• What Is The First Step In Buying A Home?
  Meet with a Lender and get pre-approved. The first stage of a mortgage application the lender will run a basic credit report and determine your debt to income ratio in order to see how much mortgage you qualify for. A lender will answer questions like:
  Which type of loan is best for you? Will you be in the house several years and benefit most from a long-term fixed rate, or do you want a lower, short-term rate because you plan to move soon or expect your income to increase rapidly over the next few years?
  
  
• What is a Buyer's Agent?
  A buyer's agent works solely on behalf of the buyer and owes duties to the buyer which include the utmost good faith, loyalty and fidelity. The agent will negotiate on behalf of and act as an advocate for the buyer. The agent must disclose to potential sellers all adverse material facts concerning the buyer's financial ability to perform the terms of the transaction and whether the buyer intends to occupy the property. A separate written buyer agency agreement is required which sets forth the duties and obligations of the broker and the client.
  
  
• What is Down Payment?
  The difference between the purchase price and that portion of the purchase price being financed. Most lenders require the down payment to be paid from the buyer's own funds. Gifts from related parties are sometimes acceptable, and must be disclosed to the lender.
  
  
• What is Earnest Money?
  Earnest money is a cash deposit buyers make when they sign a contract to buy a house. It makes the contract binding and signifies the intention of the buyer to complete the purchase. At closing, the earnest money becomes part of the down payment. If the buyer defaults without a good reason, as spelled out in the contract, the earnest money becomes payment for damages suffered by sellers and their agents.

  The earnest deposit could be several hundred or even several thousand dollars, but usually no more than 5% of the purchase price. Note: If the buyer's contract is not accepted by the seller, the money is returned to the buyer.
  

• What Are Closing Costs?
  Any fees paid by the borrowers(buyer) or sellers during the closing of the mortgage loan. This normally includes an origination fee, discount points, attorney's fees, title insurance, survey, and any items which must be prepaid, such as taxes and insurance escrow payments.
  
  
• What Is A Good Faith Estimate?
  A written estimate of closing costs which a lender must provide you within three days of submitting an application.
  
  
• What Is PITI?
  Principal (the amount of money upon which interest is paid), interest (That portion of a mortgage payment that is the "charge" for using the lender's funds), taxes (An annual or semi-annual tax paid to one or more governmental jurisdictions based on the amount of the property assessment. Generally paid as part of the mortgage payment)and insurance (A contract between purchaser and an insurer, to compensate the insured for loss of property due to hazards (fire, hail damage, etc.), for a premium), which comprise your monthly mortgage payment.
  
  
• What Is Mortgage Insurance?
  MIP or PMI is insurance purchased by the borrower to insure the lender or the government against loss should you default. MIP, or Mortgage Insurance Premium, is paid on government-insured loans (FHA or VA loans) regardless of your LTV (loan-to-value). Should you pay off a government-insured loan in advance of maturity, you may be entitled to a small refund of MIP. PMI, or Private Mortgage Insurance, is paid on those loans which are not government-insured and whose LTV is greater than 80%. When you have accumulated 20% of your home's value as equity, your lender may waive PMI at your request. Please note that such insurance does not constitute a form of life insurance which pays off the loan in case of death.
  
  
• What Is A CMA?
  A Comparative Market Analysis (CMA) is done by a Realtor to help determine the probable sales price of a property. A good CMA will take into account recent sales, pending sales, and current listings that are within the same neighborhood and have similar characteristics as the subject property.
  
  
• What Is MLS?
  The Multiple Listing Service (MLS®) is a regionally centralized list of homes for sale. The main advantage of the MLS to sellers is it creates greater exposure for their homes. It also tells buyer Realtors that a commission will be paid if they bring a buyer to the seller.
  
  
• What is a Contingency?
  These are conditions - or "safety valves" written into Real Estate offers and contracts to prevent a buyer from being forced to buy a house that is unsatisfactory - either structurally or financially. Examples of contingencies are "This contract is subject to the buyer obtaining a satisfactory whole house inspection." or "Subject to the buyer being able to obtain a mortgage."
  
  
• Which Settlement Expenses Can Buyers Deduct On Their Taxes?
  Some of the biggest costs at settlement are tax deductible in the year the home was bought. The loan fee or points, even if paid by the seller, as well as the pro-rated mortgage interest and property taxes, are tax deductions. Most of the rest of the closing costs are not deductible, but can be added to the home's purchase price to increase the basis of the property. These costs include attorney and recording fees, transfer taxes and termite inspection. The homeowner's property insurance is a personal expense, so it's not tax deductible and cannot be added to the basis of the home.
  
  
• What Is A Homeowner's Association?
  An owners group, whether in a condominium, townhouse or single family subdivision that establishes general guidelines for the operation of the community, as well as its standards.
  
  
• Why Do You Need An Appraisal?
  An estimate of value of a Real Estate property by a professional third party. Virtually all non-owner financed mortgages will require an appraisal and is generally paid for by the buyer.
  
  
• What Is Negative Amortization?
  Amortization in which the payment made is insufficient to fund complete repayment of the loan at its termination. Usually occurs when the increase in the monthly payment is limited by a ceiling. The portion of the payment which should be paid is added to the remaining balance owed. The balance owed may increase, rather than decrease over the life of the loan.
  
  
• How Do You Buy A Property At An Auction?
  Buying a house at a real estate auction can be tricky at best, even for the experts. It's all too easy for the unwary buyer to get caught up in the thrill of bidding and wind up owning a costly mistake.
  Get pricing help- Your best bet is to ask a knowledgeable real estate agent to assist you in arriving at an appropriate purchase amount. A savvy bidder needs to know comparable home prices; we can provide you with a range of prices for similar properties.
  Review property package before bidding- Review the bidder's package with the agent's help. The package should include a copy of the title search, tax information, a current appraisal, special fees and the auction rules.
  Arrange financing in advance- Make sure you've arranged financing before the auction.
  Keep your head- Most of all, remember to buy sensibly; don't let the excitement of the auction cause you to pay more than the home is worth. After all, not every home sold at auction is a bargain.
  
  
• How Do I Make An Offer?
  Click Here For Info
  
  
• Why Should I Use A Realtor?
  A Realtor is more than just a "sales person." They act on your behalf as your agent, providing you with advice and guidance and doing a job - helping you buy or sell a home. Due to the fast changing market, the data on available listings is not 100% accurate. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with an agent.
  

  There are two types of agents, "Buyer's Agents" and "Seller's Agents". It used to be common for all parties involved to work for the seller, hence the term "Seller's Agent". Nowadays, you will most often find a different type of agent, the "Buyer's Agent". If you are in the market to buy, it would be advisable to use a Buyer's Agent. They can make recommendations on what terms and prices to offer as well as negotiating a deal with your best interest in mind. If you happen to be working with a Seller's Agent, never disclose to them the top dollar you are willing to pay for any property. Keep it narrowed down only to things that you would tell the seller directly.

• Should I Have A Home Inspection?
  Click Here For Info
  

Realtor®

RE/MAX Mid-States does not make any warranty or representation concerning the timeliness or accuracy of the information displayed herein. In consideration for the receipt of the information on this page, the recipient agrees to use the information solely for the private non-commercial purpose of identifying a property in which the recipient has a good faith interest in acquiring.

Equal Housing Opportunity
Real estate agents and brokers who have earned REALTOR e-PRO® Certification are Internet Professionals who have completed extensive training using the Web. REALTOR e-PRO® Certification means the real estate professional is prepared to employ the latest techniques and services for your benefit, just like you've grown to expect from a professional.

Member of Heartland MLS (Multiple Listing Service)