FAQs – A BUYER’S GUIDE
What is a pre-approval letter?
A pre-approval letter is a document from a lender that states that you have been pre-approved for a certain loan amount, based on your income and credit history. It is an important step in the home buying process as it shows sellers that you are a serious and financially capable buyer.
How much money do I need for a down payment?
The amount of money needed for a down payment varies depending on the type of loan you are getting. For a conventional loan, the down payment is typically 20% of the purchase price. For an FHA loan, it can be as low as 3.5%.
What is an escrow account?
An escrow account is a neutral third party account that holds the money for the down payment and closing costs until the sale is complete.
What is a home inspection?
A home inspection is a thorough examination of a property to identify any potential issues or defects. It is usually done before the purchase of a home and can help you make an informed decision on whether to proceed with the purchase.
What is a closing cost?
Closing costs are the expenses that are associated with the purchase of a home, such as loan origination fees, title insurance, and escrow fees.
What is a mortgage rate?
A mortgage rate is the interest rate that you will be charged on your mortgage loan. It can vary depending on the type of loan and the lender.
What is a closing date?
A closing date is the date when the sale of the home is final and the property is transferred from the seller to the buyer.
What is private mortgage insurance (PMI)?
PMI is insurance that protects the lender in case the borrower defaults on the loan. It is typically required for conventional loans with a down payment of less than 20%.
What is a real estate agent?
A real estate agent is a professional who helps buyers and sellers navigate the real estate market. They can help you find a home that meets your needs, negotiate the purchase price and assist with the paperwork and closing process.