Are you uneasy with legalese? Get familiar with land-buying lingo so you can make a well-informed, educated choice for your next big investment.
Written by Estrellita S. Sibila for Brickell Magazine
Pre-Approval: A pre-approval is a process in which a conditional commitment is issued after a loan profile is underwritten with all standard documentation except a property appraisal and a title search. Most seller’s will only want to enter into contract with pre-approved not just pre-qualified buyers.
Offer & Acceptance: An offer is made to purchase a property at a specific price. It’s best to have your attorney help negotiate and review all contracts before you sign. Once an offer is accepted, then a contract for sale is issued.
Down Payment: The down payment is the amount of money a buyer pays upfront in order to purchase a property. It’s usually paid at the signing of the contract in the form of a certified check. The amount is typically 10% of the sales price, but could be up to 20% for self-employed borrowers.
Due Diligence: Due diligence is the investigation and review of a property to determine any legal liabilities. This is the time in which inspections take place, the survey showing the structures on the property is reviewed and title documents are evaluated by your attorney.
Mortgage vs Mortgage Note: A mortgage is a pledge of real estate collateral to secure a debt. Also, it’s a legal document describing and defining the pledge. A mortgage note is a document signed at closing which states the borrower’s promise to repay a sum of money.
Recording: Recording is registering the ownership, lien or claim of a party to a specific parcel of real estate with the county where the property is located. Once the transaction “closes,” the deed representing your ownership is recorded in the public records.
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