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Real Estate FAQ

REAL ESTATE

 

 

 

 

 

 

 

 

 

 

 

 

Frequently asked real estate questions

House hunting
 - What should I do before starting to house-hunt?
 - How should I start my house hunting?
 - What should I do when I visit a house?

Negotiations
 - What happens next if I like a house that's in my price range?
 - What is negotiable?
 - Once I've made the offer, what happens?
 - If the offer is accepted, do I sign a contract to buy the house?

Financing
 - Is getting a mortgage as challenging as finding the right house?
 - How much of a down payment will I have to make?
 - Are there other things I must do to obtain a mortgage?
 - What about a down payment?

After the sale
 - Once I've bought the house, what else should I remember to do?

 

 

House-hunting

What should I do before starting to house-hunt?

Be practical. Determine a price range you can afford and pick neighborhoods in communities that appeal to you. Make a wish list of what's important -- closeness to work, quality of schools, type of house, condition of house, sufficient number of bedrooms and bathrooms, sizable kitchen, family room, two-car garage, landscaping, pool, etc. Also think about crime, security, police and fire protection, water quality and other public services.

You may not be able to find the perfect home in your price range, but the list will help point you in the right direction.

Equally important, get your own financial house in order. Take care of credit card debt, for example, and make sure you don't have any blemishes in your financial past or present. This will become important when you shop for a mortgage to finance your purchase.

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How should I start my house hunting?

Once you figure out your budget, where you want to live and the style of house you like, check out real estate advertisements, talk with real estate agents, call phone numbers on lawn signs, visit open houses and use one of the growing number of Internet real estate services. Agents who specialize in an area will usually have many homes to show you, but bear in mind that they represent and are paid by sellers -- not you. You might want to hire a "buyer's broker" with a network of contacts and listings in a certain community. The broker may charge a fee or receive part of the commission when you buy your house.

 

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What should I do when I visit a house?

Don't be afraid to ask questions of the real estate agent and/or owner. Inspect nooks and crannies, such as the plumbing, wiring, roof, windows, closets, etc. Turn on lights. Flush toilets. Turn on showers and fill tubs. Try the dishwasher and oven. See if the sprinklers work. Put the air conditioner or heat through the paces. Write down everything you like and dislike. Even bring a still camera or video camera to record the visit. For the homes that make your final cut list, try to visit more than once, at different times of the day. You may find the neighborhood is quite different at night when everybody is home, for example, than it is during the day. Also, listen for noise from nearby roads and highways, and for planes flying overhead.


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Negotiations

What happens next if I like a house that's in my price range?

Whether you're single, married or married with children, consider the pros and cons of the house. You may decide it's your dream house, even with certain flaws that can be improved. In that case, don't hesitate to make an offer. If you like it, someone else will too. But in making an offer, don't just try to undercut the seller's asking price. Find out what recent comparable sales have been in the neighborhood -- your agent can help you with this -- and make an intelligent offer. The offer will often be done in writing.

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What is negotiable?

Essentially, everything. If you don't like the hot tub in the back yard, ask if the owner will remove it. If you like the antique chandelier in the living room, but your told it's not included, ask to have it included. The worst that can happen is you're told no.

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Once I've made the offer, what happens?

The real estate agent will convey your offer to the seller, who will accept it, reject it outright, or respond, with a higher counter offer. If the latter is the case, counter with a final offer. This negotiating dance should not go on indefinitely, for it will end in bitterness and anger.

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If the offer is accepted, do I sign a contract to buy the house?

Yes, you will sign a purchase and sale agreement and make a deposit, which is normally 5 percent of the purchase price. It will be put in an escrow account, a third-party account at a bank.

The purchase and sale contract, based on negotiations between you and the seller, should spell out any improvements to be done by the seller before the sale is completed. You have the right to hire a private inspector to review the property, including wiring, plumbing, roof and termite inspections. Many standard contracts include provisions for the owner to pay up to a certain amount -- usually a percentage of the sale price -- for repairs that an inspector found were needed.

The contract should also spell out the terms of the sale. Make sure it specifies that you will get your money back from the escrow account should you fail to obtain mortgage financing for the purchase within a reasonable period of time.

Read the contract carefully. If there is something that you don't understand, ask the agent or another source to explain it. If there is something in the contract you don't like, ask that it be changed to your liking. Remember that everything, essentially, is negotiable.

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Financing

Is getting a mortgage as challenging as finding the right house?

It can be. Again, you have to do your homework. Ask the real estate agent involved in the transaction if they know of reputable mortgage lenders. But don't just rely on their advice. Seek out mortgage rates from a variety of sources, such as banks, mortgage lenders, mortgage brokers and the Federal Housing Administration. It insures favorable loans for eligible low- and middle-income people.

Long before this process, make sure your financial house is in order. A problem could delay or prevent securing the mortgage.

As you try to obtain the lowest rate, keep in mind that lenders may charge points for your home loan. Points are upfront charges for the loan; they normally range from zero percent to three percent of the total loan. For example, one point on a $100,000 mortgage equals a charge of $1,000.

If you expect to be living in your house for a few years, try to avoid paying points for your mortgage; if you expect to be living there for many years, consider paying points because it will reduce the interest rate on your loan.

Another thing to consider is the type of loan: 30-year, fixed-rate mortgages are the most common. They make sense in today's market because rates are in the historically low percent range. There also are adjustable rate mortgages. They're lower than fixed rates but can fluctuate yearly to your advantage or disadvantage depending on the direction of interest rates.

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How much of a down payment will I have to make?

The down payment toward the purchase price is normally 10 to 20 percent of the sales price, but can be as low as 5 percent with a conventional lender -- and even less through federal programs. The down payment is due at the closing.

The down payment affects the size of the mortgage needed to finance the purchase, and possibly the type of rate you can get, or the number of points you'll have to pay.

With a down payment of less than 20 percent, your lender may require that you pay for mortgage insurance, which would pay the bank should you default.

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Are there other things I must do to obtain a mortgage?

Yes, you must buy property and casualty insurance and you must get title insurance. The latter will clarify whether there are any liens -- debt obligations -- on the property. At the same time, you should have the house re-inspected to make sure the seller took care of those improvements stipulated in the purchase and sale contract. Schedule a walk-through of the house right before closing to verify that all is in order.

You might consider hiring a real estate attorney to assist you, especially at the closing. The closing, which brings together the seller, buyer, mortgage lender and title insurer, finalizes the sale. The attorney's role is to protect your financial interests, checking the fine print. And there will be plenty of fine print, as well as piles of papers to be signed.

When all is said and done, you will likely spend between $3,500 and $5,500 on an appraisal of your house, inspections, mortgage fees, loan points, title insurance, state taxes, attorney's fees and other miscellaneous costs for a $100,000 mortgage. The seller pays the commission to the real estate agent.

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What about a down payment?

The down payment toward the purchase price is normally 10 to 20 percent of the sales price, and is due at the closing. The down payment affects the size of the mortgage needed to finance the purchase, and the type of rate you can get.

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After the sale

Once I've bought the house, what else should I remember to do?

Make sure the new deed for your house is registered locally soon after the closing. In Texas, you can apply for a homestead exemption during the year in which you bought your home.  Gaining this exemption will take a big bite out of your tax bill each year.

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