Buying a home is an exciting milestone. If you’re going through the process for the first time, you may be hearing unfamiliar terms and contemplating which options best fits your situation. Doing some research is a good place to start. To help, below are answers to common questions first-time homebuyers frequently ask.
Do I need a Realtor® to buy a home?
While a Realtor® is not required to buy a home, they can be very helpful throughout the process. Realtors® have the expertise to guide you through the home search, inspection and closing processes, and they can even negotiate an offer on your behalf.
How do I determine my home buying budget?
Lenders look at many factors when considering the size of mortgage you can afford, including your household income, cash available for a down payment and total debt. A good place to start is calculating your debt-to-income (DTI) ratio. Calculate DTI by dividing your monthly mortgage payment by your monthly pre-tax gross income.
Are there any hidden costs to buying a home?
In most cases, buying a home means you no longer have a landlord or property manager to call when things need repaired. Consider hidden costs such as maintenance, property taxes and HOA fees that start when you buy a home. Being aware of them ahead of time allows you to build them into your homebuying budget.
How do I choose the right mortgage lender?
Choosing the right mortgage lender can be extremely helpful as you navigate the homebuying process. Your lender should communicate with you in a clear and timely manner, have the expertise to help you find the best solutions for your situation, and offer personalized service.
What’s covered in a mortgage prequalification meeting?
Visiting with a mortgage lender is one of the first steps to buying a home. Most home sellers will want you to provide a prequalification letter, which you will obtain after this meeting. Be prepared to discuss your financials, including credit report, sources of income, loan options and rates, and more.
What’s the difference between a 15-year and 30-year fixed mortgage?
Two of the most common mortgage options are 15-year and 30-year fixed mortgages. As the names suggest, the number of years it takes to pay off these mortgages differs. Another major difference is shorter-term mortgages often have lower interest rates but may require a higher payment each month compared to longer-term mortgages.
What’s the difference between a fixed-rate and an adjustable-rate mortgage?
A fixed-rate mortgage maintains the same interest rate throughout the entire loan life, while an adjustable-rate mortgage begins to change – which can go up or down – based on the credit market. Both options have advantages and disadvantages, but especially during a low-rate environment or a volatile market, fixed rates are often more favorable to buyers.
What is an escrow account and escrow analysis?
An escrow account is used by homeowners and mortgage lenders to ensure adequate payments are made on homeowners’ insurance and real estate taxes. An escrow analysis is an annual review of your account to ensure you are not paying too much or too little, as property tax and home insurance rates change over time.
What is a homestead credit, and do I qualify for one?
Homestead credit is a tax credit for homeowners designed to lessen the amount of property tax they pay. While eligibility varies greatly by state, in some states the qualifications needed to be granted a homestead credit are minimal.
Is it OK to waive a home inspection to strengthen my offer on a home?
In a seller’s market, when several buyers are already offering over asking price, it may be tempting to strengthen your offer by waiving your right to a home inspection. However, this comes with risks, like potential costly home repairs down the road. A Realtor® can provide information on ways to strengthen the offer without skipping this important step.
If I can’t find my dream home, can I build it instead?
In today’s real estate market, many homebuyers are considering building instead of buying an existing home. Building a house can be a great way to get exactly what you desire for your dream home, especially when the market doesn’t have a lot of options.
While the homebuying process can be overwhelming, experts are there to help.
Contact a mortgage loan originator to start your homebuying journey.
