4. What is the difference between a mortgage broker and a lender?
A mortgage broker acts as an intermediary who sells mortgage loans on behalf of individuals or businesses. A lender is an institution or individual who loans borrower money. The most traditional lender is a banking institution or a private financial group.
5. What is earnest money?
Earnest money is a cash deposit buyers make when they sign a contract to buy a house. It makes the contract binding and signifies the buyer’s good faith to complete the purchase. At closing, the earnest money becomes part of the down payment. If the buyer defaults without a good reason, as spelled out in the contract, the earnest money becomes payment for damages suffered by sellers and their agents.
The earnest deposit could be several hundred or even several thousand dollars, but usually between 1% and 3% of the purchase price. Normally, a copy of the check is included in the offer. If the buyer's offer is not accepted by the seller, the money is returned to the buyer.
6. What is a contingency?
A contingency is a condition on the sale put into the contract by either the buyer or seller to protect against specific eventualities. Examples of common contingencies are: a requirement that the buyer obtain financing or sell the current home; the seller has a home inspection done; or the seller must repair certain items before settlement. Contingencies can be removed by an addendum to the contract, or they can expire if a time limit is specified in the contract.
7. Is buying a home directly from the owner save us money?
Wrong! The "for-sale-by-owner" sellers are doing their own marketing to save the commission a professional real estate agent would charge. So what is left for you to save? In fact, you might end up paying more if the house is overpriced. Beware of these costly pitfalls: a.) you would have to do your own negotiation on the contract and repair agreement b.) you would attend home and termite inspections c.) and you would be signing documents that are unfamiliar to you.
8. Should I hire an agent whose name is on the yard sign to make an offer on that particular property?
Maybe not, but it’s up to you if you want to work with a dual agent. The agent whose name is on the sign is the listing or seller agent and has a fiduciary duty to the seller. Just be careful not to divulge any important information about you that the agent might tell the seller. Instead, hire an Exclusive Buyer Agent (or Buyer's Agent) and get a full representation.
9. What is the difference between pre-approval and pre-qualification?
A pre-approval is a conditional loan approval from a lender based on your application while pre-qualification is a verbal exchange with a lender about how much you can probably afford. Pre-qualification does not obligate the bank to make the loan, whereas a pre-approval is a conditional loan commitment. Final approval is made when both your finances and the property pass review.
10.What are the closing costs?
Closing costs typically consist of loan origination fee, loan discount points, appraisal fee, credit report, attorney fees, title insurance, hazard (home) insurance, survey, inspection fees, recording fees, pro-rated property taxes and pro-rated HOA fees. Your loan officer or mortgage broker should be able to provide you a Good Faith Estimate (GFE) when you apply for a loan.
