Should I enlist a real estate agent to help me buy a home?
YES! Unless you are a real estate professional.. you truly do not do this often enough to know the in’s and outs of the process, have access to the legal documents required and preferred, and should problems arise (which they more than often do) you want someone who can problem solve on your behalf. Similarly, we really believe that we make the process so much easier and take so much off your plate.. we prepare the offer, schedule the inspections, negotiate the repairs, act as a middle man between you and the seller/seller’s agent. Sure – you can buy a home without an agent.. but most of the time the seller is going to have an agent who represents them. In any large transaction – you want someone looking out for your best interest!!
Does Tennessee have any down-payment assistance programs for first time homebuyers?
Yes the state of Tennessee offers many programs for first time homebuyers. The Tennessee Housing Development Agency offers a couple of programs that helps first time homebuyer’s purchase a home. For more information about the programs please reach out to us.
What is the average number of days from contract to closing?
It really depends on the situation and the financing you are using. Loans these days take anywhere from 30-60 days to close depending on the lender or bank you are using. For cash, you can close much sooner; however, you will still want to have time for inspections and any due diligence you may want to perform before closing. Also, it depends on the closing date that you and the seller have negotiated.
Do I need a 20% downpayment to buy a home in the Greater Nashville area?
If you qualify for an FHA loan – you can have a downpayment as low at 3.5%. Other options go as low as 3% down for a conventional loan. For loans lower than 20%, generally you will have to pay an insurance on top of the monthly rate called PMI (private mortgage insurance) which just insures that bank in case you default (aka don’t pay). If you qualify for a VA loan.. and sometimes other programs like the Physician’s Loan Program… you can have a 0% down payment.
What are the up-front costs of buying a home?
Earnest/trust money (traditionally around 1% of the purchase price) – The earnest money deposit is an important part of the home buying process. It tells the seller you’re a committed buyer, and it helps fund your down payment. Sellers rarely accept offers without deposits. Assuming that all goes well and the seller accepts your offer, the earnest money will go toward the down payment and closing costs. In most circumstances (unless you were to break the contract), you get your deposit back if you discover something within the inspection period you are uneasy about or it doesn’t appraise.
Appraisal – $400-$600 – If you are using a lender they will require an appraisal. This is to ensure that the bank is not lending you money exceeding the market value of the home. It is a good idea to order this soon after offer is accepted to give appraiser enough time to get back with lender.
Home Inspection – $300-$600 depends on size of the property and if you want additional inspections (like radon, fungal/mold, etc)
Termite Inspection – $25-$60
What are closing costs and how much can I expect to spend?
Typically 3-6% of the cost of the home. Closing costs are fees paid at the closing of a real estate transaction. This point in time called the closing is when the title to the property is conveyed to the buyer. Closing costs are incurred by both parties and can sometimes be apart of the negotiations.
Closing costs include – fees to the lender, fees to the title company, title insurance, prepaids
Title Insurance – Title insurance is meant to protect an owner’s or a lender’s financial interest in real property against loss due to title defects, liens or other matters.
Prepaids – Prepaid Closing Costs are payments and/or deposits for items such as property insurance premiums, interim interest, real estate taxes, and initial deposits to the escrow account.
Lender fees: $150 – $1,000+ – Lender fees come in various names and amounts, and include such items as an underwriting fee, processing fee, document preparation fee, and administrative fee. These fees are paid directly the lender.
More – Document preparation fee, Courier fee ($75), Document Storage fee ($10), Closing Fee (Around $395), etc
Your lender can give you a better understanding/fee worksheet of potential closing & upfront costs so there are no surprises.
What is earnest and trust money? And how much is that?
Earnest or trust money (it is referred to as both) is money put down at time of contract that is a sign of good faith. It shows the seller you are serious about buying the home and when it closes will be deducted from what you need to bring to closing.
How much is an appraisal and who orders it?
If you are working with a lender for financing – the lender will order the appraisal and take payment from you at time of order. An appraisal can range anywhere from $400-$600. It is possible it could be more than this.. but that is the usual range we see.
Why should I get pre-approved as opposed to pre-qualified?
First – all lending institutions use different words to mean different things. When we say pre-approved – we mean past the initial pre-qualification where you have been credit qualified by an actual underwriter. We recommend all of our clients get pre-approved before looking at houses. This allows us to make sure we are looking at the right houses not too high or too low. When you are pre-approved we can submit a pre-approval letter from the lender which means you will become basically a cash buyer – i.e. the seller will have more confidence in your offer and knows you are serious buyer. Also – we can close earlier if we need to because you have done a lot of the work up front.
