Questions and Answers
Pre-Approval
Why should I get pre-approved?
When should I get pre-approved?
How do I get pre-approved?
When should I apply for a mortgage?
I was pre-approved awhile ago – am I still approved?
Home Search
How do I select an agent?
How long will it take to find a home?
Can I go to open houses without an agent?
I found a house I like, now what do I do?
Writing an Offer
What is earnest money?
How much will the closing costs be?
What is a contingency?/
What types of protections are available to me?
What is a counter-offer?
What is ratification?
Mortgages
What documents do I need to apply for a home loan?
How long does the mortgage process take?
What types of mortgages are available?
What is a good faith estimate?
How do I lock-in my interest rate?
What is included in my monthly payment?
When will my first payment be due?
Settlement
What is settlement / closing?
How much money do I need at closing?
What do I need to bring to settlement?
Answers
Pre-Approval
Why should I get pre-approved?
Before you set out to buy a home, it is important to figure out what you can afford to buy. There is no sense in falling in love with homes you simply cannot afford. The most efficient way to get pre-approved is to contact our Featured Lender.
When should I get pre-approved?
Contacting a lender should be one of the first steps you take when searching for a new home. Your real estate agent will likely want you to have a pre-approval already in place before they take you to look at properties
How do I get pre-approved?
The easiest way to get pre-approved is to call a lender. With a 15-minute phone call you should be able find out what you can afford. Be sure to discuss how the big number translates into monthly payments. Contact the featured lender to get pre-approved.
When should I apply for a mortgage?
You should apply for your mortgage immediately after you ratify a sales contract for a home.
I was pre-approved awhile ago – am I still approved?
Changes in rates, or in your income, assets or debts, can have a big impact on your pre-approval. Staying in touch with your lender to be sure he/she has your most recent information will guarantee that you are pre-approved when you find the house of your dreams.
Home Search
How do I select an agent?
If you are buying your first home, you may want to find an agent who specializes in representing buyers. A buyer’s agent will represent you and only you in the transaction. Contact out Featured Buyer’s Agent to learn more.
How long will it take to find a home?
All people are different when it comes to searching for a home. Some people are more analytical and need to see a lot of homes with different features before making a selection. Others do their research online beforehand and then know exactly what they want and still others find a great home right away. Take your time and find the right house for you.
Can I go to open houses without an agent?
Yes. Visiting open houses is a great way to see inside of homes. If you attend an open house without an agent, be sure to tell the person staffing the open house that you are represented by an agent. When you sign in, give your agent’s information rather than your own. If you attend an open house without an agent, the person working the open house may be able to claim that he/she was the procuring cause or reason you purchased the house and may expect a commission. Protect your commission money and always give your agent’s card at open houses.
I found a house I like, now what do I do?
Once you find a house that you like enough to place an offer, be sure to see the house with your buyer’s agent. It is good to have a critical perspective, especially when you have fallen for a home. Be sure to look at a Comparative market report or “comps” for the property to get an idea of the recent sales in the neighborhood. Contact our Featured Agent for assistance.
Writing an Offer:
What is earnest money?
When you write an offer for a home, you will specify the amount of the earnest money deposit. This earnest money or "good faith" money is held by your real estate agent in an escrow account and shows the seller that you are serious about your offer. If you decide to back out of the offer for any reason other than one that is specified as a contingency in the contract, you could forfeit this money. If all goes smoothly, your agent will bring the money to the settlement as part of your down payment
How much will the closing costs be?
The closing costs are the costs of purchasing a home, not including the sales price. They vary for each sale, but generally include the lender fees, attorney fees, title charges, government transfer and recordation taxes and the fees for additional inspections. Your lender will be able to give you an estimate when you apply for your loan.
What is a contingency? / What types of protections are available to me?
When you work with your agent to prepare your writing offer, you will be writing what will be a 30+page contract. Many of the terms of the offer include protections for the buyer. These protections are also called contingencies. For example, the contract could be contingent on a home inspection. There are all types of contingiencies you can add to a contract, ranging from appraisal contingencies to a specific contingency that will void the contract if you can't sell your home in order to buy the next one. Talk with our Featured Buyer's Agent to discuss the wide range of options available to you.
What is a counter-offer?
A counter-offer is a response from the sellers where one or more of the terms of the contract have been changed.
What is ratification?
Ratification is when all terms of the contract have been agreed to in writing by the purchasers and the sellers and when the final signatures or initials have been delivered to the other party. Verbal agreements do not count in real estate. Ratification does not occur until delivery.
What documents do I need for a home loan?
Click here to see the Mortgage Checklist provided by our Featured Lender.
How long does the mortgage process take?
The mortgage process can take anywhere from 3 days to several weeks. Once the sales contract is ratified, the appraisal and title work can be ordered. Having a pre-approval already in place can speed-up this process.
What types of mortgages are available?
- A Fixed-rate mortgage is a loan that has the interest rate and payment set for the life of the loan. The benefit is that you always know what your principal and interest costs are, which takes out the guesswork when planning.
- An adjustable-rate mortgage (ARM) is a mortgage instrument in which the interest rate adjusts periodically according to a predetermined index and margin. The adjustment results in the mortgage payment either increasing or decreasing. A 1-year ARM, for example, will have an initial interest rate for 1 year and then adjust on the second year, and continue to adjust annually over the life of the loan. With an ARM loan, you typically get a lower starting rate in exchange for taking a risk that rates may rise in the future. There is also a cap on how much the interest rate can go up or down.
- Interest only mortgage products can be an excellent choice for some individuals. They are designed to offer the lowest payment possible as you are not paying toward the principal in your monthly payment. Interest only mortgage products may mean that you can buy more home than with a fully amortizing mortgage, or if you are refinancing you will have a lower monthly payment. Of course, you may make additional payments toward your principal balance at any time. If you choose to reduce the balance, the next monthly payment will be lower as your payment is calculated on the current loan amount. This is a significant difference from a fully amortizing loan as extra payments to that type of loan do not change your payment at all.
- A balloon mortgage has level monthly payments that will fully amortize over the stated term, but which provides for a lump-sum payment to be due at the end of an earlier specified term.
- A second trust is an additional loan imposed on property with a first mortgage. Generally at a higher interest rate and with shorter terms than a "first" mortgage. Often used to avoid mortgage insurance when the total loan amount is greater than 80% of the value of the home.
- 80/15/5 loans are also described as combination financing or piggyback loans and offer a convenient way to provide creative financing in a purchase, refinance, home improvement, or debt consolidation transaction. In a purchase transaction, a second trust is frequently used in combination with a first trust to avoid paying Private Mortgage Insurance or PMI. The first trust is always set at 80% of your purchase price which eliminates the need for PMI. We add a second trust of 15% of the purchase price and you supply 5% cash. This can also be set-up as an 80/10/10.
What is a good faith estimate?
A Good Faith Estimate (GFE) is an estimate from your lender that outlines the costs you will incur during the mortgage process. This is provided to you when you apply for your loan.
How do I lock-in my interest rate?
During the application process, select a rate for your specific loan, or call your lender at anytime during the process to lock your loan.
What is included in my monthly payment?
Principal, interest, taxes and insurance are included in your monthly payment. We refer to these items as the (PITI) Condo fees, and mortgage insurance, if applicable, may also be included.
When will my first payment be due?
At the closing, you will receive temporary payment coupons that will indicate when your first payment is due. It is usually at least a month before your first payment is due, but if you have two mortgages, be sure to check the due dates. They may not be due at the same time of the month.
Settlement
What is a settlement/closing?
Settlement or closing is the process of balancing the books on the home buying process. The settlement attorney will use a HUD-1 settlement sheet to itemize all of the expenses to the buyer and the seller and to make sure that disburesments are made to all parties involved in the transaction.
How much money do I need at closing?
Once the HUD-1 settlement sheet
is prepared, there is an exact amount of the money for your to bring. You will need to bring this amount as certified funds - either a cashiers check or certified check. If the HUD-1 is not ready when you go to purchase the funds, you can use the amount on the Good Faith Estimate from your lender. Remember, DO NOT bring a personal check to settlement. Personal checks take several days to clean and the funds have to be available to the seller at the same time that you are given the keys.
What do I need to bring to settlement?
In addition to the certified funds that you will need at settlement, you will also need to bring a photo identification card. The settlement company will make a copy of this identification to be kept on record as verifiaction of your identity. You should also bring a checkbook with you in case there are any changes to the HUD-1 made at the settlement table.
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