Frequently Asked Questions
How
do I get started in this process?
Probably, the first thing to do is to speak with your bank and find
a mortgage lender you connect with to start a “pre approval” process
which is quite easy to do. From there, you will know what you’ll
feel comfortable spending and what your interest rate will be. After
that, you could begin by visiting some open houses to not only
compare prices but to start meeting real estate agents to find
someone you may enjoy working with. After you find these two
professionals to represent you, you will be guided through the
entire process.
How do I find the right Buyer’s agent for me?
The NATIONAL ASSOCIATION OF REALTORS polled home buyers and asked
what was important to them in the home buying process and what
skills and qualities were important in the agent they chose. The
results were as follows; Honesty and integrity were important to 97%
of home buyers, 94% of buyers said Knowledge of the purchase process
was very important, 93% said responsiveness is an important trait,
Communication skills was very important to 84%, Negotiation Skills
was very important to 83%, and people skills, knowledge of the local
area and skills with technology were other valued talents home
buyers acknowledged as vital. Also, ask around. Friends and family
may know of an agent you would enjoy working with and be comfortable
looking at homes with.
Does a Buyer’s agent charge a fee?
Every Buyer agent is different in their contract with you. When you
sit down to discuss working with your agent, they will explain what
type of representation they will give you and if they will charge a
fee for their services. For the most part, your Buyer agent is paid
by their Broker through the Listing Agency. The Seller typically
will pay commission fees and a Buyer does not pay a fee.
Just discuss all the terms with your agent on your first meeting.
Can my agent show any house?
Yes! Any agent that is a member of the Duluth Association of
REALTORS can show one another’s homes. Also, if you go onto your
favorite real estate website, you should be able to find all the
homes available in the area as all companies have reciprocity with
one another and allow each other’s listings on each other’s
websites!
Do I have to call the person who has the sign in the yard?
No. Any agent can show you a home that is available on their
Multiple Listing Service.
Can I go to any open house?
Sure. Open Houses are open to the public. It is a courtesy to the
agent holding an open house to sign in for security purposes. Also,
if you are working with a buyer’s agent, you may want to disclose
this to the agent hosting the open house.
What are “HUD Homes” and are they a good deal?
HUD homes can be a very good deal. When someone with a HD insured
mortgage can't meet the payments, the lender forecloses on the home;
When someone with a HUD insured mortgage can’t meet the payments,
the lender forecloses on the home; HUD pays the lender what is owed;
and HUD takes ownership of the home. Then it is sold at market
value. federal mortgage programs. Start by contacting one of the
HUD-funded housing counseling agencies that can help you sort
through your options. Also, contact your local government to see if
there are any local home buying programs that might work for you.
Look in the blue pages of your phone directory for your local office
of housing and community development or, if you can't find it,
contact your mayor's office or your county executive's office.
Can I become a homebuyer even if I have/I’ve had bad credit and
don’t have much for a down payment?
You may be a good candidate for one of the federal mortgage
programs. Start by contacting one of the HUD-funded housing
counseling agencies that can help you sort through your options.
Also, contact your local government to see if there are any local
home buying programs that might work for you. Look in the blue pages
of your phone directory for your local office of housing and
community development or, if you can't find it, contact your mayor's
office or your county executive's office.
How much money will I have to come up with to buy a home?
Well, that depends on a number of factors, including the cost of the
house and the type of mortgage you get. In general, you need to come
up with enough money to cover three costs: earnest money - the
deposit you make on the home when you submit your offer, to prove to
the seller that you are serious about wanting to buy the house; the
down payment, a percentage of the cost of the home that you must pay
when you go to settlement; and closing costs, the costs associated
with processing the paperwork to buy a house.
When you make an offer on a home, your real estate broker will put
your earnest money into an escrow account. If the offer is accepted,
your earnest money will be applied to the down payment or closing
costs. If your offer is not accepted, your money will be returned to
you. The amount of your earnest money varies. If you buy a HUD home,
for example, your deposit generally will range from $500 - $2,000.
How do I know if I can get a loan?
Use our simple mortgage calculators to see how much mortgage you
could pay - that's a good start. If the amount you can afford is
significantly less than the cost of homes that interest you, then
you might want to wait awhile longer. But before you give up, why
don't you contact a real estate broker or a HUD-funded housing
counseling agency? They will help you evaluate your loan potential.
A broker will know what kinds of mortgages the lenders are offering
and can help you choose a lender with a program that might be right
for you. Another good idea is to get pre-qualified for a loan. That
means you go to a lender and apply for a mortgage before you
actually start looking for a home. Then you'll know exactly how much
you can afford to spend, and it will speed the process once you do
find the home of you
What do I need to take with me when I apply for a mortgage?
Good question! If you have everything with you when you visit your
lender, you'll save a good deal of time. You should have: 1) social
security numbers for both your and your spouse, if both of you are
applying for the loan; 2) copies of your checking and savings
account statements for the past 6 months; 3) evidence of any other
assets like bonds or stocks; 4) a recent paycheck stub detailing
your earnings; 5) a list of all credit card accounts and the
approximate monthly amounts owed on each; 6) a list of account
numbers and balances due on outstanding loans, such as car loans; 7)
copies of your last 2 years' income tax statements; and 8) the name
and address of someone who can verify your employment. Depending on
your lender, you may be asked for other information
How do I know if I am ready to buy a home?
Do I have a steady source of income (usually a job)?
Have I been employed on a regular basis for the last 2-3 years? Is
my current income reliable?
Do I have a good record of paying my bills?
Do I have few outstanding long term debts, like car payments?
Do I have money saved for a down payment?
Do I have the ability to pay a mortgage every month, plus additional
What should I look for when walking through a home?
In addition to comparing the home to your minimum requirements and
wish lists, use the HUD Home Scorecard and consider the following:
Is there enough room for both the present and the future?
Are there enough bedrooms and bathrooms? Is the house structurally
sound?
Do the mechanical systems and appliances work?
Is the yard big enough?
Do you like the floor plan?
Will your furniture fit in the space? Is there enough storage space?
(bring a tape measure to better answer these questions.)
Does anything need to be repaired or replaced? Will the seller
repair or replace the items?
Imagine the house in good weather and bad, and in each season. Will
you be happy with it year-round?
Take your time and think carefully about each house you see. Ask
your real estate agent to point out the pros and cons of each home
from a professional standpoint.
What does a home inspector do and how does an inspection figure
in the purchase of a home?
An inspector checks the safety of your potential new home. Home
Inspectors focus especially on the structure, construction, and
mechanical systems of the house and will make you aware of only
repairs, that are needed.
The Inspector does not evaluate whether or not you're getting good
value for your money. Generally, an inspector checks (and gives
prices for repairs on): the electrical system, plumbing and waste
disposal, the water heater, insulation and Ventilation, the HVAC
system, water source and quality, the potential presence of pests,
the foundation, doors, windows, ceilings, walls, floors, and roof.
Be sure to hire a home inspector that is qualified and experienced.
It's a good idea to have an inspection before you sign a written
offer since, once the deal is closed, you've bought the house as
is." Or, you may want to include an inspection clause in the offer
when negotiating for a home. An inspection t clause gives you an
'out" on buying the house if serious problems are found, or gives
you the ability to renegotiate the purchase price if repairs are
needed. An inspection clause can also specify that the seller must
fix the problem (s) before you purchase the house.
Do I need to be there for the inspection?
It's not required, but it's a good idea. Following the inspection,
the home inspector will be able to answer questions about the report
and any problem areas. This is also an opportunity to hear an
objective opinion on the home you'd I like to purchase and it is a
good time to ask general, maintenance questions.
What are “Home Warranties”, and should I consider them?
Home warranties offer you protection for a specific period of time
(e.g., one year) against potentially costly problems, like
unexpected repairs on appliances or home systems, which are not
covered by homeowner's insurance. Warranties are becoming more
popular because they offer protection during the time immediately
following the purchase of a home, a time when many people find
themselves cash-strapped.
How do I make an offer?
Your real estate agent will assist you in making an offer, which
will include the following information:
Complete legal description of the property
Amount of earnest money
Down payment and financing details.
Proposed move-in date
Price you are offering
Proposed closing date
Length of time the offer is valid
Details of the deal
Remember that a sale commitment depends on negotiating a
satisfactory contract with the seller, not just Making an offer.
Other ways to lower ins-insurance costs include insuring your home
and car(s) with the same company, increasing home security, and
seeking group coverage through alumni or business associations.
Insurance costs are always lowered by raising your deductibles, but
this exposes you to a higher out-of-pocket cost if you have to file
a claim.
What is Earnest Money? How much should I set aside?
Earnest money is money put down to demonstrate your seriousness
about buying a home. It must be substantial enough to demonstrate
good faith and is usually between 1-5% of the purchase price (though
the amount can vary with local customs and conditions). If your
offer is accepted, the earnest money becomes part of your down
payment or closing costs. If the offer is rejected, your money is
returned to you. If you back out of a deal, you may forfeit the
entire amount.
How can I find out information about my credit history?
There are three major credit reporting companies: Equifax, Experian,
and Trans Union. Obtaining your credit report is as easy as calling
and requesting one. Once you receive the report, it's important to
verify its accuracy. Double check the "high credit limit, "'total
loan", and 'past due" columns. It's a good idea to get copies from
all three companies to assure there are no mistakes since any of the
three could be providing a report to your lender. Fees, ranging from
$5-$20, are usually charged to issue credit reports but some states
permit citizens to acquire a free one. Contact the reporting
companies at the numbers listed for more information.
Experian: 1-888-524-3666
Equifax:1-800-685-1111
Trans Union: 1-800-916-8800 |
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