Buyer – Frequently Asked Questions
Q – Do I have to use the seller or builder’s lender to get Pre Approved?
Answer – You can use the lender of your choice. However, the builder or seller can legally require that you use their preferred lender IF you want the builder/seller to contribute to paying any part of your closing cost.
Q – How much closing cost will I have to pay?
Answer – Closing cost are fees that your lender charges you to close your loan. Make sure you ask the lender to give you an estimate of their closing cost fees. Closing cost fees are paid on the day of closing and will be on your closing HUD Statement.
Q – Who pays the Buyer’s Agent commission?
Answer – The Listing Agent & Buyer Agent SHARE the commission, which is paid by the seller. If you decide not to be represented, the Owners Agent retains both sides of the commission, so don’t be misinformed by thinking your getting a better deal without your own Buyer Agent. This is the most frequent mistake buyers make.
Q – What is a Mortgage Pre – Approval Letter?
Answer – A Pre Approval letter means a lender has evaluated your credit worthiness, income & debt. Based on that information, they’ll determine an amount they may be willing to loan you for a mortgage.
The Pre Approval Letter will state how long it is valid & may contain other conditions necessary for you to obtain the mortgage & full approval. The seller often requests to see a copy of the buyers Pre Approval Letter prior to confirming an appointment to view the property.
Q – Does the Onsite Agent or Builders Agent represent me as a buyer?
Answer – No. When you visit any new model home community, the builders Agent or representatives only represent the builder, not the buyer. The Onsite Agents have signed a contract with the builder to represent that builders sole interest. Don’t be misinformed.
Q – What if I want to view a private property before I get Pre – Approved?
Answer – The owner is not entitled to show the property to buyers that can’t provide a written Pre Approval letter. The Agent shows the property upon the instructions of the property owner so all appointments must be confirmed through the property owner.
When the seller list their property for sale, they sign a listing agreement with an Agent to show their property to Ready, Willing & Able buyers. A Ready, Willing & Able buyer is a qualified buyer who has been Pre Approved by a lender based on their credit worthiness to purchase a property for a specified amount.
Q – Can I pull my own credit report to determine if I’m Pre Approved?
Answer – You can get a copy of your credit report at Credit.com. However, this alone is not enough for a seller or builder to acknowledge that your pre approved to purchase a property. The Pre Approval letter needs to come from the lender that is committed to providing you with a mortgage loan on the property. Also, the lender has to factor in your debt to income ratios & other factors to determine your approval capability. Only a lender can determine whether they are going to give you a mortgage and inform you of their closing cost or charges to you to close the loan.
Q – Can I work with multiple Agents?
Answer – Many buyers think that working with multiple Agents will improve their chances of gaining access to more houses when in fact, Agents have access to the same MLS listings, so a buyer just needs to choose an active licensed Realtor that they want to work with. This is the most common mistake buyers make. See more myths for home buyers by viewing The Common Real Estate Myths for Home Buyers article.
Q – Why do I need to sign an Acknowledgement to work with Diamond Realty Brokers?
It is standard practice for the buyer to sign an Acknowledgement, which explains the relationship between the buyer and the Realtor before services begin. We just happen to have our Buyer form online so it can be easily e-signed.
See Brochure – Home Buying – The Process
Q – Why is earnest money required?
Answer – Earnest money is requested by the seller to show the buyers good faith in closing on the property at the time specified in the sales contract. The earnest money is credited back to the buyer toward closing cost/pre-paids at the time of closing. Earnest money is typically 1% of the sales price.
For example, if the property is $300,000, the seller could request $3000 in earnest money from the buyer. Of course, a lower earnest money amount could be proposed. However, the seller could decide not to engage in the offer.
Q – Is it possible to loose my earnest money?
Answer – Yes, depending on the terms & conditions of your sales contract. Typically, if the buyer defaults on any terms of the contract, doesn’t get a full loan approval or close on the property as stated in the contract, the buyer could risk looking their earnest money. Even if the buyer uses the seller or builder’s preferred lender, it would not be deemed their fault if the buyer doesn’t meet conditions required to get a full approval or financing.
It is very important that you read the sales contract & communicate with the mortgage lender to make sure you can meet the financial terms of the contract before signing a sales contract with a builder or seller. This is why getting a Pre Approval letter before even viewing at property is a best practice that we recommend every buyer adopt.
Q – How much is the downpayment on a property?
Answer – FHA requires 3.5% downpayment
For example, on a $300,000 home 3.5% = $10,500
Conventional or Bank Mortgages typically require 5% downpayment
For example, on a $300,000 home 5% = $15,000
Note: Downpayment is separate from your closing cost, which is the cost your lender will charge you to obtain or close the loan. The downpayment on commercial property depend on a number of factors, refer to your lender for an estimate.
Q – Is the earnest money the same as the downpayment?
Answer – No the earnest money is separate from the downpayment. The downpayment is required by the lender or mortgage company that is financing your mortgage. The earnest money is required by the builder or seller that is expecting you to close on the property at a specified time. The earnest money is credited back to the buyer as closing cost on the HUD statement once the buyer closes on the property.
Q – Why should I get Pre Approved before I view a property?
Answer – Unless the property is a new construction community, then you need to be Pre Approved so the owner has proof that you can afford the home before requesting that their family make special arrangements for you to view it. Since it only takes a few minutes for you to get Pre Approved, the owner considers it as common courtesy among other things. If you visit a new construction community without informing your Agent, always register your Agent when you sign in as a guest. Remember, the onsite builders Agent doesn’t represent you.
Q – I have a Pre Approval Letter from my lender, What’s next?
Answer – Once you’ve requested Diamond Realty Brokers to be your Realtor, Email Property Alerts will be set up for you based on your criteria, interests & Pre Approved amount. Your home search isn’t limited to only our listings but the entire MLS database. Buyers can save properties, schedule showings or request more information about specific homes, property values or market analysis to ensure your making the best decision before purchasing a property.
A summary of what to expect before & after making an offer on a property until closing can be found at http://diamondrealtybrokers.com/buyers
Q – How do I become a customer or client of Diamond Realty Brokers?
Q – Can Diamond Realty Brokers refer me to a broker to help me buy or sell property outside of Georgia?
Answer – Yes, Diamond Realty Brokers is licensed in multiple states. However, for states we are not licensed, we’d be happy to refer you to a preferred network broker just sign the Referral Authorization form.
Q – What are the typical lender requirements to purchase a home?
Answer – Every lender has their own requirements. However, the typical lender requirements are as follows:
1. 600 Credit Score (no late payments within 12 months) Best Score 640 & above
2. 3.5% DownPayment for FHA Financing (excluding HUD Homes & VA Loans).
For example: If sales price = $300,000 Then Down Payment = $10,500
2. 3 months Bank Statements
3. Most recent 30 day Pay stub
4. Last 2 years Filed Tax Returns
5. Any B/K must be 1 years from discharge
6. Prior foreclosure must be 2 years from when the previous bank sold the property, assuming you’ve re established your credit.
Q – What is a Short Sale?
Answer- A short sale is when the property owner’s lender has agreed to take an offer lower than the mortgage amount due on the property.
Preview Brochure Short Sales & Distressed Properties
Q – What if the status on a property says Pending Approval?
Answer – Pending approval means there is a short sale offer on a property pending the approval of the owner’s lender.
Q – Why are my offers not accepted?
Answer – The reason your offer wasn’t accepted is because the owner of the property didn’t choose your offer as the highest & best offer. Keep in mind, every offer that is the highest isn’t necessarily the best offer. If your offer has multiple contingencies that you requested the owner to meet, such as inspection contingencies, repair contingencies, finance contingencies etc… can make your offer less attractive to the owner.
Q – Why is there a multiple offer process?
Answer – If a property is priced to sell, it will most likely end with multiple bids whether it’s a distressed property or not. When multiple offers have been made, a multiple offers bidding process can be necessary to determine the highest & best offer.
Preview Brochure – Home Buying – The Process
BUYER TEN COMMANDMENTS
- Thou shalt not change jobs, become self-employed or quit your job.
- Thou shalt not buy a car, truck or van (or you may be living in it)!
- Thou shalt not use charge cards excessively or let your accounts fall behind.
- Thou shalt not spend money you have set aside for closing.
- Thou shalt not omit debts or liabilities from your loan application
- Thou shalt not buy furniture.
- Thou shalt not originate any inquiries into your credit.
- Thou shalt not make large deposits without first checking with your loan officer.
- Thou shalt not change bank accounts.
- Thou shalt not co-sign a loan for anyone.
More Helpful Resources
Begin Your Home Search with a Pre-Approval in Hand – Realtor.com
Don’t Forget Your Pre-Approval Letter – Realtor.com
Comparing Prequalification to Pre-Approval – Realtor.com
Get Pre Approved – Money 101 Lesson#8 – Money Magazine
Paperwork Checklist for First Time Homebuyers – Realtor.com
Get Pre Approved before Shopping for a Home – Credit.com
Get Pre Approved before you begin looking at homes – Money USNews
Buying a Home – Investopedia
House Hunting Tips – Realtor.com
Brochure – Protecting Yourself When Purchasing a Home – Georgia Association of Realtors
Brochure – Home Buying Tips – The Process
Disclosure – Information shall not be used as real estate advice unless you are a client of Diamond Realty Brokers. Information subject to change based on rules, regulations & state laws specific to the location of the property. The broker, Angel Knight is licensed in multiple states where other terms & conditions may be applicable.