Buyer’s guide

To purchase a home, you must get pre-approved or have cash. Let us break down each of the types of mortgage loans that are out there.

FHA Loan – A common loan for first-time home buyers. This loan is a government backed loan that only requires a 580+ credit score and 2 years of employment (doesn’t have to be with the same company). You only have to put down a 3.5% down payment. This means on a $100,000 home; the down payment would be $3,500. Please note: if you are going with FHA, the home has to meet FHA guideline conditions which usually means the home must be in great condition and 100% move in ready. You cannot purchase a fixer upper with FHA. This loan typically has the lowest interest rate.

USDA Loan – A 100% financing loan for rural areas. USDA is also a government backed loan that requires 620+ credit score, 1 year of employment (doesn’t have to be with same company) but it’s for rural development. Depending on the location of the home will determine if you can get this loan. For example, you will not be able to get a USDA loan on a home in downtown Knoxville. The home needs to be out of the city limits. If you are looking for a little more rural living or are not in the financial situation to put down a down payment, this can be a great loan. Please note: if you are going with USDA, the home has to meet USDA guideline conditions which usually means the home must be in great condition and 100% move in ready. You cannot purchase a fixer upper with USDA.

THDA Loan – A downpayment/closing cost assistance loan that attaches to the other loan types (this is not a standalone loan). THDA is a government loan supplement option that is based on your income level. You may be eligible for government funds to help with downpayment, repairs, closing costs and upgrades with this loan. Please note: if you are going with THDA, the home must meet the guidelines of the MAIN loan type.

VA Loan – A 100% financing loan for military veterans. VA loans can be used by a military veteran and typically have very low interest rates. If you are military, you will definitely want to take advantage of this loan. Please note: if you are going with VA, the home must meet VA guideline conditions which usually means the home has to be in great condition and 100% move in ready. You cannot purchase a fixer upper with VA.

Convention Loan – Strongest type of home loan for buyers. This loan is the most powerful loan because it does not need government requirements for the house. This loan can also be used on homes that need major repairs or are not “move in ready”. Most conventional loans start at a 3% downpayment requirement. This is the type of loan that will win the multiple offer bids against the government-based loans. Sellers love accepting conventional loan buyers because they are generally more qualified meaning higher credit score and more downpayment money.

Each of these loans have closing costs which is the money the mortgage company, title company, insurance and taxes receives for processing the loan. Closing cost also includes a year of prepaid homeowners insurance, taxes and HOA fees. This normally averages out to 3-6% of the home value. In a slower market, sellers are more likely to pay these costs for the buyer. However, in a fast market, it’s very hard to get a seller to pay these costs for you. Getting closing cost covered is something we will always try and do within an offer for you but it’s case by case if the seller will accept those terms.

We have worked with several different mortgage companies over the years. We have found the best of the best who will do everything they can to get you financed with none of the crazy hidden fees other lenders hit you with. They are credit experts and give great advice on how to build your credit score to qualify for better rates. We always recommend talking with at least 2-3 loan officers to see who is going to offer you the best deal because their approvals and rates vary company to company. One of the biggest mistakes buyers make in a real estate transaction is they do not shop and talk to multiple lenders. Local mortgage brokers and credit unions are typically the better options. Stay away from the online lenders as they are the worst of the worst.

Make sure to check out our Preferred Lenders page to meet our suggested lenders and get their contact information.

We can help you figure out exactly what you are looking for such as size of home, location, and your budget. We cover a 60-mile radius around the Knoxville area to help you find the right house for you. We can create you a custom portal that automatically sends you all the listings that match your needs straight to your email. As soon as a new home gets listed, you will get the email with all the information. From there, anything you see that you want more information about or want to see in-person just let us know. The average buyer looks at between 5 and 30 houses before finding the right one. We are not in the business of selling you a house but helping you find the right home that works best for you. When we visit the home, we are looking to point out the negatives and the issues the home has to ensure you have as much information possible before submitting an offer. Once you find the right home, we will work on negotiating the best terms possible for you.

Typically, within 5 days, you will need to give your “Earnest/Trust Money”. Earnest money, also known as trust money, is to show the seller that you’re serious about purchasing the home. This is still your money and will apply to your downpayment, closing costs or credited back to you at closing. The amount of earnest money required usually depends on the price point of the home. If you had an inspection contingency in the offer and the inspector finds issues that the seller is unwilling to fix, or you aren’t comfortable with such as major structure issues, we can walk away from the contract and the earnest money will be refunded to you.

Although it’s not required, we HIGHLY recommend getting an inspection. The cost is about $400 to $600 depending on what company you go with. This normally must be done within 7 to 12 days of an accepted offer. Once we get the inspection results, we will review and talk through submitting a repair proposal to start negotiating repairs. If an agreement cannot be made between the seller and the buyer, then the inspection contingency kicks in and you can walk away from the deal and get your earnest money back. Keep in mind, inspectors are always going to note anything that is not perfect or up to today’s standards. For example, if a light bulb is burnt out, they will note it on the inspection report. Inspectors have guidelines they must follow and use those for best practices. These guidelines include everything from building codes to loan requirements.

The mortgage lender will schedule a third-party appraiser that will cost $400 to $700 that will come out to ensure the house is worth what you are paying for it. Let’s say you are buying a house for $500,000 but the appraiser came out and said it was only worth $498,000. We will then go back to the seller with the appraisal and ask them to lower the price to $498,000. This is very uncommon that the house does not appraise for the value, but it does happen. If you are using FHA, USDA, THDA or VA loan types, the appraisal process is very strict as the house condition must meet the required guidelines for the loan. If you are using a conventional loan, the appraisal process just validates the home is worth what you are paying for it and home does not have major issues.

Typically, the day of or day before closing, we will do our final walk through of the home to ensure everything is in the same or better condition and all repairs have been completed, if applicable. We will get a scheduled time to close with the title company once we have a clear to close. We meet at the title company to sign all the documents and CONGRATULATIONS!!! YOU ARE NOW A HOMEOWNER!