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Questions & Answers
What is the first step in buying a home?
The absolute first step is to get approved for a mortgage. Without being approved for a mortgage it will be quite difficult, if not impossible, to purchase a new home. If you don't know where to start or who to call, just call me and I can refer you to reputable mortgage lenders that can assist you.
Should I sell my current property before buying a new one?
This is a tricky question, and the answer primarily depends on one’s funds and ability to find temporary housing. If you are in need of more equity to purchase a new home or meet a mortgage plan, then it is best to sell one’s current home before purchasing their next one. That being said, you may most likely need temporary housing at a friend or relatives, or by arranging a short-term rental elsewhere.
Should I do a home inspection?
Yes, I always recommend YES! A home inspection is one of the most vital steps when purchasing a property. A professional home inspector has a keen eye for how well the house has been taken care of. The inspectors can comment on structural and cosmetic issues, along with any local code issues. Also know that here in New Mexico a home inspector must be licensed. CLICK HERE TO REVIEW A LIST OF APPROVED LICENSED INSPECTORS.
What is a final walk-through and should I do one?
A final walk-through is not required but highly recommended. Final walk-throughs gives you, the buyers, a chance to make sure nothing has changed since their initial inspection or previous visits. Also, if repairs were requested as part of the sale offer then a follow-up visit ensures all repairs are done according to the agreement and contract.
What is earnest money and how does earnest money work?
Earnest money (also known as a good faith deposit) is a cash deposit a buyer makes when the sale contract or purchase agreement is signed, or alongside the offer. This deposit is made in order to show how serious the buyer is about purchasing the home. Though there are no real rules as to how much money should be deposited in a good faith deposit, it's typically between 1-5% of the purchase price. The money is then deposited with the Title company into an escrow account, where it will typically be used to cover some of the closing costs. In other words, the deposit will go towards your purchase price.
It is important to note that earnest money is NOT the same as a down payment and buyers should know that this deposit may be lost in some cases. Please talk to your Realtor® about how much earnest money may be right for your purchase and what situations may cause you to loose that earnest money.
How many houses should I view before purchasing one?
The number of houses to view can depend greatly. If you are just starting to look but haven't gotten pre-approved, looking online view this website, you can start to get an idea of what the prices are and what the homes look like by viewing them online. Once you are pre-qualified or pre-approved, together we can make a plan to narrow down the homes you'd like to view and schedule a day to view those homes.
What happens if I decide to back out of buying a house?
There are some implications when getting cold feet. Know that in this instance you will have to forfeit the earnest money, which again, is around 1–2% of the home’s sale price. Also, the seller may take legal action to force the buyer to perform their contract and move forward with the sale. Talk to your Realtor® about this matter before making an offer on a home to make sure you understand all terms before going into a transaction.
What is the difference between Pre-Qualification and Pre-Approval?
Pre-qualification can be considered the first part of gaining a pre-approval for a loan. This allows homebuyer to gain an idea of how much of a loan they'll be qualified for. The lender will analyze financial data supplied by the borrower to determine how much he/she would qualify for. Pre-qualification however, is no guarantee that the lender will approve the loan. It's just a first step towards pre-approval.
Pre-approval is when lander has verified their personal information, checked their credit and sources of income, and is ready to be approved to receive the loan. A letter of pre-approval can give a homebuyer an edge over other homebuyers, since it shows how serious the homebuyer is, and how likely it is that they will be approved.