This is something I created as a hand-out for buyers I work with. Let me know if I'm missing anything or if something could use a fixin. Please feel free to use this as well, but I ask that my email and website be attached if you are going to use or repost this.
Thanks,
Dustin Nulf
Buyer FAQ
This page is an attempt to answer some popular questions that buyers tend to have when thinking about purchasing a new home. Please feel free to contact me with any other questions or comments via the "contact me" link on the top right-hand side of this page.
•1. Where do I start? What is the first step in the home-buying process?
I would say that a good first step would be to talk to some lenders to see "how much house you can afford". It's a good idea to talk to the bank or credit union that you utilize on a daily basis first. Find out what rates they can offer you on conventional mortgages and see if you can get prequalified right there. Don't be afraid to shop around too. Some banks will offer better rates than others on the same type of loan.
It is also good to know what monthly payment you'll be able to handle and whether you will want to look for a 15 year or a 30 year mortgage.
•2. What does it mean to be prequalified? Why should I be prequalified?
Being prequalified is having a lender take a look at your credit history, your income, and your debt ratios to determine the maximum amount that they would be willing to lend you (if at all). The lender will then supply you with a written notification stating that you're a prequalified for up to $xxx. Having this letter allows you to place an offer on a property and supply proof that you are "good for it". Many sellers will not even consider an offer unless there is some sort of proof-of-funds or preapproval letter.
•3. What is an FHA loan?
FHA loans are very popular nowadays. An FHA loan is a federally-backed mortgage. The standards for receiving an FHA loan are usually a bit more lax than other types of mortgages. FHA loans allow barrowers to accept a certain amount of money as a "gift" from family and also usually require less money down. FHA loans usually require the property to be in better shape than a conventional loan. (There can be no peeling paint or old electrical boxes and things of this nature).
•4. What is a VA loan?
A VA loan is a loan that is also backed by the government and is available to those who have served in the Armed Forces at one time. VA loans are also a bit more relaxed when it comes to barrower requirements. Ask your loan officer for more information on VA loans if you think you may qualify.
•5. What are the benefits of using a Real Estate Agent over searching on my own?
The benefits of using a Real Estate Sales Professional are many:
Experience: A Real Estate Agent is a trained professional in the field of Real Estate Sales. Agents view, show, and complete real estate transactions on a regular basis, whereas an average buyer may only buy or sell a property 1 to 3 times in their entire life.
Negotiations: Having an Agent is also having a negotiator mediating between you and the seller. Emotions tend to become involved when individuals are selling the home they have lived in for a while and unfortunately this can lead to heated arguments which sometimes result in a failed transaction. To have someone on your side, working as a mediator to quell any such issues and avoid disputes is a major advantage.
Bargains!: A good Buyer's Agent will be able to do a Comparative Market Analysis for you to ensure that you are not paying too much for a home in any given area. He or she should also be able to walk through a property with you and let you know where certain issues may arise affecting your ability to get financing as well as things that may drain your pocket book in the future. (Leaky plumbing, older appliances, older roofs, etc.). Your agent should then be able to advise you in your best interest during offer time.
No Fee!: Buyer's Agents do not get compensated until the sale closes... and the commission comes from the seller not the buyer. If you are not satisfied with the efforts of your Buyer's Agent, you should be given the option of writing a termination letter and finding a new agent (this is an option that all buyers should demand).
•6. Won't I save money by avoiding the services of a Sales Agent then?
A large number of homes are sold by Real Estate Agents. Just drive down any road near you and see for yourself... compare the number of homes with a broker's sign to the number with "For Sale by Owner" signs. Who has the most homes for sale? If you are buying your home from an agent, you will be paying a commission (period). The same commission will be collected no matter how many agents are involved (it's in the contract that the seller(s) signed to list their home). So if the same commission is being collected either way, would you prefer to be represented or not? The seller is being represented in this scenario.
Now let's say the home you want is 10% overpriced, but you don't know this. Wouldn't you want to have someone who is able to warn you before you pay too much for this home? This is how a Buyer's Agent can save you money.
(I was being nosey one day and looked up the price of two homes that some friends of mine had purchased strait from an agent without having an agent working for them. I was sad to see that they had both overpaid by 10k or more.)
•7. Are all Real Estate Agents also Realtors®? What's the difference?
Real Estate Agents are not all members of a Realtor's® Association. Realtors® are members of local and national Realtor® Associations. To be a Realtor® means that you have been sworn to uphold a higher level of ethical business practice. A Realtor® is held accountable to this oath by his colleagues within the association and by the clients he works with every day.
Did I miss anything? For more information about purchasing a home, drop me a line at: dustinnulf@prudentialpreferred.com
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