Page 77 - The ultimate homebuyers guide - preview

Your Latest Home Buying Guide

how much house you can afford. It is your total housing expenses
plus your total debts divided by your gross income, multiplied by
100. Lenders usually use 36% or less.
Down Payment
Amount of cash you put down on a property at closing. The more
you put down, the less you will pay in monthly payments, the less
you will pay for the loan and the less debt you acquire. Down
payment can be as low as 3.5% on some loans.

Due diligence
All the research and inspections that go into buying a house.

Earnest money
Deposit by the buyer on a house after the offer is accepted. It binds
the contract and represents about 1-3 percent of offer price. This
money is held in an escrow account and is applied to down payment
if sale goes through. Money is returned to the buyer if
contingencies are not met.

Escrow
Third party designated to be the referee for the buyer and seller.
They hold all documents and funds, ensure signatures are placed
where necessary, and distribute proceeds of the sale at closing.

Escrow Account
An account that keeps funds on behalf of the buyer, to be
distributed at closing. It also holds funds to be used monthly, to
cover taxes and insurance.

Equity
Difference between what your property is worth and what you owe.

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