When it comes to your agent, there are no stupid questions.Home buying is more than just finding a house you like, buying it, and moving in. You still need to get a lender to approve you for a loan, lock in your mortgage rate, decide your housing budget, make an enticing offer to the seller, get the house appraised and inspected, pay any closing costs, and sign a mountain of paperwork.
Even we need some time to relax after all these questions!
If you don’t ask your agent questions or ask for clarification, your real estate agent won’t be able to help you understand the process because they won’t know that you are confused.
Buyers will be seeing the home at its best, so the agent doesn’t even need to say, “Picture this.”
“There are no such things as stupid questions,” says REALTOR® Ryan Fitzgerald from Raleigh, N.C. “If you have a question, ask it, no matter how foolish it sounds in your own head.”
Feel free to ask questions. You should use your agent’s experience and knowledge to your advantage since this is one of the biggest financial transactions you will ever make, so here is what to ask your real estate agent when buying a home.
In keeping your house clean and sanitized, diluted bleach or rubbing alcohol are both good options.
1. How Many Clients Have You Worked With?
Before you pick a real estate professional, ask them how many clients they’ve worked with to find a home, and how many clients that have found a home for. Your real estate agent is supposed to be an expert, so one with a lot of experience will be a big help to a new home buyer like you.
2. Is the Roof, HVAC, and Water Heater Recent?
While gorgeous aesthetic features like crown molding and 12-foot ceilings matter, you still have to take care of the basics of your house like the water heater, roof, HVAC, plumbing, and electrical system.“Knowing the age and condition of the major items will help you gauge how much your home could potentially cost once you move in,” Fitzgerald says. “The older the home, the more likely you are to have higher maintenance costs.”
Since these items are expensive when they do fail (e.g., thousands of dollars in damage from a leaking water heater or $5000+ for a new HVAC system), they affect your home value more than having hardwood flooring or quartz countertops.
3. What If There Is A Major Issue?
Home inspections can be one of the most stressful parts of buying a home since you learn every possible issue with the house you want and hope to buy.
Most of the time the inspection goes as expected, but if you aren’t expecting a major issue and the inspector discovers something significant like a rusting sewer main or walls full of termites, it can be panic attack time.
You might ask, “What if my inspector has bad news?”. Take a deep breath and speak with your agent, who can reassure you and help you plan ahead, whether you decide “Let’s dump this house” or “Let’s talk it out and get things fixed before we close.”
4. What If My Appraisal Is Too Low?
There can be a bidding war over your house where there are more buyers than sellers, which will push prices higher than its actual value and mess up the deal
.If your appraisal is too low, ask your agent what to do next since they will have good advice and experience to share. Some options could include getting a second appraisal, paying the rest in cash, or simply walking away.
The deal might not fall through even if the house value is low, so stay calm no matter what happens.
“When things don’t go as expected, it’s important to remain level-headed. You never want to allow your emotions to be too up or too down when buying a home,” Fitzgerald advises.Related:
5. How Should I Prepare for Closing?
Closing day is where the home legally becomes yours and you sign the paperwork and get your new keys.
It is imperative to ask your real estate agent what to bring for your closing, such as your homeowner’s insurance, your ID, and your checkbook to cover the closing cost.
Ask about everything you’ll need in advance if you want everything to go smoothly, so you don’t forget any key paperwork and head home without your new keys in hand.
Feel free to ask away, since there are no dumb questions in the home buying process.
Thoughts on Closing Your House Deal
You’re almost there! Once you sign the paperwork, write the check, and have the keys, the house is yours. You may have some questions as you seal the deal, so we’re written them out here for you.
What is “closing”?
Closing is when you finally sign off on the paperwork and get the keys in your hand.
The four-to-six week closing process starts with signing the sale agreement, which has your closing date, and your money is held in escrow until the deal finishes.
You’ll pay less for your home as long as you keep your goals in mind and keep a calm head during the process.
What is a Closing Disclosure (CD)?
A Closing Disclosure (CD) from your lender, three days before closing, is a statement detailing closing costs and loan terms.
In the three days you have to review your CD, you should compare it to your Loan Estimate that you received after you applied for your loan. If you don’t know what a Loan Estimate is or just need to review it, you can view a sample version here.
How Long Until the Final Walkthrough?
You can typically do a walk through within 24 hours of closing to check on the home, and you and your agent can check during this inspection that any repairs agreed upon have been done.
You’ll be double checking that everything is in good shape during this inspection. Make sure to:
- Run water at all the sinks and check for leaks.
- Test appliances.
- Check your garage door opener.
- Flush toilets.
- Open and close all the doors.
- Turn on fans and test the garbage disposal after making sure there is no debris inside.
If everything looks good, off to the closing meeting you go!
Your agent will contact the listing agent and try to negotiate for the seller to pay you at closing for repair costs if something is wrong with the house.
In case you have to delay closing to resolve issues in your house, your agent will guide you through the process.
Who Can Come to The Closing?
Who shows up to your closing will vary by state. They could be:
- Your agent
- The seller
- The seller’s agent
- A title company representative
- Your loan officer
- Any involved real estate attorneys
While closings can take place at the title company, attorney’s office, or real estate office for the buyer or seller, some states like California allow electronic closings with remote notarization.
You’ll still have to sign all the paperwork: Deed of Trust, Promissory Note to guarantee that you’ll pay back your loan, and more documents, but it’s worth every second after you close.
How Much Are Closing Costs?
You’ve likely heard others around you vent about unexpected closing costs and other issues with buying a home. Here is what to expect on closing day, so you won’t be complaining too.
Closing costs will differ based on your location and how much your home is worth. You’ll pay most of the closing costs, which are 3-4% of the house purchasing price. For example, you’ll likely pay $9000-12000 in closing costs on a $300,000 house, while your seller will usually pay 1-3% of the house price in closing costs.
Calculators like Nerdwallet’s can help you predict closing costs using your mortgage information.
Closing fees can include:
- Commission for the Buyer’s agent and Seller’s agent
- Loan Application fee
- An Origination fee for processing the loan
- Appraisal fee
- Credit Report retrieval fee
- An Underwriting fee
- Title Search fee
- Property Taxes (pay within 60 days of purchase)
- Recording fee for filing a public land record
While these fees are a pain, at least you’ll only have to pay them one time.
What Do I Need at Closing?
You will need:
- A government-issued photo ID
- A copy of the ratified sales contract
- A homeowner’s insurance certificate
- Proof of flood insurance (if your house is in a flood zone)
- A cashier’s check or proof of wire transfer to cover closing costs and the down payment
Make sure to ask your attorney about additional documents depending on your state or situation, such as separation or divorce papers if your relationship status could affect the closing.
Do I Need Title Insurance?
All lenders require that borrowers have title insurance to protect both of you from others trying to claim the property as theirs.
For example, if the previous owner didn’t pay all of their property taxes, the taxing entity could take the home if you do not have title insurance to show it is your property. Title insurance also works for liens, clerical errors in legal documents, fake signatures, or fake claims from previous owners.
While you can choose the title company, lenders might have a specific title company they work with, so check with your agent for referrals.
Two types of title insurance:
- Lender’s title insurance, which protects the lender and is required.
- Owner’s title insurance, which protects you and covers your interest, which is why it is recommended. You’ll be protected if your insurance company loses a dispute over your title, and your insurance will cover legal fees if you have to defend yourself in court over ownership.
Title insurance will be a one-time cost at closing unlike other insurance like home or car insurance, which are monthly charges. According to ValuePenguin, title insurance typically costs $544 for lenders and $830 for homeowners, but of course the cost depends on the house you buy, your location, and the process.
Should I Be Worried If There Are Last-Minute Problems?
You loan has to be underwritten for approval. Your underwriter has to verify that your income, credit, and debt have remained the same since you were preapproved, and review the property’s appraisal, and then your loan will usually be approved.
You’ll have to address any issues found in underwriting before you can close. For example, you might have to delay closing to raise your credit score if you have maxed out your credit cards recently or obtained a new auto loan, so it is better to hold off on anything that could affect your credit score like a big purchase or overusing credit until after closing on your house.
Can I Relax Now?
Once you’ve crushed that mountain of paperwork and got through the closing, congrats! You finally own a home and can relax with keys in hand.
You’ve put in lots of work to build those relationships with your agent, lender, and other experts that you’ve worked with along the way.
Now you can invest in building new relationships, like with your new neighbors.