When you are buying a home, condo or a town-home you are not paying your real estate agent to represent you.
The real estate agent you are hiring is going to be compensated by the seller, no matter if that is the(your) agent’s listing or another Real Estate agent’s listing. That money comes out of the sellers closing costs.
As a real estate buyer, you have to pay three things.
- Your part of the Escrow Fee – Typically 1% of the total amount you are paying for the home, condo or townhome.
- Title Insurance – Typically 1% of the total amount you are paying for the home, condo or townhome.
- The Lender’s Fee – Sometimes referred to as the “origination” fee. This varies greatly. Some don’t change anything, or so they say, but they really do – and some let you know upfront it will be 1% or more.
The Lender is typically the wild card in the formula reference to your closing costs.
Additional Resources: See more detailed intel about Closing Costs and you!
Questions to ask the lenders you interview:
1. Will you give me a “full” copy of my credit report, without obligation, after you run it?
-Some will tell you they cannot. It’s against the agreement they have with the vendor that gives them access to pull credit. While I cannot tell you if this is factual or not, I don’t know their vendor, I can tell you there are plenty of reputable lenders that will do it without argument.
2. Will you generate for me a Good Faith Estimate (GFE) for my Maximum qualification amount and another for 100K less?
-This too should not be an issue. Some lenders will say you need to have a home, condo or townhome identified, before they can generate a good faith estimate because they don’t know things like HOA fee’s, Mello Roos, Special Assessments, etc… Tell them to make one up and to keep it the same for each GFE they generate.
3. Ask them to put all promises in writing.
-Emails are the best format. If real estate lender, or even the realtor, is promising you something that seems too good to be true, such as adjusting the interest rate if it reduces during the time in which you are closing the home you are buying, get it in writing.
This should keep you safe. Make sure you ask your agent if there are other “specific” things you should be asking the local lenders within the area you are buying real estate in.
It could be that a majority of the offers submitted on real estate in your particular city of interest all have Pre Approval Letters with Full Underwriter Approvals too. This will make a big difference if you go in with only a pre qualification letter in having your offer considered. The Local Real Estate agents rule the roost – ask them and thanks for reading.