When buying or selling real estate, it’s important to have professional representation to ensure that you have a smooth transaction. With the real estate industry constantly changing, it will be beneficial to have a real estate agent in your court when it comes time to close on an acquisition or sale.
Start Asking Questions
Whether commercial or residential, acquiring a mortgage is a significant life event, and you’ll want to make sure that you understand the financial implications and responsibilities that come with property ownership. Knowing what to ask your real estate agent will ensure that you know what you are taking on, as well as prepare you for any other financial decisions that will need to be made as you assume ownership. Grab a pen and paper, get your agent either on the phone or in person and start taking notes as you ask these all-important questions that will further your understanding of your mortgage:
What Type of Mortgage am I Eligible For?
When considering the purchase of property, it is important to know what your mortgage terms will be. Do you want 15 year or 30 year? Sliding interest or fixed rates? Do you qualify for a first-time home buyer loan, or will you need a more conventional setup? Talk to your real estate agent about the types of loans that they typically set up, and know what options you qualify for you and your wallet.
What Will My out of Pocket Costs Be?
As you head to the negotiation and closing table, you’ll most likely come with cash in hand. This either comes off the top of your current mortgage, or you can negotiate closing costs with the seller to reduce your upfront obligations. Know what you must come to the table with, and prepare to pore over documents as you sign over a significant portion of your income to the mortgage lender. It is not uncommon for a typical closing cost fee to be around 4 to 5 percent of a home’s selling price; plan and prepare so you can breeze through the final stages of property acquisition.
What is Escrow?
Few home buyers or property owners understand exactly what escrow is until it is explained in simplified terms. An escrow account is money in a separate account held by the mortgage lender to pay for homeowner’s insurance and property taxes. Your lender has a vested interest in keeping the property in good standing; this protects both you and the mortgage company in the event that you default on your loan. The main takeaway regarding escrow is that it is held by an impartial third party whose main objective is to protect both buyer and seller and to ensure a smooth transaction.
Communicate With Your Mortgage Lender
Upon closing, you’ll receive information related to your mortgage lender and the channels of communication you must go through to do business with them. Phone numbers, emails, and physical addresses will all be necessary to record and keep on file in the event that you have questions or concerns about your loan.
Knowing what to ask and where to get information regarding your mortgage will be key factors in successfully navigating property ownership. The more questions you can ask of your real estate agent and your mortgage lender, the more likely it is that you’ll be satisfied and comfortable with your significant purchase.