BuyingAHome-JenniferChristenot

FAQ’S ABOUT BUYING A HOME | JENNIFER CHRISTENOT

FAQ’S ABOUT BUYING A HOME 

1.) What is the difference between a real estate agent, a 

Realtor, and a broker? 

When buying a home, especially before the process has even 

begun and you’re looking for a real estate agent, you’ll come 

across the terms agent, Realtor, and broker. So what’s the 

difference, and how are you supposed to know which one to 

choose? 

A real estate agent is anyone that is licensed to accommodate 

the sale or purchase of real estate, land or property, to any 

individual or business. To earn a real estate agent license an 

individual must undergo a number of courses and training 

pertaining to real estate transactions and the law surrounding 

them, and then pass a final exam. The requirements and 

coursework vary from state to state but it typically consists 

of 40-90 hours of study time. All states also require that real 

estate agents are at least 18 years of age. Once the individual 

has completed the training and passed the exam, they cannot 

operate independently even though they now have their real 

estate license. They must work for a real estate broker. 

A Realtor is a real estate agent that has undergone extensive 

training past the minimum amount required, is a member 

of the National Association of Realtors (NAR), and subscribes 

to the Realtor Code of Ethics. The ethics training undergone 

by potential Realtors must be completed within one year of 

FAQ’S ABOUT BUYING A HOME | JENNIFER CHRISTENOT 

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the agent becoming a member of the NAR and they must 

also update their training and examinations once every two 

years. While all Realtors are real estate agents, not all real 

estate agents are Realtors, and only those that are can use the 

registered Realtor trademark on their promotional materials. 

A real estate broker is an individual that has completed even 

more extensive training beyond the real estate agent level and 

is educated and licensed to run their own brokerage. Once 

this training has been completed, the broker can then work 

independently or can hire real estate agents to work for them. 

2.) Can I buy a home without using an Agent? 

Many people toy with the idea, at least at first, about buying a 

home without an agent. After all, how hard could it be to find 

a suitable home for sale and make an offer, without having 

to deal with a middle-man? Truthfully, with the amount of 

online databases, and properties being advertised just about 

everywhere, it’s not that difficult. And, because the seller won’t 

have to pay a commission fee to an agent, they might even 

be more flexible with you on the price. However, purchasing 

a home without the help of an agent can not only be very 

daunting, it’s also extremely complicated and can end up 

being a disastrous situation. 

One of the first thing’s you’ll face when you decide to buy a 

home without your own agent is that the seller might ask if 

you’re interested in dual representation. In this scenario, the 

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seller’s agent will complete all the paperwork and handle the 

transaction for both the buyer and the seller. This can seem 

like a tempting option since you’ll still have an agent to work 

with without having to actually find one yourself; but it can be 

dangerous. Because the agent was technically the agent for 

the seller first, they will always have the seller’s best interests at 

heart and it will be impossible for them to remain impartial. 

Another thing to be wary of when you opt to buy a home 

without using an agent is that the home may have a shady 

history that you’ll be unaware of. Real estate agents have more 

access to information about the home, such as if it was ever 

used as a meth lab, and they are required by law to disclose 

that information to buyers. But if you don’t work with an agent 

when buying the home, they’ll never have the chance to tell 

you about it and so you could commit to something that could 

have serious implications in the future. 

Information regarding the home’s history isn’t the only thing 

you might miss out when you choose to buy a home without 

an agent. Real estate agents can tell you about schools in the 

area, amenities, and which neighborhoods are pricier than 

others. Without this information you could not only pay more 

in the long run, but you could also end up very unhappy in 

your new home. Without a real estate agent to tell you about 

these things, the home-buying process will also likely take 

much longer. 


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3.) What other benefits are there to using a Real Estate 

Agent? 

There are many benefits to letting a Real Estate Agent help 

you during the home-buying process. The first, and possibly 

biggest, benefit is that they will have much more education 

and experience about buying property than you do because 

they have done it every single day for several years. They have 

seen a lot of different situations, know what to look for, and 

know the ins and outs of the neighborhood you’re moving 

into. All of this, and not to mention the extensive training and 

licensing requirements they’ve undergone in order to sell real 

estate. 

Agents can also be great buffers between you and the homes 

that aren’t worth your time. They might have a history with 

sellers, knowing if they’re willing to negotiate and by how 

much, and they’ll also keep those sellers away that are trying 

to entice you into buying their home, when it’s not really 

something suitable for your needs. Because most people 

during the transaction will be dealing with your agent rather 

than you, all you’ll have to worry about is finding a home that 

you’re comfortable and happy in. 

Even if your nose is constantly in the real estate section of 

the local paper and you keep yourself up to date on current 

market trends, an agent is going to know more about the 

current market condition, be able to forecast the future of the 

local real estate market, and give you information about which 

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properties will be best for you given those conditions. 

An agent can also help you with hiring the different 

professionals you’ll need to work with during the home-buying 

process. This includes inspectors, appraisers, home contractors, 

home designers, and other professionals. Your agent will be 

able to recommend the best people in the business and will 

once again save you the time it would take to research these 

professionals on your own. 

Even with the most current information about the housing 

market, and the ability to find different properties that are 

suitable to you, you’ll have no one better fighting for you during 

negotiations than an agent. Agents know how to argue and 

negotiate for their client to get them the best possible price 

and conditions possible, while never giving away confidential 

financial or personal information. 

And the last, but certainly not the least important benefit you’ll 

get by using a real estate agent is the help and advice even 

after closing. Closing can be a very important time, getting the 

keys to your new home and officially taking ownership. It can 

be easy to overlook things like transfer taxes, doc stamps, and 

property tax assessments. Once the deal has been done and 

these issues crop up, your real estate agent will be there to 

help you sort it all out. 


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4.) How do I find an agent? 

Choosing to use an agent can end up being a very smart 

decision in the end, but only if you find a great agent that has 

both a great education and experience and is also there for you 

whenever you need them. So how do you find that agent? 

Referrals are one of the best ways to find a real estate agent. 

In fact, most agents rely on them in order to stay in business 

because they can’t always be spending time finding new 

clients. The first thing you should do when looking for a real 

estate agent is to ask friends and family members that have 

bought real estate in the past. 

Look in the local newspapers and online about open houses 

in your area. Take the time to go to a few, even if you’re not 

interested in the home that’s being shown. It will give you a 

chance to meet with different real estate agents in person, 

which will tell you a lot more than just visiting their web page. 

5.) What should I look for in a real estate agent? 

So now you know how to find the names of different real 

estate agents, but how do you go about finding the right 

one for you? What should you look for in a real estate agent? 

Truthfully, the right real estate agent for you will be someone 

who has a number of things, including proper licensing, happy 

clients, experience, and knowledge of the area you’re looking 

at living in. 

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Start your search by making sure that any real estate agent you 

speak to is licensed; the ones that don’t have proper licensing 

aren’t worth your time. You can check the status of any agent’s 

licensing status by asking your state’s licensing board to give 

you the details of the agent’s license. These regulatory bodies 

will also often have information regarding any complaints 

or issues that have arisen with an agent in the past, which is 

another reason why this is a great place to start your search. 

Along with licensing, credentials are another good indication 

that any agent you’re dealing with is a good one. A real estate 

agent that’s also a CRS (Certified Residential Specialist) has 

completed extensive training that makes them a specialist 

in residential real estate. An ABR (Accredited Buyer’s 

Representative) is specialized to represent and help buyers in 

any real estate transaction, which can make these most helpful 

for those in the home-buying process. An SRES (Seniors Real 

Estate Specialist) is someone that is also specialized in helping 

buyers and sellers in their real estate transactions, but with a 

focus on clients in the 50+ age range. If honesty and integrity 

are the traits most important to you in a real estate agent, 

it’s important that you choose a Realtor, who has officially 

pledged to abide by a certain code of ethics. 

Also make sure you check out the real estate agent’s website 

and online presence. Is their website easy to navigate, and 

were they easy to find using a simple search engine? All of 

these things will tell you how comfortable the agent is working 


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with and utilizing the Internet; and that will prove to be very 

important during the home-buying process. 

Lastly, once the real estate agent has found you a suitable 

home to look at, ask them what other houses are for sale in 

the area. This will give you a chance to see how well the agent 

knows the area off the top of their head; they should know the 

area extremely well. 

6.) How are agents paid, and how much are they paid? 

No one can put an exact number on how much agents are 

paid because it’s typically a commission based on the home’s 

selling price. Commission rates for one agent might not be the 

same as those of another; and the division of the commission 

fees between the listing and buying agent will vary from 

state to state. However, typically when sellers sign a listing 

agreement, their contract is with the brokerage that listed the 

property. Any agent or brokerage fees that are paid must be 

paid through that brokerage, and it’s through this brokerage 

that the seller’s agent, as well as the buyer’s agent, will be paid. 

7.) What’s the difference between a pre-qualification letter 

and a pre-approval letter for a mortgage? 

After speaking to a lender about financing their mortgage, 

buyers are likely to get one of two letters: a pre-qualification, or 

a pre-approval. Both are likely to evoke excitement, but what 

do they really mean? 

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A pre-qualification letter is simply a letter from your bank, 

lender, or mortgage broker, which states how much of a 

mortgage you can afford. It’s important to understand that this 

letter simply states how much home you can afford, and does 

not take into account other costs of home ownership such as 

property taxes, insurance, utilities, and home maintenance. 

It’s also important for home-buyers to understand that 

while there may be a certain amount indicated on a prequalification 

letter, it doesn’t absolutely mean that the buyer 

will be approved for this amount when it’s time to apply for a 

mortgage. 

A pre-approval on the other hand, is very different. With 

these letters, a bank or lender has committed to lending 

you a certain amount, and you can confidently start looking 

at homes under that price, as you know that financing has 

been virtually secured. Pre-approvals typically garner the 

most excitement from home-buyers as they should; they’re a 

guarantee that you’re going to get financing and that you can 

purchase a home you’re interested in. It’s for this reason that 

pre-approvals also make sellers excited, because to them it 

means that the buyer isn’t going to have financing issues that 

hold up the closing of the sale. 

8.) A property I’m interested in is listed as a “short sale”. What 

does that mean, and what are the benefits to buying a short 

sale property? 

When a seller wants to sell a home for less than what’s still 


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owed on the mortgage, it’s called a “short sale”. In order for a 

short sale to occur, the lender financing the mortgage has to 

agree to the sale. Sometimes the lender will agree to the sale 

and just take the difference as a loss because it’s easier than 

unloading a foreclosed property. Other times the seller will 

have to pay the lender the difference. Short sales are beneficial 

to sellers because they can often sell a property that they can’t 

afford, and because short sales can help protect their credit. 

But, short sales also bring a number of benefits to buyers. 

Short sales can help save the buyer money in a number of 

ways. Firstly, because the home is being sold for less than the 

amount already owed on the mortgage, buyers can often snag 

a great price because the lender would rather sell it than pay 

the costs associated with foreclosure. Also, properties that need 

maintenance or repairs completed on them, and that are listed 

as a short sale, often require that the responsibility of repairs be 

on the buyer. Bringing these factors up during the negotiation 

process can also help score you a better deal. 

Properties that are listed as a short sale can also save the 

buyer money if the lender wants to sell the home, and sell it 

quickly in order to start making some money from it. Typically 

when a homeowner has gotten into so much trouble with 

their mortgage that they’re forced to list their property as a 

short sale, they’re already two or three months behind on 

their mortgages payments; which means the lender has been 

receiving no money during that time. Rather than start the 

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process of foreclosure and not only continue not to receive any 

payments, but also incur more expenses, the lender is often 

eager to sell it to someone who will pay the mortgage, even if 

they have to offer a great deal to do it. 

9.) What are foreclosures and what are the pros and cons to 

buying a home that’s been foreclosed? 

Foreclosure is a legal proceeding started by the lender when 

a homeowner has stopped making their mortgage payments. 

Typically no homeowner goes into foreclosure willingly but 

rather because they were laid off or fired from their job, 

unable to work due to medical conditions, excessive debt and 

bills, divorce, and a number of other reasons. For this reason, 

homeowners that have been put into foreclosure are often 

frustrated, and that’s just one of the things that can make 

the process of buying a foreclosed home so difficult. If buyers 

choose to embark on this journey, it’s very important that they 

know what they’re in for, and what the pros and cons are. 

The biggest reason buyers typically show interest in foreclosed 

homes is because they can get them at a great deal. Lenders 

don’t usually want to keep a property that’s not getting them 

any profit on their books, so they want to sell it as quickly as 

possible. Because of this, they’re often willing to offer buyers 

great deals and the price that’s paid is often well under market 

value for the home. When this happens in a foreclosure deal, 

the buyer has already profited before they’ve even moved into 

the home. 


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That money saved also gives the buyer more to put back 

into their home. Whether that’s through upgrades or moving 

into a nicer neighborhood than they could otherwise afford, 

foreclosures often allow buyers to purchase a much nicer 

home than what their budget would otherwise allow. 

However, while price and saving money might be the biggest 

pros for buying a foreclosed home, there are many more cons 

to purchasing this type of property and it’s important that 

buyers are aware of them. 

The condition of the property is often one of the biggest cons 

of buying a foreclosed home. Pre-foreclosures are considered 

to be in the best condition of all, but the homeowners are still 

in foreclosure because they couldn’t afford their mortgage. The 

chances are very good that they also couldn’t afford repairs 

and upkeep on their home and so, it won’t be in very good 

condition. 

Homes that have reached the real estate owned (REO) phase 

of foreclosure are typically in the very worst shape and are 

often uninhabitable because of the amount of structural 

damage present. This is because REO indicates that the 

property is very far long in a very lengthy foreclosure process, 

and that the property likely hasn’t been lived in for months, if 

not years. During that time mold can build up, pipes can break, 

vermin and bugs can infest, and a number of other things can 

occur. 

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Any and all repairs or maintenance that is required to the 

home is the responsibility of the buyer and although that can 

be used as a bargaining chip when it comes to the offer, it 

can also mean a lot of headache and stress for the new buyer. 

Also, because homes in foreclosure are often required to be 

purchased sight-unseen, home buyers might not know exactly 

what they’re getting into when they buy the property. 

It’s also important to understand that even though the 

property has been foreclosed, the previous owners might not 

be so eager to leave. Not only might they refuse to go until 

legal eviction proceedings have started, but they could also 

take out their anger on the home before they leave and cause 

further damage. 

If the last owners are no longer there when you plan to move 

in, it doesn’t mean that they’re completely gone. If there are 

debts associated with the property such as property taxes, 

construction loans, or home equity lines of credit, it’s very 

possible that you could assume responsibility for that debt 

when you take ownership of the property. Be sure that you 

ask about the financial obligations tied to the property so that 

you’re fully aware of what you’re getting into. 

With foreclosures also comes a lot of red tape, and absolutely 

no guarantees that you’ll eventually be the owner of the home. 

Foreclosures can take an awfully long time and there’s a lot 


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more paperwork required for these purchases. In some cases 

several people will need to approve your offer including the 

current owners, the primary lender, and any lienholders. This 

can take months and a lot of homebuyers can lose patience 

within that time. 

While lenders are trying to sell the property and start making 

a profit from it once again, they also don’t want to lose too 

much money and want to make as much as possible from the 

sale. Because of this, they can typically back out of the deal at 

any point, up to and including closing. This can happen if they 

start to have doubts about the buyer, they work out a payment 

system with the current owners, they receive a better offer, or a 

number of other reasons. Whatever the reasoning is, it can be 

incredibly frustrating and upsetting to buyers that have already 

gone very far in the process of buying a home they really want, 

only to have it taken away. 

Getting a mortgage can also be very difficult for distressed or 

foreclosed properties because many lenders simply don’t offer 

them. Before you even make an offer on a foreclosed property, 

you need to make sure the lender you want to deal with will 

finance the property. 

Lastly, foreclosures can come at a great deal for the buyer, and 

that means that any foreclosed property you’re looking at is 

likely gaining a lot of attention and interest. Because of this, 

you’ll face much steeper competition and will have to make 

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a much more attractive offer. Homes that are up for auction 

come at an even bigger discount, which means that the 

competition will be even more serious. 

10.) I already own a home. Should I buy another before selling 

my current home? 

Whether you sell your home before you buy or buy before 

you sell it is up to you, but there are some things you need to 

consider before deciding either way. 

When you buy a new home before you’ve sold your current 

home, it can be very reassuring to know that once the current 

property is gone, all you have to do is move from one place 

to another – without any rushing around looking at homes 

and properties. However, know that when you put an offer to 

buy the new house it will have a contingency clause stating 

that your home must be sold and the transfer of title on the 

home must take place before you can actually buy the new 

home. During the time period of placing an offer on the new 

house and selling your current house, other buyers could enter 

the picture and place on offer on the new house without any 

contingency clauses, making it that much more appealing for 

the seller. In this case you could end up losing a home you’ve 

already fallen in love with, and that can be heartbreaking. 

Selling your current home before buying a new one takes away 

the fear of contingency clauses and other buyers because 

you’ve already sold your current home and just need to buy 


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another. The downside in this scenario is that you might not 

find a new home before you have to vacate the current home. 

If this is the case, sellers can ask the buyer about “rent-back,” a 

scenario in which the sellers (you) are able to stay in the home 

for a certain number of days after closing so there is time to 

find a new home. With rent-backs, the seller has to take over 

the buyer’s mortgage for the amount of time they remain in 

the home. 

First-Time Buyers 

11.) How much of a down payment do I need? 

There is no fixed dollar amount set for the amount of down 

payment you will need; rather, the down payment is a 

percentage of the total cost of the home. The size of the down 

payment you’ll need will depend not only on the price of the 

house but also on your financial and credit history, which will 

be checked by lenders when you apply for a mortgage. 

First-time buyers can apply for Federal Housing Administration 

(FHA) loans, which require that you make a down payment of 

just 3.5% of the home’s total value. Veteran Administration (VA) 

loans offer 100% financing. You can get a conventional loan 

with as little as 3-5% down you may have to have PMI (private 

mortgage insurance) included in your monthly payment for 

anything less than 20% down. 

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12.) Why should I buy instead of continuing to rent? 

The biggest reason ever given for buying a home instead 

of renting one is that when you buy, you are making an 

investment on your future, and for something that is 

completely yours. While renting, you pay rent every single 

month to someone and that money is gone forever, giving you 

nothing really but a place to live for one more month. When 

you own a home though, that monthly mortgage payment is 

going towards equity in your home, meaning there’s another 

little piece of it that you actually own. Once your mortgage is 

entirely paid off, you’ll then have the biggest asset you’ll likely 

ever own – a home! 

But in addition to just making a sound investment for your 

future, there are other reasons that buying is so much more 

attractive than renting. You can also deduct your mortgage 

interest from your federal, and often your state taxes, every 

single year. This can save you thousands of dollars because 

your monthly mortgage payments are largely made up of 

that interest that you can write off each and every year. The 

property taxes you pay for the home can also be deducted 

from your yearly income tax. 

Lastly, when you own a home – even before the mortgage is 

paid off – it’s yours to do with as you wish. Paint the walls, dig 

up all the landscaping and replace with new, and knock out 

walls if you wish. When you buy a home there are no limits on 

what you can do with it because it’s yours and so, you can feel 


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free using it as another means of personal expression. When 

you rent however, that property still belongs to someone else 

so even if you just want to touch up the paint job, you’ll have to 

get written permission, which can be difficult to get and isn’t 

always granted. 

13.) Are rent-to-own properties a good idea? 

Rent-to-own properties can sound like a great idea, especially 

for homebuyers that don’t feel as though they can afford to 

take on a whole mortgage but also want to get out of the hole 

of renting and start investing in a home of their own. But rentto-own 

agreements can be very complex and often, they don’t 

end up very favorable for the buyer. 

You can find rent-to-own properties through a real estate 

agency, companies that specialize in rent-to-owns, or private 

owners that are willing to sell their home over time, through 

a rent-to-own contract. With these contracts, buyers will still 

make a payment over time. A portion of this payment will be 

put towards the rental of the property for the time the buyer/ 

tenant is living there; and the other portion of the payment will 

be put towards the down payment on the home for when the 

buyer fully purchases the property in the future. 

Many buyers typically look for rent-to-own properties because 

their credit score is not high enough to get them approved 

for a traditional loan; and this is the reason why these types of 

purchases are not usually ideal for the buyer. The risk on the 

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owner or lender is great when lending to individuals with low 

credit scores and because of this, they’ll charge a much higher 

interest rate on the home, meaning it will take even longer to 

pay off and own the home. 

14.) Can I buy a home if I have bad credit? 

Buying a home with a less than perfect credit history is 

possible, but it’s going to be a lot harder to get a loan than 

someone with outstanding credit. You might be required 

to supply a larger down payment and you could even be 

required to pay for mortgage insurance. This type of insurance 

is provided by companies and it protects the lender in case the 

buyer is unable to make payments on their mortgage. While 

this insurance is in place to give consumers the opportunity 

to purchase a house when they’d otherwise be unable to do 

so, it’s also very costly and can add hundreds of dollars to your 

mortgage payment every month. 

Another factor that will greatly increase the amount of the 

monthly mortgage payment is the amount of interest you’ll 

need to pay. When a buyer has bad credit, the lender assumes 

a much greater amount of risk and for this they will charge 

a much higher interest rate. For this reason, it’s extremely 

important that before buying a home you try to get your FICO 

score as high as possible and that you try to repair any past 

credit problems. 


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15.) How much money do I need upfront to buy a home? 

Of course the amount you’ll have to pay before you even move 

into the home will vary depending on the cost of the home, 

as well as the type of mortgage you choose to get. However, 

there are three different costs you’ll have to pay once the deal 

is signed and the home is officially yours. These are the earnest 

money deposit, the down payment, and the closing costs. 

An earnest money deposit is money that you give to your real 

estate agent when you first put an offer in on a house. The 

agent will then place this money into an escrow account until 

the offer is accepted and at that time, it will be put towards 

your down payment or closing costs. If your offer isn’t accepted, 

the money will be returned to you in full. The amount of the 

earnest money deposit varies from property to property. 

The down payment on your home is of course, a large amount 

of money that you’ll have to pay upfront for your mortgage. This 

down payment gives you equity in the home (the portion of 

the home that is actually paid for) and gives the lender some 

protection in case you default on your mortgage payments. 

The larger your down payment is the lower your mortgage 

payments will be so it’s important to try and save as much as 

you can for it before buying a home. Different lenders will have 

different requirements for their down payments but typically 

it’s suggested that you try to acquire 10 to 20 per cent of the 

home’s price. Certain loans, such as those provided by the FHA 

can have very low down payment requirements and buyers can 

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take advantage of down payments lower than four per cent. 

Closing costs must be paid at closing, when the deal is 

signed and officially done. These costs cover the different 

costs charged by the lender as well as expenses incurred for 

processing the loan. While these costs may not sound all that 

significant they can be quite large averaging about 3 to 4 per 

cent of the price of the home. When you first apply for your 

mortgage your lender will be able to give you an estimate of 

what your closing costs will be so that you can figure those into 

your purchase. 

16.) Should I speak to a bank before or after I’ve found a 

home I like? 

Buyers often think that they should look at homes first so that 

they know how much to ask the bank for, but this is a mistake. 

You could end up falling in love with homes you can’t afford, 

or having financing problems you don’t know about. Instead, 

before even starting to look at homes, speak to your bank or 

your lender. They will talk to you about your current financial 

situation, your debts and assets, and tell you what you can 

afford to spend on a home. 

If you’re a first-time buyer, it’s especially important that you 

speak to a bank first. There are many federal, state, and county 

programs available to help first-time buyers and you should 

know about them before you start looking. First-time buyers 

often aren’t familiar with the different costs of buying a home 


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including escrow, pre-paid items, and down payments to 

name just a few. Speaking to a bank can help buyers know 

exactly what they’re committing to before they start looking at 

homes. 

17.) How do I find a lender? 

Finding a lender for your mortgage is very easy. Finding the 

right mortgage lender for you however, requires some time 

and research on your part. If you don’t already have an idea of 

the bank or lender you want to use, I am happy to refer you to 

a lender. If you’re already working with a real estate agent, you 

can also ask them if they know of a particularly good mortgage 

company or lender in the area. 

Each of the lenders is likely to offer different interest rates 

and terms for your mortgage so make sure when speaking to 

them you bring a pen and paper to write down the numbers, 

amounts, and other important information. Make sure that you 

speak with several different lenders before making a decision; 

you’re entering into a contract with that company that you’ll be 

committed to for the next 15 to 30 years. 

For most lenders the entire loan process will take 3 to 6 weeks 

from beginning to end. This means for many buyers, they can 

apply for and be approved for the loan before they’ve even 

started closing the deal on their house. 

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18.) What does a mortgage cover, exactly? 

So you’ve heard that your mortgage payment might cover 

other payments such as mortgage insurance, but what 

other costs will be included in your mortgage payment? It’s 

important to know so that you’re aware of what you’re already 

being covered for, and what you’re not. 

Most mortgages have four parts: the principal, interest, 

homeowners insurance, and property taxes. The principal is the 

total amount that you borrowed. In most mortgage contracts, 

the first payments are made up of mainly interest expenses 

while the payments made in the last years of the loan’s life 

make up the principal of the loan. The interest is money 

paid to the lender for allowing you to borrow the money. All 

mortgages also include homeowners insurance, which will 

protect you and your home from fire, smoke, theft, and other 

hazards. Lastly, property taxes will also be included in your 

mortgage payment. Each year the county or city will assess the 

taxes due on your property. That amount will then be divided 

by the number of mortgage payments over the year. 

The principal, interest, homeowners insurance, and property 

taxes are all costs that will be added to just about any 

mortgage for any home. However, there might also be 

additional costs added to the monthly mortgage payments 

depending on your situation, such as mortgage insurance. 


24

19.) What should I take with me when I’m applying for a 

mortgage? 

This is a great question and it’s one that’s asked all the time 

by first-time buyers. The amount of paperwork that you’ll both 

need to complete and bring with you can be overwhelming, 

and how are you to know what the bank or lender is going to 

need from you? The lender is going to be most interested in 

your current financial situation including your assets and your 

debts so you’re going to need documents showing all of your 

loans, income, and investments. 

Start by collecting: the social security numbers for both you 

and your spouse, if you’re both applying for the mortgage; 

checking and savings accounts for the past 2 months; 

paperwork pertaining to any investments including bonds or 

stocks; paycheck stubs from the past 30 days outlining your 

earnings; your income tax statements for the last two years; 

and the contact information for an individual that can verify 

your place of employment. 

Of course, every bank and lender is different and requires 

different items and paperwork. Before you make an 

appointment with anyone, make sure to ask them what else 

you should bring in order to make the loan process go as 

smoothly as possible. 

20.) What type of mortgage should I apply for? 

There are numerous types of mortgages that you can use to 

25 


finance the purchase of your home, and the sheer amount can 

seem overwhelming at first. However, take the time to fully 

research all of them and speak to a mortgage broker or other 

professional about all of your options; knowing what they are 

could save you a lot of money and stress for the next several 

decades! 

The two most common types of mortgages are fixed-rate and 

adjustable rate mortgages (ARM). Fixed rate mortgages are 

just that, homeowners pay a fixed amount for their mortgage 

payment every month. That amount is the same amount 

every single month and includes the principal, interest, and 

other parts of the mortgage. The biggest benefit of this type 

of mortgage is that it’s much easier to budget for the monthly 

payment because you’ll know exactly what it will be every 

single time. 

ARMs work a bit differently in that they are directly tied to the 

U.S. Treasury Securities index, the financial index that states 

what the interest rate currently is. ARMs can change according 

to this index, going up when interest rates rise and falling 

slightly when those same rates drop. This can happen a few 

times a year, which can be scary for those that need to know 

exactly where their money will be going over the course of the 

entire year. The initial interest rates on these loans is typically 

smaller than on fixed rate mortgages, which is a huge benefit 

to buyers, along with the fact that at times, they could be 

paying much less for their mortgage. 


26

In addition to these two most common types of mortgages, 

there are others that you might choose to take advantage 

of including Veteran’s Administration programs and the 

Department of Agriculture’s program. It’s important to speak 

to your lender or your mortgage broker about all the many 

different programs available that might be able to get you a 

mortgage made just for you. 

21.) What happens if I put in an offer on a home and it’s 

rejected? 

This is often the worst fear of buyers, but even if your real 

estate agent comes back and tells you that your offer has been 

rejected, it doesn’t mean that you’re never going to live in that 

home. It simply means that you need to start negotiating if you 

still want the home. Those negotiations may begin with you 

offering more money for the home but they can often include 

the seller taking on the closing costs, or making repairs that 

perhaps you would have been willing to overlook for the first 

price. While no one wants their first offer rejected, it can be a 

real opportunity when it is. 

Just remember that during negotiations, it can be easy to 

lose sight of the end goal and emotions can make you start to 

value the home more just because it’s so difficult to get. Don’t 

let that happen. Keep a clear head, only offer as much as you 

want to or can afford, and don’t be willing to give in to the 

demands you have that are the most important for you. 

27 


22.) When will I know if the seller has accepted or rejected 

my offer? 

This is another very common question asked by a lot of buyers, 

especially those that are buying their first home, and it’s one 

that is very difficult to answer. Every minute that goes by 

after that offer has been submitted can seem like an eternity 

because you’re so anxious to hear whether or not you’re going 

to get the home. However, you should be aware that once 

the seller has received your offer, it has an expiration date 

and time. This time varies but could be anywhere between 12 

hours and 4 days. 

Your real estate agent will be able to tell you when you should 

be able to hear, but there are some guidelines that you can 

expect. If the home you’ve put an offer in on is a new listing 

with a high probability of receiving multiple offers, a shorter 

life, or closer expiry date, is suggested. However, if the property 

has been on the market for some time already and there are 

extenuating circumstances, such as the seller being out of 

town, a longer life might be necessary. 

23.) I’ve been offered a final walk-through of the home. Is this 

a necessary step? 

Every homebuyer that purchases a new home has the right 

and the opportunity to take a final walk-through of the home. 

Often the sale isn’t ready to close until weeks, sometimes even 

months, after you’ve initially walked through the home during 

the showing. A lot can happen during that time and you 


28

want to make sure that there’s no major damage that wasn’t 

present the last time you were there, that any appliances or 

other items that were included in the contract are in fact still 

there, and that the home is in the same condition it was when 

you agreed to buy it. 

Although taking that final walk-through is not required of 

you, it’s essentially as important as an inspection where you’re 

looking throughout the home and making sure you’re happy 

with it. During the walk-through make sure you check that the 

furnace is working, that the roof is in good shape if possible, 

that there’s hot water, and that all the toilets are flushing 

properly. 

24.) What can I expect at closing? 

Closing is something you’ll hear a lot about during the homebuying 

and mortgage process and many buyers, especially 

first-time buyers, don’t really know what’s going to happen or 

what they can expect. Where does this “closing” even happen? 

Closing is simply when the deal essentially closes and you 

take ownership of the home. Typically keys will be exchanged, 

closing costs will be cleared up, and any remaining items 

will also be taken care of. During the home loan process your 

lender should have provided you with an estimated closing 

disclosure (CD) of how much you’ll have to pay at closing; 

they’re required by law to supply this estimate. They’ll also tell 

you about any and all documentation that you’ll need to bring 

29 


to closing with you. If you don’t receive this information from 

your lender you must ask for it. Closing costs can be a lot and 

you’ll need to know right away just how much you’ll expect to 

pay. 

The closing is when you sign the final loan documents with 

a notary public (who may be your escrow officer). The closing 

agent will have a lot of papers for both you to sign and while 

they might give a brief explanation of what they are, take the 

time to read through each of them. You don’t want to be 

agreeing to something you don’t want. Once the paperwork 

has been signed, it gets returned to the lender for funding. 

Once the loan has funded, it records at the county and you are 

officially the new owners and you get the keys!!!!!!!!! 

SAQ’s When Buying a Home 

25.) Why do you want to purchase a home? 

This is the most important question that all homebuyers must 

first ask themselves before speaking to any lenders or even 

looking at homes. Of course you want to make sure you’re 

buying a home for the right reasons, because you want to 

start investing in your future and have a place all your own, 

but there are other factors you have to take into consideration 

as well. One of those things is what purpose you expect your 

home to serve you. 

Is this a home for you to live in, or is renting an option? Where 


30

will your life be in the next five years? What will your life look 

like in the next five years? Will there be any additions to your 

family or people leaving the nest? All of these are things you 

need to consider because you need to know what you’re going 

to need out of your home not just this year, but one, two, or 

several years from now. Even if you’re buying a rental property 

you’re going to have to consider how easily the home will be to 

rent to a number of different people with different needs over 

the next few years. 

Answering these questions could also determine the type of 

home loan you end up getting for the home, which is another 

reason why it’s important to ask yourself this before the homebuying 

process has even begun. 

26.) Am I moving in the next five years? 

Many people can get lured into the idea of buying a home 

when interest rates are low, and the market is active, especially 

if they are financially ready to buy a home. But while these 

conditions might be completely favorable for some, it’s not a 

worthwhile investment if you’re going to be moving within a 

few years of moving into the house. 

The very process of buying and selling real estate is costly 

because of all the administration fees and costs associated 

with it, so if you don’t stay in the home you could end up 

paying those fees several times over the course of just a few 

years. It’s cheaper to just rent for the time-being and then 

think again about buying once in your new city or state. 

31 


27.) What kind of neighborhood do you want to live in? 

This is a question that can be easy for buyers to overlook, 

especially if they’re purchasing a home that’s not in the town 

they’re currently in, but it’s one that needs to be asked. Not 

only do you want to make sure that you’ll be happy in the 

neighborhood and that it has the amenities you need, but 

you should also check out several different neighborhoods, 

even if it’s only online. This is important because different 

neighborhoods have different price ranges and so, while you 

could start off really wanting to live in one neighborhood, you 

might find out it’s not for you once you see that the asking 

prices are way out of your budget. 

Of course, just like you have to consider what your life will 

be like after you own the home, you also have to consider if 

the neighborhood will be suitable for that life. If you’re young 

and like to be out and about on the town, you might want to 

consider a metropolitan center that will keep you in the “hub” 

of everything. If you currently have a young family, or think you 

may have one in the next several years, your priorities will likely 

be a neighborhood that has access to public transportation, 

parks, and that has a very high safety standard. 

28.) What will the total cost of home ownership be for this 

home? 

By now you probably already know that when purchasing a 

home, you need to take into consideration not just the sale 

price, but also things like property tax, mortgage insurance, 

and closing fees. However, there are other costs of owning a 


32

home that are just as relevant and that you also need to know 

about. 

You’ll have to pay for the water, gas, electric, and other utilities 

in your home so you need to know how much these are to 

understand how much it will cost you every month to live in 

your home. In addition to that, you’ll also have to accept the 

fact that there will be repairs and maintenance that needs 

to be done on the home; no home is ever perfect forever. 

Also remember that if the home is in an area that is prone to 

natural disasters such as earthquakes or tornadoes, you’ll likely 

have to pay for hazard insurance as well, and this can be very 

costly. 

29.) How much house can I afford? 

Before you start looking at homes, you need to know how 

much you can afford. Typically speaking to a lender or bank 

will tell you this information but if you want to get an idea of 

how much you can afford before you do, you can do it on your 

own. Outline all of your income, expenses, assets, savings and 

debts. Doing so will help you get a realistic picture of what you 

can afford and what you cannot. 

You also have to remember that the total you end up with is 

not the total amount you can spend on a home; you’re going 

to need money for other living expenses as well. The general 

rule of thumb that’s used by mortgage brokers and lenders is 

that your maximum mortgage payment should not be more 

than 28% of your gross income. Your debt load, including the 

33 


new mortgage payment you will have, should not be greater 

than 41% of your gross income. These are the ratios that are 

typically used by lenders when determining if they are going to 

agree to the loan. 

One of the best ways to find out how much home you can 

afford is to find a mortgage calculator online. Simply search 

through any search engine and you’ll be provided with a list of 

calculators that will all take some basic information from you 

and determine how much of a home you can actually afford. 

30.) What are the average utility bills for the home you’re 

considering? 

To find out the utility costs of any home, try to speak to the 

seller directly about it. They can not only provide you with an 

average monthly amount, but they can also tell you whether 

they kept the house warm, if they continuously ran dishwashers 

or laundry machines that would use up more water and 

energy, or if they had any appliances in the home that used 

a lot of energy. All of these things will help you compare 

their utility bills with yours, as you may not keep the heat on 

that high or simply use less energy and resources, which can 

ultimately make a difference in the monthly bills. 

31.) What are comparable properties worth? 

A real estate agent can tell you what the asking price is on an 

offer, and they can provide guidance as to whether a seller 

will even consider your offer if your first suggested offer is 


34

too low. But ethically, real estate agents cannot tell buyers 

an exact dollar amount to offer on the home. Buyers are 

given the listing that includes the price and determine on 

their own whether they should offer the full asking price, or 

whether they should go a bit above or below it. Often the 

choice seems very simple. If the buyers are in love with the 

home and are happy paying the asking price, they will. If the 

buyers could see themselves there, but think the seller might 

have overestimated the value, they can offer a little less. But 

sometimes, the answer is just not that simple. 

For example, what if you do love the home and would happy 

to pay the full asking price, if there wasn’t all that work needed 

in the basement, or on the roof. While you might want to 

offer a bit lower than asking, you might not know how much. 

Because the agent can’t tell you directly how much to offer, 

you’ll need to know some other questions to ask to get your 

answer. 

The best question you can ask is for prices of “comps,” 

comparable homes that are in the same neighborhood, 

and are similar in size and structure. If those properties have 

already sold you can ask what they sold for, and even for price 

ranges of multiple homes in the area. 

Another great question to ask to get an idea of the home’s 

worth is to ask how long the property has been on the market. 

If it’s been listed for several weeks and hasn’t seen a lot of 

35 


offers, it could be because the property is overpriced, which will 

give you an indication that offering less than the asking price 

would be acceptable. 

32.) Should I start with lowball offers? 

Some buyers think it’s better to start with their lowest offer 

so that during negotiations, they have some wiggle room to 

move higher to the seller’s asking price. But, this can be a 

very tricky situation and anyone about to enter into it needs 

to know what they’re getting into. If the initial offer is too low, 

it could actually insult the seller and they might close off the 

bargaining doors to you altogether, meaning you lose out on 

the home. If this is going to be your buying tactic, know that 

you’ll likely have to make several offers on many homes, which 

can require patience and a bit of emotional restraint once 

you’ve seen a home you really love. 

If you do want to place a low offer, or at least one lower than 

the asking price, but you want to make sure you don’t insult 

the seller, there are a few ways to go about it. The first is by 

simply asking how flexible the seller is on the asking price, and 

you can ask this directly to the seller or you can go through 

your agents to find out. 

You can also ask if the seller is willing to help with the closing 

costs. These can be significant and if the seller is willing to take 

on some or all of them, it might leave room in your budget to 

make a higher offer. 


36

33.) Is there anything wrong with this house? 

Some states, such as Texas, require that sellers submit a 

disclosure form to the buyer, indicating everything that’s wrong 

with the property. Other states don’t have this requirement 

though, that’s why a home inspection is so important. During 

the inspection a licensed and registered inspector will visit 

the home, give it a thorough examination and analysis, and 

then write a report indicating everything that’s wrong with 

the home or that might require repairs sometime in the near 

future. Some sellers want to be certain of what they’re selling 

and so they’ll hire their own inspector before even putting the 

home on the market. Even if this is the case, you want to make 

sure that you still hire your own inspector that is completely 

impartial and that you’ll be able to ask, “What’s wrong with 

this house?” The home inspection is one of the most important 

aspects of the home-buying process. 

34.) I’ve been advised to forego a home inspection. Is this 

wise? 

TThis is something that sometimes happens in hot markets. 

There are lots of properties available and most of them already 

have multiple offers. When advising their clients on how to 

get a home that they’ve really fallen in love with, they suggest 

submitting a “clean offer”, or one that doesn’t include a home 

inspection clause. By doing so you make the offer much more 

attractive to the seller and therefore, much more likely to be 

accepted and end up with the home of your dreams. However 

it is always, always a huge mistake to buy a home without a 

37 


home inspection. And if you do, that home you loved so much 

could end up being a nightmare. 

If you purchase a home without a home inspection, you could 

overlook major problems with the home. There could be 

problems with the foundation that you didn’t even know to 

look for, problems with the electrical or plumbing systems that 

you can’t see, or other major issues. If the home is purchased 

and you find out about the problems after the fact, it will be 

too late. The responsibility for making the repairs or updates, as 

well as all costs associated with it, will be yours. 

35.) What’s the age of certain items and fixtures in the home? 

It’s important to know what the age is of certain items and 

fixtures in the home, especially ones that are essential and 

costly to fix. A home inspector will be able to tell you how old 

the roof is by looking at it and determining if areas are sagging, 

or if shingles are starting to come off. However, there are other 

items in the home that the home inspector won’t be able to 

tell you the ages of and for those, you’ll need to ask either your 

agent or the seller. 

You’ll definitely want to know the ages of the furnace, water 

heater, and air conditioning. If the seller doesn’t know the ages 

or you can’t speak directly to the seller, your real estate agent 

should know where they can find the serial numbers on the 

appliances and fixtures, which will give you the age of them. 

Based on those ages you can then determine (or ask the home 

inspector) how much longer they should last for and when or if 


38

they’ll need any repairs any time soon. 

36.) Can you provide paperwork including warranties, for 

mechanical systems, appliances, and other large items? 

This one’s simple: you must ask for any and all warranties for 

any and all mechanical systems, appliances, and other large 

items before closing the deal. You must also write an offer 

to include the seller paying for 1-year home warranty on the 

house. This will cover anything that breaks during the first year 

and then the buyer can renew it at their own expense. 

37.) Is the home in a flood plain? 

If you’re familiar with the area, this is an answer you might 

already know before even asking. If the home is in a flood 

plain the chances are good that you’ll have to deal with the 

unpleasantness of a flood, and the damage they can bring, at 

least once while living in the home. Not only do you need to 

be prepared for that, but you also need to know if a home is in 

a flood plain for insurance reasons, too. 

You can tell if the potential property is in a flood plain by 

checking out the different maps provided by the Federal 

Emergency Management Agency (FEMA) or just by asking the 

seller (of course, you’ll always want to double-check). You can 

also speak with the county and your real estate agent as well. 

If the home is in a flood plain, you’ll need to buy additional 

flood insurance, which can greatly add to the cost of the home. 

Different flood plains have different ratings and certain ratings 

39 


indicate a higher risk of flood than others. Of course, the higher 

the risk, the higher the insurance payments will be so it’s not 

only important to know if the home is in fact in a flood plain, 

but what type of flood plain it’s in. 

Your real estate agent might be able to tell you how much 

you’ll have to pay for flood insurance but if they don’t, you can 

always ask the seller directly what they’ve paid for it in the 

past. In some instances it’s even possible to simply assume the 

seller’s insurance policy upon sale of the house, which could 

mean less time and paperwork for you! 

38.) How do I know if a property is a short sale? 

With a short sale, the lender agrees to allow the buyer to sell 

the home for less than what is still left on the mortgage. This 

can be very advantageous to the buyer because it means that 

they can often purchase the property for a much lower price 

than if the property wasn’t listed as a short sale. Because of 

this allure of short sale properties, some sellers advertise their 

property as a short sale even when it’s not, simply to get buyers 

in the door. What happens then is that just before the deal 

closes, the lender denies approval of the short sale and the 

buyer often ends up losing out on the deal, and the home. 

In order to avoid this happening to you, you must first find 

out if the lender is agreeing to the short sale, preferably 

even before you look at the property. This step can often be 

overlooked by buyers who are so eager to purchase a home, 

especially if it’s a home they love, that they neglect their due 


40

diligence and don’t take all the steps necessary to make sure 

that the homes they’re looking at are actually what they’re 

advertised to be. 

39.) Should I buy a home in foreclosure? 

Like short sales, foreclosures can be very enticing to buyers 

because they often come at an incredibly low price. But too 

often buyers simply look at the benefits and don’t take into 

consideration the amount of work, stress, time, and possible 

heartache is involved with buying a foreclosure. That’s 

why before you embark on the adventure of purchasing a 

foreclosed property, you must ensure that doing so is the right 

decision for you. 

Firstly, you have to make sure that your finances are in order. Of 

course this is a step that you have to make sure when buying 

any home, but it can be especially important with foreclosures. 

This is because in addition to just having to purchase the 

home, pay closing costs and earnest money deposits, 

foreclosures have costs that other homes simply don’t. These 

can include upfront fees to research foreclosure properties, 

construction and repair expenses, and the cost of any inherited 

liens tied to the property. You have to make sure that you’re 

ready to take on all these costs, plus have additional funds for 

unexpected expenses. 

And while an experienced real estate agent that’s 

knowledgeable in the area might be enough when looking 

41 


at standard properties, when purchasing a foreclosed home 

you’ll want to work a foreclosure expert. There can be a lot of 

different issues that go into buying a distressed property and 

even the law surrounding them is different. For this reason, 

you’ll want an agent that specializes in selling foreclosed 

properties, as well an attorney that’s extremely familiar with 

foreclosed properties and foreclosure laws in your area. 

It’s important to know that when you’re buying a foreclosure, 

there could be a number of things that could delay the 

purchase of the home or, cause it to fall through altogether. 

Homeowners that find themselves in foreclosure could come 

up with the money for their loan, putting it back in good 

standing order and taking their home off the market. At 

auction, lenders could also find that there are no lucrative 

offers and so simply decide to take full ownership of the 

home. In these cases, it could be months before the bank 

puts it up for sale as an REO property. The timeline for buying 

a foreclosed property can be tricky. While you have to be 

prepared to act quickly, you also have to be very patient during 

the sales process and understand that a number of things 

could hold up the process. 

Repairs or significant work might be another factor that 

doesn’t necessarily hold up the sale of the property, but do 

in fact hold up your move-in date. Because of this, if you’re 

interested in foreclosed properties, especially those that are 

in quite a state of distress, you need to understand that you 

might not be able to move into your new home right away, 


42

and will need to have alternate accommodations available 

during that time. 

Lastly, it’s important to know that buying a foreclosed property 

can be a real rollercoaster ride. It’s an emotional process that 

will almost never work out exactly as you had planned. Just 

make sure that you’re up for the journey before embarking on 

it. 

I hope you’ve found all this information helpful, and I that we get to 

work together in finding you the perfect house to call HOME! 

Happy house hunting! 

Jennifer Christenot 

DRE#01974700 

Realtor 

760-272-0101 

43

BuyingAHome-JenniferChristenot

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