Home Buying FAQ's
What is the first thing I should do to buy a house?
The first thing you should do to buy a house is become pre-qualified for a mortgage. The two reasons are: 1. You need to know price range of homes you can afford along with the downpayment necessary. 2: The Seller will want to see a prequalification letter to know you can actually afford to buy their home before accepting your offer to purchase.
What is earnest money?
Earnest money is a good faith showing of future performance from you to the Seller. For example: Your neighbor is selling their car for $2,500. You see the car and want to buy it but only have $250 cash in your pocket. You offer your neighbor $250 as a deposit to hold the car with an agreement to pay the balance at a future date.
How much should I offer as earnest money?
Earnest money is typically 1% of the purchase price, but can be higher or lower.
Is earnest money refundable?
Provided you adhere to the terms and conditions of the purchase contract and have a valid reason (under the provision of the contract) to cancel the agreement - earnest money is refundable.
How much is the down payment on a house?
The amount of your down-payment depends on the type of mortgage financing you choose. For example, an FHA mortgage requires 3.5% down but VA financing has no down payment requirement. Conventional loans will vary with 5, 10, or 20%, and you may one with a down payment as low as 3% but this is rare.
Is the price of a home always negotiable?
No. Prices are not always negotiable. Some Sellers ask for the amount they intend to receive and do not "pad" to negotiate lower.
How do I know how much to pay?
"How much to pay" is one of the many places throughout your purchase where agents step in to provide information and guidance so you can make your best home buying decision. What we do is balance all the the elements: asking price, market conditions, the value for which the house will likely appraise, the seller's motivation to sell, your need for seller concessions, timelines, financing, and, and, and... to come to an offer price.
Who pays closing costs?
Buyers and Sellers each have their own set of closing costs. Unless negotiated otherwise, Buyers pay their own and Sellers pay the portion that is their responbility.
How much do closing costs run?
I tell clients to plan for 3% of the purchase price. There are several moving parts in determining the exact amount, but estimating at 3% is often a safe bet.
Are all homes advertised on the internet?
No. All homes are not advertised on the internet. Interestingly, a good portion don't even have a sign in the yard. There are many reasons a Seller will choose not to broadcast the sale of their home to the entire world and/or neighborhood. Privacy and safety are the two most common.
Are For Sale by Owner (FSBO) homes cheaper?
In my experience I have not found FSBO homes cheaper. Actually, just the opposite - when working with them while representing a Buyer (and only the Buyer) in the transaction.
What are the pitfalls when buying from a FSBO?
There are simply too many potential pitfalls to mention. While some may be selling by owner to avoid disclosure of a material fact (e.g. don't have legal ownership, pre-foreclosure, leaking roof, structural issues, etc) I wouldn't say they are categorically dishonest. What I will say is they generally have NO idea what they're doing which causes problems during and after the sale.
You're bound to have questions. If not listed here, ask by email. We'll respond and add your question to our list.