Common Real Estate Terms & Mortgage Terms Explained - Part 5

Continuing on in our series of definitions for commonly used real estate terms and mortgage terms (or terminology relating to the real estate/mortgage industry):

Earnest Money
Money that is submitted with an offer to purchase which indicates a buyer's seriousness and good faith. In virtually all cases, earnest money will need to be submitted at the time of the offer and remains in escrow until the time of closing, at which time it becomes part of the downpayment.

Equity
The difference between the value of a property and the total of any outstanding loans or mortgages against it.

Escrow
Funds held in reserve both prior to closing (for example the earnest money and deposit) by a third party and after closing by the mortgage company to pay future taxes and homeowners insurance. In some areas, "escrow" also refers to the closing process.

Escrow Agent
A neutral third party who ensures that all conditions of a real estate transaction are met.