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Frequently Asked Questions
- What is the difference between floating rate and fixed rate mortgages?
- Why should I use a Real Estate Agent?
- What is an Appraisal and why should I have it done?
- Should I purchase a house that requires fixing up?
- How much money do I need to come up with to buy a new home?
- What is a Home Inspection? Should I get one done?
- When should I make an offer?
- As a seller, should I disclose all the defects in my house?
- Am I asking too much for my home?
- What is the difference between floating rate and fixed rate mortgages?
In a fixed rate mortgage, the interest rate is pre-determined at the beginning of the loan term. The advantage of this type of mortgage is that it offers a security of knowing your monthly payments beforehand and allows you to plan accordingly.
In a variable or floating rate mortgage, the interest rates change on a periodic basis during the term of the loan according to a pre-determined formula. In a floating rate mortgage, the monthly payments can vary greatly, depending on the fluctuations in the interest rate.
- Why should I use a Real Estate Agent?
The advantages of using a real estate agent are many, regardless of whether you are on the buying or the selling side of the deal. An agent is someone who has proper education and experience in the real estate industry and can provide the right type of guidance and advice that is required when buying or selling a property.
As a home buyer, an agent can shortlist the properties that suit your budget and requirements and help you pick the best one. With their several years of experience, agents are better trained to locate faults in a particular construction. Agents also take care of the negotiation process and the paper work involved.
From the seller’s point of view, an agent can get your house the kind of advertising it requires to initiate a quick sale. An agent can get your home listed on the Multiple Listing Service (MLS) which will advertise your house to the largest number of buyers in the least possible time. The agent will also negotiate with the buyers to get you the maximum profit from your property sale.
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- What is an Appraisal and why should I have it done?
An appraisal is the valuation of your property by a professional appraiser to determine the value of your home in comparison to the current market trends. Most lenders want to see a professional appraisal of the property you want to buy before sanctioning the loan to ensure that the selling price is in accordance with the current market value of similar homes. This way, the lender is confident that he is not lending a sum that is much more than the value of the home.
The cost of the appraisal will vary according to the complexity of the appraisal and the time taken to complete it. Appraisers use a number of techniques to establish the value of a property. Some look at comparable homes sold in the past twelve months, adjusting the prices to reflect differences between these homes and the property being appraised. If several similar homes have recently sold, the appraiser’s work is fairly simple. If your home is situated in a rural area, or in a neighborhood where there is mixed development the appraiser’s task is more complex.
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- Should I purchase a house that requires fixing up?
The answer to this question depends entirely on how much fixing is required to get the house back in flawless shape. Your real estate agent might have found you the home of your dreams but the seller has not quite done his homework right – the house has not been given the facelift that is required when presenting it for sale. With the help of your agent or maybe a professional home inspector, determine the amount of fixing up that is required in terms of costs. Be sure you keep a clear definition of the term “fixing up”. Major constructional repair work will not qualify as a fix-up job and in such a case, you should reconsider the purchase.
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- How much money do I need to come up with to buy a new home?
The total sum required to purchase a new home depends on a number of factors, including the cost of the house you intend to buy and the type of mortgage that you get. In most cases, you need enough money to bear the three main expenses of:
- Earnest Money – This is the deposit that is made on the home when making an offer to show the seller that you are serious about buying the house
- Down Payment – This is a percentage of the cost of the house that you must pay when you want to book the place and start the settlement process
- Closing Costs – These are the costs associated with processing the paperwork to buy a house.
When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be used to pay the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20% of the purchase price. Closing costs average 3-4% of the price of your home. These costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs, so you can be well prepared to bear the expenses.
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- What is a Home Inspection? Should I get one done?
A home inspection is a visual examination of a house by a qualified professional to determine the overall condition and value of the home. When conducting a proper inspection, an authorized home inspector should check all the major components of the house such as the roof, ceilings, walls, and floors along with other systems such as the electrical connections, heating, plumbing and drainage and weather proofing. The inspector usually gives the results of the inspection in writing to the home owner within 24 hours of the inspection.
It is always advisable to get a home inspection done before making a purchase decision. A thorough inspection is likely to clear a majority of the doubts that you might have when buying a home. The inspection gives an idea about the quality of the construction and indicates whether any major repair work will be required. This allows you to calculate all the add-on costs before making the final decision. An inspection will definitely give you a more secure feeling about your purchase decision by removing most of your doubts.
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- When should I make an offer?
As soon as you have found your dream home. The real estate market is constantly buzzing with activity and hence you should never take things too lightly. If you really like a particular house, do not ‘sleep on it’ but go ahead and make a decent offer before someone else does. Act quickly or else you might regret your casualness later on.
When making an offer, there are a few things that you should consider. Firstly, make sure the asking price of the h |
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