Buying a home can be one of the most exciting and nervous times in your life. It’s a lot of money to buy a house and when we are talking about this much money, it’s bound to make people a little skittish.
My job is to make you feel as confident, comfortable, and knowledgeable as possible throughout the entire process. Knowledge really is power and the more you know and understand about the process, the more confidently you can buy.
Here are some of the most common questions most first time home buyers have.
#1. What does it cost to buy a house?
The buying process is different than the actual purchase price of the home. For all the parties involved, there are fees and costs, which all get lumped into one big title, the closing costs. These might include courier fees, appraisal fees, lender fees, points, commissions, inspections and other miscellaneous details. While everyone’s purchase is different, you can roughly estimate that the cost of buying a house is between 1% and 5% depending on the purchase price of the house.
Once you find a home you love and apply with a lender, such as myself, will give you a good faith estimate so you have a better idea of all the costs involved and how much you’ll need to come up with, in order to buy the house. Nothing is really set in stone yet, so this is a good way to determine exactly how much you’ll be paying for the house right off the bat.
#2. How do I know I’m ready to buy a house?
One of the best ways to know if you’re ready to buy is if you plan on being in a house for several years, you have a good amount built up for the down payment and/or earnest money deposit, and you’ve had a stable job and pay your bills regularly. If at any point you need to work on one of these areas, it’s good to know that now, so that you can plan ahead and be ready when you do want to buy.
#3. How much down payment do I really need?
This is the good news; there are literally hundreds of different programs and options out there for first-time homebuyers and even repeat buyers. Whether you are saving for your very first home or need a little bit of help as a repeat buyer, I have access to not just one bank and one lender, but literally dozens of different programs that could potentially work for you. Our County, city, and state may have down payment assistance programs that can help you get into a home so that you start building equity right away. FHA loans require 3.5% of the purchase price of the home and conventional is anywhere from 1% down to the traditional 20%. Don’t let that scare you away; because there are so many different options, the best thing to do is to discuss your current financial situation with your lender and let’s see what works for you both now and in the future.
#4. Should I buy a home at an auction or a fixer-upper?
This is purely my opinion, but I feel as your first home, you should look for a property that is move-in ready. It’s easy to start with a home that already put together and ready to go. Once you’ve played the real estate game for a few years then you can move on to auction properties, foreclosures or short sales, or even homes that need a little bit of work. All first-time homebuyers think they can get a great deal by buying a fixer-upper, and once they are in the home, realize how much work they really have to do. Trust me, nearly every first-time homebuyer that buys a fixer-upper regrets it. Start with the home that you can easily maintain, especially if you’ve worked with a landlord in the past who’s done all the repairs for you. Another great idea I have been helping first-time homeowners with, in the right markets, is purchasing a duplex. You live in one unit and rent out the other!
#5. How do I know how much home I can afford?
This, again, is one of the most common questions and it should be one of your first questions. Simply entering your income on a mortgage calculator online, will not give you an accurate look into your financial future. It’s best to have the lender look at all of your assets, liabilities, income, and debts to determine how much you can afford in a monthly mortgage payment. When we multiply that by the length of the loan, we can determine a good price range in which to look. I also tell first-time homebuyers to not max out their budget. Try to look for homes at least 10% less than their maximum budget. This will give them a little bit more wiggle room with their budget throughout the month.
#6. How long does it take to buy a house?
On average, from the time you make an offer, to the time your agent hands you the keys, is anywhere from 25 to 45 days. Things can change, dates can get extended, but this is the norm. Most real estate agents try to wrap things up in about 30 days, but because there are so many parties involved, dates can get pushed around quite frequently.
However, once you make an offer, you set the closing date and the date can either be negotiated, agreed to, rejected, or changed if need be. But don’t worry, chances are you’ll have a really good idea of when your property will close within a day or two.
This is just a quick snapshot of a few of the most common questions first-time homebuyers have, but if I didn’t answer your question here please give me a call. I’d love to talk with you about affording a home, buying a home or connecting you with real estate agents in your area, inspectors or anyone involved in the real estate process.