We know there’s nothing more frustrating to home-buyers than having unanswered questions. Here at Theory, we want to prepare and inform our buyers! Buying a home is one of the largest investments a person can make. Before you can go through with purchasing a home, it requires lots of thought, research, and documentation. So, here are 5 questions you should ask before buying your home.
Should I Talk With A Lender Before Looking At Homes?
Yes, you should! Talking with a lender before looking at homes will help you understand exactly how much you can afford. There’s no reason to start looking at $400,000 homes if your income only allows for a payment you’d have at the $200,000 price point.
Also, if you’re not quite up to the minimum credit level required, your lender can help put you on a GREAT credit repair plan. Whether you can buy this month or in 6 months, it’s a good idea to talk to a lender and get the ball rolling as soon as possible. The pre-approval process itself is actually pretty quick. We have great lenders we’d be happy to recommend if you’d like to see if you can get pre-approved.
How Much Money Should I Save Before I Start Looking Buy A Home?
Out of our 5 questions you should ask before buying a home, this is perhaps the most common one we hear! The answer depends on a number of factors, including the cost of the house and the type of mortgage you end up getting. Talking to a lender first and foremost will help answer these questions so you know exactly how much to save for. In general, you need to come up with enough money to cover three costs:
Earnest Money
This is the deposit you make when you reach mutual acceptance on a home. It is essentially an act of good faith that proves to the seller that you are serious about wanting to buy the home. Earnest money is generally $1,000, but some buyers like to put down more earnest money. The more money you put for earnest money, the more attractive your offer looks to the seller. At closing, your earnest money applies to your down payment or closing costs.
Down Payment
This is a percentage of the purchase price that you must pay when you close on the home. The more money you can put down for your down payment, the lower your mortgage payment will be. Some types of loans require 10-20% of the purchase price. However, most first time homebuyers will go the FHA route, as FHA only requires 3.5% down. There are also some down payment assistance programs for FHA buyers that allow as little as $1,000 down.
Closing Costs
These are simply the costs associated with buying a home. These include title and escrow fees, lender fees, pre-paids, etc. For a buyer, closing costs usually run 2.5-3% of the purchase price. If you don’t have enough money saved up to cover your earnest money, down payment, AND closing costs, you can ask the seller to pay for your closing costs. If you’re able to save up and pay your own closing costs, it’ll definitely help make your offer more attractive! Your lender can give you a closing cost estimate (early on in the process) so you’re not caught off guard when you sign your closing paperwork.
Should I Get A Home Inspection?
While buyers often wonder if a home inspection is truly necessary, most agents will say yes, yes, and yes! It’s very important. A home inspector takes a weight off of your shoulders by looking into the ALL components of the home: the condition of the roof, foundation, electrical, heating source, plumbing, crawl space, and attic. The inspection will run you anywhere from $350-$500, but that’s a LOT less than any major repairs would be! Ensuring that all of these home components are in good condition prevents you from paying to fix them in the near future. If there are aspects of the house that are not as sound as you thought (prior to inspection), you can negotiate with the seller to get those items fixed before you close on your new home.
How Long Does It Take To Buy A Home?
The timeline for finding a house varies greatly from person to person. Meet with your Agent early on in the process and create your “needs list”. Your Agent can then help you establish a realistic timeline to find your home. Once you find a house and have an accepted offer, it usually takes around 25-45 days to close!
Who Pays For My Real Estate Agent?
If you’re buying a home, you are off the hook. The seller ALWAYS pays for both sides of the commission, which is paid at closing.
So there you have it! These were 5 questions you should ask before buying your home. If you still have any questions that need answered, feel free to contact us anytime!
