Frequently Asked Questions
- What is escrow?
- An escrow is a system of document transfer in which documents and funds are entrusted to an impartial third party, the escrow closer, until all conditions in a contract are met. When the conditions are met, the escrow closer releases the entrusted documents and funds. An escrow ensures all parties to a transaction that no funds are delivered and no documents are recorded until all conditions are met.
- What is an appraisal?
- A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties. When a person borrows money to buy a home the lender will have the property independently appraised at the buyer's expense.
- What is title insurance?
- This is an insurance policy protecting lenders and buyers from legal problems with the title. It insures the owners of the property against loss due to encumbrances, defective title, or adverse claims against the property title. It is important to know there are different kinds of policies with different types of coverage available.
- What are closing costs?
- Closing costs are charges paid to the various entities involved in the real estate transaction. These typically include escrow fees, document preparation fees, cost of an appraisal, and lender fees.
- What is earnest money?
- Earnest money is a "good faith" deposit submitted with the buyer's offer to show the seller that the buyer is serious about purchasing the home. There is no set amount that is required, but the amount can sometimes make a difference in the negotiation process. The earnest money deposit is included in the purchase price and will show up as a credit to the buyer on the settlement statement at closing.
- What is assessed value?
- The value placed on a property by a municipality for purposes of levying taxes. It may differ widely from appraised or market value.
- What happens if I offer less than asking price?
- The seller has three options when an offer is received. They can accept the offer as written, they can counter the offer, or they can reject the offer without countering. An offer can sometimes go back and forth a few times before terms are settled upon.
- What is a Good Faith Estimate?
- The Real Estate Settlement Procedures Act (RESPA) requires lenders to provide this form. It discloses an estimate of the charges and fees, for specific settlement services the borrower is likely to incur, in connection with acquiring the mortgage. It also shows the interest rate and monthly payments for the loan.
- What is a contingency?
- A condition that must be met before a contract is legally binding. For example, home purchasers should usually include an inspection contingency in their offer, so the sales contract is not binding if the home fails to pass the buyer's inspection. In our area the use of the term "contingent" is usually reserved for a home that is under contract to buy, but is contingent upon the buyer selling a home of their own, before moving forward on the purchase of the seller's home.
- What is PITI?
- This is an acronym for the four components of a monthly house payment: Principal, Interest, Taxes, and Insurance.
- What is a HUD-1 Settlement Statement?
- A final listing of the closing costs of the mortgage transaction. It provides the sales price and down payment, as well as the total settlement costs required from the buyer and seller. It's a good idea to put this where you can find it as you'll use it when figuring your income taxes.
While many general real estate questions can be answered with online resources, please don't hesitate to contact me directly when your questions become more specific. Confidentiality is guaranteed.
Broker & Residential Specialist
Patrick Rusher
Cooper Jacobs Real Estate
3645C Wallingford Ave N.
Seattle, WA 98103
homeinthenorthwest.com | 206 356-2377 | patrick@cooperjacobs.com