It is normal for people to have lots and lots of questions before, during, and even after the home buying process. This is especially true with first-time home buyers. You should never be afraid to ask questions. In fact, it is your RIGHT and RESPONSIBILITY to ask as many questions as you feel are necessary to make an educated decision about your loan and the home you are purchasing. Below are ten commonly asked questions.
What is the first step of the home buying process?
Honestly? Research. Buying a house can require a lot of time and effort. It is important that you understand how to find and finance the best house for you. Following are some of the things you can do to begin your research.
- Conduct an internet home search starting with this website. Take note of the types of houses you like and the areas in which you would prefer to look.
- Ask your friends, family, and/or co-workers what they like or dislike about their neighborhoods.
- Get an idea of what you can afford by asking your favorite REALTOR® for a list of preferred mortgage brokers and lenders and speaking to one.
- Research the types of mortgage loans available and ask the mortgage broker or lender about which one is right for you.
What credit score do I need to qualify for a mortgage loan?
Loan requirements change frequently, but a credit score of 620 or higher is generally recommended. A higher credit score offers better lending terms. However, there are lenders who will work with buyers with 580 credit score. Ask your favorite REALTOR® for a list of preferred mortgage brokers and lenders as they will be your best source for current lending requirements.
How will I know how much home I can afford?
After you have asked your favorite REALTOR® for a list of the most friendly and knowledgeable mortgage brokers and lenders in the business, choose one. Because unless you are paying cash for a property, you will need to apply for a mortgage. After speaking to a mortgage broker or lender and providing some basic information about your income and savings and investments, you will be issued a prequalification letter. This letter will tell you how much the lender is willing to lend to you based on the information you have provided.
Are there special mortgage loans for home buyers?
Based on your research, you probably know there are two main varieties of mortgage loans to use when buying a home: conventional mortgages and government-backed mortgages (FHA, USDA, and VA). Your REALTOR® and mortgage broker or lender can help you understand the difference between these loans and which one may best suit your needs. Some entities even offer down payment assistance if certain conditions are met.
Do I need money for a down payment?
It depends. Down payments can range from 0% to 20% depending on the home you are purchasing and the loan you choose. Conventional loans can vary from 3% to 20%. FHA loans just dropped their requirement from 3.5% to 3%. Eligible veterans can apply for a VA loan which requires no money down. Rural properties areas are usually eligible for a USDA loan financing which also requires no money down.
What do I need to apply for a mortgage?
After you have chosen a mortgage broker or lender and have been issued a prequalification letter you will still have to fully apply for a mortgage. Following is a general list of documents you will need from each person applying for the mortgage. Your lender will use these documents to verify your financial status and credit.
- Social Security card
- Valid driver's license or government-issued photo ID
- Address(es) from the past two years
- Employment history for the past two years
- Pay stubs from your current job
- W-2 forms for the past two years and K-1 forms (if applicable)
- Tax returns from the past two years
- Proﬁt & loss statement and balance sheet (if self-employed)
- Bank statements from the past two months
- Investment account statements from the past two months
- Retirement account statements from the past two months
- Make and model of vehicles you own and their resale value
- Credit card account information
- Personal loan account information
What do REALTORS® actually do?
We herd cats. Just kidding. Seriously though, sometimes we do literally herd cats, dogs, chickens, but that is a story for a different day....
A REALTOR® can be your most valuable asset when buying a home beginning with the list of friendly and knowledgeable mortgage brokers and lenders. This is where we begin to walk you through every part of the home buying process. Showing homes is the smallest part of what we do for our clients. Our most important job is to educate and inform you of all your options before, during, and sometimes after the home buying process. When you hire a REALTOR®, you are employing that REALTOR® to represent YOUR BEST INTEREST in the transaction.
How long does it take to find a home?
The timeline for finding a home varies greatly from person to person. If you have done your research, know where you prefer to live, have a reasonably good idea of the type of home you want, and know how much you qualify to borrow, the process can take less than 90 days if there is a consistent inventory of homes available that meet your wants, needs, and budget.
How long does it take to buy a home?
After your REALTOR® has assisted you in finding a house, submitting an offer, and getting the offer accepted, it takes anywhere from 30 to 60 days to close depending on the circumstances.
Do I have to pay my REALTOR® as a home buyer?
In most cases, you do not have to pay your REALTOR® anything but patience and gratitude to assist you in buying a home. When a seller lists their home for sale with a REALTOR®, they agree to pay the listing REALTOR® a certain commission. If a separate REALTOR® brings a buyer to purchase the listed home for sale, the listing REALTOR® agrees to share the commission with the buyer's REALTOR® at closing.
If you have any other real estate questions you would like answered, please feel free to contact us directly or leave a comment below for others to answer as well. A great REALTOR® is your very best source of accurate information when it comes to buying a home. Once you have found a great REALTOR®, ask as many questions as possible. A great REALTOR® will gladly and patiently walk you through each step of the home buying process.