Top 5 Terms to Learn Before You Buy a Home or Property (and then some)
Here at PropertyGuerilla.com, one of our goals besides offering a direct conduit for communication between all interested real estate parties is to also be a conduit of information, and offer clarity whenever possible. There's no doubt the terms in the supporting article are super important, especially to first time Buyers, but we want to be sure you have all the information about them. For instance, the article cites the mortgage Pre-Approval as one of these 5 terms with which to become familiar, and rightly so.
However, it also states that a Pre-Approval and a Pre-Qualification are often synonymous depending on the Lender. In such a competitive market it's best to make sure your "PRE" anything is as strong as it can be, and for that a Pre-Approval is more appropriate. They are VERY similar, but the typical difference is that a Pre-Qualification is a gauge of how much you can borrow based on consumer submitted data, whereas a Pre-Qualification takes it a step further by offering the same information based on consumer verified data, i.e.; a credit check, so insist on the latter.
One of the other more important terms cited is the Appraisal, the process to make sure the property supports the value and amount borrowed. The author states that "... If the appraisal comes in lower than that amount, you'll need to renegotiate or make up the difference in cash." True in some cases, but again a bit more insight would be helpful to those who take a literal reading of this summation. Dig a little deeper and you'll find out that if you have an Appraisal Contingency in, or as part of, your contract to purchase it will also state that either both parties can terminate the contract without penalty if the appraisal comes in deficient. A not so subtle difference that can ease a lot of stress should that situation occur, especially for those who might have thought they'd have to come up with a huge chunk of change as described above!
Also described is the importance of the term Earnest Money, but again the whole story regarding Earnest Money is super important. The summary in the supporting article states that, "As long as you go through with the deal, the deposit will go toward your closing costs and down payment. If you back out of the deal, the seller gets to keep it." Suffice it to say that in some cases this may be true, but there are many instances where a Buyer can back out of a deal and get these funds back, and in most (but not all) cases the money doesn't automatically go to the Seller but will go through an Escrow Dispute process for the final determination of who gets the deposit. The short answer is these are GREAT terms to know and learn! The LONG answer is to make sure you know the full meaning of each and how it pertains to you, and if you're still uncertain than utilize the services of a Lawyer, Realtor®, and a Lender whom you can trust (preferably all 3!). Remember, the more you know...
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