Top Home Buyer Questions

Purchasing a home is one of the largest financial expenditures you will make in your life. At first glance, it is also one of the more complicated endeavors you’ll undertake. But it doesn’t have to be. We’ve cut through the complexities to compile a simple list of questions every home buyer should consider.

1. How much home can I afford?

Determining your budget BEFORE you begin your search is important. It will help you narrow your focus to save you time, and frustration. Touring a 5,000-square foot home all tricked out in the latest appliances and finishes when you’re on a tight budget is a road to disappointment. No house within your budget will ever compare. See how much home you can afford by visiting the mortgage calculator page on our website here.

2. How much should I save for a down payment?

There are no hard and fast rules. Typically, down payments are 20% of a home’s sale price, keeping in mind that the more money you put down the lower the interest rate you will secure. Lower down payments are also acceptable and can even go as low as 5%. If you are putting less than 20% down, remember to factor in private mortgage insurance (PMI).

3. How much will I pay in closing costs?

Closing costs run between 2% and 5% of the home’s final sale price, so be sure to factor in this cost into your budget. To learn more about closing costs and other mortgage basics, visit our website’s resources page here

4. Should I get pre-approved?

You don’t have to, but more and more, sellers are expecting to work with buyers who have secured their mortgage loan. Pre-approval speeds up the purchasing process. It also makes you a more competitive buyer. If you get into a bidding war with another buyer who is still waiting for loan approval, the chances the seller will go with you are high. Pre-approval provides bargaining power for the same reason. It is convenient for a seller to work with a buyer who is prepared to move forward with the sale now rather than at some unknown time in the future. 

5. What is a title search?

A title search examines public records to confirm legal ownership of a property and determine if there are any claims to a property. Challenges to your potential home’s title will delay the sale.

6. Who pays for items that are red flagged in a home inspection?

Having a neutral, third party examine a home before the transaction is completed is very important. If a serious problem is discovered, the buyer can rescind an offer without penalty.  Issues that come to light as a result of a home inspection can be negotiated between buyer and seller. If the seller does not want to deal with the hassle of fixing an item, the buyer can assume the responsibility and, in turn, get the house for a lower list price.  

7. I am getting a home inspection, but should I get a pest inspection as well?

Not all states require pest inspections as part of the real estate transaction, so check your local guidelines. Even if your state does not, it’s not a bad idea to include a pest inspection as wood-destroying insects can do significant, and costly, damage to your future home. Additionally, many mortgage companies mandate that pest issues be resolved before the transaction is finalized. 

8. Should I know how much similar properties have sold for in my prospective neighborhood?

Research the prices other homes on your block or in your subdivision have garnered. These are called comps. It’s fiscally prudent to be buying within the comp range. Typically, you don’t want to be the most expensive house on the block because the chances of recouping your investment when and if you sell are limited. Comps become less important when you are looking for your forever home.

9. Why is it important to know how long a house has been on the market?

There are many reasons why a house could be on the market for a longer period of time. It could require extensive updates, which tends to scare off many potential buyers. It could be over-priced. Or it could have a feature that does not appeal to the average buyer.  Conventional wisdom says the longer a house is on the market, the more bargaining power the buyer has, especially if the seller has already purchased another home and is making two house payments. A seller with a house that has been listed for an extended period of time might be more willing to accept a lower offer than listing price. 

10. Should older appliances and major systems make me shy away from a house?

That depends. Some buyers like move-in ready homes, completely updated with the latest in appliances and fixtures. Others don’t mind renovating a little at a time as their budget allows. Replacing a few older appliances should not be a deal breaker. But replacing every appliance and fixture can quickly add up. Consider using this fact as a bargaining tool to negotiate a lower price. For budgeting purposes, it is wise to know the age of big ticket items, like heating and cooling systems and roofs. 

Congratulations on starting your house hunt! It’s an exciting time. Manned with this extra knowledge, you’ll sail through the process. And remember, we are always here to help you navigate the home-buying process. Give us a call today and take your first step toward move-in day!

 


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.