F.A.Q.

Frequently Asked Questions

Q: Why should I use a real estate salesperson?

A: A real estate agent is more than just a “sales person.” They act on your behalf as your
agent, providing you with advice and guidance and doing a job – helping you buy or sell a
home. Due to the fast changing market, the data on available listings is not 100%
accurate. There are times when you need the most current information about what has
sold or is for sale, and the only way to get that is with an agent. There are two types of
agents, “Buyer’s Agents” and “Seller’s Agents”. It used to be common for all parties
involved to work for the seller, hence the term “Seller’s Agent”. Nowadays, you will most
often find a different type of agent, the “Buyer’s Agent”. If you are in the market to buy, it
would be advisable to use a Buyer’s Agent. They can make recommendations on what
terms and prices to offer as well as negotiating a deal with your best interest in mind. If you
happen to be working with a Seller’s Agent, never disclose to them the top dollar you are
willing to pay for any property. Keep it narrowed down only to things that you would tell the
seller directly.

Q: If I want to buy a house and I know the property and the seller
already have an agent, can I act as my own agent and negotiate a
lower fee?

A: You probably don’t have the correct knowledge to represent yourself. The seller pays
the real estate commission, not the buyer, and real estate commissions are already set in
the listing contract. It doesn’t cost you anything to have your own agent represent you
because the seller is already paying for it.

Q: What are closing costs?

A: Closing costs are expenses incurred by buyers and sellers in transferring ownership of
a property.

Q: What is a Multiple Listing Service (MLS)?

A: A multiple listing service is a computerized listing of the homes for sale in an area listed
with a realtor. Agents are granted access to the MLS and can use it to find a house in a
particular price range or area.

Q: What is earnest money?

A: Earnest money is a deposit you make when you make an offer on a house

Q: Can I afford to buy a home?

A: Before you start actually going out and looking at homes, it is a good idea to determine
what you can afford. It is a disappointing experience to fall in love with a house only to find
out that your lender will not approve you for the amount of money you need. It is far better
to know in advance what price range of houses to look at. The first step in determining how
much you can afford to spend is sitting down and taking a look at your income and
expenses. As a rule of thumb, your monthly housing cost should not be above about 28%
of your pretax income. You will then need to factor in the cost of any other fixed long term
monthly payments that you have. Ideally the combination of housing and payment costs
should not be higher than 35% of your monthly income. Any lender you approach will want
to assure themselves that any mortgage they approve for you will be within these
guidelines. Insured loans may allow you more latitude in these percentages. Once you
know how much you can afford in monthly payments ask your Realtor® to calculate
approximately how large a mortgage that payment would service. Determine how much
money you will use as a down payment (don’t use all your cash for the down payment, you
will need to pay some closing costs). Add that down payment and mortgage amount
together and you will know what price range you are looking at. Then — happy home
hunting!

Q: What exactly does my mortgage cover?

A: Most loans have 4 parts: principal, the repayment of the amount you actually
borrowed; interest, payment to the lender for the money you’ve borrowed; homeowners
insurance, a monthly amount to insure the property against loss from fire, smoke, theft,
and other hazards required by most lenders; and property taxes, the annual city/county
taxes assessed on your property, divided by the number of mortgage payments you make
in a year. Most loans are for 30 years, although 15 year loans are available, too. During
the life of the loan, you will pay far more in interest than you will in principal, sometimes as
much as two or three times more! Because of the way loans are structured, in the first
years you will be paying mostly interest in your monthly payments. The interest payment is
deductible on your federal income taxes. In the final years, you will be paying mostly
principal

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