- What is the difference between pre-qualified and pre-approval?
Both terms are referring to your status in the approval process. Prequalification determines your probable ability to obtain a home loan. You must meet with a loan officer or mortgage lender to obtain prequalification. They will help determine your affordable home price based on your assets, income and debt, as well as your ability to provide a down payment(earnest money).
- What is Earnest Money?
Earnest money is a “good faith” down payment deposit that is submitted with your offer to show the home seller you are serious about purchasing the property. Earnest money is usually required when presenting an offer. There is not a predetermined or set amount required, however the amount will make a difference in the negotiation process. The earnest money will be applied to the purchase price and show as a credit to the buyer(s) on the settlement statement drafted by the escrow company.
- What are Closing Costs?
Closing costs are charges paid to various entities along the way through the escrow process. They may include items such as: escrow fees, document preparation fees, inspection and lender fees.
- What is a Point?
A point is equal to one percent(1%) of the total loan principal. There are some mortgage lenders that charge points, in addition to fees and interest.
- What is Title Insurance?
Title insurance is in place to protect any loss from defects in the chain of title, liens against the property or any other adverse claims. Most lenders require title insurance.