Frequently Asked Questions About Real Estate
Every day I get asked countless questions about real estate. That’s completely okay! I love taking questions from both buyers and sellers! However, sometimes you don’t know what you don’t know so I compiled a list of frequently asked questions to help you with your home buying or selling journey. Keep in mind that some questions are not as straightforward and depend completely on the market and/or individual circumstances.
What is an offer?
The offer is the amount of money that the buyer agrees to pay for the home, plus any additional conditions in the contract. A “bid” on a house is another term for this.
What is an option period?
An option period is a time outlined in the contract in which the buyer can cancel the contract without forfeiting their earnest money.
How long is the option period?
However long stated in the contract. Typically they range between 5 and 10 days. In general, a buyer wants the option period long enough to get a home inspection completed.
How much is the option fee?
As agreed upon between the buyer and seller. This non-refundable fee typically ranges between $100 and $200 depending on the market.
What is earnest money?
This is a portion of the purchase price that is paid to the seller as an indication that the buyer intends to complete the purchase. It is typically paid with cash or a certified check and can be held by the title company until the home closes.
How much earnest money is required?
The amount of earnest money varies and is largely based on current market conditions, but a good rule of thumb is 1% of the sale of the home.
What type of mortgage loans are there?
There are so many types of mortgages I don’t think I can list them all. The common types of mortgages I have worked within Central Texas have been VA loans, FHA loans, USDA loans, and conventional loans. My recommendation is to call a lender to see what type of home loan is best for your situation.
What is an FHA loan?
An FHA loan is a type of mortgage that is insured by the Federal Housing Administration. Another name for this type of mortgage is an FHA-insured mortgage. The minimum down payment requirement for this type of home loan is just 3.5%.
What is PMI?
PMI stands for Private Mortgage Insurance. It is insurance that protects the lender in case you stop making your mortgage payments. The protection was created to cover the lender’s hazard of lending money on a property that could potentially be worth less than what they lent. PMI can sometimes be required by the lender.
What is a VA loan?
A VA loan is a mortgage that is guaranteed by the U.S. Department of Veterans Affairs (VA), which places no restrictions on how much your down payment can be or what type of property you can purchase.
What credit score is needed for a va loan?
No minimum score is required for VA loans, however, most lenders require at least a 620.
Who qualifies for a VA loan?
Generally, you must have served in the military either on active duty, reserves, or national guard. There are specific requirements for each situation, such as when and how long you served, which you can find out about here.
How many times can you use a VA loan?
You can use a VA loan as many times as you would like. Keep in mind, however, there are different fees based on whether it is your first time using it or a subsequent time.
What are the VA funding fees?
VA funding fees range from 1.4% to 3.6% depending on how much of a down payment you’re paying and if it’s your first time using a VA loan or subsequent use.
Are VA loans assumable?
Yes. The new homebuyer must meet all of the VA loan requirements and pay a funding fee to do so.
What is a home inspection?
A home inspection is an examination of components of the home. A home inspector looks for underlying issues that may be present with the property and you will want to know about them before making your final decision on whether to buy the property.
How much is a home inspection?
A home inspection can cost $75 – $200 for small properties and $150 – $500 for larger properties. Throw in other items such as a pool, it can cost slightly more.
Who pays for a home inspection?
The party purchasing the home is responsible for paying for a home inspection.
How long does a home inspection take?
Home inspections usually take 1-3 hours, but this depends on the size of the home. Larger homes can take much longer.
What are closing costs on a house?
Closing costs are the fees associated with buying or selling a home. These include all of the expenses in order to close on a home including notary fees, title search, appraisal fee, inspection fee, recording fees, origination fee, etc. Closing costs vary from home to home and are accurately calculated shortly before closing, but your real estate agent should be able to give you a rough estimate.
Who pays closing costs?
Typically the buyer pays the majority of closing costs, but it’s actually determined in the terms of the contract. Depending on the market and situation, the seller could pay closing costs if negotiated.
When do I get the keys?
The buyer receives the keys once the house is funded by the buyer’s lender and the seller has received the funds. This can take one or two business days, but I’ve seen it completed within hours after closing.
Hopefully, this FAQ answered some of your most burning questions. Most questions are dependant on your personal situation and some of these may change as laws and regulations change as well. Your best bet is to get with a local real estate agent to get the latest information.