Marin County Buyer Frequently Asked Questions (FAQ)Below is a list of common Frequently Asked Questions by buyers in Marin County. If you have any questions that you do not see on this list, please contact us and we will get back to you with an answer. Many questions are also answered in our blog.
Why should I buy, instead of rent?There are many reasons to buy a home instead of rent. These reasons include:
- Pride of Ownership
- Mortgage Interest Deductions
- Property Tax Deductions
- Capital Gain Exclusion
- Preferential Tax Treatment
- Mortgage Reduction Builds Equity
- Equity Loans
Should I use a real estate broker? How do I find one?Marinrealestate.net has created a dedicated section to this question. Many of your questions will be answered here: How to Choose a Realtor. For more detailed information, please contact us.
How do I find a lender?Much like finding a real estate agent, finding a lender is an important step in buying your home. As with a real estate agent, it is best to use all of the resources available to you including:
- Friend recommendations
- Office awards and accolades
- Real estate agent recommendations
- Internet recommendations
- Contact us for a Marin County mortgage broker recommendation
How much home can I afford?To determine your maximum mortgage amount, lenders look at:
- Your credit history
- Available cash for down payment and closing costs
- Your income
- Your existing debt and financial obligations
- Job History - 2 years in same line of work
- Your maximum mortgage amount, plus your planned down payment, equals your home-purchase price range.
How important is my credit?A history of paying monthly payments on time indicates you are likely to make mortgage payments on time. Your credit score, (e.g., a FICO score) will be a factor in the kind of mortgage program for which you may qualify but historical credit problems does not always mean that you can’t get a mortgage.
Your credit history can also affect:
- The amount required for a down payment
- The amount of money you can borrow in relation to your income
- The interest rate you are offered
How much do I need for a down payment?A typical down payment in Marin County is 20-25% of the homes value but in today’s environment some homebuyers bay be eligible for down payment assistance and you may be able to buy a home with very low or no down payment. However, loans with down payments of less than 20% typically require mortgage insurance.
Should I wait until the market goes down?It may go down some more but there is no guarantee the home you like in the area you want will be available. Buy what you like and plan to keep it for 3 years and you will be ahead between the write-off on taxes and your peace of mind you receive from being settled.
What are and how much are closing costs in Marin County?Generally, closing costs in Marin equal between 1%-2% of the home purchase price.
Closing costs vary based on a variety of factors, but they usually include the following:
- Lender fees: Your mortgage company may charge for expenses related to making the loan, including an appraisal fee, a credit report fee, origination points, and discount points.
- Third party fees: Charges for services not provided by your lender often include the settlement fee, title insurance, and attorney’s fees.
- Prepaid items: This is the largest closing cost. Certain mortgage costs must be paid to your lender in advance. The most common of these are pre-paid interest, hazard insurance, and deposits to set up an escrow account. Some of these fees can be financed.
How large a loan can I be approved for?Lenders use a variety of items to determine your loan eligibility and your debt-to-income ratio, these factors include:
- Your income, the type and security of your job
- Whether you are borrowing on your own or with someone else
- Your savings and outstanding loans
- Your credit history
- Whether anyone will act as guarantor by agreeing to repay the loan if you are not able to
- The value of the property you want to buy.
What is the average mortgage size and down payment in Marin County?There is no typical amount of down payment. The mortgage amount that you qualify for and the monthly payments you feel comfortable with help to determine your down payment. Also, your current age and earning potential can be a factor. Currently at least 20-25% is what the banks like to see but many lenders will work with as little as 3%.
What will my mortgage payment include?Usually your monthly mortgage payment is made up of four amounts - often referred to as PITI:
How does an escrow account typically work in Marin?An escrow company is attached to a title company in this area and it is a neutral depository for your transaction. They are the third party who handles the legal transfer of all funds and loan documents associated with a transaction. Fees are on a sliding scale and first time home buyers receive a discount.
Which type of loan is right for me?The best way to match your needs to the perfect loan is to work with an experienced mortgage specialist. Ask your advisor for a Good Faith Estimate (GFE) to get an idea of the type and amount of loans that they offer. Please contact us for a recommendation or review our [Mortgage Section] for clarification on different types of loans.
When I find the home I want, how much should I offer in this market?There is no all-encompassing answer to this question. It is best to speak with your real estate professional regarding your specific situation. Please feel free to ask us our opinion about any specific home or area in Marin County. Our experience throughout previous Marin real estate home pricing cycles will help you in pricing your offer. When your agent or broker is pricing your home, make sure to ask the following questions:
- What are comparable homes asking price and historical selling prices?
- How is the condition of the home?
- How long the home has the home been on the market?
- Have there been any recent price reductions?
- How much you can afford?
- How much you really want the home?
What happens if my offer is rejected?Offers are often rejected but a rejection is often an open invitation to negotiate. If you chose your real estate broker wisely they will be an enormous help here. More money is not always the only option; occasionally you can ask the seller to cover some of the expected repairs and closing costs and incorporate that into another offer. Negotiations often go back and fourth several times before a deal is made.
What is “Pre-Approval”?“Pre-approval” means that you have met with a loan officer, your credit files have been reviewed and the loan officer believes that you can readily qualify for a given loan amount with one or more specific mortgage programs. The lender will them provide you with an approval letter which will show your buying power. See our section on "The Home Buying Process” for more information.
Will I have to pay for Private Mortgage Insurance (PMI)?Private Mortgage Insurance (PMI) provides your lender with a way to recoup its investment if you are unable to repay your loan. PMI is usually required when the mortgage amount is higher than 80% of the home’s value.
Should I pay discount points / Should I “buy down” my rate?Discount points are prepaid interest, which you can pay to your lender at closing in exchange for a lower interest rate on your mortgage. Your decision to pay discount points depends on two factors, how long you plan on living in your home and your current financial situation. Please discuss this with your mortgage broker, real estate broker or contact us for more information.
Should I choose a fixed-rate or adjustable-rate loan?Most mortgage loans have either a fixed interest rate or an adjustable interest rate. Fixed-rate mortgages have an interest rate that never changes and your payments remain stable throughout life. As the name suggests, adjustable-rate mortgages (ARMs) have an interest rate that changes at regular intervals based on a pre-determined formula that is based on a market index.
Generally it is best to select a fixed-rate mortgage when you plan to stay in your home long term and/or rates or low and it is best to select an ARM if you plan on staying in your home short-term and/or rates are relatively high.
For help deciding which option is right for you, check GMAC’s Fixed vs. Adjustable calculator