Q: Should I buy, instead of rent?

A: Simple answer, YES. Many of my clients who were renting had the idea that they could not afford a home. Homeownership allows one many benefits like the ability to deduct the cost of your mortgage loan interest and property taxes from your federal income tax. The home will appreciate in value, at least in this market, earning valuable equity as well.

Q: How much money will I have to come up with to buy a home?

A: This amount varies depending upon the value of the home, but there are typically three costs involved in buying a home: earnest money, down payment and closing costs. Earnest money is money you submit with an offer to buy that shows the seller you are serious and protects the seller in case of default. One percent of the sale price is acceptable as a guideline for earnest money. A down payment may be necessary from your lender to secure your loan, but there are still products available that do not require a down payment. Closing costs are fees associated with the sale and transfer of title; generally a wildcard that requires constant follow-up to keep on target. Three to four percent of the sale price is typical for a range of realistic closing costs. Good faith estimates from lenders regarding closing costs are estimates and should be taken with a grain of salt. One could possibly entice a seller to pay closing costs by offering more (the closing cost amount) for the property and asking for the seller to pay closing costs up to that amount. The difference would be an amount you borrow versus an amount you have to come up with for closing. Depending on the loan there will be a limit on the amount a seller can pay for you, but it's around three percent typically. I have sold homes to first-time buyers who only had two or three thousand dollars saved up for earnest money, where partial funds were returned at closing!

Q: Pre-approval or pre-qualification?

A: Quite simply a pre-qualification means you could possibly qualify for the loan amount, whereas a pre-approval is a letter of loan commitment and much stronger than a pre-qualification. I ask all of my clients to obtain a pre-approval before beginning the home buying process.

Q: What will my mortgage cover?

A: You should structure your loan to cover principal (actual loan), interest, taxes and insurance (homeowners and mortgage policies). You will still need to pay utilities of course.

Q: How long will it take to close?

A: After your offer has been accepted it can take anywhere from three to six weeks to close. It can be done even faster if you don't need a loan.