1. What is the first step in buying a home?
You know the saying, "Don't put the cart before the horse," well that's important to remember when it comes to buying a home. You don't want to start looking for a house until you have gotten to sit down with a lender and discuss what the bank/lending broker will qualify you for. If you fall in love with a house that's $250,000 and come to find out you're only qualified for $200,000 you can get your hopes crushed and waste a lot of time. Don't start the process on the wrong foot and make sure the numbers line up. For a list of reputable lenders we have years of experience with, contact us!
2. Must I have perfect credit to buy a home?
Lenders and banks come by the hundreds of thousands and all though there are a few loan options, a lot of lenders can work with credit scores down to the mid 500's. Give us a call to connect you with the right lender who can help you get approved. There is a lot of factors that go into approvals, but your credit doesn't have to be a sore thumb during the process. However, you will be doing yourself a favor if you connect with a lender that will help guide you to at least get those numbers in the 600's. A better score will lower your interest rate.
3. How much money does it take to buy a home?
There is a lot of cost that goes into buying a home, and that includes upfront costs. One of the mandatory ones is an appraisal. In some cases you will also be required to have a termite inspection. If you are getting a mortgage, the home will have to appraise and possibly get a letter stating there are no termites in the home. Termite inspections can range between $25-$175 dollars. An appraisal can range from $300-$700 dollars. Aside from your down payment, you then need to pay for closing costs. And NO, they are not the same thing. Closing costs can range anywhere between 3-6% of the purchase price. In certain markets, this can be negotiated for sellers to cover by rolling into the offer price, but whether that decision is smart to do or not when it comes to landing your dream home will need to be discussed with your agent.
4. Do I really need 20% down payment to buy a home?
Not at all! An FHA loan only requires 3-3.5% while a conventional only requires 5%. There are a lot of programs that can potentially help you with down payment assistance or be 0% down mortgage. USDA and VA loans are the most popular 0% down programs, but there are others. If you are a policeman/woman, or nurse, doctor, EMT, EMS, etc, there is a loan you may qualify for that would assist with your down payment (not a permanent loan so check if available). If you qualify, this can take a big chunk off the amount of cash you have to bring to the closing table.
5. Why do I need to hire a real estate agent?
For starts, when buying a home, 99% of the time the buyer's agent gets paid by the sellers. That random 1% can be for odd circumstances. So you're getting to use the services of a real estate agent for free. Having a real estate agent on your side means you'll get to see homes that aren't as readily available on public searches, you avoid outdated listings and scammers (there are lots of them), and you have protection and guidance when it comes to navigating the legalities of contracts and buying a home. The listing agent works to protect their seller, not the buyer, and they do not reduce the commission if there is not a buyer's agent. Why wouldn't you want an awesome negotiator working to ensure you get the best from the transaction? For FREE!
6. Can I buy a home and sell my current home at the same time?
Yes, you can—BUT, it's the real estate equivalent of walking a tightrope. On the one hand, if you buy a home before you sell the one you're in, you're overextended financially and could hurt your credit; if you sell before you buy, you might need to rent awhile before finding a new place which means moving twice. But there are ways to do both at once, and one option is to have a “sale contingency" in your contract. This means you only agree to buy a home if you can sell the one you're in. The only downside is if your seller doesn't agree (which is possible if they want the timing set in stone). In a seller's market there are many people buying who do not need this contingency so you could be fighting an uphill battle. Speak to your Realtor about your specific location and your specific situation. Your lending professional will also need to be involved with this decision.
7. Should I get a home inspection?
Most Realtors unequivocally say yes, yes, and YES! A home inspector looks into the condition of the roof, electricity, heating and air, plumbing, foundation, etc etc. Ensuring these things work prevents you from paying to fix them in the future. If some things are not up to par, you may be able negotiate with the seller to get those fixed before you sign the paperwork.
8. Can I back out if I change my mind?
While buyers can always back out of a deal, doing so without good reason may forfeit their earnest money (the cash put down to secure the offer, typically around 1%-2% of the home's price). But there are some ways to back out with your earnest money in hand. "Contingencies" can be used as loopholes. For example, upon an unsatisfactory home inspection during an "Option Period", the buyer can ask for their deposit back.
9. I want a good deal; Can I offer less than the list price?
As a rule of thumb, knocking 5% off the list price won't insult a seller and should yield a response. You never want to send a "low-ball" offer to a seller. Even if they were able to reduce the price some, they will opt not to out of "principle". The bottom line is, you never know how low a seller will go. They have different motivations for selling. If the sellers are eager to move, you could luck out and score a deal, which is a bit more prevalent in a buyer's market. The main goal should be a win-win situation for all involved.
If you do not see the answer to your question, please contact us, we will be thrilled to help you!