First-Time Homebuyers: Frequently Asked Questions
If you’re a first-time homebuyer, you probably have a lot of questions. After all, you’ve probably been told that buying a home is one of the most significant investments you’ll ever make. However, you want to be wary of making mistakes.
Here’s a list of frequently asked questions that first-time homebuyers ask and their answers.
1. Do I require the services of a real estate agent?
It is possible to purchase a home without the assistance of a professional real estate agent. It’s just a lot more difficult to do on your own. Professional real estate agents are not only trained to assist purchasers, but they are also current on market situations, real estate procedures, and the closing process. They have access to beneficial industry contacts such as bankers, appraisers, and other service providers who may assist the purchase process run more easily. A skilled real estate agent will gladly represent a buyer during the first offer process, price negotiations, and any other stage of the home-buying process.
2. What kind of house can I afford?
Speak with a bank or lender to discover a range of home prices that you might be approved to buy-in. Before issuing a preapproval letter, lenders will assess how much a buyer earns, how much debt they have, any assets they own, and their credit history, assuming their financial situation does not radically alter during the home-buying process.
Learn more: 7 Fortunate Signs To Buy Your First House
3. How can I tell if I’m ready to buy a house?
While there is no sure sign that you’re ready to buy a home, there are a few indicators that it may be the right time. If you enjoy your current location and want to stay for a while, you may be ready to settle down and purchase a home. Having a solid savings plan in place will allow you to pay down debt and accumulate a small nest egg. If you’re handy around the house, you may be prepared for the maintenance that comes with owning a property.
Related: The Complete Homebuying Guide
4. Can I buy a house with a fair credit score and little or no money down?
Almost every homebuyer who wants to enter the real estate market can find a lending package that suits their needs. The amount a buyer is approved to buy and their financing rate may be influenced by their credit score and down payment. However, there are usually mortgage options to suit a variety of financial situations.
5. Why should I buy rather than rent a home?
It is cost-effective to own rather than rent a home. When you buy a home, you’re making an investment in your own future but when you rent, you assist your landlord in making an investment in his or her future! There are also financial benefits to owning a home, such as tax deductions and home equity.
6. What exactly is PMI?
PMI is a fee that a buyer pays in addition to their principal and interest to refund a lender in the event that they default. This fee is frequently included in a buyer’s monthly mortgage payment until the home is paid off to roughly 80%, at which point PMI is usually dropped.
7. How can I locate a suitable lender?
Many first-time homebuyers begin their search with local banks or credit unions. For first-time homebuyers, the federal government also offers competitive lending options. Homebuyers can compare mortgage rates from a variety of lenders before deciding on the best option for them.
8. How does the closing procedure work?
The closing process begins once buyers and sellers agree on a home’s price, and it usually takes 30-60 days. The purchase contract is drawn up and signed at this time, as are financial documents, home inspections and appraisals, and several other legalities. Both the buying and selling parties gather on closing day (sometimes for the first time!) to sign final documents and hand over the keys!
9. What is covered by a monthly mortgage payment?
As a first-time homebuyer, it’s vital to remember that a monthly mortgage payment does not cover all of the monthly expenses that come with owning a property. A monthly mortgage payment typically includes the principal amount borrowed, homeowners’ insurance, property taxes, interest costs, and, if necessary, PMI. Utilities, cable and internet service, and homeowners’ association fees are not included in monthly mortgage payments.
10. How much money do I need for a down payment?
The amount of money you’ll need to put down on a new house is determined by the home’s price and the mortgage conditions you’re accepted for. Different lenders provide various lending alternatives, some of which allow a buyer to deposit as little as 3% down or even less. However, you may be required to pay private mortgage insurance (PMI) at some point throughout your loan. Doing this will increase your monthly mortgage payment until the PMI is paid off.
We hope this FAQ list has answered some of the questions and concerns that you have as a first-time homeowner. Ashley Lyon can assist with the purchase of your first home. Call her on +1 (302) 216-5588.