The "Ins-and-Outs" of buying a house...
What is the difference between "pre-qualified" and "pre-approved"?
If you are "pre-qualified" you have determined, with a loan officer,
what price you can afford based on the down payment, your debts and the
amount the mortgage company will approve for your mortgage. Being
"pre-qualified" is only a determination of your probable credit. If you
are "pre-approved", your credit, employment and funds have been approved
by the lender.
What are closing costs?
Closing costs are an accumulation of charges paid to different entities
associated with the buying and selling of real estate. For buyers, they
are usually about 4-6% of the total sales price of a property. Some of
the closing costs you might encounter are: application fees, appraisal
fee, county taxes, credit report, discount points, documentation fee,
escrow fees, homeowners' association fees, loan fees, mortgage
insurance, origination fees, tax registration and title insurance
What is a point?
One point is equal to 1% of the new loan amount. Whenever government
regulation, state usury laws and/or competitive practices prohibit the
lender from charging a rate of interest that would make the real estate
loan competitive with other fields of investments, the lender must seek
some method of increasing the yield for the investors. By charging
"points", the lender can bring the real estate loan up to those other
What is earnest money?
When you make an offer, you will need to put up an earnest money deposit
as a sign of good faith that you are seriously interested in buying a
home. That deposit becomes a part of the purchase price and is held in a
trust account until there is full acceptance of the offer. Typically, an
earnest money is 3-5% of the offer amount.
What is title insurance?
Title insurance protects the named insured against loss because of
defects, liens, encumbrances, adverse claims or other matters not shown
or disclosed to the new owner that attach before date of policy.
Is VA or FHA financing unfair to sellers?
FHA and VA loans provide purchasers the opportunity to buy homes with
minimal cash investment and at lower interest rates. The result is a
larger market for sellers, who also benefit by receiving all cash for