Home Purchase > Frequently Asked Questions
Purchase

by Nancy Osborne, COO of ERATE®

Appraisals

• Will the lender require an appraisal of the property? If so, will I receive a copy of it?

Annual Percentage Rate (APR)

• What is the APR and how is it calculated?

Closing Costs

• What types of problems typically cause closing delays?
• Which closing costs associated with my purchase are tax-deductible?
• Is it best to pay points up front to reduce the interest rate?
• What is the difference between a zero point and a no cost loan?
• Is it possible to obtain a no cost loan on a purchase mortgage?
• What is the APR and how is it calculated?

Closing Escrow

• How will my real estate agent (or builder) and my lender work together to coordinate the closing?
• Once the offer is accepted, how long will it typically take to close the transaction?
• What types of problems typically cause closing delays?

Condominniums

• I am purchasing a condo (or townhouse or PUD) and I have been told that I need project approval, what is it and who handles it?
• What is the function of the HOA (Homeowner's Association)?
• What expenses are typically covered in the HOA dues?
• If my development (or project) has an HOA, what type of insurance am I expected to obtain independently?
• I am purchasing a condo (or townhouse or PUD) and I am aware that the HOA is currently in litigation with the developer, will I be able to obtain financing in the development?

Conforming Loans / Jumbo Loans

• What is the difference between a conforming and non-conforming (aka jumbo) loan?

Down Payment

• What is the minimum down payment required to buy a home?
• What is the minimum down payment typically required to purchase an investment or rental property?
• Is it best to put down as much money as possible (or as little) towards the down payment?
• Is it possible to borrow 100% of the purchase price?
• Is it possible to get a gift from a relative for 100% of the down payment?
• Can I borrow the funds for the down payment?
• Is it possible to borrow against (or liquidate) my 401(K) or IRA for a down payment and if so is this a good idea?

Finding an Agent

• Do I need a real estate agent and how do I go about finding one?
• Is it important to find an agent that works primarily in the neighborhood where I would like to live?
• Do I need the services of a loan agent/officer when applying for a loan?
• How will my real estate agent (or builder) and my lender work together to coordinate the closing?
• Must I obtain financing from the lender my real estate agent (or the builder) recommends?

First Time Buyer's

• I am a first time buyer, what is the best way to get started looking for a home?
• Do I need a real estate agent and how do I go about finding one?
• Do I need the services of a loan agent/officer when applying for a loan?
• How will my real estate agent (or builder) and my lender work together to coordinate the closing?
• Must I obtain financing from the lender my real estate agent (or the builder) recommends?
• What documentation will the lender typically require from me to process my loan?
• What is the minimum down payment required to buy a home?
• What is the minimum down payment typically required to purchase an investment or rental property?
• Is it best to put down as much money as possible (or as little) towards the down payment?
• Is it possible to borrow 100% of the purchase price?
• Is it possible to get a gift from a relative for 100% of the down payment?
• Can I borrow the funds for the down payment?
• Is it possible to borrow against (or liquidate) my 401(K) or IRA for a down payment and if so is this a good idea?
• What is mortgage insurance and am I required to have it?
• Is mortgage insurance something that I should avoid if possible?
• How can I avoid having to get mortgage insurance on my loan?
• If I do get mortgage insurance, how can I eliminate it?
• What is the difference between loan pre-qualification and pre-approval?
• Is it necessary to get pre-qualified before making an offer on a property?
• Is it necessary to get pre-approved before making an offer on a property?
• How long does it take to get pre-qualified or pre-approved for a loan?
• What is the best way to shop for a loan?
• Will the lender require an appraisal of the property? If so, will I receive a copy of it?
• What is a loan prepayment penalty and is it generally advisable to get a loan that has one?

Flood Insurance

• Must I have flood insurance coverage?
  
  

Homeowner's Associations

• I am purchasing a condo (or townhouse or PUD) and I have been told that I need project approval, what is it and who handles it?
• What is the function of the HOA (Homeowner's Association)?
• What expenses are typically covered in the HOA dues?
• If my development (or project) has an HOA, what type of insurance am I expected to obtain independently?
• I am purchasing a condo (or townhouse or PUD) and I am aware that the HOA is currently in litigation with the developer, will I be able to obtain financing in the development?

Homeowner's (aka Hazard ) Insurance

• What is Homeowner's (aka Hazard) insurance?
• How much Homeowner's insurance coverage will I need?

Insurance

• What is mortgage insurance and am I required to have it?
• Is mortgage insurance something that I should avoid if possible?
• How can I avoid having to get mortgage insurance on my loan?
• If I do get mortgage insurance, how can I eliminate it?
• What is Homeowner's (aka Hazard) insurance?
• How much Homeowner's insurance coverage will I need?
• Must I also have earthquake insurance coverage?
• Must I have flood insurance coverage?
  
  
• What is title insurance and why do I need it?
• What is the best way to shop for insurance?
• If my development (or project) has an HOA, what type of insurance am I expected to obtain independently?

Investment/Rental Property

• When purchasing investment or rental property, what is the difference in rate for non-owner occupied vs. owner occupied financing?
• What is the minimum down payment typically required to purchase an investment or rental property?

Jumbo Loans

• What is the difference between a conforming and non-conforming (aka jumbo) loan?
• What is a super jumbo loan and how much higher (than the average jumbo loan) is the interest rate typically?
  
  

Loan Amount - conforming vs. jumbo

• What is the difference between a conforming and non-conforming (aka jumbo) loan?

Loan Documentation

• What documentation will the lender typically require from me to process my loan?
• Are there limited documentation (aka EZ doc, no income qualifier) loans available?

Loan Process

• Do I need the services of a loan agent/officer when applying for a loan?
• How will my real estate agent (or builder) and my lender work together to coordinate the closing?
• Must I obtain financing from the lender my real estate agent (or the builder) recommends?
• What documentation will the lender typically require from me to process my loan?
• Are there limited documentation (aka EZ doc, no income qualifier) loans available?
• What is the most important consideration when selecting a loan?
• How do I determine which loan program is best suited for my personal situation?
• What is the difference between loan pre-qualification and pre-approval?
• Is it necessary to get pre-qualified before making an offer on a property?
• Is it necessary to get pre-approved before making an offer on a property?
• How long does it take to get pre-qualified or pre-approved for a loan?
• What is the best way to shop for a loan?

Loan Selection

• What is the most important consideration when selecting a loan?
• How do I determine which loan program is best suited for my personal situation?
• Is it best to pay points up front to reduce the interest rate?
• What is the difference between a zero point and a no cost loan?
• Is it possible to obtain a no cost loan on a purchase mortgage?
• What is a loan prepayment penalty and is it generally advisable to get a loan that has one?

Making an Offer

• I already own a home and I am looking to move up, do I need to sell or list my current home prior to making an offer on a new property?

Mortgage Insurance

• What is mortgage insurance and am I required to have it?
• Is mortgage insurance something that I should avoid if possible?
• How can I avoid having to get mortgage insurance on my loan?
• If I do get mortgage insurance, how can I eliminate it?

Neighborhood Information

• How do I find out information about local neighborhood schools?
• How do I find information about specific neighborhood statistics (i.e. population, crime, local services, etc.)?

No Cost Loans

• What is the difference between a zero point and a no cost loan?
• Is it possible to obtain a no cost loan on a purchase mortgage?

100% Financing

• Is it possible to borrow 100% of the purchase price?
• Is it possible to get a gift from a relative for 100% of the down payment?

Points

• Is it best to pay points up front to reduce the interest rate?
• What is the difference between a zero point and a no cost loan?

Pre-approval

• What is the difference between loan pre-qualification and pre-approval?
• Is it necessary to get pre-approved before making an offer on a property?

Pre-Payment Penalty

• What is a loan prepayment penalty and is it generally advisable to get a loan that has one?

Pre-Qualification

• Is it necessary to get pre-qualified before making an offer on a property?
• How long does it take to get pre-qualified or pre-approved for a loan?

Project/Complex Litigation

• I am purchasing a condo (or townhouse or PUD) and I am aware that the HOA is currently in litigation with the developer, will I be able to obtain financing in the development?

Quake Insurance

• Must I also have earthquake insurance coverage?

Rates

• Should I lock my interest rate at loan application or float the rate until closing?
• Will the lender require a fee to lock in my interest rate?
• If I decide to lock my interest rate and rates go down, will the lender give me the current lower rate?
• What is a super jumbo loan and how much higher (than the average jumbo loan) is the interest rate typically?
  
  

Rate Locks

• Should I lock my interest rate at loan application or float the rate until closing?
• Will the lender require a fee to lock in my interest rate?
• If I decide to lock my interest rate and rates go down, will the lender give me the current lower rate?

School Information

• How do I find out information about local neighborhood schools?

Searching for a Home

• I am a first time buyer, what is the best way to get started looking for a home?
• I already own a home and I am looking to move up, do I need to sell or list my current home prior to making an offer on a new property?
• . Do I need a real estate agent and how do I go about finding one?
• Is it important to find an agent that works primarily in the neighborhood where I would like to live?
• How do I find out information about local neighborhood schools?
• How do I find information about specific neighborhood statistics (i.e. population, crime, local services, etc.)?

Super Jumbo loans

• What is a super jumbo loan and how much higher (than the average jumbo loan) is the interest rate typically?
  
  

Tax Considerations

• Which closing costs associated with my purchase are tax-deductible?
• Is it best to pay points up front to reduce the interest rate?
• How can I find a qualified, reputable CPA to advise me?

Title Insurance

• What is title insurance and why do I need it?

Townhomes

• I am purchasing a condo (or townhouse or PUD) and I have been told that I need project approval, what is it and who handles it?
• What is the function of the HOA (Homeowner's Association)?
• What expenses are typically covered in the HOA dues?
• If my development (or project) has an HOA, what type of insurance am I expected to obtain independently?
• I am purchasing a condo (or townhouse or PUD) and I am aware that the HOA is currently in litigation with the developer, will I be able to obtain financing in the development?

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Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.

"I am addicted to Bloomberg TV" says Nancy.