UNDERSTANDING LOAN LINGO/ DEFINITIONS
Frequent Asked Questions by Buyers
What credit rating do I need to obtain a loan?
Usually, lenders require at least a 660-credit rating for a loan
What is Earnest Money?
Earnest Money is money that a buyer pays a seller to show that they are serious about purchasing a property.
How long before closing?
The time it takes to close a loan varies depending on several factors, however it is typically 30-45 days depending on your loan type.
Can I take out a loan for closing cost?
No, your lender usually will not allow this, if you do not have a down payment there are other possible options available.
What is a home-inspection?
A home inspection is an inspection that you as a buyer, will order once you find the perfect home and are under contract. This inspection will help to identify any major issues with the
home prior to closing. Your realtor will be able to assist you in the process. (There is also a termite-inspection as well; both are what you order and the reports are yours.
Can I get out of a contract that I have on a home?
Once you have a contract on a home, you have a legal document that states you are buying the property. You are legally bound and usually cannot just “get out of the deal” or walk away as the seller could take legal action against you. However, if the home inspection reveals that there are major issues with the home and the seller is not willing to fix these items or work with you, then you are not obligated and will be able to get your earnest money back. There are different situations that may arise and your realtor will be able to assist you through the process.
A buyer’s representative is a contract between you and your realtor. This document states that they are working on your behalf and that you are working with them. It protects both you and the agent and is strongly encouraged to sign. Most agents who do not have a buyers rep signed are not really obligated to you and will not work as hard on your behalf, as their clients come first. This is a legal contract and once signed you should only deal with that agent. If you feel your agent is not doing a good job, then speak with the agent to adjust, most agents are willing to work with your needs to see you to the closing table.
Can I work with more than one agent to see a home/ my agent is busy?
NO! Agents go through a lot of work to pull documents, arrange for showings , juggling their schedules, plus the drive time and gas, be considerate and do not try to work with more than one agent. If a home is outside of your agent’s driving area, then make sure that they are aware you will be reaching out to another agent to view homes in that area.
Money that a buyer pays a seller to show that they are serious about purchasing a property.
Expenses above the price of the home such as loan origination fees, discount points, title fees and insurance, any surveys you ordered, taxes, title, etc.
Discount Points- Discount points are paid by the borrower to lower the interest rate on a loan.
Debt to Income Ratio-
Your monthly debt divided by your monthly income.
ARM (Adjustable-Rate Mortgage) An interest rate that is fixed for a period of time, then will adjust over the life of the loan. (Your interest rate may vary).
A report that provides an estimate of the property value.
Shows the term and cost of the loan and the projected monthly payment.