Got a few questions about buying a house? No worries, we got you! Here are frequently asked questions our team receives from buyers.
1. What is a purchase agreement?
A purchase agreement is a written contract between the buyer and the seller. It lays out the terms and conditions both parties agree to and serves as a legally binding contract.
2. Do I pay my REALTOR® as a buyer?
Typically the seller pays the agent’s commission to the broker for the listing agent and buyer’s agent. However, a buyer may be asked to pay a commission if the seller is unrepresented.
3. How long does it take to purchase a home?
The length of time differs for each buyer. However, once your offer is accepted, you can expect a closing time of 30-60 days—sooner if you are paying cash.
4. What are closing costs?
Closing costs are associated with closing the transaction. Some of those costs include credit report fees, flood certification, lender fees, appraisal, wire fees, settlement fees, recording fees, title examination fees, and Iowa title guarantee fees.
5. What is PMI? Do I have to pay this?
PMI is an acronym for Principal Mortgage Insurance. It protects the lender from a large loss if a buyer defaults on their loan. PMI may be required if a buyer has not offered at least 20 percent of the purchase price for a down payment.
6. What are the out-of-pocket expenses I have to pay before closing?
You should expect to incur expenses from inspections (general, radon, HVAC, etc). Most additional expenses are included at closing.
7. What is an escrow account?
During the closing process, you’ll set up your escrow account. This is the account your mortgage servicer pays your taxes and insurance out of on your behalf. It’s set up so when taxes and insurance are due, you have enough money in your escrow account to pay them.
8. What is earnest money, and will I get it back?
Earnest money is the buyer’s investment in the transaction. A larger earnest money deposit shows the seller you are serious about purchasing their home. We recommend writing a check for at least one percent of the purchase price. The earnest money check is deposited into the listing broker’s trust account after an offer is accepted and will be credited to the buyer at closing.
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