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Frequently Asked Real Estate Questions

Frequently Asked Real Estate Questions

Select one of the frequently asked real estate questions below to learn more about buying and selling properties. These are all important things to consider when diving into your real estate search.

An agent who is authorized to open and run his/her own agency. All real estate offices have one principal broker.

A real estate broker is a licensed professional who acts as an intermediary between buyers and sellers of real estate, facilitating transactions such as the buying, selling, or renting of properties. They are authorized to represent clients in real estate transactions and are held to certain legal and ethical standards.

Here are some key roles and responsibilities of a real estate agent:

  1. Representation: Brokers represent their clients and work in their best interests throughout the transaction process.

  2. Market Knowledge: Realtors have a deep understanding of the local real estate market, including property values, market trends, and neighborhood dynamics. This knowledge helps them provide valuable advice to their clients.

  3. Marketing: Brokers market properties for sale or rent on behalf of their clients. This may involve creating listings, staging properties, taking photographs, and promoting properties through various channels such as online listings, social media, and traditional advertising.

  4. Negotiation: Real estate agents negotiate the terms and conditions of real estate transactions on behalf of their clients. This includes negotiating the sale price, terms of the contract, and other relevant aspects of the deal.

  5. Paperwork and Legal Compliance: Brokers handle the paperwork and legal documentation involved in real estate transactions, ensuring that all contracts and agreements comply with local laws and regulations.

  6. Networking: Brokers often have extensive networks of contacts in the real estate industry, including other brokers, agents, lenders, attorneys, and home inspectors. 

  7. Continuing Education: Real estate brokers are required to complete ongoing education and training to maintain their license and stay current with changes in real estate laws, regulations, and best practices.

Overall, real estate agents play a crucial role in the market by facilitating transactions, providing expertise and guidance to clients, and ensuring that deals are conducted smoothly and legally.

This is really just a matter of preference, but both newer and older homes offer distinct advantages, depending upon your unique taste and lifestyle.

Older homes can generally cost less than new homes, however, there are many cases where new homes can also cost less then older homes. Most new homes will not have any backyard landscaping and some don”t include any front landscaping either. With an older home, the landscaping is normally already completed and could have 10”s of thousands of dollars in landscaping done, which is included in the purchase price.

Taxes on some older homes may also be lower. Some people are charmed by the elegance of an older home but shy away because they”re concerned about potential maintenance costs. Consider a home warranty to get the peace of mind you deserve. A good Home Warranty plan protects you against unexpected repairs on many home systems and appliances for a full year or more after you move in.

In a new house, you can pick your own color schemes, flooring, kitchen cabinets, appliances, custom wiring for TV”s, electrical, computers, phones and speakers, etc., as well as have more upgrade options. Modern features like media rooms, extra-large closets and extra-large bathrooms and tubs are also more attainable in ground-up construction. In a used home, you rely largely on the previous resident”s tastes and technological whims, unless you plan to farm thousands into a remodeling and rewiring.

New-home designers can use new building materials such as glazed Energy Star windows, thicker insulation and other technology that will lower future energy costs for the owner. Most states now have minimum energy-efficiency requirements for new construction. Kitchens and laundry areas in new homes are designed to house more efficient energy-saving appliances. Older homes, unless they have undergone an energy retrofit, usually cost much more per square foot to air-condition and heat.

Builders have to follow very strict guidelines in new-homes and additions, especially in the West and Northwest, where earthquake safety standards must be observed. In general, new homes are usually more fire-safe and better accommodating of new security and garage-door systems.

Older homes can be better judged for their quality and timeless beauty. New homes that now possess a smooth veneer might reveal the use of substandard building materials or shoddy workmanship over time.

As you can see there are advantages and dis-advantages to each, but it really comes down to what fits you and what you are looking for in a home.

If you’re prequalified it means that you POTENTIALLY could get a loan for the amount stated to you, assuming that all of the information you provide to the bank is accurate and true. This is not as strong as a preapproval. It is like a quick glance at your financial situation and a general assumption is made on whether you could be approved for a loan in the future.

If you’re preapproved, it means that you have undergone the extensive financial background check, which includes looking at your credit history, previous tax returns and verifying your employment – and the lender IS FOR SURE WILLING to give you a loan, basically meaning you’re approved!

You will usually be provided an accurate figure which shows the maximum amount that you are approved for.  Most sellers prefer buyers that have been preapproved because they know that there will not be any problems with the purchase of their home.

The credit score needed to secure a home loan depends on the type of loan you’re looking to use. Most conventional loans require a score of 620 or above, but USDA loans may need at least a 640. 

Government-backed loans are typically have much lower credit requirements. The Federal Housing Administration (FHA) loans could go as low as a 500 credit score if you provide a 10% down payment on the property (580 with a 3.5% down payment). 

When it comes to VA loans for military veterans, there is no minimum limit. 

Most mortgages originated today calculate interest in arrears, unlike consumer loans which calculate interest to the date of payment receipt. As an example, when borrowers pay their February mortgage payments, they are paying the January interest. This method of calculating interest is based on a 360 day year in which each month has 30 days.

Generally, real property never depreciates in value, or more so, it is not very common for property to depreciate.  This is why it’s a great investment. Make sure you carefully consider location and community when choosing a home, it can effect the home’s future value greatly.

If you are in a newly developed area, do some research on the construction of the surrounding areas being developed to determine if they may effect your home’s value.

Title insurance is insurance that protects the lender and buyer against any losses incurred from disputes over the title of a property, such as an unresolved lien on the home or a missing/defective chain of title.

When a loan is originated, the mortgage documents specify the escrow conditions. This has become a standard practice for all mortgages, including FHA, VA, and conventional mortgages.  Occasionally on conventional loans, FRFCU waives the collection of escrow requirement at closing if the member has a minimum 20% equity position in the property.

The easiest way to avoid private mortgage insurance (PMI) is by putting 20% down payment; however, PMI can also be avoided if you only have 5% or 10% for the down payment. The way to accomplish this is via a first and second mortgage combination commonly referred to as 80/10/10^s or 80/15/5^s.

These two methods combine a first mortgage lien for 80% of the home price with a second mortgage lien for either 10% or 15% of the home price leaving the remaining 5% or 10% as the down payment. Because the first lien is at the magical 80% loan-to-value, there is no PMI required, even though a second mortgage is being piggybacked onto the financing thus allowing for the lessor down payment.

While the second lien terms are not as attractive as first lien rates, the second mortgage is still home mortgage interest and thus deductible as such on your federal tax return where PMI is insurance and offers no deduction.

Private Mortgage Insurance (PMI) is typically required by lenders when a borrower makes a down payment of less than 20% on a conventional mortgage. The primary purpose of PMI is to protect the lender in case the borrower defaults on the loan. However, PMI can provide some benefits to borrowers as well:

  1. Access to Homeownership: PMI allows borrowers to purchase a home with a lower down payment, making homeownership more accessible, especially for first-time buyers or those who may not have enough savings for a large down payment.

  2. Lower Initial Costs: By allowing a lower down payment, PMI reduces the upfront cash needed to buy a home. This can be advantageous for borrowers who prefer to keep their savings for other purposes or investments.

  3. Ability to Build Equity Sooner: Instead of waiting to save a larger down payment, borrowers can start building equity in their home sooner by purchasing with a smaller down payment and paying PMI. As they pay down their mortgage balance, their equity in the home increases.

  4. Potential Tax Deduction: In some cases, PMI premiums may be tax-deductible, which can provide some financial relief for homeowners. However, tax laws regarding PMI deductions can change, so it’s essential to consult with a tax professional for current information.

  5. Flexibility: PMI can offer flexibility for borrowers who may not have other options, such as qualifying for a government-backed loan program like FHA or VA loans, which have their own insurance requirements.

It’s important to note that while PMI can offer benefits, it also adds an additional cost to homeownership, as borrowers are responsible for paying the premiums. Once the loan-to-value ratio reaches 78% (based on the original property value), lenders are generally required to cancel PMI automatically, although borrowers can request cancellation earlier if they meet certain criteria.

Most mortgages originated today calculate interest in arrears, unlike consumer loans which calculate interest to the date of payment receipt. As an example, when borrowers pay their February mortgage payments, they are paying the January interest. This method of calculating interest is based on a 360 day year in which each month has 30 days.

Many tax authorities will mail an informational copy of the real estate tax statement to the homeowner in addition to the Credit Union.  However, there are some statements tax authorities do not forward to the credit union, and in special cases we will need your assistance in obtaining the bill. If you receive a statement for any of the following, please forward it to our office by mail or fax:

  • delinquent real estate taxes
  • supplemental or additional real estate taxes
  • special assessments
  • if the tax authority will not honor a bill request from another party.

STILL HAVE QUESTIONS?

The experts at Janiga Estates would love to help! Reach out today and we will find you an answer as soon as possible.

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