Frequently Asked Questions When Buying a Home
Buying a home-a smaller home, a newer home, a bigger home, a nicer home. Just like selling a home is bound to cause stress and anxiety, so is purchasing a home. Many questions come to mind to those ready to enter the home buying process. You may be surprised to know that your questions are most likely similar to other home buyers and you’re not the only one with worries.
Is buying a home the best thing for me?
There are several things to consider when buying a home, and it’s not necessarily for everyone. There are a few things we suggest thinking about before jumping into your first mortgage and home buying experience.
Pick another homeowner’s brain for estimated maintenance costs, responsibilities, and additional tasks when owning a home.
Check your credit score using Experian, Equifax, or Transunion. Lenders typically like to see a credit score above 600 for new mortgage loans. If your credit score is lower, use your reports to find ways to raise your credit score prior to applying for a pre-approval.
Where are you headed ?
Think about your future. What are you thinking for yourself in the next few years? If you’re planning to travel the world, move across the country, or just don’t intend to be in the same place for over three years, buying might not be your best option.
Interest rates are low, often resulting in lower mortgage payments than rent payments. If you’re locked into a low interest rate, you can save money over time, and make money as home values increase.
Overall, there are a lot of things to think about when purchasing a home. Jumping into the home buying process before you’re ready can result in several issues including relationship or marital stress, financial hardship, and even foreclosure.
Benefits of Homeownership:
- Financial gains and appreciation of home value
- Tax breaks
- Pride, confidence
Does owning a home sound appealing? Ask yourself the following questions. A steady job, income, and positive credit history are important to lenders.
- Do I have a consistent job, and have I had this job for the last two to three years?
- Is my current income reliable now and for the foreseeable future?
- Do I have a positive history when paying bills?
- Do I have money saved for a down payment?
The first step in the home buying process is to visit a bank for pre-approval.
How much can I afford?
Once you’ve decided to buy a home, you will need to be pre-approved for a mortgage loan. Find a bank you are familiar with get started on the application for pre-approval. The pre-approval process gives you a maximum amount of money for a mortgage amount, given your income and other various qualifications.
Keep in mind that the monthly mortgage payment does not include utilities, home maintenance, and other home needs. Our mortgage payment calculator is helpful when buying a home and drafting budgets for potential living circumstances.
How much cash do I need for a down payment?
Typically, 3% to 5% down payment is required for most loans. FHA loans now require 3.5% loans. There are a few programs that help buyers who don’t have that cash up front, particularly for certain living areas or groups of people.
What are some tips for me while looking at different homes with my realtor?
- It’s appealing to see a tidy home. We all want to view a nice, clean, and staged home. However, looks aren’t everything. Be reasonable. A few dings on a wall need touch up paint, not a huge renovation. Listen to your realtor when it comes to this, so you have a logical understanding of what would need to be done to the house once you move in.
- Be cautious when sharing your opinion about homes, particularly at a prospective house. You are likely to be comfortable with your realtor and want to give your honest opinion. In the case a homeowner is at the house when you visit and overhears negative comments, this could hurt you later in negotiations.
- If you like a home, don’t wait. If too much time passes, the seller might not take you seriously.
- The seller CHOOSES the buyer, unlike other purchases you’ve made in the past. In this case, trusting your realtor is important, so you can present the best packaged offer including price, contingencies, etc.
- Talk to the listing agent only with your realtor present. Unknowingly sharing incorrect information is hurtful to the buying process, and guidance from your realtor is necessary.
This is just a portion of commonly asked questions from those looking to buy a home. It can be an intimidating process and a bit scary! We are here to answer questions about homeownership, and help you make the best decision for you and/or your family. Contact us and we will give you the information that you need.