What Every Homebuyer Wants to Know (But Might Be Afraid to Ask)

Thinking of buying a home in the near future? I’m sure you have a lot of questions! In this blog post, we answer the most common buyer questions. Let’s dive in!

DO I NEED TO BE APPROVED FOR A LOAN BEFORE I LOOK AT HOUSES?

That’s easy, YES! Absolutely yes! While you can certainly look at homes without an approval, that wouldn’t be a smart move and most agents won’t show homes to buyers who aren’t pre-approved. A pre-approval makes house hunting much easier.

WHAT IS A PRE-APPROVAL?

You may be asking yourself, what IS a pre-approval? This is when you have talked to a lender and given them your financial information to determine your eligibility for a loan and also the amount you can borrow. With a pre-approval you know your budget in advance and that helps narrow down the homes you look at. You certainly don’t want to look at homes that are listed for more than you can spend, or even homes that are below your budget that may not meet your needs. It’s also important to have a pre-approval so that when you find your dream home, you are ready to make an offer. There’s nothing worse than finding your dream home and then losing it to multiple offers because you weren’t ready!

WHAT IS THE PROCESS FOR MAKING AN OFFER?

Once you have your pre-approval and find your dream home, it’s time to make an offer! Making an offer means that you submit your terms of the purchase to the seller. This includes your purchase price, earnest money amount, proposed closing date, proposed seller paid closing costs, inspection terms and requests for items to remain with the house, along with other details of the purchase. Once you’ve decided on these specifics, you will sign and submit your offer to the seller’s agent, along with your pre-approval and earnest money, in most cases. The seller’s agent will then review the offer and meet with their client to discuss the terms. The seller will decide if they would like to accept or if they want to counter your offer. The seller may counter any one or more of the terms you submit. Once an agreement is reached between parties, you are under contract!

WHAT AND HOW MUCH ARE CLOSING COSTS?

Closing costs are all of the costs associated with purchasing the home. These can vary depending on the type of loan or if you purchase with cash. Some common closing costs are title search and insurance, attorney’s fees, appraisal, lender fees, and recording of the deed, just to name a few. While determining closing costs on a cash purchase is pretty straight forward, only a lender can give you an exact closing cost amount when you’re buying with a loan.

WHAT IS EARNEST MONEY?

Earnest money is a good-faith payment that’s given by the buyer along with an offer. This money is typically held by the buyer agent’s brokerage, or in some cases the title company, until closing. During the offer process, terms for the inspection and financing periods were determined and only during those periods can Earnest money be refunded to the buyer. For example, if the buyer has a home inspection done on day 6 with a 14-day period, and find that there are structural issues, the buyer is able to submit a termination based on these findings and have their earnest money returned. However, if you are out of your inspection or financing period and decide you no longer want to buy the home, the seller would retain the earnest money.

HOW MUCH EARNEST MONEY DO I NEED?

Typical earnest money amount is 1% of the purchase price, however, less could be acceptable depending on the seller. HOW SOON CAN I MOVE IN? During the offer process, you request a date for closing. Closing can occur on or before that date, as per the contract. Once you have closed, and possession is conveyed, the house is yours to move into as soon as you’d like! In some cases, possession can happen a few days after closing depending on the situation, such as a tenant occupied property or a seller that’s waiting to close on another home.

WHY SHOULD I HIRE YOU AS MY REALTOR?

Great question! I’ve been a Realtor in West Alabama for 8 years! I have helped hundreds of families buy, sell or invest - from first time buyers to retirees, and from UA parents to those relocating to the area! I’m familiar with all loan types and am well connected to lenders, contractors, home inspectors, appraisers and pretty much anyone else we need during the home buying (or selling) process! Helping people is my passion! I will be there every step of the way, and always have your best interests at heart!