FAQs for First-time Buyers You Should Know
Getting Through the Home-buying Process.
Buying a home is no easy feat but with the correct Realtor to help you through the long and arduous process, it can be a whole lot easier. As a first-time buyer, you might be asking what are some common questions for first-time buyers? What should I ask my Realtor? Or what should I ask in general? To help you through it all here are some quick faqs for first-time buyers you should know and in no order.
Know What to Expect
Remember, any successful home-buying experience is all about getting the details right from start to finish. So do check out these faqs for first-time buyers as you go through the process of buying a home with your real estate agent.
Hopefully, these faqs for first-time buyers should help you start the process, save money, and finish up the deal.
Q: When should you start saving for a new home?
A: As soon as possible and early on. There the main costs to consider when saving for a home such as a down payment. A down payment requirement will depend on the type of mortgage you choose and the lender and is one of the most asked faqs for first-time buyers. Some conventional loans usually available to first-time homebuyers with excellent credit allow as little as 3% down.
However, even a small down payment can be tough to save. For example, a 3% down payment on a $300,000 home is $9,000.
Use a down payment calculator to decide your goal, and then set up automatic transfers from checking to savings to begin and do remember this when wondering about faqs for first-time buyers.
Q: What about closing costs and other costs?
A: Closing costs should be kept in mind, too as you ponder over faqs for first-time buyers. These are fees and expenses you pay to finish your mortgage, and they can range from 2% to 5% of the loan amount. You can ask the seller to pay a portion of your closing costs, and you can save on some expenses like home inspections, by hunting around.
Move-in expenses, of course, are part of it and you will need funds after the home purchase. Put away money for home repairs, upgrades, and furnishings.
Know Your Budget
Q: How do I know what I can afford?
A: Figure out how much you can safely spend on a house before starting to look. Again, there are home affordability calculators to help with setting a price range depending on income, debt, down payment, credit score, and where you hope to reside. Be sure to address this as you review faqs for first-time buyers.
Q: Does my credit score matter?
A: Yes. Your credit score will determine if you qualify for a mortgage and affect the interest rate lenders will offer. Get free copies of credit reports from each of the three credit bureaus — Experian, Equifax, and TransUnion — and dispute any errors that may hurt your score. Pay bills on time and keep credit card balances as low as possible. Keep current credit cards open as closing a card may increase the portion of available credit you use, which can lower a score. All of this is another frequently asked faqs for first-time buyers.
Q: What about mortgages?
A: There are a variety of mortgages available with varying down payment and eligibility requirements and typically another faq for first-time buyers.
Conventional mortgages are not guaranteed by the government. Some conventional loans targeted at first-time buyers require as little as 3% down.
FHA loans are insured by the Federal Housing Administration and allow down payments as low as 3.5%.
USDA loans are guaranteed by the U.S. Department of Agriculture. They are for rural homebuyers and usually require no down payment.
VA loans are guaranteed by the Department of Veterans Affairs. They are for current and veteran military service members and usually require no down payment.
Q: What about the mortgage term?
A: You also have options when it comes to the mortgage term and should review when exploring faqs for first-time buyers. Most homebuyers opt for a 30-year fixed-rate mortgage, which is paid off in 30 years and has an interest rate that stays the same. A 15-year loan typically has a lower interest rate than a 30-year mortgage, but the monthly payments are larger.
Q: How about mortgage rates and fees?
A: The Consumer Financial Protection Bureau recommends requesting loan estimates for the same type of mortgage from multiple lenders to compare the costs, including interest rates and possible origination fees. Get the information ahead as you check out more faqs for first-time buyers. Lenders may offer the chance to buy discount points, which are fees the borrower pays upfront to lower the interest rate. Buying points can make sense if you have the money and plan to reside in the home for many years.
Q: What is a pre-approval letter
A: A mortgage pre-approval is a lender's offer to loan you a specific amount under certain terms. Having a pre-approval letter shows home sellers and real estate agents you're a serious buyer. This is a popular question when going over faqs for first-time buyers. Try to apply for pre-approval when you're ready to start looking for a home. A lender will pull your credit and review documents to verify income, assets, and debt. Applying for a pre-approval from more than one lender to shop rates will not hinder your credit score if you apply within a limited time frame.
Be Sure to Hire the Best Real Estate Agent
Q: Why is choosing the right real estate important?
A: A good real estate agent will search the market for homes meeting your needs and walk you through the negotiation and closing process. This is yet another faqs for first-time buyers and an important one. Ask for agent referrals from other home buyers, friends, family, and colleagues. When interviewing potential agents, ask about their experience helping first-time homebuyers, etc.
Q: How do you pick the right type of house and neighborhood?
A: Weigh the pros and cons of different types of homes by your lifestyle and budget when going through the process and learning faqs for first-time buyers. Visit the neighborhood often and observe at various hours to see what is going on.
Q: Are there other options besides building a new home or buying a used one?
A: Yes, another option to consider is buying a fixer-upper — a single-family home most likely needing updates or repairs. Fixer-uppers typically sell for less per square foot than move-in ready homes. However, you may need to budget extra for repairs and remodeling. Be sure to do your homework if you go this route and when going over faqs for first-time buyers.
Home Hunting During Pandemic
Q: What about during this time of COVID lockdowns how do I look for a home?
A: During these lockdowns, hunting for a home is difficult but not impossible, and one of the most faqs for first-time buyers. Make the most of open houses i.e., online 3D home tours are popular amid the COVID-19 pandemic. These tours let shoppers virtually walk through a home any time and look at details regular photos don't always reveal. However, virtual visits won’t allow for those things when you do in-person visits — such as how the carpets, closets, etc. smell — but may help narrow the list of properties to check out. If you can tour a home, listen for noises, detect any odors, and observe the overall condition of the home inside and out. Also, one of the most faqs for first-time buyers is whether to ask about the type and age of the electrical and plumbing systems and the roof.
The Importance of Home Inspections
Q: Should I get a home inspection?
A: Another of the most asked faqs for first-time buyers and the answer is yes. A home inspection is a thorough assessment of the structure and mechanical systems of the home in question. Professional inspectors look for potential problems, so you can make an informed decision about buying the property. Remember standard inspections don’t test for things like radon, mold, or pests. Be sure you know what's included in the inspection and what other inspections you might need. Make sure the inspector can get to every part of the house, such as the roof and any crawl spaces.
Q: Who attends the inspection?
A: Typically, the buyer attends the inspection. By following the inspector around, you will get a better understanding of the home and can ask questions then and there. If you can't attend the inspection, review the inspector's report carefully and ask about anything you don’t understand.
Q: Can I negotiate with the seller?
A: You may be able to save money by asking the seller to pay for repairs in advance or lower the price to cover the cost of repairs you’ll have to make later. This is typically one of the many faqs for first-time buyers You may also ask the seller to pay some of the closing costs. However, lenders may limit the portion of closing costs the seller can pay.
Q: Should I buy home insurance?
A: Your lender will require you to buy homeowners insurance before closing the deal. Home insurance covers the cost to repair or replace your home and belongings if they're damaged by an incident covered in the policy. A usual asked faqs for first-time buyers and yes, it also provides liability insurance if you're held responsible for an injury or accident. Buy appropriate home insurance to cover the cost of rebuilding the home if it's destroyed.