Buying or selling a home can be a daunting task. Often there are so many questions that need answers before you take the plunge. In this blog post, we’ve got you covered with some of the most frequently asked questions about real estate. From understanding common real estate terms to guidance on mortgage loans – this post will leave you feeling confident and prepared for your next real estate adventure.
1. What is the difference between pre-qualification and pre-approval?
Pre-qualification is the first step in the mortgage process. This usually involves a simple conversation with a lender where you provide your financial information. Based on that, the lender will give you an estimate of how much you might be able to borrow. Pre-approval, on the other hand, is more involved. You will need to provide more detailed financial information, and the lender will verify this information. With Pre-approval, you will receive a written offer that guarantees the amount you can borrow. Obtaining a Pre-approval ensures that your budget is the most accurate it can be and will strengthen your offer for the home you want to purchase.
2. What are closing costs?
Closing costs are the fees and expenses associated with the purchase or sale of a property. These can include things like loan origination fees, inspection fees, title search fees, appraisal fees, attorney fees, and more. Closing costs typically amount to between 2-5% of the purchase price of the property.
3. What is an escrow account?
An escrow account is a special account that is held by a third party (usually a title company or a lawyer) during the home buying process. Money from the sale is deposited into the account, and the funds are released to the seller only when all conditions have been met. This helps to protect both the buyer and the seller by ensuring that the money is only released when everyone has fulfilled their obligations. With a Realtor guiding you through the home buying process, this is typically a seemless transaction on closing day.
4. What is a home inspection?
A home inspection is a detailed examination of a property’s condition. This includes checking the foundation, roof, electrical and plumbing systems, and much more. The inspection is typically conducted by a professional inspector hired by the buyer. The inspector provides the buyer with a report that identifies any issues or concerns with the property. This report is then used to negotiate repairs or credits with the seller before the sale is finalized. Ask your Realtor for a listed of recommended Inspectors if you do not have a preferred company.
5. What is earnest money?
Earnest money is a deposit that is made by the buyer when submitting an offer on a property. This deposit shows the seller that the buyer is serious about purchasing the property. If the sale goes through, the earnest money is typically applied towards the down payment or closing costs. If the sale falls through due to a contingency in the offer, the earnest money is typically returned to the buyer.
Buying or selling a home can be overwhelming, but hopefully, these FAQs have helped to ease the process. Remember that working with an experienced real estate professional can make all the difference when it comes to navigating the ins and outs of real estate transactions. From mortgage pre-approval to the home inspection, understanding the process is key to making informed decisions and successfully closing on your dream home. Let our agents take the pressure off of you and help guide you through the process!