First Time Home Buyer? How about some FAQ’s?
The first time home buyer may have many questions to get
started.
Why should I work
with you Roy to buy a home?
For numerous reasons. First, I am and experienced real
estate broker who will work in your interest in helping you find and buy the
home of your dreams, and not charge you
anything for my services. I specialize in residential transactions. I will
be personally available, responsive, and ethical and help you find the home of
your dreams.
But I can find homes
for sale myself on the internet. Why do I need you to assist me?
Yes, with the internet and IDX
services tied to multiple listing services, you can find homes for sale very
easily. (Such as on my site here.) That is just one part of the process and
there is much more. I can show you new homes, and resale homes listed by any
other company who places their listings in a MLS.
Then, help you through the process of finding the right lender, negotiate the
price, complete contract and other forms, facilitate the inspection, inspection
resolution, facilitate the title work, facilitate the appraisal, and help guide
you through the entire process through a successful closing.
Most sellers have a seller’s agent working solely to the
benefit of the seller. You need a professional on your side to represent your
interests.
It may appear complicated and stressful, but I will guide
and assist you throughout the process to a successful closing.
Why don’t I have to
pay you to be my buyer broker?
In Colorado, the
listing broker almost always offers to pay the buyer broker a “co-op” or a
portion of the commission the seller has agreed to pay. This is most often the
case in Colorado. Once in awhile,
a seller’s broker agrees to a “variable rate” commission which means if there
is no buyer broker involved to share a commission, the commission rate is
reduced. This is a small fraction of seller agreements. Short of this, the
seller’s broker will make more money if you do not have a buyer broker. Most
new home sellers offer to pay a buyer broker a commission for their assistance.
Some real estate companies may charge you a transaction fee. I will not charge
you this.
How much down payment
do I need?
Depends on the type of loan and program you can use. In Colorado,
it could be as little as about $1000 with the CHFA program.
You may also be able to qualify for a grant program which
can cover your down payment and some of your closing costs.
I can refer you to a qualified lender or work with the one
you have previously chosen.
What is a
“pre-qualification” or “pre-approval” letter?
It is a letter from your lender that shows you are
pre-qualified or pre-approved for a loan at a certain amount. Generally, a
pre-qualification letter shows you can qualify for a loan on the surface, based
on information provided to a lender along with a credit check. And, generally,
a pre-approval letter says you are “pre-approved” for a loan based upon
information you provided plus documentation requested. Both are generally
qualified with terms such as “dependent upon verification and review.” It is to
your benefit to have these prior to shopping to have available to your buyer
broker to submit with your offer
How do I submit an
offer?
Once I show you homes that meet your desires and you choose
one you would like to make an offer on, I will provide you sold comparable
information for the home. We will discuss and I will provide you my advice on
what would be a good offer. I provide the information and advice and you make
the decision. Remember, I work for you.
I will write up your desired terms in a Colorado
state approved contract form. The offer may be accepted, rejected, or counter
offered. In addition to the amount offered, the seller may consider the
strength of your pre-qualification or pre-approval letter, the dates and terms,
and the amount of your earnest money.
What is earnest
money?
It is the money you offer to place in escrow to show
“earnestness,” or seriousness if you will. It is placed into an escrow account
upon acceptance of contract. In Colorado,
on the state approved contract forms, your offer includes how much earnest
money you are offering.
ARM, FHA, CMA,
ETC. Confused By The Letters?
ARM? Adjustible rate
mortgage. See below for general information.
CMA? Comparable market
analysis. This is a tool to help estimate a home’s value based on recent sales
(and sometimes those on market) based on similar (comparable) homes in the area
of the target home. This is NOT an appraisal.
IDX? Internet Data
Exchange. See MLS below. Often real estate
brokers can allow visitors to their sites to search homes in their respective MLS
via an IDX.search tool.
See my the search tools on this site..
FHA? Federal Housing Administration.
FHLMC? Federal Home Loan Mortgage Corporation.
Commonly referred to as Freddie Mac (buys mortgages on the
secondary market, pools them, and sells them as a mortgage backed security to
investors on the open market)
FNMA? Federal
National Mortgage Association. Commonly referred to as Fannie
Mae.
HOA? Home owner association. When considering purchasing a
home in which there is an HOA, be sure to review all the applicable documentation
which may include, by example, covenants, rules, restrictions, meeting minutes,
financial statements, dues, and management.
HUD? U.S.
Department of Housing and Urban Development.
LTV? Loan to value. For
example, you put a down payment of 20% of a homes value (generally appraised
value in this context) and borrow the remaining 80%. The LTV
is 80%. Different loan programs may have different LTV
requirements and terms of the loan may differ based on LTV
(and many other factors.)
MLS? Multiple listing
service. Generally, a database service in which brokers can place and access
home listings. Many MLS’s also have other
information such as sold homes information; sold prices, concession amounts,
listing and selling broker, etc. Different MLS’s
have differing rules on who can be a member or who can have comprehensive
access to information. Often, there is limited public access through IDX
sites.
PMI, MIP? Private
mortgage insurance. Mortgage insurance premium. Often, when a borrower borrows
more than 80% LTV, the lender requires
mortgage insurance (an additional borrower cost) to help insure (the lender) against
possible loss in case of loan default.
YOC? Year of construction of home.
Roy Johnson
Resident Realty
303-875-1986
myhomecolorado@gmail.com
www.mybrokercolorado.com
