You have questions. We have answers.
How to get Started
What are first steps? The first steps are always a buyer’s meeting with us and getting preapproved with a lender. You can meet with us in person at our office, or do a phone consultation.
Why should I get a loan preapproval upfront? Getting preapproved is quick and shows you exactly the price range of home you qualify for. Sellers don’t consider offers without preapproval letters. Buyers who aren’t quite sure what they can afford also have challenges. A $35,000 price change will take you into a totally different type of neighborhood, or make another bedroom or bathroom accessible. What would you do if you walked into the best house in the perfect neighborhood offered at fair price, but someone else buys the house for less than you were willing to pay – simply because you didn’t get your finances organized first?
Why should I have a buyer’s agency agreement? The short answer is that Virginia law requires it in order to protect you. We make sure you’re protected by keeping your personal information private, counseling you on the best options, and ensure you’re getting a fair deal. We can also dedicate more time and energy to helping you.
When can I start looking for homes? The minute we have a preapproval letter, we can start seeing homes.
I like searching online, but sites like Zillow and Realtor.com aren’t updated quickly, which do you recommend? We can give you a log-in for Listingbook.com which is accessible by invitation or the link at the bottom of the home page. We can see your activity, favorites, and notes to us through our agent interface. This is a great way for us to collaborate while keeping you in control of your search. *Another option is we can create an MLS automatic search that emails listings as often as twice a day, or as infrequently as once a month. We have a few more tools and search options in than the consumer sites.
How long will it take to find a home? Average buyers look at 10-15 homes over 2-4 weeks before finding the home they buy. Most people have an idea of what they want, but go in a slightly different direction when they see the selection. We’ll work at the pace that fits your needs, especially if you are relocating from out of state. Many clients fall in love with the 1st home we saw. One very young, frugal, and tireless client searched for 17 months before finding an extreme fixer-upper after it failed to sell at auction in 2008.
I found a home I want. What is the typical time from contract acceptance to closing? Typical sales take about 30 days. Cash buyers can expect a shortened timeframe of 14 days. Short sales are always approached on a case-by-case basis depending on the seller’s situation.
I can pay cash. I can get an amazingly good deal, right? Cash becomes an advantage when the home is in poor condition and it can’t qualify for a loan, or barely qualifies but needs too much work for most people. There are always exceptions, but this is what you’ll usually find. If you were selling a home worth about $100,000, would you sell it to someone offering $100,000 using with money from a loan, or someone offering $90,000 using cash?
What’s a short sale? A short sale refers to a sale where the property market value is less than the loan balance owed on the home. Before the owner can sell the house, the bank must approve the sale. (The bank does not own the home; the owner is the “upside down” owner.) A short sale involves the bank taking a loss and accordingly substantial review of documentation is required before the bank will approve the sale. Acquiring bank approval adds an extra 30-120 days for these properties.
What’s a foreclosure? When most people use the term foreclosure it refers to a home the bank repossessed from the previous owner. By the time you see a foreclosure on the market, the asset manager (bank employee) has evaluated it and determined what they think it’s currently worth. It’s very similar to a normal sale except the home is sold as-is, meaning the bank will not repair, change, or upgrade anything in the home. From 2007-2009 in the DC metropolitan region, foreclosures were the main type of property available, but this isn’t the case now.
Some people think foreclosures are “better deals” than other homes, however, if you look at [the cost of a foreclosure plus cost of upgrades desired] vs. [cost of a move in ready normal sale] there is minimal financial benefit in the current market. Institution owned properties can still be a good option if you want a home that needs cosmetic work and you have money set aside for updates. Nearly all foreclosures will qualify for financing and are priced at or above market value. Banks are pricing inventory to maximize revenue now that the national housing market has normalized.
How much can I afford? The best way to get specifics on affordability is to talk to a lender. You probably already know what monthly payment is comfortable. Instead of focusing on the sticker price of a house and working backwards, they’ll evaluate your unique financial situation and help you find what sales price that translates into. Remember, affordability and loan approval are not the same thing. It is possible to be approved for a loan that is too big for you. Know your payment comfort zone before you talk to a lender.
How do I find a quality lender? We can provide referrals for reputable lenders, but you can select any lender you want. A loan is like any other large purchase: you can save money if you look for the best terms.
How much money will I need to buy a home? In general, you need to come up with enough money to cover three costs:
- Earnest money – This is the deposit you offer when you submit your offer to prove to the seller that you are serious about wanting to buy the house. Within 5 days of going under contract, your earnest money check will be deposited into an escrow account. This money is applied to the down payment or closing costs at settlement. Most buyers offer 1% of the sales price in Virginia.
- Down payment – A portion of the sales price that you must pay at settlement. Some types of loans require 10-20% down. FHA loans require only 3.5% down. Military veterans can be eligible for loans with no down payment.
- Closing costs – The costs associated with processing the paperwork to buy a house. This is paid at settlement – average 2.5-4% of the price of your home. The typical costs include origination fee of your mortgage, appraisal of the home, one year of homeowners insurance, establishing escrow accounts for future tax and home insurance payments, attorney fees, recording fees, home inspection and termite inspection fees etc. Your mortgage company will provide a Good Faith estimate of your closing costs.
What if my credit needs improvement? That’s ok. A lender can council you on which specific actions will improve your credit. Credit bureaus use certain formulas to determine your score. Sometimes if you do something that’s considered socially moral, such as paying an old inactive debt or returning a car to a dealer, it can negatively impact your score and prevent you from qualifying for a mortgage. So, ALWAYS talk to a professional before you try it yourself.
Is there anything else I should know before I start shopping for a loan?
YES. The major things that impact your ability to get a loan are your credit, your income, your assets, and your debts. While you are buying a home it’s important that you maintain or improve your credit, income, and assets while avoiding any new debts. This means keep your job, keep paying your bills, avoid large cash purchases, avoid charging a large total on credit cards, and especially don’t finance a car, flat screen TV, or cosign a loan for anyone else.
***Additionally, avoid sites like Lending Tree that offer to have banks compete for your loan. Your information is distributed to dozens of lenders who all check your credit at their convenience. Every time your credit is checked there is a very small negative effect. Usually this is negligible, but if your credit is borderline and you have a large number of inquiries, this can impact your credit enough to increase the interest rate you can get, or worse, prevent you from qualifying completely. Be careful.
When I find the home I want, how much should I offer? We will offer our professional opinion on what the market value is and what we think you can get it for. There are several things we will consider:
- What have recent area homes sold for?
- Is the home you’re interested in similar condition to sold properties?
- Is there anything bigger in similar condition or the same size but nicer, currently available for less?
- Will you have to spend a substantial amount of money making it livable?
- Has the home been on the market for more than 30 days? When was the last price reduction?
- How much do you really want the home?
In some cases, you may even want to offer more than the asking price if you know you are competing with others for the house. And yes, for desirable properties this happens enough to mention.
What do I need to make an offer? For a seller to consider an offer legitimate, it must include a preapproval letter and evidence of an earnest money deposit. If you are paying cash, you need to provide proof of funds.
What’s in an offer? In a contract? A contract spells out the specific terms of your offer and details several scenarios “if A occurs, then B happens” in order to protect everyone involved. For every home sold in Northern Virginia, there are about 20 standard pages. A few forms and addenda are also added depending on the buyer & seller’s situation and the age of the home. All foreclosures have another mandatory addendum; each bank has their own version. Only when the entire agreement is completely signed by everyone, it becomes a legally binding ratified contract.
What if the seller counters my offer or doesn’t take my offer? Now we begin negotiating. Negotiation is about finding terms that work for everyone. Often, negotiations on price and terms go back and forth several times before an agreement is made. Although this may be an exciting and somewhat emotional time, it’s most important to remain cool, calm and collected through this process. Just remember -don’t get so caught up in negotiations that you lose sight of what you really want: your new home. An assertive, positive attitude goes a long way. Negotiation is about finding a win-win scenario for both parties.
Can I do a home inspection? Yes! In every contract we write, we make sure you are permitted to do a complete home inspection unless you specifically waive that right. Inspections are done within the first few days of going under contract. A licensed home inspector can do the inspection in 3-5 hours; costs are around $400-$550 depending on the size of the home. If there are any major issues in a normal sale, we negotiate those items with the seller. If the home is sold as-is (short sales and foreclosures) you can still have an inspection, but it’s just for informational purposes. If you determine the house is not for you during the inspection you’ll have the opportunity to cancel the contract. You will know your rights when making an offer.
I’m excited! When can I see the house again? Normally a buyer sees the home a total of 3-4 times. You see the home once or twice before making the offer. You have the right to be there again for your home inspection (you’ll want to take measurements then), and final time for a brief walk through inspection right before closing to make sure everything is in the same condition.
What contingencies can I expect? It’s normal to negotiate contracts with several contingencies. Contingencies start the day the contract is ratified and durations are specified in the contract. By Virginia law, if the home is in a homeowner’s association (HOA) you are also entitled to a 3 day review period after receiving a copy of the HOA documents.
Average duration for contingencies are:
- Home inspection, 7-10 days
- Buyer’s financing, 14-21 days
- Appraisal, 21 days
What if I change my mind? When you are under contract, there are always options available. Every scenario is unique, but we will keep you constantly informed of your rights and obligations. If the contact has applicable contingencies, the earnest money will be returned to you. If you think there’s a strong chance you’ll change your mind you shouldn’t be looking at homes or making offers.
What if I can’t get a loan? If you can’t qualify for a loan after the seller verifies your financial information, we submit a rejection letter to the seller along with a release form as soon as possible. If this is done within the contingency period, your earnest money is returned.
Can you tell me about the appraisal? Your lender places an order, then an independent licensed appraiser inspects the home to verify 1) that it’s worth the contract price and 2) conforms to certain condition standards. If the appraised value is lower than the contract price, the seller can choose to lower the price. If the appraised value is higher, nothing changes. Your lender is the client of the appraiser, but you’re entitled to receive a copy upon request.
What if there are termites? If termite issues are found, the seller pays for treatment and repair. Most loans require that detached homes and townhouses have a termite inspection.
What do I need for closing? Bring your photo ID, a cashier’s check, and your checkbook.
So what happens at closing? Basically, you’ll meet with us and a notary or attorney from the title company at the title company office. The notary will have a stack of papers for you to sign. You will have a basic explanation of each document and receive copies. After you sign everything and give the notary a cashier’s check for your down payment and closing costs, the home is yours.
How much money will I need to bring exactly? Before you go to closing, your lender is required to give you a booklet explaining the closing costs, a “good faith estimate” of how much cash you’ll have to bring to closing, and a list of documents you’ll need. If you don’t get those items, be sure to call your lender BEFORE you go to closing.
What happens if there are delays? Delays are sometimes unavoidable. The buyer and seller will sign an addendum extending the closing date. If an avoidable delay was your fault, a seller might ask you to pay their costs caused by your delay as a sign of good faith.
So what will my mortgage cover?
- Principal: repayment of the amount you actually borrowed
- Interest: payment to the lender for the money you’ve borrowed
- Property taxes: the annual taxes assessed on your property, divided by the number of mortgage payments you make in a year
- Homeowners insurance: a monthly amount to insure the property against loss from fire, natural disasters, and other hazards – this always a smart thing to have and it is required by lenders
- Private mortgage insurance: a monthly amount to insure the lender against default. If your down payment is 20% or more, this does not apply to your loan.
In addition to the mortgage payment, what other costs do I need to consider? Well, of course you’ll have your monthly utilities. In addition, you might have homeowner association or condo association dues.
When is my first mortgage payment due? Mortgage payments are due at the 1st of the month, starting the second month after you close on the home. For example, if you buy January 15th, your first payment is due March 1st.
If I have no mortgage, how do I pay taxes? If you don’t have a mortgage, you pay property taxes directly to the county every 6 months. It’s always a good idea to protect your investment with homeowner’s insurance too.
We’re here to assist with all of your real estate related needs. Ask us anything and we’ll have the answer or find it for you. We also offer referrals for lenders, title companies, home improvement contractors, photographers, appraisers, home stagers, landscapers, cleaners, and just about anything else you can think of.