Final answer:
John's agreement with Mary to buy her property and pay in installments over 5 years, receiving the title post full payment, is akin to a land contract. This contrasts with Freda, who paid outright and possesses full equity of $250,000, and Ben, who financed his purchase and has $100,000 in equity with a house value increase.
Step-by-step explanation:
The situation described involves John entering into a contract to buy Mary's property, wherein he will take possession of the property immediately and pay for it in installments over the next 5 years. Only after full payment will John receive the title and deed. This arrangement is similar to a land contract or contract for deed, which are common real estate purchasing agreements where the buyer makes payments over time and the legal title transfers once the full purchase price is paid.
Comparing this scenario to others, we can find different methods of buying property. For example, Freda who paid cash for her house and now owns it outright with an equity value of $250,000. Contrastingly, Ben made a down payment and borrowed the remainder from the bank. With a rise in his property's value to $160,000 and having paid $20,000 off his loan, his remaining debt is $60,000, granting him an equity of $100,000.
Understanding these examples illustrates the concept of home equity, which is the market value of the property minus any debts owed on it. Additionally, it touches on the importance of down payments in real estate transactions and how market value appreciation can affect a homeowner's equity.