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When multiple buyers make an oer on a home, sellers
sometimes will go with the oer that has a higher deposit
because they perceive these buyers to be very serious about
buying the home.
Mortgage:
A legal document that pledges
property to the mortgage
company as security for
the repayment of the loan.
The term is also used to
refer to the loan itself.
Earnest Money:
You typically will need to pay
what’s called “earnest money”
which shows the seller you are
serious about buying the home.
Think of earnest money as a
deposit you are providing the
seller (usually around $500 -
$1,000 or a certain percentage
of the oer price) that will be
applied to the purchase once
the contract is nalized.
Escrow Account:
The actual account where the
escrow funds are held in trust.
Closing Costs:
Various fees required to conclude
a real estate transaction.
Down Payment:
The amount of cash a borrower
may need to pay in order to buy
a piece of property; equal to
the purchase price minus the
amount of any mortgage loans
used to nance the purchase.
Title Company:
An agency that works with
all parties involved in a
real estate transaction to
research and insure the title
of the home you’re buying,
facilitate the loan closing,
and ensure that the transfer
of ownership is completed
and recorded properly.
Lender:
An organization or person
that lends money with the
expectation that it will be
repaid, generally with interest.
Earnest money
An earnest money deposit is a sum of money that a buyer provides
along with the oer to show how serious they are about buying
the house. When multiple buyers make an oer on a home, sellers
sometimes will go with the oer that has a higher deposit because
they perceive these buyers to be very serious about buying the home.
Typically, earnest money deposits are between 1% and 3% of the price
of the home. They are held in an escrow account and then either
applied toward the closing costs or your down payment at closing.
Earnest money deposits are usually made through a personal check to
the real estate agent or title company. If you back out of the sale, you
may lose this deposit, depending on the terms in your sales contract.
Ratified sales contract
One of the conditions of getting your mortgage is to send your lender a
ratified sales contract, which is a legally binding contract from both you
and the seller. It should include a closing date—the date at which you
and the seller will execute all documents needed to transfer ownership.
Your lender will then start working toward that date to provide the
money you need to purchase the home.
Necessary documents for the home purchase
Now that everything is moving toward the home purchase, you will
need to focus on working with a lender to get your mortgage. Here are
some examples of the types of documents you can expect your lender
to request.
Congratulations! At this point, the seller accepted your
offer and you have a ratied sales contract. Soon, it will
be time to celebrate, but you need to complete a few
important items before the home is yours. Now, it’s time
to start putting some of that hard-earned money that you
saved to work and take the next steps to obtain
a mortgage.