Thinking about buying your first home? You’re sure to have loads of questions. Look no further. I’ve got all the answers you need, all you have to do is keep reading.
1. Am I Ready?
First things first, don’t listen to me or anyone else. Only YOU know if it’s the right time to take on such a great responsibility. There are a few decent signs that the timing may be on point, however. Do you love where you live? If you do, and plan on sticking around awhile, it might be time to kick the tires. Are you financially secure? There are SO MANY great programs for closing cost and down payment assistance, but at the end of the day you still have to pay that monthly mortgage. Are you handy around the house? Homeownership comes with a lot of maintenance. The more you can handle yourself the better prepared you’ll be for the unforeseen. Whether it be a sound investment, a new life chapter, or a flex on an ex, the reasons to home own a home are plentiful. Take some time, think it over, talk to your friends and family, and come to a decision that works for you.
2. Why Buy If I Can Rent?
I’m not going to lie to you, sometimes renting is the way to go. If you’re only going to be in town for a short while you might not have time to build enough equity to make it back on a sale a couple years down the road. Every market is different and they’re changing daily. That said, owning a home is usually a fantastic investment. The truth is, when you’re a homeowner you are increasing your net worth every day. When you’re a renter? You’re increasing your landlord’s net worth. He or she may be freaking lovely, but I recommend looking out for yourself first. Also, tax deductions and home equity are awesome.
3. How Do I Know How Much Home I Can Afford?
I should probably make this the first question, but I’m not about to go back and change it now. We’ve gone too far. Most people think the first contact when buying a home should be me, or someone like me, your friendly neighborhood Realtor (or if I’m being honest, some faceless Zillow employee). In truth, it should be a mortgage professional. These folks are going to ask you difficult questions and pry into your financial life. But once they’ve finished you’ll have a crystal clear picture of how much house you can afford. The best ones (I can recommend several) will even go as far as to tell you what you should spend – not simply the top dollar amount.
4. Can I Buy a Home With Below Average Credit or No Money Down?
There are limits to everything, but the short answer here is a resounding “yes”. As I mentioned before, there are loads of programs to help folks realize their dream of homeownership. VA, Navy Federal, and USDA all offer zero money down options. FHA also has a 3.5% down program that’s pretty great too. There are certain requirements, but they’re not unreasonable. And they don’t require an atmospheric credit score.
5. What Does a Mortgage Payment Cover?
You know what rent is, a monthly fee that covers an agreed upon amount provided to your landlord. But did you know there’s a good chance you’re paying more than just his/her monthly principal. The reason for that is a monthly mortgage payment covers the principal amount borrowed, homeowners insurance, property taxes, interest fees and PMI (private mortgage insurance), if applicable. Monthly mortgage payments do not cover things like utilities, cable and internet service or homeowners association fees.
6. Do I Need a Real Estate Agent?
Quite frankly, if you’re on my blog and you’ve read this far and still have to ask this question – I’m offended. Just kidding, I don’t get offended (you should try it, it’s liberating). It’s entirely possible to navigate a real estate transaction without an agent. Would I recommend it? Probably not, and almost certainly not if it’s your first time. When you buy a new car do you take the car salesman at his word? When you’re walking the streets of Guangdong do you really believe that iPhone case should cost you 300 yuan? No! You need to go in prepared. Even better? Have someone with you that knows the process inside and out. Heck, after hours and hours of courses, exams, continuing education classes, and soaking up every bit of real estate knowledge I could – I still need help from more seasoned agents to navigate parts of transactions. You, my dear first time home buying amigo, have done none of those things. Let myself, or one of my esteemed colleagues, fight for you and your best interests.
7. What Happens During Closing?
This is a good one. After you and the sellers agree to a contract, the closing process begins and it typically lasts between 30-60 days. During this time, all the behind the scenes magic is happening. Financial documents are finalized, home inspections and appraisals are scheduled and completed and various other legalities are handled, too. Contingencies are removed, repairs are often made, sparks fly and emotions run high. Just before closing you’ll perform a final walkthrough to ensure the place is in the agreed upon condition. It is? Sweet! It’s on to closing, where you’ll sign your name a hundred times. After wondering to yourself “Is the pain in my wrist actually worth it?” you’ll get those keys – and your dream of homeownership is realized. Congrats!
I hope this helps shed a little light on the home-buying process. Of course, this only scratches the surface. If you’re seriously interested and want to know more, please don’t hesitate to give me a shout. It’s literally what I do for a living. Thank you for taking the time to read my FAQs for First-Time Homebuyers – and remember – you’re awesome!