Quick Definitions

Escrow account - a legally protected holding account into which a buyer's deposit will be retained until released at closing.

Title company - the title company acts in a legal capacity, checking on title, arranging title insurance, and coordinating closing and the distribution of funds.

Pre-qualification - a preliminary estimate of whether a buyer will be able to obtain financing, based on the buyer's stated financial status.

Pre-approval - a firm offer of financing, based on documentary evidence of the buyer's financial status.

Home appraisal - this is an independent valuation of the home, required by the lender as the basis for the loan amount.

Home inspection - this is carried out at the buyer's expense to identify any problems with the home that may need to be fixed before closing.

Closing statement - also called a HUD1 statement, this is the financial balance sheet that forms the basis of the distribution of funds at closing.