What do I need to do after closing escrow?

Prepare a file to keep all of the documentation received regarding real estate disclosures, insurance, and loan documentation. Immediately re-lock the home, you have no idea of how many original keys are there. Talk to your insurance agent and find out details of your coverage, and find out exactly when and how much property taxes are due.

Should I order a home inspection?

The answer is always YES. While some loan programs don’t require inspections, it is wise and prudent to hire a professional inspection company that will give you a detailed description of what is wrong or not up-to-code with the home. Buyers are to use this information to request repairs from the seller.

What if my offer is rejected?

Sellers can flat-out accept or reject an initial offer. However, most sellers will respond with a counter offer. The counter may be in terms of price, down payment, time to close escrow, what appliances are/are not to be included, among other considerations.

How long can the seller take to respond to my offer?

Written offers stipulate the time for seller to respond. 24 hours should be enough.

What is earnest money?

When you make an offer on a home, your agent will ask for a check to accompany it , usually 1-3 % of the purchase price. Earnest money is made in good faith to demonstrate that the buyer’s offer is genuine, and it provides the incentive for the seller to accept your offer and open escrow with you.

The money is deposited in a trust or escrow account for safekeeping. If a deal is agreed upon, the earnest money is applied to the down payment and closing costs. If the deal falls through, the money is returned to the buyer.

There are some instances, when buyer fails to perform, that earnest money may not be returned to the buyer. Ask your agent about how to protect yourself.

Should I sell my current home before buying a new one?

If the built-up equity in your current home will be applied to the down payment on the new home, naturally the former will need to be sold first.

What is PMI?

It is very important to consider putting a higher % as a down payment to avoid the lender charging PMI (Private Mortgage Insurance), which the lenders tack on the loan payments to protect themselves from defaulting buyers. Most programs will force borrowers to carry PMI when the down payment is less than 20 % of the purchase price.

How much do I need for a down payment?

Down payments usually vary between 3.5 % and 20 %. First home buyers usually only put down 3 to 5% on a home, as there are programs for them requiring lower down payments. There are some very restrictive loans (for example VA loans) that can be made with zero down. Most other buyers should expect to put 10-20 % down.

What kind of credit score do I need to buy a home?

Most loan programs require a FICO score of 620 or better. The higher the middle credit score, the lower down payment requirement and better interest rate to the borrower. Credit scores of 700+ are considered excellent scores and will qualify for the best loan programs available in the market.

What is a FICO score?

It is a credit score which is a result of a complex algorithm, that takes into account how much credit you have available, the # of late payments, # of closed accounts by lenders, etc. There are 3 credit bureaus that calculate this score based on their own collected data, which in turn may result in 3 different scores. For that reason, it is customary for lenders to look only at your middle credit score.

How much do I have to pay an agent to help me buy a house?

Y Broker agents charge nothing to the buyers. Their commission is paid by the seller for bringing home buyers to the table. Agents get paid only if and when escrow closes. Beware of agents that want to charge you an upfront fee.

What is a short sale?

A short sale takes place when the home value is lesser than what is owed to the bank. (In other words, the property is upside down). It is called a “Short Sale” because the payoff to the lender will be less than the mortgage owed, hence the seller will be short on his payment. In these cases, home owners ask the lender to approve the short sale. This process can be many weeks because the lender will review the owners’ financials, and property value, before approving of the short sale.

What are REO’s ?

REO stands for Real Estate owned, and are homes that have already been foreclosed upon by the lender. These homes have been, most likely, repaired and restored to selling condition by the foreclosing bank or the listing agent. These may have deferred maintenance issues, so buyers need to be very thorough in inspecting the REO homes.

How long does it take to sell a home?

Market conditions are a major factor in how fast homes are sold. In “Seller Markets” where there are not enough homes in the market for ready and able buyers, homes will be “in contract” only a few days after it has been listed, and often at a higher price. If in the contrary, there are not enough buyers for the amount of listed homes for sale, it may take a few weeks and several price reductions to get the home sold.

How long does it take to buy a home?

From when you start working with an agent, to closing escrow, buying a home takes about 10 to 12 weeks. Once a home is selected and the offer is accepted, the average time to complete a standard transaction (whereas there are no problems with seller defaulting on the loan) the escrow period on a home is 30 to 45 days. Cash transactions may close in 20 days or less. Transactions that involve a home repossessed by a lender, or it is a short sale, will take longer to close.

What is escrow?

Escrow Companies are the fiduciary intermediaries in a transaction, and must be state licensed in order to operate. They gather all the buyer/seller agreements, make pay-offs to existing lenders, creditors, and tax authorities. They also order the county recording of the new owner(s).

Where do I start when buying a home?

Getting pre-approved for a mortgage is always the first step. By getting pre-approved by a lender you will find out how much money you can borrow, and how much money is required for the down payment and closing costs. Also, being pre-approved for a mortgage demonstrates that you are a serious buyer to both your real estate agent and the person selling their home.