Frequently Asked Questions
Frequently Asked Questions About Real Estate
What is an Earnest Money?
Earnest Money is paid to confirm a contract. The buyer gives an agreed amount of money to a third party (escrow agent) to hold in escrow until the completion of the real estate transaction. The money will be credited to the buyer at the closing. If the buyer is in breach of the contract, seller may keep the earnest money. If the buyer uses an option money clause in the contract and exercises that option within a predetermined time-frame, the earnest money will be refunded back to the buyer.
What is an Option Period?
Option Period is an agreed upon time period in which the buyer has a choice to either continue with the purchase or terminate the contract on a home. A fee is paid to the seller for an option period. During this time, the buyer needs to have inspections done and make sure that the home is insurable. The buyer may exercise their option to terminate for any reason during the option period. If the buyer opts out of the contract during the option period, the fee is kept by the seller.
What are the different types of loans available to purchase a home?
A Mortgage is a loan in which property or real estate is collateral. Several different types of mortgage loans are offered by banks and lending institutions - FHA, CONVENTIONAL, VA, USDA, Fixed-Rate, ARM, and Jumbo are among the programs offered. There are different time frames for mortgages as well; 30, 20, 15 year loans. Find out which one best suits you by contacting your local lender.
What is PITI?
PITI stands for principal, interest, taxes and insurance. If a buyer has an escrowed loan, the monthly payment to the lender includes all of these. The lender will create an escrow account for taxes and insurance to deposit the money collected. Once a year, the lender will pay the property taxes and insurance from the escrow account. While the principal and interest portion of a mortgage payment will not change, taxes and insurance may change over the course of the loan.
Should I have the home inspected? It looks OK to me.
Inspection of the home is critical to knowing the overall condition of a particular home. Once the buyer has made an offer and an executed contract is in force, the buyer typically has an option period in which to examine the home. It is strongly suggested that every buyer have their future home inspected by a TREC licensed inspector. A professional, well qualified inspector is recommended to inspect the structural, mechanical, electrical, plumbing, roofing integrity of the home. Some inspectors offer foundation, termite and thermal inspections.
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- Jennifer Radar, Amcap Mortgage