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What is the
difference between "pre-qualified" and "pre-approved"?
If you are "pre-qualified" you
have determined, with a loan officer, what price you can afford based on
the down payment, your debts and the amount the mortgage company will
approve for your mortgage. Being "pre-qualified" is only a determination
of your probable credit. If you are "pre-approved", your credit,
employment and funds have been approved by the lender.
What are closing
costs?
Closing costs are an
accumulation of charges paid to different entities associated with the
buying and selling of real estate. For buyers, they are usually about 4-6%
of the total sales price of a property. Some of the closing costs you
might encounter are: application fees, appraisal fee, county taxes, credit
report, discount points, documentation fee, escrow fees, homeowners'
association fees, loan fees, mortgage insurance, origination fees, tax
registration and title insurance premium.
What is a point?
One point is equal to 1% of the
new loan amount. Whenever government regulation, state usury laws and/or
competitive practices prohibit the lender from charging a rate of interest
that would make the real estate loan competitive with other fields of
investments, the lender must seek some method of increasing the yield for
the investors. By charging "points", the lender can bring the real estate
loan up to those other investments.
What is earnest
money?
When you make an offer, you will
need to put up an earnest money deposit as a sign of good faith that you
are seriously interested in buying a home. That deposit becomes a part of
the purchase price and is held in a trust account until there is full
acceptance of the offer. Typically, an earnest money is 3-5% of the offer
amount.
What is title
insurance?
Title insurance protects the
named insured against loss because of defects, liens, encumbrances,
adverse claims or other matters not shown or disclosed to the new owner
that attach before date of policy.
Is VA
or FHA financing unfair to sellers?
FHA and VA loans provide
purchasers the opportunity to buy homes with minimal cash investment and
at lower interest rates. The result is a larger market for sellers, who
also benefit by receiving all cash for their equity. |
