I often receive a lot of questions about the home-buying process - especially from first time home buyers. Buying your first home can intimidating but it doesn't have to be. Below are a few frequently asked questions and answers to help you understand the buying process.
What is the difference between "pre-qualified" and "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, survey, credit report, discount points, documentation fee, escrow fees, homeowners' association fees, loan fees, mortgage insurance, origination fees, tax registration and title insurance premium.
When to check on Home Owner’s Insurance?
It is a good idea to move forward with checking on home insurance before submitting a contract offer to the seller. The insurance company will be able to tell you if the home has wind and flood coverage. They will also be able to tell you if there are any outstanding claims. Most important they will be able to give you the yearly dollar amount for the insurance policy. This information should be given to your mortgage company to help calculate the monthly payment.
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. The earnest money is a part of the contract and will be credited back to the buyer at the time of closing.
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.
If you have any additional questions, please do not hesitate to email me! For more information on the home buying process, visit my "Buyers Resources" tab on my website!
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Hi Maggie, Great information for first-time (even 2nd- and 3rd-time) buyers. Thanks for posting.
Good Job Maggie, it helps that you blog about a great suggest like this. I will hit the suggest button, more google juice for you.
Hi Maggie, there are so many facets to home buying that it can be overwhelming to first time home buyers. This is an easy to understand, succinct list . Your buyers will find this quite helpful.
Maggie ... Great Blog with wonderful info for first time buyers an a great reminder for those who haven't bought in a long long time!