FAQ

Frequently Asked Questions

Buying Your First Home?

Thinking about purchasing a home of your own? Keep these critical considerations in mind:

If you purchase a home and get a job transfer or decide to move after only a short time, you may end up paying money in order to sell it. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home.

The length of time that it will take to cover those costs depends on various economic factors in the area of the home. Most parts of the country have an average of 5% appreciation per year. In this case, you should plan to stay in your home at least 3-4 years to cover buying and selling costs. If the area you buy your home in experiences an economic upturn, the length of the time to cover these costs could be shortened, and the opposite is also true.

What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you’ll need to ensure that the home has the amenities that you’ll need. For example, a two-bedroom dwelling may be perfect for a young couple with no children. However, if they start a family, they could quickly outgrow the space. Therefore, they should consider a home with room to grow. Having an idea of what you’ll need will help you find a home that will satisfy you for years to come.

Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, solid lenders are more skeptical if your credit history is not good. Generally, a couple of blemishes on a credit report will make you a good credit risk and could qualify you for the lowest interest rates. If you have more than a couple of blemishes on your report, lenders may still provide you with a loan, but you may just have to pay a higher interest rate and fees.

Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. This is a decision only you can make. Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching financially? Make sure that whatever you do, it’s within your comfort zone.

To determine how much home you can afford, talk to a lender or go online and use a “home affordability” calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the “28/36″ rule applies, in today’s home mortgage market, lenders are making loans customized to a particular person’s situation. The “28/36″ rule means that your monthly housing costs can’t exceed 28 percent of your income and your total debt load can’t exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential and other factors, lenders can push the ratios up to 40-60% or higher. While we’re not advocating you purchase a home utilizing the higher ratios, it’s important for you to know your options.

Typically, homebuyers will need some money for a down payment and closing costs. However, with today’s broad range of loan options, having a lot of money saved for a down payment is not always necessary – if you can prove that you are a good financial risk to a lender. If your credit isn’t stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender. As Low as 3% down payment programs are also available, best is to talk to your lender.

Maintenance, improvements, taxes and insurance are all costs that are added to a monthly house payment. If you buy a condominium, townhouse or in certain communities, a monthly homeowner’s association fee might be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your realtor and your lender aware of your desire to limit these costs.

If you are still unsure if you should buy a home after making these considerations, you may want to consult with an accountant or financial planner to help you assess how a home purchase fits into your overall financial goals.

Escrow FAQ's:

All Real Estate transactions are handled by Lawyers or Escrow Companies/Officers.

The process of escrow assures that no funds or property will change hands until all of the transaction instructions have been faithfully followed and completed. Acting as an unbiased and impartial third party, the escrow agent protects all funds and documents and distributes each only after all escrow conditions are achieved.

The buyer, seller, lender, borrower, the principals, will create escrow instructions, generally in writing, to be signed and delivered to the escrow officer. Normally, if a broker is involved, she/he will provide the Escrow Officer all necessary information for the creation of your escrow instructions and documents. At that point, the Escrow Officer processes the escrow according to the prepared instructions. Upon completion, and only when all required escrow conditions have been met, the escrow will be closed.

The Escrow Officer performs many duties, which may include, but are not limited to:

  • Adhering to the instructions set forth by the principals and all parties to the transaction.
  • Processing the Escrow in a quick and efficient manner.
  • When all terms have been complied with, he/she closes the Escrow.
  • Paying all authorized bills, fees and charges.
  • Disbursing funds in accordance with instructions.
  • Providing the Closing or Settlement Statement.

Please remember that Escrow Officers are not attorneys, cannot practice law, cannot offer legal advice and cannot relate personal opinions about the transaction.

Typically, homebuyers will need some money for a down payment and closing costs. However, with today’s broad range of loan options, having a lot of money saved for a down payment is not always necessary – if you can prove that you are a good financial risk to a lender. If your credit isn’t stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender. As Low as 3% down payment programs are also available, best is to talk to your lender.

First, be sure to read and understand your escrow instructions so you know what to expect. Direct any questions regarding your instructions to your Escrow Officer. He/she is chartered to follow the instructions set forth by the principals to the escrow. To ensure the timely close of your transaction, always try to respond to requests and correspondence promptly. Procedures differ, but you will be required to deliver funds into the escrow in the form required by your Escrow Officer. If you have any immediate or special need on the day of closing, such as checks, title issuance, policies, wires or statements, proactively advise your Escrow Officer.

Your Escrow Officer provides your lender with the escrow instructions, the preliminary report and any requested documents. The Escrow Holder is required to comply with the lender’s instructions when processing your closing. With a new loan, many lenders forward loan documents to escrow to facilitate signing of lender documents. Because these are lender documents, your escrow officer cannot interpret or explain them. Therefore, you can request that a lender representative be present at your signing to clarify any questions you have pertaining to the loan arrangements or documents.

The closing statement is a straightforward, written financial record compiled at the close of escrow that lists itemized charges and credits to your account. When you receive your closing paperwork, examine the closing statement carefully and direct any questions you may have to your Escrow Officer. Items shown on the statement will include:

  • Purchase price.
  • Funds deposited or credited to your account.
  • Funds you are entitled to at the close of the escrow.
  • Payoffs on existing encumbrances and/or liens.
  • Costs for all services.

The IRS often requires you to submit your costs and/or profit on the sale of any property so be sure to safely store your closing statement and all related escrow paperwork for income tax purposes.

Let's Find You Together The Place You Deserve

Font Resize