Frequently Asked Real Estate Questions

What is a conforming loan?

A conforming loan is one that is limited to $647,200 for most of the U.S., which means you may be able to avoid the stricter requirements of a jumbo loan.

Loan limits vary over time and by location so you should check with your lender or Realtor for the latest information.

Other loan types include jumbo loans, FHA, and VA.

What is a credit score?

A number ranging from 300-850 that’s based on an analysis of your credit history.

Your credit score helps lenders determine the likelihood you’ll repay future debts.

You’ll need a score of 620 or better, but you’ll get better financing rates with a score of 720 or higher.

There is much more to know about credit and credit scores, so feel free to ask if you have specific questions.

To learn more about credit scores and credit reports, click here.

What is a Deed of Trust?

A Deed of Trust is like a mortgage. It is an agreement between a borrower (you) and a lender (a bank or other financial institution).

The lender gives you money to buy a house or other property, and you agree to repay the loan with interest, in regular payments.

The Deed of Trust also includes a clause that says if you don’t make the payments, the lender can take the property back.

What is a down payment?

The sum in cash that you can afford to pay at the time of purchase of a home or property.

A conventional loan down payment is usually 20% of the sales price, but other types of financing require as little as 3.5% to 15%. Some 0% down programs are also available.

A mortgage lender can tell you what types of loans you qualify for.

What is a Jumbo Loan?

Conforming loan limits are $647,200 for most of the U.S., so anything above this would be a jumbo loan.

Jumbo loan requirements are stricter and there are more requirements you will need to satisfy.

Find out more about jumbo loans here.

The interest rate on a mortgage loan you pay to borrow that money when buying a home.

The lower the rate, the better.

Mortgage rates vary daily, so you don’t have any particular rate until the lender “locks in the loan” securing that rate for your home purchase.

The rate you qualify for is based on your personal financial situation and the type of loan you are applying for.

What is a Pre-Approval Letter?

It is a letter from a lender indicating you qualify for a mortgage of a specific amount.

Getting Pre-Approved

You’ll fill out a mortgage application, provide documents, and bank statements, get a copy of your credit report, etc.

Getting pre-approved is what you need to do before starting a home search. The person selling your dream home will want to make sure you really are qualified to buy. Most sellers aren’t willing to accept your offer with only a pre-qualification.

What is getting Pre-Qualified?

You contact a lender, provide a bit of financial information to them, and they tell you about how much you can afford to buy. That’s about it. It’s usually done over the phone, and your credit report is not needed at this point.

WARNING!  It’s NOT a promise of a loan. You are not guaranteed any particular interest rate. And you are not ready to purchase a home. What you have is an idea of what you may be able to buy. It’s a starting point, and a good way to start planning.

You’ll want to get a Pre-Approval Letter from your lender before you start shopping for a home.

One of the first steps in purchasing a home is getting either pre-approved or pre-qualified for a mortgage. Unless of course, you’re buying with all cash. 😁

It’s very easy to get confused between the two things. So, should you get Pre-Qualified or Pre-Approved for a mortgage loan?

Without getting into too much detail, we’ll give you just the essentials to understanding the difference, not the complete procedure for each.

Pre-Qualified

This is the simpler of the 2 processes. You contact a lender, provide a bit of financial information to them, and they tell you about how much you can afford to buy. That’s about it. It’s usually done over the phone, and your credit report is not needed at this point.

WARNING! 🔥 It’s NOT a promise of a loan. You are not guaranteed any particular interest rate. And you are not ready to purchase a home. What you have is an idea of what you may be able to buy. It’s a starting point, and a good way to start planning.

Check out Investopedia for a more in-depth explanation if you’re curious. https://www.investopedia.com/articles/basics/07/prequalified-approved.asp

Pre-Approved

This one is where the rubber meets the road. Paperwork, and plenty of it. You’ll fill out a mortgage application, provide documents, bank statements, get a copy of your credit report, etc.

It takes more time and there are more questions. It’s best to start with plenty of time before you plan to start looking for a home. That way you can deal with finding the papers you thought were in that one file cabinet, get your updated investment info, and try to fix any credit issues you may have.

Getting pre-approved is what you need to do before starting a home search. The person selling your dream home will want to make sure you really are qualified to buy. Most sellers aren’t willing to accept your offer with only a pre-qualification.

Again find out more here. https://www.investopedia.com/articles/basics/07/prequalified-approved.asp

Conclusion

Save yourself some heartache, heartbreak, and hair-tearing-out. Get pre-approved before shopping for homes.

Better yet, call me, Libby Guthrie at 925-628-2436 and I’ll answer your questions about getting started, and if you like, I’ll connect you with the right lender for your situation.

Just so you know, before my 25 years as a real estate agent and broker, I spent 15 years in mortgage banking. I know what I’m talking about and I love to share my expertise with you and your family.

Contact me today, share this article with a friend, and please, share it on your favorite social site. Thanks!

What is a Settlement Statement?

A settlement statement, also known as a HUD-1, is a document that lists all the costs associated with buying or selling a home.

It includes the purchase price, loan fees, taxes, insurance, and any other costs that need to be paid at closing.

This document will be given to the buyer and seller at the closing of the real estate transaction.

Really good agents will also send you a copy of your HUD-1 right before tax time to make sure you take advantage of any tax-deductible expenses from the purchase or sale of your home.

An Active Property

The property is actively for sale and on the market. The sellers may have received offers but have not accepted any yet.

When an offer is accepted the property will become Pending the completed sale.

If the contract falls through, typically the property will go Active again.

Active contingent in real estate is a status of a property listing indicating that it is under contract, but that the sale is contingent on certain conditions being met.

These conditions may include the sale of the buyer’s current home, the receipt of satisfactory inspection reports, or the approval of a loan.

If the conditions are not met, the listing may revert to active status.

What Does Active-Contingent Mean?

Along the same vein, we often get the question about the meaning of “active contingent” in real estate.

An active contingent offer is one of a variety of status updates given to a home listing. If a property has an active contingent label, it means the seller has accepted an offer from a buyer. But the home sale has certain contingencies that need to be met, and the seller is taking backup offers in case the first deal does not go through.

Similar to contingencies being protection for the buyer, having the listing be active contingent offers protections for the seller.

Having a home be active contingent can influence a buyer to release contingencies prematurely, or when they shouldn’t be, just so the “other guy” doesn’t get the house. This would be a mistake!

Buying and selling real estate can be a very emotional time. Relying on your agent to guide you through the process is the best way to end in a result that you will be happy with!

A professional analysis used to estimate the current value of the home in the real estate market.

This is a necessary step in validating a home’s worth to you and your lender as you secure financing.

All parties to the transaction hope the appraisal will come in at the same amount as the listing price.

If the appraisal comes in low, your options include backing out of the sale, having your agent appeal the low value, paying the difference in value in cash, and renegotiating the offer.

What does As-is mean?

A contract or offer clause stating that the seller will not repair or correct any problems with the property. Also used in listings and marketing materials.

In other words, selling a house as-is means that a buyer will get the property in its exact, current condition without any additional repairs or upgrades.

What does Back on Market mean?

The property was under contract with another buyer and their contract fell through, so it is Active again.

BOM stands for “back on the market” in real estate and is a common abbreviation used by real estate agents.

What is a backup offer?

When an offer is accepted contingent on the fall through or voiding of an accepted first offer.

Sellers may accept backup offers if they are not confident about the offer they have accepted.

Consider it a safety net for the seller if the current offer does not close.

There are also benefits for buyers.

Although it might seem like a long shot, putting an offer on a house that’s under contract actually has a reasonable chance of scoring you a home. Deals fall through for all kinds of reasons, so if you’re in the backup position, you’ll lock things in and keep a home from going back on the market.

As usual, discuss putting in a backup offer with your Realtor.

Once you have made your offer and the offer is accepted by the seller, the following questions may arise.

What does “under contract” mean?

Under contract means that all parties have agreed on terms, have signed the contract, and the signed contract has been delivered to both buyer and seller. Payment of the escrow deposit is expected but is not a requirement to make a binding contract.

What is escrow?

The escrow money, escrow deposit, or good faith deposit is money that is included with an offer, or as soon as an offer is accepted, to show the seller that you are serious about moving forward with the purchase of the home.

Because you forfeit this deposit if you back out of the purchase for any reason not allowed for in the contract, the larger the escrow deposit, the more seriously your offer is taken.

This is not the same as the down payment.

Do I need an inspection?

We always recommend that you have a home inspection done. In the grand scheme of things, paying a few hundred dollars to have peace of mind that there are no hidden dangers or problems is well worth the money.

The inspections you may need or want will vary depending on the home you are buying and the contract terms. Your agent will thoroughly discuss the inspections with you once your offer is accepted.

How much are inspections?

The cost of the home inspection depends on the size of the house and additional inspections requested, such as swimming pool, septic tank, termite/pets report, insurance, four-point (HVAC, plumbing, roof, and electrical,) wind mitigation, and radon. An average home inspection, without additional inspections, is about $300.

I will give you my recommendations for inspectors, but you can choose your own if you wish.

What if my loan doesn’t get approved?

If you have gone through the pre-approval process and have been forthcoming with all the information requested by your lender, it’s unlikely you will be turned down, but it does happen.

Make sure you do not change jobs, purchase big-ticket items on credit, take out a car or boat loan, or open any other new credit accounts while your mortgage is being processed.

If your loan does fall through, talk with your lender about changing to a different loan type.

When can I start moving?

When you have the keys! When you are financing your purchase, it takes four to six weeks for your loan to be processed. Once the lender gives the all-clear, closing is scheduled. You will sign your loan documents and both parties will sign documents transferring ownership to you.

Unless other arrangements have been agreed upon by both parties, the sellers should have completely vacated the home when they sign the closing papers. You can have your belongings ready to move, and a moving company scheduled before you go to closing.

At closing, you will receive the documentation you need to provide utility companies with proof of your new residence.

But seriously, everything is tentative until you have the keys! Even if the home is vacant, don’t even think of starting to move until escrow has closed and you have the thumbs up from your agent.

Buyer’s agent: The agent who shows the buyer’s property, negotiates the contract, or offer, and works with the buyer to close the transaction.

You might have heard of buyer’s agents, selling agents, listing agents, and so on. You’re a buyer, so what is a buyer’s agent? True to their name, buyer’s agents help real estate buyers navigate the real estate market; they can also save you tons of time and money on the road to your new home.

Read more to learn how a real estate buyer’s agent can help you.

Close of escrow is the final step in the real estate transaction. It is when the buyer pays the seller for the property and all the documents are signed.

After close of escrow, the title deed is transferred to the new owner and the keys are given to the buyer.

The escrow company then sends the money to the lender and all the parties involved in the transaction.

Closing: The end of a transaction where documents are signed, and funds are dispersed.

Closing costs are the fees that the buyer and seller will owe associated with the home-buying process, such as the real estate brokerage commission and title insurance.

Most are paid by the buyer, but the seller pays for some.

The fees will vary with each transaction. Your lender or title rep will let you know what the fees are and how much you will need at the close of escrow.

The fees required to complete the real estate transaction include points, taxes, title insurance, financing costs, and items that must be prepaid or paid through escrow.

Comparative market analysis or competitive market analysis, aka CMA, compares the sales price of similar properties in the area to help determine the price of a property.

A CMA estimates a home’s price based on recently sold, similar properties in the immediate area. Real estate agents and brokers create CMA reports to help sellers set listing prices for their homes and help buyers make competitive offers.

If you need more details about CMAs, read “What Is Comparative Market Analysis (CMA) in Real Estate?“.

Not to be confused with Country Music Awards. 🤓

A condominium (Condo) is a type of housing where several people own separate units in a larger building or complex.

Each unit is owned by an individual and the common areas, such as the lobby, pool, and gym, are shared by everyone who lives in the building.

Condominiums are often popular because they are often located in desirable areas and offer amenities that single–family homes don‘t.

What is the difference between a condo and a townhouse?

A condo is a type of housing where several people own separate units in a larger building or complex. Each unit is owned by an individual and the common areas, such as the lobby, pool, and gym, are shared by everyone who lives in the building.

A townhouse is similar to a condo, but it is usually smaller and more like a single–family home. Townhouses may have more amenities like a private backyard or a garage.

What is a conforming loan?

A conforming loan is one that is limited to $647,200 for most of the U.S., which means you may be able to avoid the stricter requirements of a jumbo loan.

Loan limits vary over time and by location so you should check with your lender or Realtor for the latest information.

Other loan types include jumbo loans, FHA, and VA.

What is a Contingency?

A provision of the contract that keeps the agreement from being fully legally binding until a certain condition(s) is met.

For example, the purchase of a home can be contingent upon the buyer selling their home first.

Every real estate contract includes space for “contingency clauses,” or conditions put forth by the homebuyer and home seller that must be met for the transaction to close.

Here are some types of contingency clauses you might see in your next home sale…

📝 Home Inspection / Due Diligence
📝 Cost-of-Repair
📝 Appraisal
📝 Financing or Mortgage
📝 Sale and Settlement

Contingency clauses can be tricky to navigate, which is why it’s always a good idea to have a licensed real estate professional guide you through the process.

We know this lingo inside and out, so reach out if you’re thinking about buying or selling a home soon!

In real estate, a contingent offer is an offer made on a property, which says that certain conditions must be met in order for the sale to be completed.

A real estate contract is a legally binding agreement between two parties for the sale and purchase of a property.

It outlines the price, terms, and conditions of the sale. It also includes any other agreements that the buyer and seller have made, such as repairs that need to be done before the sale is completed.

All real estate contracts must be written and signed by both parties.

A counteroffer is a response to a buyer’s original offer on a house to make changes that better fit a seller’s goals.

A counteroffer is one step closer to an accepted offer!

A counteroffer shows that the seller is willing to work with the buyer, but on slightly different terms (usually a change in the price or contingencies).

Here’s how your real estate agent can help you navigate a counteroffer:

☑️ Buyers, we negotiate on your behalf and provide guidance on how to get your offer accepted.

☑️ Sellers, we help you stay clear of red flags and make sure you accept the right offer.

Negotiation is a BIG part of what we do as real estate pros! Connect with our team to learn more about how we provide 5-star representation for our clients.

What is a credit score?

A number ranging from 300-850 that’s based on an analysis of your credit history.

Your credit score helps lenders determine the likelihood you’ll repay future debts.

You’ll need a score of 620 or better, but you’ll get better financing rates with a score of 720 or higher.

There is much more to know about credit and credit scores, so feel free to ask if you have specific questions.

To learn more about credit scores and credit reports, click here.

Days on market (DOM) means the number of days a home has been listed on the market.

The number of days the property has been on the market may reflect the desirability and/or pricing of the home.

If the home has been on the market too long, the property may be stale.

In real estate, what is a deed?

A deed is a document that shows who owns a piece of property. When someone buys a house, they get a deed that shows they are the owners. The deed has the names of the people who bought the house and is signed and notarized so it is legally valid.

This is not to be confused with a deed of trust. A deed conveys ownership; a deed of trust secures a loan.

What is a Deed of Trust?

A Deed of Trust is like a mortgage. It is an agreement between a borrower (you) and a lender (a bank or other financial institution).

The lender gives you money to buy a house or other property, and you agree to repay the loan with interest, in regular payments.

The Deed of Trust also includes a clause that says if you don’t make the payments, the lender can take the property back.

What is a Disclosure Statement 🤔

Also known as a “Seller’s Disclosure,” this is a legal document that outlines any known flaws that a home seller is aware of that could negatively impact the home’s value 🏡

💡 TIP: Buyers should scrutinize this document closely with their real estate agent to fully understand the condition of a home.

Our best advice? When it comes to buying a home, make sure you get an inspection to confirm what has been disclosed is accurate and discuss any potential deal breakers with your agent.

Contact our team for a ✨ free consultation ✨ to learn more about what you must legally disclose if selling and how to ensure you don’t miss any important information if you’re buying!

What is a down payment?

The sum in cash that you can afford to pay at the time of purchase of a home or property.

A conventional loan down payment is usually 20% of the sales price, but other types of financing require as little as 3.5% to 15%. Some 0% down programs are also available.

A mortgage lender can tell you what types of loans you qualify for.

The representation of opposing principals (buyers & sellers) at the same time.

That is, one real estate agent represents both the buyer and the seller in one transaction (sale of a home).

What is Due Diligence?

How to prevent #buyersremorse 👇

When buying a home, it’s extremely important to do your “due diligence.” During this period, you’ll look into the condition of your chosen property and compare it to other homes like it to make sure it’s really a good fit and value.

When a homebuyer investigates facts about the physical and financial condition of the property and its area before they make an offer and after their contract is accepted.

Due diligence is reasonable steps taken by a person in order to satisfy a legal requirement, especially in buying or selling real estate.

As your agent, we’ll guide you through this process by pointing out and addressing any of the home’s red flags so you feel completely confident about your purchase.

What is Earnest Money? 🤔

A deposit made to a seller that represents a buyer’s good faith to buy a home. It’s typically around 1% – 5% of the sale price.

Earnest money is a deposit from the buyer to the seller, made in good faith to show dedication to purchasing the property 🏡

IMPORTANT FACTS 👇

💰 The amount varies by market
💰 Goes towards the purchase of your home
💰 Protects the seller if a buyer backs out
💰 A buyer may get this money back – due to failed inspections or contingencies

💡 TIP: In a seller’s market, you may consider making your earnest money non-refundable.

Our best advice? When it comes to buying in a low inventory, competitive market, it’s essential to partner with a Buyer’s Agent who understands how to make your offer stand out to sellers 🥊

What is an easement? 🔎🏡

A right to cross or otherwise use someone else’s land for a specified purpose.

The term often crops up after buyers have made an offer on a home that’s been accepted, at which point a title search brings up the easement—which is essentially the legal right for someone else to use the property, or part of the property for a specific purpose.

Say what? You bend over backward to buy a home and now you have to share?! Don’t worry, in most cases, it’s not as bad as it sounds.

Types of Easements:

📝 Right of way: This is where a neighbor may need to pass through the property via a driveway to access the main road, a neighborhood playground, or a community feature (like a lake).

📝 Utility maintenance: This easement is typically granted to utility companies to run power and cable lines on a property.

📝 HOAs/condos: If you live in a condo or home managed by a homeowners association, odds are these institutions own much of the property—while residents have rights to pass through.

What is an escalation clause?

An escalation clause is a clause in a real estate contract that allows the purchase price of a property to increase if a certain condition is met.

For example, if the buyer and seller agree to an escalation clause and the market value of the property increases, the buyer will have to pay more for the property than originally agreed upon.

This clause is typically used when two buyers are competing to purchase the same property.

What is an expired listing?

A real estate listing that has expired and is no longer active, usually because it didn’t sell in the amount of time agreed upon by the listing agent and the owner of the home.

Other reasons for a listing to expire are the asking price was not met, or there were other issues with the property.

If you see an Expired listing, the owner may still be interested in selling. Ask your agent about it.

What is a final walkthrough?

The last inspection of the property before signing the closing documents.

A final walkthrough in real estate is when a buyer goes through the property one last time before the closing.

The buyer makes sure that all the items in the contract are in the same condition they were in when the buyer agreed to purchase the property.

This includes checking for any damage, making sure all appliances are working, and ensuring that all repairs agreed upon by the seller have been done.

What is a FSBO?

FSBO stands for “For Sale by Owner”. Often pronounced “fizbo”.

The owner of the home has it listed without an agent representation.

The buyer’s agent can usually still show the home, as many FSBOs will agree to work with agents representing a buyer.

Be wary of FSBOs since rarely does the homeowner have the requisite knowledge, experience, and understanding needed to sell a property.

A home inspector examines your home for integrity – such as the HVAC system, electrical, plumbing, attic, flooring, foundation, etc.

What is a Homeowners Association (HOA)?

A private organization that is often formed by a real estate developer to manage homes and lots in a residential subdivision.

A Homeowners Association (HOA) is an organization made up of homeowners who live in a specific neighborhood or development.

The HOA is responsible for managing and maintaining the common areas of the neighborhood, such as parks and playgrounds.

They may also have rules in place that all homeowners must follow, such as restrictions on landscaping or noise levels.

If you know where you want to live, have a steady and secure income, and are ready for the responsibilities of homeownership, then it might be time to invest in a home.

Read “5 Questions to Ask Before Purchasing Your First Home” to learn more about determining if now is the right time to buy for you.

What are real estate inspections?

Real estate inspections are when a professional inspector looks at a property to make sure it is in good condition.

They will look for any potential problems that could affect the safety or value of the property.

They will also check things like the roof, plumbing, and electrical systems to make sure they are in good working order.

An inspection can help protect buyers from buying a property with hidden problems.

There are a number of inspection types including home inspection, pest inspection, roof inspection, and more.

Your Realtor will help you decide which inspections are appropriate for your situation.

What is a Jumbo Loan?

Conforming loan limits are $647,200 for most of the U.S., so anything above this would be a jumbo loan.

Jumbo loan requirements are stricter and there are more requirements you will need to satisfy.

Find out more about jumbo loans here.

What is a Listing?

In real estate, the word “listing” is typically used to refer to the for-sale home or property itself, although it technically means the agreement between the broker and the owner of the home to market and sell the property.

This is not the same as listing the property on the MLS (Multiple Listing Service).

Mello-Roos Taxes – Definition

What is or are Mello-Roos? Sometimes misspelled “melarose”, these are special assessment taxes for Community Facilities Districts or CFDs. Typically new communities need additional infrastructures such as police and fire protection services, ambulance and paramedic services, parks, elementary and secondary schools, libraries, museums, and cultural facilities.

These taxes are liens which are usually municipal bonds issued to fund this needed infrastructure before a housing development is built.  These are in addition to your regular property taxes. When buying your new home, any unpaid special assessments are paid by the seller.

The buyer (that’s you) will take title of the home subject to the condition that these special assessments will continue to occur in the future. That means you will be paying Mello-Roos taxes for as long as you own the home, or until they expire. The bonds issued for Mello-Roos may expire in 10 to 40 years, depending on the CFD.

There are four Community Facilities Districts in Brentwood for instance, along with various other communities in California.

To find out if the home you are looking to buy is in a Mello-Roos district, you have to know the parcel number of the property.

We can do that for you!

Also, the seller must disclose that the property has Mello-Roos taxes before you actually purchase, so you will know in advance either way.

Mello-Roos Tax – Conclusion

Let’s sum this up. Some homes in CFDs have special tax assessments called Mello-Roos. These communities benefit from having additional infrastructures such as new schools, libraries, and other community enhancements. Homebuyers in these districts will have to pay these taxes along with regular property taxes for as long as they own the home, or until the additional tax expires.

You, along with your Real Estate Agent can determine if buying a home with Mellow-Roos is right for you.

What is the MLS?

MLS stands for Multiple Listing Service. They collect, compile and distribute all information about homes listed for sale.

The MLS is the organization real estate brokers use to search for and list properties for their clients.

Membership isn’t open to the general public, although selected MLS data may be sold to real estate listing websites, like Realtor.com or our own MLS listing search where the public can search the MLS at no charge.

See also the term “listing“.

The interest rate on a mortgage loan you pay to borrow that money when buying a home.

The lower the rate, the better.

Mortgage rates vary daily, so you don’t have any particular rate until the lender “locks in the loan” securing that rate for your home purchase.

The rate you qualify for is based on your personal financial situation and the type of loan you are applying for.

What are Natural Hazards Disclosure Reports?

Natural hazards disclosure reports are reports that tell potential buyers about any natural hazards near a property.

These hazards can include things like flooding, earthquakes, and wildfires.

The report will also include information about potential risks associated with these hazards and what the buyer can do to protect their property.

The report is usually provided by the seller before the sale is finalized.

What is an offer to purchase?

Typically just an “offer”, is when a buyer proposes certain terms and presents these terms to the seller.

When you make an offer on a house, you and your agent will discuss the terms of your offer and submit the offer to the home seller’s agent.

Your offer may be accepted, or rejected, or the seller may submit a counteroffer.

What does Pending mean?

With a property that is pending, the property owner has accepted an offer from a buyer and they are under contract with that buyer.

Their agreement may be subject to a variety of contingencies: inspections, appraisal, financing, and more.

The home is not sold just yet. Typically if the sale does not go through, the house will return to “Active” status.

What is a Pre-Approval Letter?

It is a letter from a lender indicating you qualify for a mortgage of a specific amount.

Getting Pre-Approved

You’ll fill out a mortgage application, provide documents, and bank statements, get a copy of your credit report, etc.

Getting pre-approved is what you need to do before starting a home search. The person selling your dream home will want to make sure you really are qualified to buy. Most sellers aren’t willing to accept your offer with only a pre-qualification.

What is getting Pre-Qualified?

You contact a lender, provide a bit of financial information to them, and they tell you about how much you can afford to buy. That’s about it. It’s usually done over the phone, and your credit report is not needed at this point.

WARNING!  It’s NOT a promise of a loan. You are not guaranteed any particular interest rate. And you are not ready to purchase a home. What you have is an idea of what you may be able to buy. It’s a starting point, and a good way to start planning.

You’ll want to get a Pre-Approval Letter from your lender before you start shopping for a home.

One of the first steps in purchasing a home is getting either pre-approved or pre-qualified for a mortgage. Unless of course, you’re buying with all cash. 😁

It’s very easy to get confused between the two things. So, should you get Pre-Qualified or Pre-Approved for a mortgage loan?

Without getting into too much detail, we’ll give you just the essentials to understanding the difference, not the complete procedure for each.

Pre-Qualified

This is the simpler of the 2 processes. You contact a lender, provide a bit of financial information to them, and they tell you about how much you can afford to buy. That’s about it. It’s usually done over the phone, and your credit report is not needed at this point.

WARNING! 🔥 It’s NOT a promise of a loan. You are not guaranteed any particular interest rate. And you are not ready to purchase a home. What you have is an idea of what you may be able to buy. It’s a starting point, and a good way to start planning.

Check out Investopedia for a more in-depth explanation if you’re curious. https://www.investopedia.com/articles/basics/07/prequalified-approved.asp

Pre-Approved

This one is where the rubber meets the road. Paperwork, and plenty of it. You’ll fill out a mortgage application, provide documents, bank statements, get a copy of your credit report, etc.

It takes more time and there are more questions. It’s best to start with plenty of time before you plan to start looking for a home. That way you can deal with finding the papers you thought were in that one file cabinet, get your updated investment info, and try to fix any credit issues you may have.

Getting pre-approved is what you need to do before starting a home search. The person selling your dream home will want to make sure you really are qualified to buy. Most sellers aren’t willing to accept your offer with only a pre-qualification.

Again find out more here. https://www.investopedia.com/articles/basics/07/prequalified-approved.asp

Conclusion

Save yourself some heartache, heartbreak, and hair-tearing-out. Get pre-approved before shopping for homes.

Better yet, call me, Libby Guthrie at 925-628-2436 and I’ll answer your questions about getting started, and if you like, I’ll connect you with the right lender for your situation.

Just so you know, before my 25 years as a real estate agent and broker, I spent 15 years in mortgage banking. I know what I’m talking about and I love to share my expertise with you and your family.

Contact me today, share this article with a friend, and please, share it on your favorite social site. Thanks!

What are Property Taxes?

A levy or tax imposed by a municipality on real estate and personal property. The amount of tax varies depending on the property value.

Property taxes are an annual tax that local municipalities collect each year, based on the assessed value of your property (not on the appraised value of your home). These funds help pay for services that benefit the community, such as schools, roads, maintenance, etc.

First-time homeowners often forget to factor property taxes into the overall cost of their new home, which can come as a nasty shock come tax season. So let this be a reminder to all homeowners to calculate property taxes into their annual budget!

 BONUS TIP: If you own a rental property, your property taxes may be tax-deductible 

What is a Purchase and Sale Agreement?

Often just a “purchase agreement”, it is the written contract between the buyer and seller that outlines the terms of the sale.

 The completion and signing of a purchase agreement effectively places both the buyer and seller (as well as the property in question) “under contract.”

Does a real estate purchase agreement need to be notarized?

No, a real estate purchase agreement does not require notarization to be valid as it is not filed with county records.

Buying a home is one of the most important purchases you’ll ever make. We’re here to help you understand the home-buying process so you know what to expect. Today, we’re talking about what you need to do before you even begin.

What can I afford?

Figuring out what you can afford will determine the course of your home-buying process. This all depends on a few different factors including how much you make a year, how much you pay towards your debt every month, and how much of a down payment you expect to make.

Other things to consider are your debt-to-income ratio, property tax, loan term and interest rate, home insurance, and possibly monthly Home Owners Association (HOA) dues. All of this can add up!

Zillow has a good home affordability calculator that can get you started.

What do I want?

Make a list of your wants and work from there. Maybe you have young children and want a friendly neighborhood with kids that play on the street. Perhaps you are older and enjoying retirement and want to walk out to the golf course.

Ask yourself what’s important to you and the way you live and work. Do you want good schools? Nice parks? Lots of shopping with great restaurants? Questions like these will help you narrow down what you’re looking for.

How’s my credit?

Unless you’re going to be buying your home for cash, you are going to need to finance it. It’s important to pick the right lender, but even before all that, you need to review your credit situation. After all, your lender will look at your credit and so should you!

You can start the process on your own by getting a copy of your credit report. There are a lot of different ways to do this. Credit Karma is a popular free website that gives you an updated credit report every month. This is a great way to keep track of precisely what is going on with your credit.

Once you have the credit report, take a good look at it. Make sure that everything is correct and up to date. If you notice anything wrong, work to correct those immediately. If your credit isn’t great, there are ways to improve it.

Remember: the better your credit, the better your mortgage rates will be. A reasonable mortgage rate can save you a lot of money in the long run.

Need more help? Give me a call! I’m an expert on credit and mortgage information and may be able to help you better understand your situation.

What is a Real Estate Agent?

A licensed professional that represents a buyer or seller.

A real estate agent is a professional who helps people buy or sell property.

They will help you find a home that meets your needs, negotiate a purchase price, and handle all the paperwork that comes with buying or selling a house.

A real estate agent can also answer questions about the local housing market and provide advice on things like taxes and financing.

The agent may or may not be a Realtor®.

What is a real estate broker?

A real estate broker is a licensed professional that represents a buyer or seller – they can own and operate a brokerage with subordinate agents.

A real estate broker is a licensed professional who helps people buy or sell property.

They are more experienced than real estate agents and typically have additional training, including a broker’s license.

Brokers can help you find a home that meets your needs, negotiate a purchase price, and handle all the paperwork that comes with buying or selling a house.

They can also answer questions about the local housing market and provide advice on things like taxes and financing.

Real Estate agents work under the Broker of record for a real estate office.

An individual who provides services in buying and selling homes.

Real estate professionals are there to help you through the confusing paperwork, find your dream home, negotiate any of the details that come up, and so you know exactly what’s going on in the housing market.

There are several types of real estate professionals including Realtors^®, real estate agents, and real estate consultants.

What is a REALTOR®?

A designation that the agent is a member of the National Association of REALTORS®.

A Realtor is a real estate professional who is a member of the National Association of Realtors (NAR).