What is Real Estate?
Real estate includes the land and the structure. There is value on the land and the home. Both land and the structure make up the value of the property and this is real estate.
What is a Mortgage?
A mortgage is simply an IOU to a bank. They buy the house and you agree to pay them so much a month with interest which is their fee for giving you the money.
What is Equity?
Equity is the difference between what you owe and what the real estate is worth. Remember your equity can change. If the home values rise your equity goes up but if the values drop, your equity will also drop. By default, your equity will rise as you make payments that’s because you owe less on your real estate as time goes on.
What is an Offer to Purchase and the P & S?
The Offer to Purchase is the price you are willing to pay to the Seller for a piece of real estate. In that offer are your terms and conditions which can even include things like home furnishings.
The P & S is a legal contract between the buyer and seller. It sets out the obligations of each party from the time the property is taken off the market to the closing. The P & S is usually prepared by an attorney whereas the offer to purchase is not.
What is Escrow?
When you submit an offer to purchase and give your down payment, that down payment is held in escrow, meaning the sellers real estate broker puts it into a secure account which is setup for that purpose. There’s laws governing how an escrow is handled.
What is Pre-Approval?
Pre-approval is basically a quick credit, income and debt check by the bank and they determine about how much money they will loan you in the event you decide to buy a piece of real estate.
What is an Appraisal?
When you want to purchase real estate the bank has to be sure they are not getting into a poor investment. They don’t want to authorize a loan that would put their interests at risk, so the bank uses an independent appraiser that will give them a price on the house.