Home Buying FAQs: What You Need to Know

If you’re in the market to buy a new home, you may have a lot of questions about listings, real estate agents, financing, and inspections. You’re not alone! Here are some questions buyers frequently ask:

Should I Get Pre-qualified or Pre-approved for a Mortgage?

Even if you’re at the earliest stages of your homebuying journey, you may have come across information about pre-qualification and pre-approval. Getting pre-qualified means a lender has looked at your finances and has determined an estimated maximum mortgage value that you can afford. This pre-qualification demonstrates to the seller that you can probably afford their home.

Getting pre-approved can be even more advantageous because it can be a good indication of creditworthiness and the ability to borrow. The pre-approval process begins by submitting an official mortgage application. Lenders then are able to offer pre-approval up to a specified amount. A pre-approval letter is then provided that serves as a mortgage offer—not a guaranteed commitment—that can be used in purchase negotiations. Pre-approval letters are valid for a specific time frame, usually up to 90 days. Getting pre-qualified or pre-approved are both common first steps in the process of purchasing a property.

What’s A Good Way to Find New Home Listings?

Websites such as Zillow, Redfin, and MLS provide property listings. You may want to begin your search on your own, but you may also want to enlist the help of a licensed real estate agent. When working with an agent, you can choose to describe in detail the type of home you are looking for, desired location, and the amount you can afford to spend. Agents can send you daily listings of homes for sale and offer to set up in-person viewings. You might even be able to find out ahead of time when a new home is about to come on the market.

How Do I Make an Offer and Can I Negotiate on the Asking Price?

Your real estate agent can prepare a written offer after you decide how much you want to offer. Once you make an offer, the seller may make a counteroffer. This can be an opportunity to negotiate on price or ask for other add-ons. For example, if the home furnishings match your taste and style, you can see if the homeowner is willing to add them into the deal. Alternatively, if there are repairs you know you will need to make, the current homeowner may make them in exchange for a higher offer from you. An experienced realtor can help negotiate the best possible deal.

Do I Need a Home inspection?

Realtors and investors alike recommend home inspections. A home inspection is a way of having a qualified professional inspect what is likely the biggest purchase of your life. It can give you peace of mind, find hidden issues with the property, and even help you with offer negotiation. For example, if the inspector unearths a flaw that you weren’t aware of, you can still buy the property—but perhaps at a lower price to allow for the repair. While the recent housing boom had would-be buyers waiving inspection, many buyers came to regret the shortsighted decision. After the fact, they found major issues with their property.

How Do I Compare Loan Estimates from Lenders?

Comparing loan estimates from lenders may help you decide on the mortgage loan that works best for you. You may want to request a loan estimate from at least three lenders. It’s important to look at the interest rate and the annual percentage rate (APR) that may include any fees. Mortgage points might also be listed separately along with a projected monthly payment.

The lender’s loan estimate form should contain the interest rate, your monthly payment amount, and total closing costs. It should also provide an estimate of your real estate taxes and insurance, and if your interest rate and payments could change in the future. As always, consult a real estate professional or financial advisor for advice.

Who Pays Closing Costs and How Will I Know How Much I Owe at Closing?

You are generally responsible for all closing costs. Your lender is required to provide you with a Closing Disclosure at least three business days before your closing date that will include a full list of all such closing costs. Buyers typically pay closing costs averaging 3% to 6% of the purchase price.

Will I Need Private Mortgage Insurance?

Private mortgage insurance may be required if your down payment is less than 20% of the total purchase price. Once you reach 22% of the purchase price with your monthly payments, you may be able to cancel the insurance.

Are you in the market for a mortgage, refinance, or personal loan? Contact Mariner Finance today.