www.MattSmithAZ.com
 There are
hundreds of questions that can come up in the course of buying a home.
The two people who are equipped to answer most of them are your Realtor
and your Loan Officer. The following is a list of questions most
commonly asked by buyers.
- What is a point
when referring to loan fees?
A point is a loan fee
that is paid by the borrower, (or occasionally by the seller on the
buyer's behalf), to lower the loan interest rate. For example, suppose
you are getting a loan for $100,000 and the current interest rate for a
30 year loan is 7%. If you pay one point, which is equal to 1% of the
loan amount, (in our example the point would cost 1% x $100,000 or
$1000), you might reduce the loan interest rate from 7% to 6.75%. A
point may be called a discount point or an origination fee and is paid
along with your down payment and other closing costs at the close of
escrow. - What is the
difference between a home appraisal and a home
inspection?
The purpose of a home
appraisal is to determine how much the house that you are buying is
worth in comparison to similar houses that have recently sold in the
area surrounding your new home. An appraisal is required by all lending
institutions in order to get any type of loan. On the other hand, the
purpose of a home inspection is to determine if the house is
structurally sound and in good working condition. A home inspection is
not required by a lending institution in order to get a loan.
- What is a credit score
and how can it affect the type of oan and interest rate that I get?
It
is almost certain that if you have bought goods and services using
credit in the past that you have what is called a credit score. A
credit score is a reflection of how responsible that you have been in
using credit to make purchases. Making your payments on time is one of
the major factors in having a good credit score. The higher your credit
score is the more responsible you have been with using your credit. As
a general rule, credit scores of 700 or higher are considered very
good. A credit score in the mid to high 600s is generally considered a
good score, and a score in the low 600s and below are considered a
below average credit score. A below average credit score might keep you
from obtaining a loan with the best interest rates and terms or might
keep you from getting any type of loan at all. This is why it is good
to ask for a free credit analysis to see where you stand before you
begin looking for a home. - Can
I buy a house with someone that I am not married to?
The
answer to this question is yes with only one exception. You cannot buy
a home using a VA loan, (veteran loan), with someone unless you are
married to that person. - When
I go to the title company to sign my loan papers at the close of
escrow, can I pay for the down payment and closing costs with a
personal check?
The answer to this is no. This is
because if you paid with a personal check the title company would have
to deposit your check and wait for it to clear in order to close your
loan. That could take several days and of course would delay the
purchase of your home. So most of the time, the title company will ask
you to bring in a cashier's check. - What
is mortgage insurance? Is it the same as life
insurance?
Mortgage insurance is not the
same as life insurance. Mortgage insurance protects the lender from
loss due to the borrower not making payments, (defaulting on the loan).
With mortgage insurance, lenders are able to make larger loans and
allow the borrower to make smaller down payments. The borrower pays for
the mortgage insurance by making monthly payments that are usually
included in the borrower's monthly mortgage payment. You can ordinarily
eliminate mortgage insurance on conventional loans by making a down
payment of 20% of the sales price or more. Life insurance on
the other hand, provides protection to your beneficiary if you die. For
example, suppose two people purchase a home by getting a loan for
$100,000. Then one of these people die. Now if the two owners of the
home had taken out life insurance policies of $100,000 on each other,
then the surviving owner could pay off the loan and own the home free
and clear. - How
should I take title to the property?
First, it must
be said that how you take title to the property has significant legal
and tax consequences. It is therefore very important that you get in
contact with a qualified professional early in the process of
purchasing a home. I would suggest starting with an escrow officer at a
title company. I have listed the name and phone number of two title
companies and two escrow officers that will answer your questions.
- FIDELITY NATIONAL TITLE
John
Sanow, (480) 951-0294 - CAPITAL
TITLE AGENCY
(480) 325-2312 You
may also seek the advise of an accountant of attorney to help arrive at
this decision. - Do I
have to be prequalified for a loan before I begin looking for a home?
I
would strongly recommend that you call a lender and be prequalified
before you begin your home search. Then you will know how much of a
loan that you can qualify for. This, of course, will directly affect
the price range of the homes that you look at. Prequalifying usually
can be done over the phone and takes about 15 minutes. If you would
like you can call me at (480) 481-2810 and I will happy to assist you
with this. Home
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