FAQ’s for Buyers:
What is the difference between Pre-Qualification and Pre-Approval? Pre-qualification is an estimate of what a buyer might qualify for before submitting a mortgage application. Pre-approval is a firmer commitment and is a more formal process which includes a credit check and employment verification.
Why do I need a home inspection? To minimize unpleasant surprises and unexpected difficulties, you’ll want to learn as much as you can about the house before you buy it. A home inspection may identify the need for major repairs. Also, you’ll know more about the house, which will allow you to make decisions with confidence.
What do Home Inspectors focus on? They focus on the structure, construction, and mechanical systems of the house and will make you aware of only repairs that are needed. They do not look at the cosmetics of a home.
Do I need to be there for the Inspection? You are not required to be there, but it is recommended. When the inspection is complete, you will have the opportunity to ask the inspector questions you may have.
Do I really need Homeowner’s Insurance? Yes! Title will not be transferred until you can prove you have the home covered by insurance. It is an insurance policy that combines various personal insurance protections.
What is Earnest Money? Earnest Money is a good faith deposit to show your motivation for purchasing a home. Because there is no set amount, the amount varies. When your offer is accepted then this money is credited back to you at closing.
What are Home Warranties? Home Warranties help protect homeowners against the cost of unexpected repairs or replacements of their major systems and appliances that break down due to normal wear and tear.
What is a Good Faith Estimate? This is an estimate that lists all fees paid before closing, all closing costs, and any escrow costs that you will come across when purchasing a home. This can be supplied to you by your lender.
What makes up Closing Costs? Closing costs are usually made up of the following: Attorney’s fees, Property taxes, Interest, Loan Origination Fee, Recording Fees, Title Insurance, First Payment to escrow account for future taxes and insurance, paid receipt for homeowner’s insurance policy, any documentation preparation fees.
What is Title Insurance? Title Insurance is insurance against loss from defects in title to real property, and from the invalidity or unenforceability of mortgage liens. It is meant to protect an owner’s or lender’s financial interest in real property against loss due to title defects.
What is PMI? PMI stands for Private Mortgage Insurance and is extra insurance that lenders require from most homeowners who obtain loans that are for more than 80% of their new home’s value.
What is an Appraisal? It is an opinion of value of real property, usually its market value. Typically, the appraisal is ordered by your lender.
What happens if the home does not appraise? Typically the lender will not fund the loan if the home does not appraise. At this time we can negotiate with the seller and develop a solution.
What do I need to bring to closing? You will need picture identification and a certified check, as well as any other documentation that your lender has told you will be required in order to close.
What is a Settlement/HUD Statement? This is what you and the other party signs at closing outlining all of the costs for closing. It itemizes all the charges to the buyer and the seller, and gives each party a complete list of their incoming and outgoing funds.
What is Dual Agency? This is when the real estate agent represents both the seller and the buyer in the same transaction. This situation, however, does not occur often.
How much are closing costs? They average 3-4% of the price of your home. These costs cover various fees your lender charges, and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs.
How much money will I have to come up with to buy a home? In general, you will need to come up with enough money to cover three costs: earnest money- the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house; the down payment- a percentage of the cost of the house that you must pay when you go to settlement, and closing costs- the costs associated with processing the paperwork to buy a house.
