Buying a Home in Louisville: Frequently Asked Questions

Once an offer is submitted on a property, how is my offer evaluated?

A number of criteria are considered when evaluating offers from prospective purchasers. These include, but are not limited to, net funds received  after deducting brokerage commissions and sale expenses, and payment terms  considered in light of the applicant's credit worthiness and ability to perform.

Is it a Bad Idea to Buy From "FSBO's"? (For Sale By Owner)

Buying from FSBO's can cause you a lot of extra work and time. This is the reason why real estate agencies exist, to make it easier and faster for you. For most buyers, and especially first time buyers, this is a great inconvenience. Unless you have your own broker, you will have to do all the face-to-face negotiations, pay for an attorney to finalize the paperwork, find your own financing options, and you may have to pay for a building inspector to come and look at the property before you commit. Your agent may be able to contact the owners and do the negotiating for you.

What is an "earnest money" deposit?

A serious buyer will put down an "Earnest Money Deposit" as a show of good faith. This shows the seller that you are "earnest" in your interest to purchase the property.

How can I make my offer stand out against competing buyers?

Being pre-approved for a mortgage gives you a distinct advantage when making an offer on a property. A seller is more likely to accept an offer when they know you will not have a problem getting a loan.

What happens after I present my offer?

Once your offer has been presented, the seller has three options. They can accept the offer as it was written, they could counter-offer with a price and terms that are more acceptable to them, or, if the offer is completely unacceptable, they can reject it.

What happens to my deposit if my offer is accepted?

Once all parties have agreed to a price and terms and have signed the Offer to Purchase agreement, the deposit is placed in the listing properties escrow account, where is stays until the closing. The deposit is usually counted as part of your total down payment.

What happens to my deposit if my offer is rejected?

If the Seller rejects your offer outright or if all parties cannot agree on price and terms, the deposit is returned to you

What is a final walk-through?

A final walk-though is an opportunity to for the buyer to walk through the property and make sure everything is the way you agreed in the Purchase and Sale Agreement. Any work that was to be done before the closing should be completed at this point, and if the property is to be delivered vacant, any tenants should have moved out. If there is a problem and things are not as you agreed, then arrangements can usually be made at the closing to remedy the situation. The final walk through is usually done right before the closing.

What happens at the closing?

At the closing, the buyer will be required to sign a mortgage, and a number of other legal documents. The seller will sign a deed, and several tax documents. Once you've passed papers, the buyer will be given the keys, and then own the property.

Is a termite inspection required?

For conventional loans, some lenders will require a termite inspection. All government loans require a pest inspection on any structure that is ground level or of total wood construction (including condos).

Cash buyers do not need a termite inspection, but it is recommended.

What is the Mortgage Good Faith Estimate?

The Good Faith Estimate (GFE) discloses estimated costs associated with your mortgage transaction. The GFE, by Federal law, estimates the lender's charges along with the local closing agent's charges and fees. The GFE also includes estimated amounts for real estate and property taxes and homeowner's insurance.

Why is private mortgage insurance (PMI) required?

Private mortgage insurance (PMI) is an actual insurance policy that the lender takes out to protect them if the borrower defaults on the loan. This protects the lender and at the same time, enables buyers with minimal down payment the opportunity to purchase a home. PMI is usually required for loans that are greater than 80% of the property value. Once 20% or more of equity has been achieved in a home, you can apply to have the PMI removed from most loans.

What is FHA?

FHA assists first-time buyers and others who might not be able to meet down payment requirements for conventional loans by providing mortgage insurance to private lenders. It also insures loans for home improvements and buying manufactured (mobile) homes. This is done through the Federal Housing Administration (FHA), a branch of HUD which works through local mortgage lending institutions to provide Federal mortgage and loan insurance for homeownership and the construction or improvement of affordable housing.

What are the Benefits of a FHA Mortgage?

The FHA and HUD were developed to help homeowners buy with low down payments. These programs ensure payment to lenders in the case of foreclosure, so the lenders can feel safe to make loans up to 97% of the property's value. The government is not providing the loan, just insuring it, so you can go with a local lender who deals in FHA mortgages.

Where do I go to get a Mortgage Loan?

You can find help with a mortgage loan at some of the following:
Savings Bank
Commercial Bank
Savings and Loan Institution
Mortgage Bankers
Credit Unions

What's so great about VA Mortgages?

No Money Down!! All you have to do is be able to carry the payments as with all mortgages. You can get VA loans for the entire appraised value of a property.

US Armed Forces veterans with a discharge "other than dishonorable," and one of the following:
180 days active duty between September 16, 1940 and September 7, 1980
90 days service during a war (Korean, Vietnam, and Gulf conflicts count)
Two years service after September 7, 1980.
Eligibility never expires. Once the first one is paid off, another one may be taken out.

How much house can I afford?

Since most prospective home buyers do not wish to set themselves up for financial ruin, it is important to determine how much house you can afford before getting too far into the house hunting process. The two most important questions to answer are:
How large a mortgage do I qualify for, and at what rate and terms?
How much do I feel comfortable spending each month?

Lenders determine the answer to the first question, while you must determine the answer to the second question.
See our mortgage calculator for more information.

What is KHC?

Kentucky Housing Corporation, created by the 1972 General Assembly, is a self-supporting, public corporation of the Commonwealth of Kentucky administratively attached to the Finance and Administration Cabinet. A portion of KHC funds are derived from the interest earned through the sale of tax-exempt mortgage revenue bonds. From these proceeds, KHC has made homeownership possible for over 52,000 low- and moderate-income Kentucky families. KHC also operates through the receipt of fees for administering federal programs including rental assistance that makes safe, decent, affordable housing available to more than 20,000 low-income Kentuckians. Other programs additionally offered by KHC include rental housing production financing, homeownership education/counseling and a variety of rental assistance, housing rehabilitation and home repair initiatives

How do I find out how much my closing costs will be?

Once you've applied for your mortgage, your lender will provide you with a Good Faith Estimate of Closing Costs. This will give you a good idea of how much you'll be expected to pay at the closing. It will also explain the fees in writing so you know exactly where the money is going. The final numbers at the actual closing may be slightly higher or lower, but the original estimate is often pretty accurate.