Select one of the frequently asked questions below to learn more about buying, selling, and renting real estate. Also, begin to think about important things to consider when diving into your real estate search.
Buying a home – Common Questions
• Will consist of a lender reviewing and pulling your credit score
• What is your price range?
• Do you have a particular area(s) you are looking to purchase a home?
• Megan’s Law – purchaser shall exercise due diligence-contact local, state police departments
Have you spoken with a lender and are you pre-qualified? We can offer multiple lender options
What are my upfront costs?
• Earnest Money Deposit (EMD) – this is your deposit on the home and is required when making an offer to purchase. Typically $1,000 and varies per home. This will be held in escrow and applied to buyer side at close.
Home Inspection and Radon
• Costs vary depending on the size and age of the home
• The home inspector will note “material defects” which is a defect that compromises safety of the home or a “repair” – something that is not working as it is intended to function
• Radon is done at the same time (48 hours test)
• Approximate cost – $350-$550 (nonrefundable)
What is the difference between being prequalified and preapproved for a loan?
If you’re prequalified it means that you POTENTIALLY could get a loan for the amount stated to you, assuming that all of the information you provide to the bank is accurate and true. This is not as strong as a preapproval.
If you’re preapproved, it means that you have undergone the extensive financial background check, which includes looking at your credit history, previous tax returns and verifying your employment – and the lender is willing to give you a loan, basically meaning you’re approved!
You will usually be provided an accurate figure which shows the maximum amount that you are approved for. Most sellers prefer buyers that have been preapproved because they know that there will not be any problems with the purchase of their home.
What is title insurance?
Title insurance is insurance that protects the lender and buyer against any losses incurred from disputes over the title of a property.
• Termite inspections can average around $50 – treatment typically paid by the seller can range from $400-500 – depending on the size of the home
How can I avoid private mortgage insurance?
The easiest way to avoid PMI is by putting 20% down payment; however, PMI can also be avoided if you only have 5% or 10% for the down payment. The way to accomplish this is via a first and second mortgage combination commonly referred to as 80/10/10^s or 80/15/5^s.
These two methods combine a first mortgage lien for 80% of the home price with a second mortgage lien for either 10% or 15% of the home price leaving the remaining 5% or 10% as the down payment. Because the first lien is at the magical 80% loan=to-value, there is no PMI required, even though a second mortgage is being |piggybacked| onto the financing thus allowing for the lessor down payment.
While the second lien terms are not as attractive as first lien rates, the second mortgage is still home mortgage interest and thus deductible as such on your federal tax return where PMI is insurance and offers no deduction.
Optional but recommended inspections
• Septic, visual sewer line (camera) inspection, roof and well water test (e-coli and lead nitrates and nitrites)
• Mortgage lender requires an appraiser to assess the value and condition of the property. This may be an upfront cost or charged at closing. Approximate cost $500-$700 *nonrefundable
• Depending on the type of the loan, you may be required to put down money at closing. This can vary from 0% down to 20-30%