Frequently Asked Questions
These terms refer to your status in the loan approval process.
What is the difference between prequalified and preapproved?
Prequalification is a determination of your probable ability to obtain a loan. To become prequalified, meet with a loan officer or mortgage company. They will help you determine the price you can afford, based on your monthly income and your current debts, as well as the cash you have for a down payment.
Preapproval means that the mortgage lender has already verified and approved your credit and employment. Obtaining preapproval early in the process will make your offer more attractive to the seller.
What is earnest money?
Earnest money is a "good faith" deposit submitted with your offer to show the sellers that you are serious about purchasing their home. Earnest money is a required part of an offer. There is no set amount that is required, but the amount sometimes makes a difference in the negotiation process. Earnest money eventually becomes part of the purchase, and will show as a credit to the buyers on the settlement statement drawn up by the escrow company.
What are closing costs?
Closing costs are charges paid to various entities during the real estate transaction. They can include escrow fees, document preparation fees, cost of an inspection and lender fees.
What is a point?
A point is equal to one percent of the loan principal. Some lenders charge points, in addition to interest and fees, at closing.
What is title insurance?
Title insurance protects against loss from any defects in the legal title, liens against the property or other adverse claims. The lender usually requires title insurance.
Home inspections
When you're ready to complete a purchase and sale agreement on a home, your offer will generally be contingent on a professional inspection of the entire property - including improvements. The home inspector looks beyond the cosmetics to make sure that the home's general systems operate properly. The inspector will also look for large repairs that are needed and report on the condition of the home.
The standard home inspector's report will review the conditions of the home's heating and cooling system, interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; foundation, basement and visible structure. The inspector will also look for cracks in cement walls, water stains that indicate leakage and any indication of wood rot.
A home inspection also points out the positive aspects of a home, as well as the maintenance that will be necessary to keep it in good shape.
As your Windermere agent, I'm familiar with home inspection services and can provide you with a list of names from which to choose. Another good source for finding a home inspector is to ask a friend, or perhaps a business acquaintance, who has had a home inspection and can recommend a home inspector they were satisfied with.
Remember, no home is perfect. If problems are found, we will help you negotiate through the process.
