Sell My House House Buying 4 — Questions and Answers
Question 1: What does 'as-is' mean when a seller lists a property that way?
- The home comes fully furnished
- The seller will not make repairs or credits for defects found (Correct answer)
- The buyer can move in immediately after closing
- The price is non-negotiable under any circumstances
Correct answer: The seller will not make repairs or credits for defects found
An as-is listing signals the seller will not repair defects or provide credits, though buyers can still inspect and back out if issues are unacceptable.
Question 2: What is private mortgage insurance (PMI), and when is it typically required?
- Insurance for the buyer's personal belongings, required on all loans
- Lender protection insurance required when down payment is less than 20% (Correct answer)
- Title insurance required by the lender at closing
- Flood insurance mandated by FEMA in high-risk areas
Correct answer: Lender protection insurance required when down payment is less than 20%
PMI protects the lender if the borrower defaults and is typically required on conventional loans with less than a 20% down payment.
Question 3: Which type of deed provides the buyer with the highest level of protection against title defects?
- Quitclaim deed
- Special warranty deed
- General warranty deed (Correct answer)
- Bargain and sale deed
Correct answer: General warranty deed
A general warranty deed guarantees clear title for the entire history of the property, not just the seller's period of ownership.
Question 4: A buyer is purchasing a condo. Which additional monthly fee will they most likely pay beyond the mortgage?
- Transfer tax
- Homeowners association (HOA) fee (Correct answer)
- Seller concession
- Survey fee
Correct answer: Homeowners association (HOA) fee
Condo owners typically pay monthly HOA fees that cover shared building expenses like maintenance, amenities, and sometimes utilities.
Question 5: What does it mean when a home appraises below the agreed purchase price?
- The deal automatically cancels
- The lender will base the loan on the appraised value, creating a gap the buyer must cover (Correct answer)
- The seller must immediately lower the price to match
- The buyer receives a refund of the difference at closing
Correct answer: The lender will base the loan on the appraised value, creating a gap the buyer must cover
When the appraisal comes in low, the lender caps the loan at appraised value, leaving the buyer to cover the shortfall in cash, renegotiate, or walk away.
Question 6: What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage (ARM)?
- Fixed loans require PMI; ARMs do not
- Fixed loans have one set rate for the loan term; ARMs have rates that change periodically (Correct answer)
- ARMs always start with higher rates than fixed loans
- Fixed loans are only available for primary residences
Correct answer: Fixed loans have one set rate for the loan term; ARMs have rates that change periodically
A fixed-rate mortgage has the same interest rate for the entire term, while an ARM starts with a fixed period then adjusts periodically based on market indexes.
Question 7: Why might a buyer request the seller pay closing costs as part of the offer negotiation?
- To avoid needing a pre-approval letter
- To reduce the cash needed upfront at closing (Correct answer)
- To eliminate the need for a title search
- To waive the appraisal requirement
Correct answer: To reduce the cash needed upfront at closing
Seller-paid closing costs (seller concessions) reduce the buyer's out-of-pocket cash needed at closing, making homeownership more accessible.
Sell My House House Buying 4
What does 'as-is' mean when a seller lists a property that way?