Q: Do I need a home inspection?
A: Need? Not always. A new or nearly new home may not need an inspection. It is always recommended that an older home be inspected.
Q: What is a home inspection?
A: A home inspection is carried out by an objective third party to establish the condition of a property during a real estate transaction. An inspector will report on such things as a home’s heating system, the stability of the foundation, and the condition of the roof. The inspection is meant to identify major issues that might affect the value of the home and the stability of your and your lender’s investment and return.
Q: What is a pre-approval letter?
A: Documentation from your mortgage lender showing how much money you have been approved to borrow and what type of loan program you have been approved for. This means a lender has checked your credit, verified your information, and approved you for up to a specific loan amount for a period of up to 90 days.
Q: What is an appraisal?
A: A professional analysis used to determine the value of the home. The lender will not provide a loan for any amount over the appraised value. The lender orders the appraisal and the buyer pays for it through closing.
Q: How much money do I have to put down to buy a home?
A: Typically, a buyers’ down payment is 3-20% of the purchase price, but there are programs available (if qualified) at 0%.
Q: What is a rate lock?
A: A rate lock allows borrowers to lock in an advantageous interest rate before a real estate transaction closes. A rate lock allows the borrower to lock in that interest rate for a specific period of time protecting them from market fluctuations.
Q: What happens at a final walkthrough?
A: It is one more chance to inspect the home before closing. It is the time to confirm that all agreed upon repairs are complete and that the property is as expected.
Q: What is title insurance?
A: Title insurance protects buyers in case there are any outstanding liens on a property.
Q: What is earnest money?
A: Earnest money is a deposit (usually 1-2% of the home’s total purchase price) made by a homebuyer at the time they enter into a contract with a seller. Earnest money demonstrates the buyer's interest in the property and is generally deducted from your total down payment and closing costs.
Q: What are closing costs?
A: Closing costs are the fees or charges connected to originating & closing a mortgage loan. usually comprised of between 2-5% of the total purchase price of the home and can include fees paid to title companies, attorney fees, title recording fees & lender fees. These fees are paid on/prior to the closing date.
Q: What are pre-paid’s?
A: Expenses that are pre-paid when you buy a home: first year of property insurance, 1st month of mortgage insurance, property taxes and the start up for your escrow account.
Q: What is an assessed value?
A: An assessor calculates the assessment of a home’s value by looking at comparable homes in the area and possibly inspecting the home in question. Property taxes are based on this value.
Q: What does “subject to sale” mean?
A: An offer submitted to a seller that includes that the buyer's existing house is not yet sold, but the Purchase & Sale Contract is contingent (or "subject to") that house closing in order for the Buyer to close on the purchase.
Q: What is down payment assistance?
A: Down payment assistance programs help homebuyers with loans or grants that reduce the amount of down payment that a buyer has to pay.
Q: What is a mortgage?
A: A mortgage is the agreement between a borrower and a lender giving the lender the right to the borrower’s property if the borrower is unable to make loan payments (with interest) within an agreed upon timeline.
Q: What is amortization?
A: The schedule of your mortgage payments spread out over time. In real estate, a buyer's amortization schedule is usually one monthly payment scheduled over a 15- or 30-year period of time.
Q: What is APR?
A: The annual percentage rate (APR) is the amount of interest charged on your loan every year.
Q: What is community property?
A: Community property refers to property acquired by a married couple and owned equally by both spouses.
Q: What happens to earnest money?
A: It is paid to the listing agency when an offer is written or accepted. The listing agency holds it in their trust account. It is applied to the buyer's closing costs or down payment at closing.
Q: What is a back-up offer?
A: An offer placed on a property that is already under contract. These second buyers are hoping that the first offer is cancelled and they will be able to purchase the property.
Q: What is a buyer’s agent?
A: The real estate licensee that helps a buyer locate a property & represents that Buyer's best interests to obtain the best price & purchase scenario for that buyer. Also knows as a Selling Agent.
Q: Should I have more than one real estate agent show me homes?
A: No. You should choose one real estate agent who you trust and feel comfortable with, one who acknowledges what you want and need in your next home. That agent's responsibility it to represent you and your best interests.
Q: How do I prepare my home for a showing?
A: Look at your house through a “buyer’s eyes” as though you have never seen it before. Keep your home clean & tidy by removing unnecessary objects from all surfaces and cleaning your home, hide pet supplies, leave lights on, play music (especially if you’re home has built in speakers.)
Q: What is a Seller’s Property Disclosure?
A: A document completed by the seller that provides information & details about a property's physical condition – both good & bad.
Q: What is a home warranty?
A: A policy designed to protect a home's systems & appliances. They typically are for 1 year at a time. In a real estate transaction, it is common for a seller to provide a warranty for the buyer. Any home or condo owner can purchase their own warranty.
Q: What are seller-paid closing costs?
A: Terms written into a Purchase Contract that require the seller to pay part of the Buyer's closing costs and/or pre-paid’s. This reduces the seller's net profit and also reduces amount of money the Buyer needs to pay at closing.
Q: What does “as is” mean?
A: The property is being sold as it is presented. The seller is unwilling to perform most, if not all, repairs.
Q: What is a listing agent?
A: The real estate licensee that represents a seller by marketing the seller's property and resenting the seller's best interest to secure the best price and selling scenario possible.
Q: What is a CMA?
A: A Competitive Market Analysis (CMA) is a report, usually provided by a listing agent, on comparable homes in the area that is used to derive an accurate value for the home in question.
Q: Who pays the real estate commission?
A: The seller typically pays all real estate commissions. A buyer does not pay commission.
Q: What is principal?
A: The principal of a loan is the amount of money owed on that loan. As you make monthly- mortgage payments, your principal -- in theory -- goes down. The amount of interest you pay on a monthly loan will affect how much of your monthly mortgage payment goes to paying down the principal. A high interest rate means you’ll pay less on the principal, meaning you’ll pay more on your loan over time.
Q: What does “real estate owned” mean?
A: Real estate owned (REO) refers to property owned by a bank, government agency or other lender. Homes typically become real estate owned after an unsuccessful foreclosure auction or short sale.
Q: What is a short sale?
A: A short sale occurs when a homeowner sells their property for less than what’s owed on the mortgage. A short sale allows the lender to recoup some of the loan that's owed to them but must be approved by the lender before the seller moves forward.
Q: What is a title?
A: A home’s title represents the rights to the property. Those rights are transferred from the seller to the buyer during a real estate transaction and give the buyer legal rights to the property upon closing.
Q: What is the difference between a real estate agent & REALTOR®?
A: A real estate agent is licensed to negotiate and coordinate the buying and selling of real estate transactions. Most real estate agents must work for a REALTOR® or broker with additional training and certification. A REALTOR® is all of those things and a member of the National Association of REALTORS®, agreeing to abide by the Code of Ethics.
Q: What is a Purchase & Sale (P&S) Agreement?
A: A Purchase & Sale Agreement demonstrates a buyer’s intent to purchase a piece of property and a seller’s intent to sell that property. The document outlines the terms and conditions of a sale and holds each party legally accountable to meeting their agreement.
Q: What is a quit claim deed?
A: A quitclaim deed is a document transferring ownership of property from one party to another. It transfers the title of the property -- but only transfers what the seller actually owns.
If two people own a home jointly, one person could only transfer their half of the property via quitclaim. This type of transaction is commonly used when property is being transferred between family members not using traditional real estate channels.
Q: What is the escrow account in a mortgage?
A: Part of a monthly mortgage amount usually goes into the escrow account. These funds are used to pay the property taxes & insurance when those come do. This allows a homeowner to pay 1/12 of these expenses each month instead of paying them when they come due every six months.
Q: What is the difference between real property & personal property?
A: Real property is fixed – land and anything growing on it attached to it or built on it. Personal property is moveable.
Q: What is an amendment?
A: A written document that makes changes to a contract. It must be agreed to in writing by all parties to the original contract.
Q: What is a contingency?
A: If a property is contingent, or the contract contains a contingency, certain events must transpire or the contract can be considered null. A contingency might be that the home must past an appraisal or receive a clean inspection. The sale of a home could also be contingent on the buyer selling their home by a specified date. If either the buyer or seller fail to meet the expectations of the contingency, either party can exit the contract.
Q: What is a sump pit & pump?
A: A sump pit is a hole in the basement floor with a gravel base. It is intended to gather excess water. The pump removes the water from the pit and discharges it outside.
Q: What is radon gas & why should I care?
A: Radon is a naturally occurring gas that is produced by decaying uranium in the soil. It can enter a home through gaps & cracks in the foundation. Long term exposure to high levels of radon can cause lung cancer.
Q: What is radon monitoring?
A: There are short term activated charcoal-based test that a homeowner can set in their home for 2-7 days, then send in for results. Other tests can be set for 90 days-1 year and use alpha particle tracking. A professional will leave a continuous electric monitor in the lowest part of a home for 48 hours and provide results shortly after the monitor is retrieved.
Q: What is radon mitigation?
A: Mitigation is a system to remove the radon from a home. Passive mitigation is a PVC vent pipe from the sump pit to the outside. An active system also has a fan to draw out the radon.
Q: What is a homeowners association?
A: A homeowners association (HOA) is a non-profit organization intended to maintain the community & uphold the area property values. HOA's are usually found when you purchase a condominium, townhome, or other development property. To purchase the home, you must also join the HOA and pay monthly or yearly HOA fees. These fees can cover common area maintenance, repairs, and general upkeep. The more amenities the building/community offers, the higher the HOA fees typically are.
Q: What do HOA dues provide?
A: HOA dues typically cover the costs of maintaining the association's common areas: landscape, ponds, pools, elevators, common areas of buildings, saving for future large expenses and the association's insurance.
Q: What are restrictive covenants?
A: Binding legal obligations written into the deed of a property. They enforce a standard of uniformity across a development & can apply to both single family home neighborhoods and condo or other multi family communities. They often include the designated purpose of the property, minimum sizes of homes, pet policies, whether fences or sheds can be constructed, lease restrictions, maintenance requirements and many more.
Q: What is a title opinion?
A: A title examination reviews all public records tied to a property. It generally reviews all previous deeds, wills, and trusts to ensure the title has passed cleanly and legally to every new owner.
Q: What is a lien?
A: A property lien is unpaid debt on a piece of property. It's a legal notice and denotes legal action taken by a lender to recover the debt they are owed. It can come from unpaid taxes, a court judgement, or unpaid bills and can slow down the home buying process when unattended.
Q: What is fair market value?
A#1: A property’s fair market value is its accurate valuation in a free and open market under the condition that buyers and sellers are knowledgeable about the asset, acting in their best interests, and free of undue pressure to complete the transaction. OR The price a home would sell for under normal market conditions.
Q: What does “sale pending” mean?
A: A sales is considered “pending” if all contingencies have been met and the buyer and seller are moving toward closing. At this point, it’s unlikely the sale will fall through, and the buyer or seller risk losing the earnest money if they walk out on the deal at this point.
Q: When should I schedule my movers?
A: 4-6 weeks prior to your moving date (or sooner!)
Q: What is a clear title?
A: Also known as a "just title," "good title," or a "free and clear title" -- a clear title doesn’t have any kind of lien or levy from creditors. It means there is no question of legal ownership of the property such as building code violations or bad surveys.
Q: What is a closing?
A: A closing is the final stage of the real estate transaction. The date is agreed upon when both the buyer and seller go under contract on the home. On the closing date, the property is legally transferred from seller to buyer.
Q: What happens at closing?
A: The home sale is completed. A Seller's documents are presented and the Buyer's monies are conveyed (either cash or through a mortgage.)
Q: How long does it take to close on a house?
A: A cash purchase can take 21-30 days to close. A conventional loan takes 30-45 days & VA, FHA or USDA can take 60 days or more.
Q: What is foreclosure?
A: If a homeowner doesn’t make a mortgage payment (usually, for more than 90 days), foreclosure is a legal process during which the owner forfeits all property rights.
If they are unable to pay off outstanding debt on the property or sell it via short sale, the property enters a foreclosure auction. If no sale is made there, the lender takes control of the property.
Q: What is appreciation?
A: Appreciation is the amount a home increases in value over time.
Q: What is an easement?
A: An easement grants someone else the legal right to use another person’s land or property while leaving the title in the owner's name.
Q: What is encroachment?
A: When a property owner violates the rights of a neighbor by building or adding on to a structure that extends onto a neighbor’s land or property line, that is called encroachment.
Q: What is the Equal Credit Opportunity Act?
A: The Equal Credit Opportunity Act (ECOA) was enacted on October 28, 1974 and rules it unlawful for creditors to discriminate against applications because of race, color, religion, national origin, sex, marital status, age, or because they receive public assistance.
Q: What is equity?
A: Home equity is the part of your property you actually own. While you do “own” your home, your mortgage lender has interest in the property until it’s paid off.
To calculate your home’s equity, subtract your outstanding loan balance from the current market value of your property. Home equity will increase as you pay down your loan or the market value of your home increases.
Q: What does it mean to "flip" a house?
A: In real estate, flipping houses describes the strategy of purchasing a property, making improvements to it, and then putting it back on the market for a profit.
Q: What is a distressed property?
A: A property becomes distressed when a homeowner defaults on their mortgage payments, is delinquent on paying property taxes, or is condemned due to disrepair.
Any additional questions, please do not hesitate to reach out! 978-855-9112