Real Estate Facts

• Why should I use a real estate agent?
• What is a closing?
• What are closing costs?
• What are discount points?
• What is an appraisal?
• What is a survey?
• What is equity?
• What is escrow?
• What is a title search?
• What is earnest money?
• What is a debt-to-income ratio?
• Besides making my monthly mortgage payment, how can I build equity into my house?
• How big is an acre?

Why should I use a real estate agent?

A real estate agent is more than just a "sales person."  They act on your behalf as your agent, providing you with advice and guidance and doing a job - helping you buy or sell a home.  Due to the fast changing market, the data on available listings is not 100% accurate.  There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with an agent.

There are two types of agents, "Buyer's Agents" and "Seller's Agents".  It used to be common for all parties involved to work for the seller, hence the term "Seller's Agent".  Nowadays, you will most often find a different type of agent, the "Buyer's Agent".  If you are in the market to buy, it would be advisable to use a Buyer's Agent.  They can make recommendations on what terms and prices to offer as well as negotiating a deal with your best interest in mind.  If you happen to be working with a Seller's Agent, never disclose to them the top dollar you are willing to pay for any property.  Keep it narrowed down only to things that you would tell the seller directly.  

What is a closing?

The process of finalizing all the dealing associated with the sale and purchase of a home. (Also known as a settlement)

What are closing costs?

Closing costs are expenses incurred by buyers and sellers in transferring ownership of a property

What are discount points?

Discount points are a type of point paid by the borrower to reduce the interest rate.

What is an appraisal?

An appraisal is an estimate of the value of a certain property by a qualified, independent individual.

What is a survey?

A survey is an examination of a property's boundaries to determine the quantity of land, location of improvements, and other information. Usually the surveyor includes a map or drawing of the legal boundaries of the property.

What is equity?

Equity is the financial interest or cash value of your home, minus the current loan balance(s). If selling the home, this would also be minus any costs incurred in selling the home.

If you're buying a home and don't have very much money for the down payment, you may want to find out if the seller would be interested in "sweat equity".  This would allow you to perform the labor on any needed repairs and maintenence to the home, (such as outside repairs, painting or electrical work) in exchange for credit towards closing costs.

What is escrow?

Escrow is a trust account created by a neutral third party to hold money for the seller or buyer. When you put down a deposit on a house, for example, you should put that money into an escrow account. When the sale is complete, the money can be released from this account to the seller. You should also set up an escrow account for your taxes and insurance. Your monthly mortgage payment includes payment for 1/12 of your taxes and insurance. This money is kept in an escrow account. When the bill comes due, your mortgage company uses the escrow money to pay it.

What is a title search?

A title search is the process of reviewing court records and other records to ensure that there are no liens or claims against the property you are buying.

Earnest money is a deposit you make when you make an offer on a house.

What is a debt-to-income ratio?

A debt-to-income ratio is the percentage of a person’s monthly earnings used to pay off all debt obligations

Besides making my monthly mortgage payment, how can I build equity into my house?

When making your monthly mortgage payment, try to send a little bit more.  This will go directly to the principal of the loan rather than the interest. Even an extra $50.00 per month can quickly build your equity, as well as knock years off of your loan.

An acre is an area of land equal to 43,560 square feet.  For visuality purposes, an acre is most often compared to the size of a football field - not counting the two end zones, which are each 30 feet in length.  Now try to envision one square mile, which is equal to 640 acres!