation of a property. In Washington DC, this could potentially allow for different uses of a tear-down lot.

Sales Comparison Approach: A real estate appraisal method that compares a property to comparable properties sold in the area to determine its value.

Smart Home Technology: Advanced systems that automate various functions in a home, such as lighting, heating and cooling, security, and entertainment systems. Many luxury custom homes in Washington DC feature smart home technology.

Smart Home: A house that incorporates advanced automation systems to provide the inhabitants with sophisticated monitoring and control over the building’s functions.

Subcontractor: A professional or company hired by the general contractor to perform specific tasks during the construction process, such as plumbing, electrical work, or carpentry.

Sustainable Design: An approach to design that seeks to reduce the negative impacts on the environment and the health and comfort of building occupants. For environmentally-conscious new home buyers in Washington DC, sustainable design might be a key consideration.

Title Insurance: A form of indemnity insurance that protects against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans.

Title Search: A process to retrieve documents evidencing events in the history of a piece of real property to determine relevant interests in and regulations concerning that property. Crucial for new home buyers in Washington DC during the feasibility process.

Title: A legal document that proves a person’s ownership of a property. When buying a tear-down lot in Washington DC, a clear title is crucial to ensure that there are no legal issues with ownership.

Topography: The physical features of a property, including its elevation, slope, and orientation. The topography of a tear-down lot in Washington DC can impact what can be built on the site and how much it will cost.

Underwriting: The process a lender uses to determine if the risk of offering a mortgage loan to a particular borrower under certain parameters is acceptable.

Urban Planning: The process of developing and designing cities, including the use of land. Understanding urban planning in Washington DC can be helpful when looking at the potential of a tear-down lot.

Utilities: Basic services like electricity, water, heating, and cooling. These are recurring costs that new home buyers in Washington DC should factor into their budget.

Zoning Laws: Government regulations that control how a property can be used. These laws can affect the future costs of renovations or additions for new home buyers in Washington DC.

Zoning: Local laws established to control the uses of land within a particular area.