Frequently Asked
Home Buyer Questions





This page is dedicated to providing answers to frequently asked home buyer questions (FAQ's). These questions will be updated and added to as they are submitted. If you have a question that you need answered, please take the time to ask your question (others will also be able to benefit from the answer).


HOME BUYING QUESTION: Is 655 a good credit score?

ANSWER: 655 is a fairly good credit score. 700 and above is considered really good and 750 and over is moving towards excellent credit.

At 655, home loan pre-approval should not be a challenge (considering all other factors that weigh into an approval).



HOME BUYING QUESTION: Can a home buyer purchase a home without the help of a Realtor?

ANSWER: Yes, a buyer is free to purchase a home without the help of a Realtor. However, it is not recommended. Why is it not recommended?

1. Realtors services to you are FREE! You should take advantage of these free services and allow a professional to work through the home buying process with you.

2. Buying a home is complicated when you don't know the steps involved (you can easily make costly mistakes simply, because you don't know how the process works).

3. Real estate contracts are difficult to read and understand if you don't know the terminology. You can easily get yourself entangled in a binding, legal agreement and not fully understand what you've consented to or signed.

4. Buying a home on your own can become worrisome, nerve-wracking and frustrating. It can be a BIG headache if you're not trained to handle the transaction.

5. It's much easier to work with a trusted Realtor, who will take care of the legalistic portion while you focus on choosing the home you love and making preparations to move!



HOME BUYING QUESTION: What is the typical length of employment needed to be approved for a home loan?

ANSWER: A borrower will need to have at least 2 years of steady employment in order to qualify for a mortgage loan.

These 2 years DO NOT have to be with the same employer. If you've changed jobs to make more money or to receive a promotion that is perfectly fine. If you've had a break (or gap) in your employment, the lender may ask you to write a detailed explanation explaining the gap of employment (i.e. you were laid-off in a company down-sizing or had surgery, a baby, etc).



HOME BUYING QUESTION: How important is credit when buying a house?

ANSWER: Credit is very important when buying a house. Your credit says a lot about your credibility, integrity and willingness to pay for the mortgage. Some lenders may be more understanding toward certain credit situations that have caused negative marks on your scores (i.e. lay-off, emergency hospital bills, etc). However, your credit plays a MAJOR role in their decision to lend to you.

You need to have a "minimum" of 600 in all three scores (Equifax, Experian, and Transunion). Lenders are not lending much to borrowers in the 500's.

Having a good credit score will not only improve your chances for being pre-approved, but it will save you money! The better your credit, the better your interest rate. The better your interest rate, the lower your monthly payment.



HOME BUYING QUESTION: How much time does a seller have to respond to a buyer's offer (bid) once it has been submitted to the seller?

ANSWER: In most states, a seller usually has 24 hours from the time of receipt of the offer to respond back to the buyer's offer. However, the seller's agent may request an additional day or two (i.e. seller may be out of town, offer made over the weekend, etc). Usually, the buyer will get a response from the seller within 24 hours (sometimes, the seller will respond on the same day)!



HOME BUYING QUESTION: Should you keep records of your canceled rent checks?

ANSWER:Yes! If you are in the beginning stages of purchasing a home, purchase a bill box or something similar to store all of your important documents.

Lenders will want to verify your rental history prior to pre-approving you for a home loan. They use a form called (VOR)-Verification of Rental History. If you keep copies of your canceled rent checks (which should be on-time payments) this will strengthen your loan application.

It is important that you NOT pay your rent with cash. Lenders ideally would like to see you pay with checks. An active checking account shows more responsibility than paying with cash and money orders. If you pay with money orders, please keep your receipts for verification and proof of payment.



HOME BUYING QUESTION: Can I be pre-approved for a home loan without knowing what type of home I plan to purchase?

ANSWER: Yes. It is important to be pre-approved before you begin any serious house hunting. It's good practice to have an idea of what you're looking for prior to getting approved. Do your homework to determine what type of dwelling you would like to purchase (single family, duplex, condo, town home, small apartment unit, etc).

During your research discover what areas you like and learn more about the amenities offered in the community (schools, stores, restaurants, libraries, etc).

Your pre-approval will serve as a helpful guide, because it will detail how much home you've been approved to purchase. Your purchase amount will also help you narrow done your choices until you find the perfect home for you.



HOME BUYING QUESTION: How long after closing can the buyer ask the seller for repairs?

ANSWER: Unless you have a written agreement stating otherwise, the buyer cannot ask the seller for repairs after closing. Once the buyer closes on the home, it becomes his/her responsibility.

It's important to invest in a professional home inspection prior to closing on a home. The buyer has a way of escape from the real estate contract if the home "does not" satisfactorily meet the buyers standards.

After the buyer's inspection s/he is allowed to do a final walk thru of the home to re-inspect and be certain that the requested repairs were made prior to closing on the home.



HOME BUYING QUESTION: How do you ease the nervousness of buying a home?

ANSWER: Education, preparation and prayer. Purchasing a home is a wonderful achievement. At times, you may experience a bit of fear and apprehension, but that's only because you are moving into unfamiliar territory. Renting is familiar to many of us (no major commitment or responsibility) - just pay on time and that's that.

Homeownership does bring increased responsibility, but along with it is increased assets and favor.

The best way to eliminate nervousness or fear is to educate yourself about the home buying process. Once you become familiar with how things will work, then you will be better prepared to handle business. You will know exactly what to expect. Prepare yourself by gathering information and resources (personal documents, saving money, etc). Lastly, always pray and acknowledge God in your decisions to purchase a home. He will protect you and guide you through the process!



HOME BUYING QUESTION: Does earnest money make my offer more attractive to the seller?

ANSWER: Yes. Earnest money is used to show the buyer's "good faith" or "good intention" to purchase the home. If a seller receives 3 decent offers s/he may lean more toward accepting the offer that presented earnest money.

The seller does not "KEEP" your earnest money. You will be credited back your earnest money at closing (usually as a credit toward your closing costs). Earnest money is "OPTIONAL" and there isn't a set amount that you have to contribute ($250, $500, $1000). It does not have to accompany your offer, but if you want to increase your chances of winning the bid, earnest money is a good idea!



HOME BUYING QUESTION: What is a rent-free letter?

ANSWER: A rent-free letter states that you live in a present residence without paying rent. The owner of the residence will write a letter stating that you do live at that address and have an agreement to live at the residence without paying rent. The owner of the residence will sign his or her name. This letter will be submitted with your loan application.

If you live with someone and pay partial rent (i.e. $200 per month) the owner of the residence will write a similar letter stating that you do live at the residence and you do pay your portion of the rent on time as agreed at $200 per month. The owner of the residence will sign his or her name. This letter will be submitted with your loan application.

The term for this letter is called "Verification of Rental History" (VOR).



HOME BUYING QUESTION: How much does a home warranty cost? How does it work?

ANSWER:Home warranties typically range from $300 to $500 dollars each.

If a covered item breaks or malfunctions the warranty will kick-in and take care of the repair. The buyer will be responsible for paying a deductible usually ranging from $50 to $100 to have the item repaired.



HOME BUYING QUESTION: What is the minimum credit score needed to get pre-approved for a home loan?

ANSWER: Since the mortgage crisis lenders have stiffened the minimum credit score for approval to 620. If you have a credit score of 620 then you have a good chance of moving toward pre-approval (other variables do affect pre-approval as well). FHA currently offers loans with credit scores of 620 or more.



HOME BUYING QUESTION: How can you typically estimate closing costs?

ANSWER:Closing costs will vary from lender to lender, because of special fees that each lender incorporates. The lender will provide you with a "GFE" Good Faith Estimate detailing all of the fees associated with accepting the loan.

Closing costs are typically 2% to 6% of the purchase price of the home. If the purchase price of the home is $200,000 it's safe to say that the closing costs associated with this loan amount will be around $6,000 or 3%. This is an example only.



HOME BUYING QUESTION: How long does a home warranty cover appliances or an air conditioner?

ANSWER: A home warranty will cover items listed in the warranty for one year from the date the policy begins. After that year the warranty will expire. The buyer is able to continue the home warranty policy on the home by paying the yearly fee.



HOME BUYING QUESTION: By law, can consumers request a FREE copy of their credit report? If so, where can the consumer go to receive those reports?

ANSWER: The Fair and Accurate Credit Transactions Act (FACT Act) was signed into law in December 2003. The FACT Act, a revision of the Fair Credit Reporting Act, allows consumers to get one free comprehensive disclosure of all of the information in their credit file from each of the three national credit reporting companies once every 12 months through a Central Source.

Is everyone eligible to get their free statutory annual credit file disclosure?

Yes. As of Dec. 1, 2005 all consumers are eligible to request their statutory annual credit file disclosure once every twelve months.

The FACT Act required that the national credit reporting companies establish a Central Source through which you will request the statutory free annual credit file disclosures. You may contact the Central Source by visiting www.AnnualCreditReport.com or calling 877 FACTACT. If you prefer to write, a request form is available on www.AnnualCreditReport.com.

The FACT Act entitles consumers to get one free statutory credit file disclosure from each of the three national credit reporting companies every twelve months.



HOME BUYING QUESTION: Is a credit score of 655 good or bad?

ANSWER:A credit score of 655 is certainly not bad. Scores over 700 are considered to be very good. So, a 655 is a good score and should provide buying power for the consumer.



HOME BUYING QUESTION: What method of payment is used to pay closing costs?

ANSWER: Closing costs are typically paid with a Cashiers Check. If the amount owed is small (i.e. in the low $100's) a personal check may be allowed.



HOME BUYING QUESTION: Why do buyers request sellers to pay for a home warranty?

ANSWER: Buyers usually ask sellers to pay for a home warranty to provide an extra piece of mind about the quality of the home. Sellers are accustomed to having the buyer ask for a home warranty. Sellers view providing a home warranty for the buyer as an extra incentive to selling the home. It's fairly in-expensive and gives the buyer protection for a year.

Remember to request a home warranty for the home you plan to purchase and ask that the seller provide the warranty at the seller's expense.




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