Your Real Estate Questions Answered
Are there any advantages to getting pre-approved for a loan?
Yes, Getting approved as early as possible is always a good idea. Buyers with a pre-approval are simply more attractive to sellers. In addition, a pre-approval can expedite the closing process and get you into your new home much sooner..
How is a pre-qualification different from a pre-approval?
Good Question, A pre-qualification is basically an informal determination of the borrower's ability to borrow by a lender. It indicates how much they are capable of borrowing. Whereas, a pre-approval is essentially a guarantee made in writing that a borrower is approved to borrow up to a specified amount. A Pre-approval is usually preceded by a pre-qualification.
How much house am I able to afford?
Lenders typically look at two primary things when making this determination. First they look at the prospective borrower's projected maximum monthly mortgage payment. This should not exceed 28 percent of an individual's gross income in pre-tax dollars. The lender also considers the home buyer's maximum debt load. This figure should not exceed 30 percent of one's gross income.
What is the earnest money deposit?
This is simply a good faith deposit that is held in an escrow account. It shows the seller that a buyer is serious about buying a home. Any earnest money is always deducted from the final amount due at the closing table. Larger deposits are often indicative of a more serious buyer.
Do I need a real estate agent when buying or selling?
While not required by law except in a few states, having a realtor in your corner when buying or selling has clear advantages. For example, these professionals typically bring years of experience to the table and can help potential buyers perform deep searches for properties that might otherwise not be possible. Further, they have valuable connections and can even assist in better and more effective negotiations from both a buyer's and seller's perspective. Most importantly, they can save you time and money.
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