Ask Nancy
Below is a collection of questions and answers frequently asked by people. They should be helpful to you. If you have a question that is not covered here, feel free to send your question to Nancy. She will respond to you via email and, if appropriate, will add your question and answer to this list. Thank you for questions!
Q: How do I begin the process of buying a home?
A:Thinking about your situation:
- Are you ready?
- How much can you afford in a monthly payment?
- How much space do you need?
- What area of town do you want to live in?
List your wants and needs – Then call me! I will conduct a personal home search for you and give you a web portal that will send new listings directly to you. We will then start viewing houses to find a home that is perfect for you and your family.
Q: Will a pool increase value?
A: Some home improvements pay off more than others. Enjoy your home improvements and most will assist you in selling your home faster. Too many expensive improvements that go beyond what is typically found in the neighborhood will make the home difficult to sell. Improvements in Kitchens and bathrooms are the best return on investment, generally 85%!
Q: How does being “pre-approved” help me?
A: You should set aside 15 to 20 minutes to discuss your assets and credit with a qualified lender. Please see my husband’s link below for a “Team Rate”. Your lender will let you know how much you are qualified to purchase. This will allow you to shop knowing how much it will cost and how much your monthly payments will be. This information will also assist you with negotiation on a contract because the seller realizes you are qualified buyer. The entire loan process is expedited and can be closed sooner.
Q: What are some questions I should ask a prospective agent?
A: So, you’re thinking about buying a new home! The first place to start is by looking for a professional to help you. An experienced real estate agent will “bind” together the entire process. The right pro will help you find the right property and keep things on track from shopping to closing. Here are some key questions to ask the agents you are interviewing:
- Do you represent the buyer or the seller?
- What are your fees and who pays them?
- How much time will you have to help me look for a new home? What tasks will you perform for me as my representative?
- How often will you communicate with me, and how can I reach you?
- Will you refer me to some buyers you have represented recently?
- Do you have access to the area multiple listing service, foreclosed listings and other sources of information about available houses?
- Will you show me all the available houses in my price range, even if they are listed by another company?
- Will you give me a comparative price analysis for any homes I am considering?
Q: Is it better to buy in a new home area or a resale community?
A: New or previously owned? Once you’ve started to look at homes under construction, or for resale in established neighborhoods. Here are some pros and cons for each type of house:
Newly-Constructed Homes
- Pluses: You choose the colors and finishes for floors, bath tiles, appliances, kitchen counters and cabinets. You can opt to upgrade and select builder options, and often can choose your lot. Everything is clean and new when you move in. Generally priced higher than resales.
- Minuses: You may not see the home you are buying until the final walk-through, and may find a number of items that need to be fixed by the builder’s maintenance crew. Often, new home buyers have to deal with construction traffic, debris, mud, dust and unfinished roads.
Existing Resale Homes
- Pluses: You can see the home you are buying, and many personal touches like drapes and curtains will likely have been added. You can also tell what the neighborhood will be like by driving through during the day, and how rush hour will be by passing through in the evening.
- Minuses: The seller’s tastes may not be yours, and you may need to do some redecorating to tailor the home to your color scheme. Also, the appliances may be several years old if they haven’t recently been replaced for the sale.
Q: We’re a little tight on cash. How can we shift some settlement costs to reduce out of pocket expenses?
A: Some buyers reduce the cash needed at settlement by scheduling closing at the end of the month. But there are several other ways to save on closing costs that may work better in the long run:
- Skip late-month settlement – Since interest on the loan is paid to the end of the month at settlement, the interest payment gets lower as you get closer to the end of the month. But another approach is to wait a few days until the beginning of the next month. That way, you’ll need to pay more up front at settlement, but you’ll gain a whole months delay before the first full mortgage payment is due, because mortgage interest is paid in arrears, after the month has passed.
- Reduce out-of-pocket cash – Another way to reduce the cash needed at settlement takes some advance planning. By negotiating with the seller, the buyer may be able to pay more for the home and finance it, while the seller puts an equal amount toward out-of-pocket settlement costs.
- Finance closing costs – A third option is to find a lender who finances closing costs by wrapping them into the mortgage. This method may, however, cost more over the long run, as lenders often will then charge a higher interest rate for a “no closing costs” loan.
Q: What is a contingency?
A: A contingency is a condition on the sale put into the contract by either the buyer or seller to protect against specific eventualities. Examples of common contingencies are: a requirement that the buyer obtain financial or sell the current home; the seller has a home inspection done; or the seller must repair certain items before settlement. Contingencies can be removed by an addendum to the contract, or they can expire if a time limit is specified in the contract.
Q: What are some typical closing costs?
A: When you apply for a mortgage, the lender must respond with a Good Faith Estimate of Closing Costs, which explains the costs you will likely have to pay at settlement. But the numbers on the form are estimates, and the final tally could be higher or lower. Some of the more common charges are:
- Loan Origination Fee – usually 1% of the loan.
- Loan Discount Points – a form of accelerated interest; each point is 1% of the loan amount (who pays points is negotiable between buyer and seller)
- Appraisal Fee – the charge to have a professional appraiser certify the value of the property being purchased.
- Credit Report – the cost of getting a credit history from a credit service.
- Tax Service Fee, Document Preparation fee – charges to set up a tax escrow account and prepare mortgage documents.
- Attorney fees – the settlement agent’s charges for processing the sale closing.
- Title Insurance – charges for insurance to guarantee the validity of the properties title for the lender; buyers can also purchase title insurance a t settlement to protect their interest.
- Recording Fees, Tax Stamps – local charges to officially record the deed and mortgage, and transfer taxes.
- Survey – the charge to verify the boundaries of the property being purchased.
Q: I’ve heard about “agency”. Who does a real estate agent really work for?
A: Many home buyers and sellers are confused about who real estate agents represent. Don’t worry; they’re not trying to disguise themselves. A quick look at the various types of agency should help:
- Seller Agency – the most traditional situation is one in which the seller is represented by both the real estate company who lists the home for sale and the real estate company who brings in the buyer.
- Buyer Agency – this is a relatively new trend in real estate. Just as a written Listing Agreement is required to represent a seller, a written Buyer Agency Agreement is required to represent a buyer. Under that written agreement, the agent represents the buyer with confidentiality and loyalty, and shares with the buyer any material information.
- Disclosed Dual Agency – in this case, an agent helps both the buyer and the seller. There must be informed consent of both the buyer and seller, using a written agreement with the involved broker(s). Special conditions apply regarding disclosures to both parties, including limitations on an agent’s ability to represent either buyer or seller fully or exclusively.