FREQUENTLY ASKED QUESTIONS – BUYERS
1. Should I buy instead of rent?
The benefits of buying a house rather than renting a house or apartment include:
- Tax breaks
- Financial gains
- Appreciation in value
- Capital gains
- A sense of pride
2. Am I ready to buy?
Ask yourself the following questions when considering whether you’re ready to buy:
- Do I have a steady job?
- Have I been steadily employed ?
- Is my current income reliable for the foreseeable future?
- Do I have a positive bill-paying history?
- Do I have few outstanding long-term debts, like car payments?
- Have I saved for a down payment?
- Can I afford to pay a mortgage, taxes, utilities, and insurance?
- Am I fully aware of the benefits of homeownership?
- What is holding me back?
3. Does my credit score impact my ability to buy?
A credit score numerically summarizes an individual’s credit history and gives a snapshot of their financial standing to a lender. Mortgage lenders use the score to decide who receives loans and at what interest rate. The higher the score means the better the chance of getting a loan with an attractive interest rate.a
4. How much do I need for a down payment?
Saving for the down payment is the greatest obstacle for first-time homebuyers. Lenders expect between 5% to 20% for a down payment. This number can vary depending on the lender’s requirements and the type and length of the loan. Make a budget, set a goal, and stick with the plan. Remember never rule yourself out and always talk to a professional
5. What is the difference between pre-qualified and pre-approved?
Pre-qualification: Getting pre-qualified for a mortgage gives first-time homebuyers an indication of how much they “might” qualify to borrow. This mortgage amount is not guaranteed because no information has yet been verified. A letter from the lender may only state that you are “likely” to be approved for a mortgage.
Pre-approved: Better yet is getting pre-approved for a mortgage, which is based on a real credit score, and it also puts real estate agents and home sellers at ease. The buyer has more to offer when making a deal and in a competitive market this can be a definite plus.
6. What is PMI?
PMI stands for private mortgage insurance and it is typically needed any time a buyer is putting less than 20% down. The prices vary greatly so make sure to ask your mortgage professional.
7. How quickly can I close?
A typical closing can occur between 30-45 days. This gives buyers enough time to do a home inspection on the property and to get all the paperwork together for closing. Due diligence is important when trying to close on time.
8. Should I get a home inspection?
A home inspector takes a weight off of your shoulders by looking into the condition of the roof, electricity, heating and air, plumbing. By ensuring that everything is working properly during the inspection it will help to prevent having you fix them in the future. If anything major is found during the inspection then you can negotiate with the seller to get those things fixed before you sign the paperwork at closing or try to renegotiate the price. It is important to point out that some issues can still be missed during an inspection and that if it is a very hot seller’s market they may not be time an inspection. There is different wys to mouvre through this situation and I am happy to guide you through it.
9. What is a contingency?
A contingency is a provision included in a sales contract stating that certain events must occur, or certain conditions must be met before the contract is valid.
10. Should I hire an attorney?
Hiring an attorney is completely optional, but in order to ensure a smoother and less stressful process, hiring an attorney to represent you is definitely highly recommended.
11. What is a Multiple Listing Services (MLS)?
A multiple listing service is a computerized listing of homes for sale in an area listed with a realtor. Agents are granted access to the MLS and can use it to find a house in a particular price range or area.
12. What is title insurance?
Title insurance that protects the lender and the buyer against any losses incurred from disputes over the title of a property.
13. What is the difference between a listing agent and buyers agent?
Listing Agents usually deal with sellers and are the ones who will list a property for sale on the Multiple Listing Service.
Buyers Agents mostly deal with the home buyers and represent the buyer’s best interests in a transaction.
The majority of agents will focus on one or the other. Some agents will also divide their time between sellers and buyers.
14. Do I have to call the listing agent to tour the home or get more information?
No, you want to align yourself with a buyer’s agent that represents you and your best interests. The agent who represents the home and has their name on the sign out front has an obligation to the seller to get them the best terms and the most money for the home. A buyer’s agent is obligated to work with your best interests in mind and can show any and all houses on the market.
15. What is the cost of hiring a buyer’s agent?
This is the best part; a buyer’s agent is typically paid for by the seller which means they are FREE. When a seller lists their home, they include a cooperating compensation to pay the buyer’s agent to bring an offer. Even though the sellers are paying for one, the buyer’s agent does not work for the seller and has a legal obligation to work for the buyer.
16. What is a counteroffer?
A counteroffer is an offer made by one party that makes changes to the original offer of the other party. Any time a counteroffer is made it cancels the obligation to the previous offer.
17. What is a debt-to-income (DTI) ratio?
A debt-to-income ratio is the percentage of a person’s monthly earnings used to pay off all debt obligations. Mortgage lenders analyze the DTI in determining how much home you can afford. This is one of the reasons why getting pre-approved can help you determine the maximum price range when purchasing a home.
18. Why should I use an agent?
A real estate agent may act on your behalf, providing you with advice and guidance when buying or selling a home. There are many constant changes in the real estate market. As such, the information available on listings is not always 100% accurate. There are times when you need the most current information about what has sold or is available for sale and the only way to get the most accurate information is with a real estate agent.
19. Should I talk with a bank before looking at homes?
The answer to the question is YES! There are tons of reasons why you should talk with a bank and get pre-approved before looking at homes. First and foremost, talking with a mortgage specialist before looking at homes can help you understand exactly how much you can afford. There is no reason to look at homes that are listed for $550,000 if you can only afford up to $500,000.
If you’re a first time home buyer, talking to mortgage specialist before looking at homes is strongly suggested, as there are many first time home buyer programs available.
Another important reason to talk with a bank before looking at homes is so you understand exactly what costs are associated with buying a home. There are many home buyers who don’t understand the difference between a down payment,and all closing costs.
20. I own a home, should I buy another before selling my current home?
There is truly no concrete “correct” answer to this question. There are pro’s and con’s to buying a home before selling your current home and the same can be said about selling your current home before buying another.
Buying a home before selling your current home
The biggest benefit to buying a home before selling your current home is the fact that you have a suitable property lined up. This can reduce the stress and pressure of having to find a home once your current home is sold. This however also can create disappointment and heartbreak. If you are unable to purchase a new home without having to sell your current home, your purchase offer is going to be contingent upon sale and transfer of title of your current home. If your current home does not sell in a timely manner, this can lead to you getting “bumped” by a non-contingent buyer and you losing out on the home you’re looking to purchase, which can be devastating.
Selling your current home before buying a new home
The time it takes to sell your current home is unpredictable. There is no crystal ball that exists that can tell you exactly how many days it will take. Selling your current home before buying a new home will put you in an ideal position to negotiate on the new home you’re purchasing due to the fact you are purchasing without the sale contingency of your current home.
One risk of selling your current home without buying a new home first is the chance of not being able to have a place to live. There are options if your current home sells before buying another though. A “rent-back” can sometimes be negotiated with the buyer of your current home. A “rent-back” would allow you to retain possession of your current home for a certain number of days after closing at the expense of paying the buyer’s mortgage. A “rent-back” allows for additional time to find a new home.
21. Do I really need a Realtor when buying a home?
No you don’t “need” one. When buying a home, you MUST rely on a professional to guide you. it’s strongly recommended you have a Realtor. There are many reasons why you should have a Realtor represent your best interests when buying a home. Keep in mind, all Realtors are not the same! When choosing a buyers agent, make sure you know how to properly interview prospective Realtors when buying a home.
Attempting to buy a home without a Realtor can really make the home buying process more difficult. Having a Realtor is always recommended when buying a home. One thing not to do when buying a home is calling the listing agent because you don’t want to “bother” your Realtor. This is one thing that real estate agents hate. You should have a whole team on your side through this process. Other professionals that you will need may be an accountant, lawyer, mortgage broker, home inspector. Your realtor will be able to direct you to the right individuals if you don’t currently have your own reliable acquaintances.
22. Who pays the Realtor fees when buying a home?
One reason why buyers ask the question about the need of having a Realtor when buying a home is because they don’t understand who pays the Realtor fees when buying a home. There are no guarantees, however, in most cases the seller pays the Realtor fees.
23. How is the neighborhood/area?
When buying a home, a common question home buyers have is regarding the neighborhood/area. As a real estate professional, there are rules against steering and providing personal insight into specific areas and neighborhoods. This doesn’t mean that your Realtor cannot provide you with tips to help you choose the right neighborhood when buying a home. Many buyers wonder about the growth of the local economy, crime statistics, taxes, and local amenities. If you have a top Realtor when buying a home, you should be able to receive all of the pertinent information to allow you to make an educated decision on areas and neighborhoods. Your realtor should undertand you daily dynamic and desired quality of life to steer you accordingly.
24. How are the schools?
This is another question that Realtors should tread very lightly with. There is no doubt that schools impact property values. Just like tips for selecting a neighborhood, a top Realtor should be able to provide you with names or websites where you can find information on the local schools so that you can determine whether or not the schools are acceptable to you or not.
25. What are the average utility bills?
When buying a home, it’s important to know what additional costs will be in addition to the monthly mortgage payment. Utility bills are just one of the additional costs to consider when buying a home. Utility bills can be obtained from the home owner and in some cases, from the local utility company, who can provide averages over the past 12 months. Keep in mind, everyone prefers to have their home temperature different, so the average bill could be different if you were to purchase the home.
26. What’s the age of the _?
When looking at homes, many buyers want to know the ages of specific items in a home. The most popular items in a home that buyers want to know about are the major mechanical items, such as the roof, windows, furnace, water heater, and air conditioning (if applicable). An experienced Realtor should be able to find the dates of a furnace, water heater, and air conditioning unit by looking at the serial numbers. The roof age is often known by the home owner. If not, the age usually can be approximately determined by looking at the roof characteristics, such as the sagging areas and the way the shingles are laying.
27. How many homes should I look at before putting in a purchase offer?
This question is often asked and is a simple answer. The answer is, there is no specific number of homes you should look at before buying a home. Don’t feel that if you were to purchase the first home you look at that you’re making a mistake. Same can be said if it takes you looking at 25 homes. There is no perfect home, my recommendation is to come up with a rating system from 1 to 10. anything under 7 is below average and you should not consider. Anything 8 and above makes the list.
28. How much should I offer the sellers?
When buying a home, you are the only one who can determine how much you should offer a seller. Certainly it’s suggested you ask for your Realtors advice and thoughts, but ultimately you are the only person who can determine how much you should offer. Please remember that a professional realtor does this as a career and should have a full understanding of the market and market value of the home. Make sure you are represented by someone who’s knowledge you can rely on.
29. What if my offer is rejected?
When a purchase offer is submitted to the seller there are generally four possible responses. The first is an accepted offer, the second is a counter offer, the third is a rejected offer, and the final is an offer that is not responded to. If your offer is rejected, meaning the seller says no and doesn’t counter, you have the right to place another offer. It’s not very common for an offer to be rejected or not responded to, unless a seller is offended by a low-ball offer. There are always more options and you and I will get your home.
30. Do I have the option to have any inspections?
When buying a home, you have the option to perform several types of inspections. The purchase offer you write can be contingent upon a satisfactory home inspection, pest inspection, chimney inspection, radon test, and many other inspections. In most cases, it’s recommended that when buying a home, you at the bare minimum have a home inspection. There are home inspection findings that are more common than others, however, no two homes are the same so it’s a great idea to get the home inspected. Depending on the market it may not be possible to have a conditional offer however I can certainly guide you so that a home inspection does happen and all of your concerns are addressed so that we can submit the necessary offer with confidence.
31. My purchase offer is accepted, What’s the next step?
Congratulations! Your offer was accepted, now what? Between contract acceptance and the closing date, there are many things that need to be completed. In a quick summary, after an offer is accepted, generally any inspections will be completed. After the inspections, you complete a formal mortgage application and last but not least, the title, abstract, survey, and any miscellaneous paperwork is completed. When buying a home, finding the perfect home is only one part of actually becoming a homeowner. Throughout the mortgage process, you should expect the bank to require documentation, letters, and other items from you to satisfy the bank conditions, so don’t be upset or surprised when this happens.
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