"Pre-qualified"
vs "Pre-approved"?
If you are "pre-qualified" you have determined, with
a loan officer, what price you can afford based on
the down payment, your debts and the amount the
mortgage company will approve for your mortgage.
Being "pre-qualified" is only a determination of
your probable credit. If you are "pre-approved",
your credit, employment and funds have been approved
by the lender.
What are closing
costs?
Closing costs are an accumulation of charges paid to
different entities associated with the buying and
selling of real estate. For buyers, they are usually
about 4-6% of the total sales price of a property.
Some of the closing costs you might encounter are:
application fees, appraisal fee, county taxes,
credit report, discount points, documentation fee,
escrow fees, homeowners' association fees, load
fees, mortgage insurance, origination fees, tax
registration and title insurance premium.
What is a point?
One point is equal to 1% of the new loan amount.
Whenever government regulation, state usury laws
and/or competitive practices prohibit the lender
from charging a rate of interest that would make the
real estate loan competitive with other fields of
investments, the lender must seek some method of
increasing the yield for the investors. By charging
"points", the lender can bring the real estate loan
up to those other investments.
What is earnest
money?
When you make an offer, you will need to put up an
earnest money deposit as a sign of good faith that
you are seriously interested in buying a home. That
deposit becomes a part of the purchase price and is
held in a trust account until there is full
acceptance of the offer. Typically, an earnest money
is 3-5% of the offer amount.
Who does the real estate agent work for?
This depends on how the agency relationship was
established. If the seller has listed his or her
property with the agent, then they are the
principal/client. The agent works for the seller in
this instance. If the buyer has entered into a buyer
brokerage agreement with the agent, then the agent
works for the buyer. The buyer is the
principal/client. Good real estate practice requires
that a listing and a selling agent provide to their
respective principals in a real estate transaction
with oral and/or written disclosure of which the
agent represents in the transaction. A pamphlet,
which describes agency as written by the State of
Washington is made available and given to the
clients. If it's a buyer, a buyer agency agreement
is signed by the buyer; for a seller, a listing
agreement is signed.
How much will my property sell for?
It really depends on
current market conditions. Your true need to sell
will dictate the price you are willing to accept. A
lower price will bring a faster sale. You need to be
careful of the "window of values". Price it too low,
in relation to comparable homes for sale, and you
may attract buyers who think it's a fire sale and
you will take even less. Price it too high and
you'll never see an offer. The "just make an offer"
thought never seems to work. The buyer will think if
they do make what they deem a reasonable offer, it
may offend you.
What is an appraisal?
An appraisal is the
process of formulating, supporting and communicating
an opinion of value. It is usually required when
real property is sold, financed, condemned, taxed,
insured, or partitioned. Remember that an appraisal
is an estimate, not a determination of value. The
appraiser does not determine value; parties to the
transaction establish value.
An appraisal may be in the form of a lengthy
written report, a completed form, a simple letter,
or even an oral report. Note: When a home is being
bought, the appraiser most always uses a pre-printed
format and fills in the necessary data as required
by the lenders. The report is prepared in accordance
with the Uniform Standards of Appraisal Practice.
The purchaser will pay for the appraisal, the lender
will order it to be done, and usually the listing
agent will be at the home during the appraisal
process. If it's new construction, often times the
builder will also be there.
I need to insure my home?
Correct. In fact, the
lender will require insurance regardless of how big
of a down payment you have. A homeowner's policy is
a combined property and liability insurance policy
designed for owners. There are a variety of these
packaged policies designed for owners of
single-family dwellings, for tenants and condominium
owners. These policies can also be endorsed for
additional coverage, such as inflation guard, an art
collection, flood insurance, etc.
Who does the negotiation for me?
In the true sense of
the word negotiation is the transaction of business
with the aim of reaching a "meeting of the minds"
and final settlement among the parties that are
bargaining. In the case of real estate, it's usually
a home, some land, perhaps investment property
that's at stake. The agent who you hired will
negotiate in your behalf. It's sometimes hard for
the people to bargain for themselves and at other
times personalities can get in the way. The agent
will act as a buffer between the parties, and in
doing so, will soften the back and forth offers
given by the principals. This softening can make all
the difference in final completion and total
agreement.
Do I need a bank or mortgage company to buy a
home?
The answer is no. If
the owner of a property owns it "free and clear" or
has an underlying loan that is assumable (with or
without qualification), you can buy without using an
institution's money. The easiest way is when the
property is free and clear. The real estate contract
is a written agreement between the seller and buyer
for the purchase of real property. The purchase
price is paid in installments, usually principal and
interest, over the life of the contract with the
balance due at maturity. Many things are negotiable;
interest rates, amortization schedule, and cash out
time periods. Remember, there may not be a lender
involved (no underlying mortgage) so care needs to
be taken when writing the purchase and sale
agreement.
Will my agent have all the legal papers I need to
buy my house?
Your agents real
estate company should supply all the documents
necessary for the purchase of the home.
Timing is very important
to my family, how can we be assured everything will
go smoothly?
A seasoned agent can
help enormously. Getting everything agreed to up
front in the original purchase and sale agreement is
vitally important. No surprises, that's my rule.
Especially the move out date for the seller, and the
move in date for the buyer. It can't be the same
day. Sounds nice on paper, but in reality it can be
a nightmare. Make sure your agent has a firm grip on
the various areas of timing in the transaction.
Getting the needed repairs done on time, when to
order the appraisal, when to order the home
inspection, will water tests be necessary, how about
the septic tank, should it be pumped? These are just
some of the timing issues your agent should know
about.
Do I need a home inspection?
The home inspection
is done for the buyers and is paid for by the
buyers. The appraisal is done for the lender, and is
also paid for by the buyers. Home inspections are
usually done when the buyer sees an older home that
they want to buy and is unsure of it's current
condition. Home inspections are very thorough
indeed. All aspects of the homes integrity are
checked out. Electrical, plumbing, roof, foundation,
appliances, pest and dry rot, gutters, siding, just
about anything you can think of is looked at and
gone over. Many homebuyers are starting to get home
inspections on new construction as well. Peace of
mind is what it's really all about, and it's worth
every dime.
What is a mortgage?
It is a legal
document used to secure performance of an
obligation, a pledge to pay back a loan. In the real
estate transaction, the buyer of the real estate
needs or wants to borrow money to pay the seller the
difference between the down payment and the balance
of the purchase price. When the lender loans the
money, the buyer-borrower is required to sign a
promissory note for the amount borrowed and execute
a mortgage to secure the debt. The purpose of the
mortgage note is to create a personal liability for
payment on the part of the borrower. The purpose of
the mortgage is to create a lien on the mortgaged
property.
In effect, the mortgage states that the lender
can look to the property in the event that the
borrower defaults and fails to make payments on the
loan. The lender can start foreclosure proceedings
to sell the property and retain that part of the
proceeds from the sale to pay the remaining unpaid
balance of the note.
What is title
insurance?
Title insurance protects the named insured against
loss because of defects, liens, encumbrances,
adverse claims or other matters not shown or
disclosed to the new owner that attach before date
of policy.
Linda McArthur: 360-921-1044
"Let my experience go to work
for you."
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Sell?
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