By Andrew Bash
If you are buying or selling home in this market you are sure to have plenty of questions. It is common to feel overwhelmed by the laundry list of terms that come with this process. I have put together a list of definitions and explanations of terms that I am frequently asked about. Knowledge is power! The more you know about the ins and outs of real estate transactions, the more prepared you will be for what is likely to be the most important purchase of your life.
Buyer’s Agent, Listing Agent and Dual Agency
Typically, there are two agents involved when you buy a home. The buyer’s agent will represent the home buyer. Conversely, the listing agent represents the home seller. You may have heard of dual agency, which is the instance when there is one agent representing both sides of the transaction. This is illegal in several states including the state of Kansas. It is imperative to understand the real estate laws in your state, especially involving dual agency. If you choose to ignore regulations, you could be inviting a lawsuit or potentially calling into question the integrity of the transaction.
Conventional Mortgage vs FHA Loans
Conventional mortgages are ideal for borrowers with excellent credit. These loans are not backed by a government agency like the Federal Housing Administration (FHA). An FHA loan allows for lower credit scores and can be easier to qualify for than a conventional loan. It is important to remember, however, that conventional loans may allow you to avoid paying mortgage insurance if you are able to make a large enough down payment. The benefit of FHA loans versus conventional loans depends on the unique needs of the borrower.
Speaking of mortgage insurance: If you have an FHA mortgage or put less than 20% down on your home, you will be required to get mortgage insurance. This is important, as it protects the lender. With a conventional mortgage, a lender will require you to pay for private mortgage insurance, also known as PMI, if you put less than 20% down. With an FHA mortgage you’ll pay for mortgage insurance regardless of the down payment amount.
Closing and Closing Costs
Closing is the is the final stage of the transaction. The closing date is decided upon when both parties go under contract. On this date, the property is legally transferred from the seller to the buyer. Closing costs are fees and/or expenses that buyers and sellers may incur to finalize a real estate transaction. These may include, but are not limited to broker fees, appraisal fees, home inspection, application fees, title fees and property taxes to name a few. These fees can be financed into the loan, but if you choose to go this route, you will pay interest on these costs.
These are just a handful of the many important things to keep top of mind when buying or selling a home. That is why it is incredibly important to choose a real estate professional that is knowledgeable, trustworthy, and communicative. At Bash & Co Sotheby’s International Realty, our team will go above and beyond to design an extraordinary experience for you, whether you are a buyer or a seller. We look forward to helping you unlock home!
Bash & Co. Sotheby’s International Realty is an innovative full-service residential real estate brokerage that leverages the latest technology to serve clients in emerging, established, and luxury neighborhoods across the Kansas City area. Follow them on Instagram here and on Facebook here.