Our Most Common Buyer Questions
Buying a home, especially for the first time, can be scary and full of many questions. This is completely natural, expected and important. So to save you some time, let’s answer some of the questions we get most often.
1. Where should I start?
If you’re like most people, then you’re probably wondering where to start. One of the first things you should do is get pre-approved for a mortgage loan. This should always be the first thing you do because it will clear up a lot of questions along the way. For instance, it’ll give you an idea of how much money you’ll be allowed to borrow as well as how much money you’ll need for the down payment and closing costs.Another benefit of getting this done immediately is that it sends a strong message to others about how serious you are about the buying process.
2. Can my credit score get in the way?
Yes, it can. But (take a breath) these credit requirements are not set in stone.
Typically, you’ll need a credit score of at least 600 to qualify for a home loan. But if you’re looking to qualify for a home loan that is backed by Fannie Mae or Freddie Mac, then you’ll be facing a credit requirement of at least 620. And with an FHC loan, it’s a 580.
3. How much money do I need for the down payment?
Thankfully, this one isn’t set in stone, either.
Despite the myth that you need to put at least 20% into your down payment, it largely depends on your own financial standing and the loan program you choose to use. Some programs will allow a 0% down payment, but this will typically come with a higher interest rate during the loan’s lifetime.
The average down payment, according to the National Association of Realtors’ 2018 Profile of Home Buyers and Sellers, is 13% for overall buyers. For first time buyers, the average goes down to 7%. Most people believe that if you put less than 20% down, you’ll end up needing private mortgage insurance. But in the end, it’s completely up to you and what works best with your funds.
4. What’s the difference between a buyer’s market and a seller’s market?
These are words that get thrown around often, and it’s okay to have questions about them. Both of these terms have one thing in common:
If there is little demand for new homes, the market is considered a buyer’s market. When supply is high and demand is low, buyers will be able to take advantage of low home prices.
The opposite of this market is a seller’s market. In this kind of market, the supply is low and the demand for homes is high, allowing sellers to drive up the prices.
You’ll need to be aware of these different markets when buying a home. Always consult your agent before diving into either of these markets.
5.What happens when we’ve closed on a house?
Closing is the last step of the homebuying process, so congratulations! After your closing paperwork has been completed, you will be responsible for the payment on your mortgage loan. You will receive a ton of documents in this period of time, and it’s important to read through and understand all of them so you know what you are signing. You will also be required to show your taxes and proof of your homeowners insurance in this time so that your loan can be finalized and you can make the first payment. But when all is said and done, you’ll get the keys to your new home!
These are only a few of the many questions we get asked on a daily basis, and any that you may have are completely normal and valid. If you still have questions, get in touch with us! We’ll walk you through the whole process and right up to the front steps of your dream home.