1. My REALTOR wants me to apply for a mortgage before we find "the" house. Why?
2. Does our REALTOR have to show us every house?
3. The first two houses we looked at met all our needs. Which one do we buy?
4. When do we inspect the home we want to buy?
5. What’s the difference between pre-qualification and pre-approval?
6. What should be included in our offer to purchase?
7. What do I need to take to closing?
8. What do I do at closing?
9: How do I remember and evaluate the features of each home I see?
Q. My REALTOR wants me to apply for a mortgage before we find "the" house. Why?
Your REALTOR's job is to find a home that meets your needs AND that is affordable. Showing you homes that are too expensive for your budget will discourage you, waste your time and could cause you to miss finding the right house because you were looking at the "wrong" ones.
It goes without saying that smart buyers will plan ahead for their home purchase. Most prospective buyers spend a long time picking out the perfect home, yet they are likely to wait until the last minute to learn about their financing options. In reality, you should know your credit standing before you even set foot in an open house. The sooner you know your credit rating, the more time you'll have to improve it and qualify for the best loan possible.
Most home lenders use FICO credit risk scores as a factor to determine your loan as well as your interest rate. The higher your score, the better your terms can be. See the FINANCING FAQs for details.
Q. Does our REALTOR have to show us every house?
By the time you’re ready to start looking at houses, you have shared a lot of information about your needs and goals (and sometimes your dreams) with your agent. No one is in a better position to help you evaluate a property than someone who understands your motivation and requirements. It is not uncommon that you will acquaint yourself with neighborhoods by exploring on your own but always include your agent when you want to see a particular house. If you buy a home that your agent doesn’t introduce you to (Open Houses might be exceptions), your agent will not get paid for the work done on your behalf!
Q. The first two houses we looked at met all our needs. Which one do we buy?
This is a good problem to have! Sit down with your REALTOR to review your real estate needs then prioritize your requirements. Don’t hesitate to include your “gut feel” about a house in your list of priorities – while your new house must fulfill your needs, you will also want it to feel like “home.”
Q. When do we inspect the home we want to buy?
In almost every transaction the home inspection is ordered soon after your contract to buy is accepted. However, before you sign the contract, be sure that there is an inspection clause making your purchase obligation contingent upon the findings of a professional home inspection. This clause should specify the terms to which both the buyer and seller are obligated. (See Home Inspection FAQs).
Q. What’s the difference between pre-qualification and pre-approval?
Not all lenders apply the same definition to each expression. When you are "pre-qualified," the lender is making an educated guess about how much you can borrow based on information you've provided. When you are "pre-approved," the lender has verified everything you have told him or her and is offering to lend you up to a given amount at current interest rates -- under certain conditions. Whether pre-qualified or pre-approved, a loan commitment is subject to an appraisal satisfactory to the lender, good title, a last-minute credit check, and other verifications. When meeting with lenders, always ask how they define each term and what additional steps will be required to obtain a loan.
Q: What should be included in our offer to purchase?
The purchase offer you submit, if accepted as it stands, will become a binding sales contract or purchase agreement. It's important, therefore, that it contains all the terms of the final sale:"
• Address and sometimes a legal description of the property.
• Sale price.
• Terms -- for example, all cash or subject to obtaining a mortgage for a given amount.
• Seller's promise to provide clear title (ownership).
• Target date for closing the actual sale.
• Amount of earnest money deposit accompanying the offer (usually 1% of the purchase price in the Indianapolis market) and how it's to be returned to you if the offer is rejected -- or kept as damages if you later back out for no good reason.
• Method by which real estate taxes, rents, fuel, water bills and utilities are to be paid between buyer and seller.
• Provisions about who will pay for title insurance, survey, termite inspections and the like.
• Type of deed to be given.
• A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing.
• A time limit (preferably 24 hours) after which the offer will expire.
• Any contingencies that must be cleared for the purchase to close, e.g., you must obtain specific financing from a lending institution or a satisfactory report by a home inspector within 10 days (for example) after acceptance of the offer. Again, make sure that all the details are nailed down in the written contract.
Q. What do I need to take to closing?
You will need a paid receipt for your home owner’s insurance policy, photo ID, and a certified check for the specific amount needed to close the transaction.
You will sign several documents that are required to transfer ownership including your mortgage and a promissory note, tax-related documents.
Q: How do I remember and evaluate the features of each home I see?
Ask me for a 1st Home Realty Home Comparison Worksheet.
Home Comparison Worksheet
I will provide . Items with a “?” get a rating; others need a fact, e.g. Kitchen? 1-2-3 or
1. Get funding
2. Make an offer
3. Get insurance
4. Closing
5. What’s next?