Frequently Asked Questions

Do I need to be pre-qualified or pre-approved for a mortgage loan before looking at homes?

Mortgage Pre-qualification*

Pre-qualification* is often seen as the first step in the mortgage process. A professional loan consultant or Mortgage Advisor can help you understand the variety of potential costs associated with buying a home and help you to determine your budget. He or she will review your financial history including: income, assets, debts and credit score. This information allows the lender to give you an estimate of what amount of money you may qualify to borrow and provide you with a pre-qualification letter. Often a pre-qualification does not require documentation of your finances, but can be self-reported. This pre-qualification letter can help you and your realtor determine where to begin your search for your new home and shows that you are a serious buyer.

Mortgage Pre-approval*

Pre-approval* is stronger than pre-qualification and shows you actually have the resources to make the purchase and it helps you act quickly when you find the perfect home. You will need to provide the required documentation to your lender who will lead you through this process. From the viewpoint of a seller, a pre-approved buyer is far more attractive as you have the documentation to prove that you can complete the transaction, effectively eliminating the need for a financial contingency on your offer. Providing a mortgage pre-approval letter with your offer could help you win the home bid. This is especially important in a situation with multiple offers.

Which first-time homebuyer programs are available to me?

Grants and specialized loan programs for first-time home buyers are available in most U.S. cities and counties. These programs may provide down payment, closing cost assistance and other unique benefits in a variety of forms, including grants, zero-interest loans, and deferred payment loans. For example, The Montgomery Homeownership Program V, an initiative of the Maryland Mortgage Program in partnership with Montgomery County, gives eligible homebuyers up to $25,000 in down payment assistance. Being eligible to apply for one of these programs does not guarantee approval for these benefits. Lenders typically consider your annual household income, current credit history and employment status while reviewing your application. Depending on your credit score, down payment, and other factors, you may even qualify for more than one loan program. Your Mortgage Advisor keeps abreast of all the current options and can help you select which one is best for you.

Why should I use a Realtor when buying a home?

A good Realtor can significantly affect the success of your buying or selling experience. If it was a simple and easy process, anyone could do it. Buying or selling a home can be one of the most stressful events in anyone’s life if not managed properly because the risks involved in making bad real estate decisions can be long lasting. Saving time and money are obvious benefits, but your Realtor also has access to information not readily available to most buyers and sellers. This information is vitally important to making good decisions along the buying or selling journey. Among other things, your Realtor acts as your advisor, advocate and key negotiator. This is why it is so important to choose a Realtor that is truly focused on your best interests.

Who pays the Realtor fees when buying a house?

One reasons why buyers ask the question about the need for a Realtor when buying a home is because they assume they are liable for Realtor fees when buying a home. Although there are no guarantees, in most cases, the seller pays the Realtor fees rather than the buyer.

What is an earnest money deposit?

An earnest money deposit used to be referred to as a good faith deposit. When a buyer purchases a home, they provide the seller’s real estate company a deposit to hold in their escrow account – showing their “good faith” to complete the transaction. The primary purpose of this deposit is to show a seller you are serious about purchasing their home. The entire deposit amount is subtracted from the final sales balance a buyer pays at closing. In most cases, the larger the deposit, the stronger a purchase offer looks to a seller. In a bidding war, sellers may be swayed to take a lower total offer when a buyer includes a significantly higher earnest money deposit in their offer than other potential bidders.

Is the house in a good area and neighborhood?

When buying a home, every home buyer wants to know if the local attributes of the neighborhood fit their needs. As real estate professionals, we are bound by ethics rules that we take very seriously. This does not mean that your Realtor cannot provide you with tips and educational resources to help you narrow your search and find the neighborhood that is perfect for you. For example, Realtors with local knowledge can provide you with websites or resources regarding the growth of the local economy, schools, crime statistics, taxes, commuter options and local amenities. Don’t hesitate to ask your Realtor about any pertinent information that could help you make an educated decision on areas and neighborhoods.

How long does the seller have to respond to an offer?

The time an offer is considered viable can vary from hours to multiple days. While there is no “standard” amount of time, most realtors agree that most sellers (or their agents) will respond back within a few days. Sometimes exceptions happen, but you can expect your Realtor will give you the best advice on how long an offer should continue.

What if my offer is rejected?

When a purchase offer is submitted to the seller there are generally four possible responses:

· An accepted offer

· A counter offer

· A rejected offer

· No response

If your offer is rejected outright you have the right to place another offer. It is a best practice to always submit your best offer when bidding on a house you really want. Your Realtor can be a trusted advisor to help you submit your best offer.

Do I have any options when it comes to inspecting the property?

The purchase offer you write can be contingent on many different types of inspections; radon, home inspection, mold, water testing, and others. It is highly recommended that you have a home inspection at the very least. Even on a property that is sold “as is” you should still be able to have a home inspection. The seller will not address any issues you find during the inspection, but you will have a professional assessment of what issues there may be with the property. Seller can also set time limits for inspections to occur and limit access to inspectors.

How long does it take to close?

The typical escrow periods are 30 to 45 days following the acceptance of a ratified offer. During this period, the buyer and seller agree to property inspections and finance milestones. The buyer also works closely with the Mortgage Advisor and Realtor to prepare the closing documentation.

When can I back out of a deal?

Buyers may back out of a deal for many reasons. But there may be negative consequences when this happens. For example, the buyer may forfeit their earnest money deposit. Contract contingencies usually offer the buyer the greatest ability to back out of a deal. For example, if the buyer’s offer is contingent upon a fully satisfactory inspection for a property that failed the inspection, the buyer can either renegotiate the terms of the agreement or back out completely. Another common contingency relates to the house’s value. If the appraised value is less than your offer when your offer included the ‘subject to appraisal’ clause, the lender can refuse your loan and effectively cancel the deal. You also may have the option to make up the monetary difference between the offer and the appraisal if you so desire.