Re/Max 2000 Realty Kim Yu Frequently Asked Questions

Getting pre-approved for a mortgage is the first step of the home buying process. Getting a pre-approval letter from a lender gets the ball rolling in the right direction. Here's why: 

First, you need to know how much you can borrow. Knowing how much home you can afford narrows down online home searching to suitable properties, thus no time is wasted considering homes that are not within your budget. Pre-approvals also help prevent disappointment caused by falling in love with unaffordable homes.  

Second, the loan estimate from your lender will show how much money is required for the down payment and closing costs. You may need more time to save up money, liquidate other assets, or seek mortgage gift funds from family. In any case, you will have a clear picture of what is financially required. 

Finally, being pre-approved for a mortgage demonstrates that you are a serious buyer to both your real estate agent and the person selling their home. Most real estate agents will require a pre-approval before showing homes - this is especially true at the higher end of the real estate market; sellers of luxury homes will only allow pre-screened (and verified) buyers to view their homes. This is meant to keep out "Looky Lous" and protect the seller's privacy. What's more, by limiting who enters their home, sellers are given extra security from potential thieves trying to case the home (like identifying security systems and locating expensive artwork or other high-value personal property).

From start (searching online) to finish (closing escrow), buying a home takes about 10 to 12 weeks. Once a home is selected and the offer is accepted, the average time to complete the escrow period on a home is 30 to 45 days (under normal market conditions). However, well-prepared home buyers who pay cash have been known to purchase properties faster than that.  

Market conditions are a major factor in how fast homes are sold. In hot markets with a lot of sales activity, buying a home may take a little longer than normal. That's because several parties involved in the transaction get behind when business suddenly picks up. For example, a spike in home sales increases the demand for property appraisals and home inspections, yet there will be no increase in the number of appraisers and inspectors available to do the work. Lender turn-around times for loan underwriting can also slow down. If each party involved in a deal takes a day or two longer to get their work done, the entire process gets extended.

Contact an experienced real estate agent to learn more about the home buying process. 

A real estate agent will tell you that in seller's markets, increasing demand for homes drives up prices. Here are some of the drivers of demand: 

• Economic factors - The local labor market heats up, bringing an inflow of new residents and pushing up home prices before more inventory can be built. 
• Interest rates trending downward - Improves home affordability, creating more buyer interest, particularly for first-time homebuyers who can afford bigger homes. 
• A short-term spike in interest rates - May compel on-the-fence buyers to make a purchase if they believe the upward trend will continue. Buyers want to make a move before their purchasing power (the amount they can borrow) gets eroded. 
• Low inventory - Fewer homes on the market because of a lack of new construction. Prices for existing homes may go up because there are fewer units available.

Home shoppers pay little or no fees to a real estate agent to buy a home. Here's why:  

For most home sales, there are two real estate agents involved in the deal: one that represents the seller and another who represents the buyer. Listing brokers represent sellers and charge a fee to represent them and market the property. Marketing may include advertising expenses such as radio spots, print ads, television, and internet ads. The property will also be placed in the local multiple listing service (MLS), where other agents in the area (and nationally) will be able to search and find the home for sale. Agents who represent buyers (a.k.a. buyer's agent) are compensated by the listing broker for bringing buyers to the table. When the home is sold, the listing broker splits the listing fee with the buyer's agent. Thus, buyers don't pay their agents.

If the built-up equity in your current home will be applied to the down payment on the new home, naturally the former will need to be sold first. Some buyers decide to turn their current home into an investment property, renting it out. In that case, the current home will not need to be sold. However, your loan advisor will still need to evaluate your risk profile and credit history to determine whether making a loan on a new home is feasible while retaining the title to the old home. Buyers often have a short time frame to sell their current home when relocating to a new city because of a job transfer. If you are moving but taking a position with the same employer, check to see if they offer relocation assistance to help offset some of the costs.

Interested in learning more about the home buying and selling process? Reach out to our trusted real estate agents today!