Buying FAQ's

Q: How large a down payment should I make?

A: Ideally, you should purchase a home and have enough accumulated for a down payment so that your down payment represents 20 percent of the purchase price of the property. Twenty percent down is recommended because it's a big enough cushion to protect lenders from default.

Q: Why do I need homeowner's insurance?

A: Homeowner's insurance is mandatory. When you purchase a home, your mortgage lender won't allow you to close the purchase until you've demonstrated that you have proper homeowners insurance.

Q: What is loan pre qualification?

A: Pre qualification is an informal discussion between borrower and lender. The lender provides an opinion of the loan amount that you can borrow based solely on what you, the borrower, tell the lender. The lender doesn't verify anything and is not bound to make the loan when you're ready to buy.

Q: What is loan pre approval?

A: Pre approval is a much more rigorous process than pre qualification. Loan pre approval is based on documented and verified information regarding your income, your liabilities, and the cash you have available to close on a home purchase.

Q: Why should I get pre approved?

A: Going through the pre approval process is a sign of your seriousness to buy a house. A lender's pre approval letter is considerably stronger than a pre qualification letter.

Q: What are points?

A: Points are up front interest and cost you money. Lenders charge points as a way of being paid for the work and expense of processing and approving your mortgage. One point is equal to 1 percent of the amount that you're borrowing.

Q: Why should I pay to have a property inspected?

A: All properties should be inspected. Period. If you're spending a lot of money for a property, protect your investment by having it inspected.

Q: What is a counter offer?

A: It's highly unlikely that the sellers will accept your offer as it's originally written. Sellers use counter offers to fine-tune the price, terms, and conditions of offers they receive.