MORTGAGE ACADEMY
Understand the Process Before You Sign
Simple explanations of the real-estate and mortgage terms that can affect your transaction.
What Is an Earnest Money Deposit?
When a buyer and seller sign a purchase contract, the contract may require the buyer to place a deposit with the designated escrow/title party.
The amount, deadline and what happens to the deposit depend on the purchase contract.
Do not assume a deposit is always refundable. The contract controls the buyer's rights.
See the Mortgage ProcessWhat Is a Financing Contingency?
A financing contingency is a provision in some purchase contracts related to the buyer obtaining financing.
The exact protection, deadlines and requirements depend on the contract.
A mortgage application by itself does not create a financing contingency. It must be part of the contract where applicable.
See the Mortgage ProcessWhat Does the Title Company Do?
Depending on the transaction and location, the title/closing company may help coordinate:
- title review
- closing documents
- settlement figures
- buyer/seller funds
- lender funds
- recording and title transfer
The exact role can vary by transaction and state.
Can Someone Sign for Me With a Power of Attorney?
In some transactions, an approved Power of Attorney may allow another person to sign certain documents on someone's behalf.
Mortgage lenders and title companies have specific requirements, so the POA must be reviewed and approved before closing.
Appraisal vs Home Inspection
Appraisal
Mainly helps the lender determine the property's value for the mortgage.
Home Inspection
Helps the buyer understand the physical condition of the property.
They serve different purposes, and one does not automatically replace the other.
Mortgage Process Appraisal in the GlossaryWhat Does “Escrow” Mean?
Escrow can mean different things depending on the stage of the transaction.
- During a purchase: an escrow party may hold funds according to the contract.
- After closing: an escrow account may be used to collect money for expenses such as property taxes and homeowners insurance.
What Are Mortgage Reserves?
Reserves are assets a lender may require you to have available after closing.
They are not simply another lender fee.
The amount required depends on the loan program.
Reserves in the GlossaryWhat Does Clear to Close Mean?
Clear to Close, or CTC, means the required underwriting conditions have been cleared and the mortgage is moving toward closing.
Some final closing steps may still remain.
Understand UnderwritingBefore You Wire Money
Wire fraud is a serious risk in real-estate transactions.
Never rely only on wiring instructions received by email. Independently verify the instructions directly with the title/closing company using a trusted phone number before sending funds.
Do I Have to Be in the U.S. for Closing?
Not always.
Depending on the lender, title company, documents and location, possible signing methods may include:
- Remote Online Notarization
- approved Power of Attorney
- U.S. Consulate/Embassy signing
- another approved signing arrangement
The signing method must be approved in advance.
Foreign National MortgagesThis information is provided for general educational purposes and is not legal, tax or financial advice. Contract terms and mortgage requirements vary by transaction.