Real Estate Questions, Answered

Practical answers to common real estate money questions - rising mortgage payments, negative rental cash flow, cap rates, seller concessions and reserves.

These are the glossary's question guides. Browse every question by topic in the Questions library →

  • Why did my mortgage payment increase?

    On a fixed-rate mortgage, the usual reason is escrow: your property tax or homeowners insurance went up, so the servicer raised the monthly escrow deposit and may be collecting a shortage from last year. Other causes are an adjustable rate resetting, a temporary buydown or interest-only period ending, or fees. Your annual escrow statement or payment-change notice shows which.

  • Why is my rental cash flow negative?

    Negative cash flow means the rent you collect does not cover operating expenses, debt service and reserves. Split the problem in two: if net operating income is positive but smaller than the mortgage, financing is the issue; if NOI itself is weak, rent, vacancy or expenses are. Each has different fixes, from raising rent at renewal to appealing a tax assessment or restructuring the loan.

  • Is a higher cap rate always better?

    No. A higher cap rate means more net operating income for each dollar of price, but markets price risk into cap rates. Properties with less reliable tenants, higher turnover, deferred maintenance or weaker locations usually trade at higher cap rates. Compare cap rates only between similar properties, and check whether the income behind the number is real and sustainable.

  • Can seller concessions cover closing costs?

    Yes. A seller can agree to pay some or all of your closing costs and prepaid items as a concession, up to two limits: your loan program's cap on interested-party contributions and your actual costs. Concessions generally cannot pay your down payment or be taken as cash, and any amount above the limits is lost or must come off the price.

  • How much should I budget for vacancy and maintenance?

    Budget three separate amounts: a vacancy allowance from how many weeks a year the unit is likely to sit empty, a maintenance allowance for routine repairs, and a capital reserve for replacing big components such as the roof and furnace. Building each from the property's own condition and local turnover is more reliable than a single percentage, which can understate costs on older homes.

  • How much below asking price should I offer?

    There is no standard percentage. Start from what comparable homes actually sold for, adjusted for condition, not from the asking price. If the asking price is above that evidence, or the home has sat on the market, an offer below asking is reasonable; if it is priced at or below the comparables and drawing interest, offering below asking risks losing it.

  • Is a 6% cap rate good?

    It depends on what you compare it with. A 6% cap rate is reasonable for a stable property in a strong location if similar properties sell near 6%. It is weak if similar buildings trade at 7% or if your mortgage costs more than 6%, because borrowing would then lower your cash return. Judge it against the market, the risk and your financing.

  • How long does it take to close on a house?

    A financed purchase usually takes several weeks from accepted offer to closing, and a cash purchase can close faster because there is no loan to underwrite. The contract sets the target date; the appraisal, underwriting conditions, title work and the required review time for the Closing Disclosure decide whether you hit it.

  • Should I sell my house now or wait?

    Waiting makes sense only if the price you expect to gain is larger than what holding the home costs you meanwhile - mortgage interest, property taxes, insurance, maintenance and, if you have already moved, a second housing payment - and you can absorb the risk that prices fall instead. If you need to move, have equity to unlock or face rising holding costs, selling sooner usually wins.

  • How much should I put down on a house?

    Enough to qualify comfortably while keeping an emergency reserve after closing. Twenty percent down avoids private mortgage insurance on a conventional loan and lowers the payment, but it is not required; many buyers put less down and pay PMI until their equity reaches the point where it can be removed. Draining savings to reach 20% can leave you exposed to the first repair.

  • How much house can I afford?

    Work out two numbers. The lender's limit comes from your debt-to-income ratio: your total monthly debts, including the new housing payment, divided by your gross monthly income. Your comfortable budget is usually lower: the full monthly cost - principal, interest, taxes, insurance, HOA and upkeep - that still leaves room for savings and surprises. Shop below the smaller of the two.

  • How much contingency should I budget for a renovation?

    Set aside a contingency on top of the contractor's price, sized to the risk of the job. Cosmetic work with nothing hidden needs a small cushion; opening walls, floors or an older home's plumbing and wiring needs much more. Many renovators plan on roughly 10% to 20% of the construction cost, and keep it separate from upgrades they choose along the way.

  • What does a new construction home really cost?

    More than the base price. The total usually adds a lot premium for a better homesite, design-center upgrades, structural options, closing costs and items a resale home often includes - window coverings, appliances or landscaping. Builder incentives can offset some of it, but compare the all-in cost with similar resale homes before you sign.

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Definitions are provided for general educational purposes and are not financial, legal, tax, or real estate advice. Rules vary by transaction and location - verify important decisions with qualified professionals.