BUYER F.A.Q.

Why should I buy instead of rent?

When you rent you are essentially paying your landlord’s mortgage. When you purchase a home of your own you are making an investment in your future. Plus, you can deduct the cost of your mortgage loan interest and the value of your property taxes when you file your federal return. In addition, the value of your property will increase as you enjoy years of making memories in your own home.

Can I become a homeowner even if I’ve had bad credit and don’t have much for a down payment?

Though there are federal mortgage programs that you may qualify for, the best thing to do is pay down your debt, work on increasing your credit rating and saving money towards a down payment.

Should I use a real estate agent?

Absolutely! The details involved in buying a home, especially the financial ones, can be mind-boggling. A good realtor can make the process much easier by guiding you along the way. A good real estate agent can help you figure out how much house you can afford as well as give you valuable information about a neighborhood you may be considering. Realtors have immediate access to homes as they are put on the market and can help direct you to suitable homes which can save you hours of your time, which you may have spent searching the classifieds and driving around town. Your real estate agent can also be invaluable when it comes time to make an offer on a property that you are interested in purchasing, because they are knowledgeable about the bidding process, the paper work and mortgages.

How much money will I have to come up with to buy a home?

The answer to this hinges on a number of factors, including the cost of the house and the type of mortgage that you get. At the very least you have to come up with the earnest money, down payment and closing costs (see glossary). The more money you can put down, the lower the mortgage payments will be. Required down payments can range from 3% to 20% of the purchase price. Your realtor can help you in determining which mortgage is right for you. Closing costs, which are comprised of various fees from your lender and other processing expenses, average 3 – 4% of the cost of the house.

How do I know if I can get a loan?

As a good start, use the mortgage calculator to see how much you could afford to pay. If you’re interested in more house than you can reasonably afford right now then it is a good idea to hold off for awhile. Again, your real estate agent can help you through this process and see what your options are. A great idea is to get pre-qualified for a loan. Go to your lender and apply for a mortgage before you even start looking for a home. This way you will know exactly what your price range is and will speed the process along once you have found the home of your dreams.

How do I find a lender?

Shopping for a loan is like shopping for any other major purchase. Take your time and look around to see who is offering the best interest rates and lowest loan fees. Again, your realtor can really help you with this process because they are familiar with lenders in the area and what they’re offering.

In addition to the mortgage payment, what other costs do I need to consider?

Your real estate agent can help you anticipate these costs. Of course, there will be the normal monthly utilities for which the seller can give you average costs. There may also be homeowner or condo association dues. You will definitely have property taxes and may have additional taxes for city or county. These figures may be included in your mortgage payment.

What will my mortgage payment cover?

Typically a mortgage payment is comprised of four parts: principal, interest, homeowners insurance and property taxes (see glossary).

What do I need to take with me when I apply for a mortgage?

Having your documentation gathered before you meet with your lender can save a lot of time. Ideally you will have: social security numbers for you and your spouse; copies of your checking and savings accounts for the last 6 months; evidence of any other assets; a recent paycheck stub for you and your spouse; a list of all credit card accounts and amounts due on each; a list of all account numbers and outstanding balances for existing loans; copies of your last 2 years’ income taxes and the name and contact information for someone who can verify your employment. Some lenders may ask for additional information. Your realtor may be able to let you know any additional requirements before you go to meet with the lender, since they are familiar with lenders in the area.

When I find my dream home, how much should I offer?

This is exactly when you will be more than thankful that you took the time to find a good real estate agent! Your agent can guide you through the process and help answer questions like: Is the asking price comparable to other homes in the area? Did a home inspection reveal faults that will have to be repaired? How long has the home been on the market? Your realtor has been through this process many times and knows when and what contingencies to include in your offer.

What if my offer is rejected?

This just means that negotiations have begun! Your realtor will be your rock and your guide through this process. Some times negotiations go back and forth several times before a contract is signed. Your real estate agent will help you go for what you want without letting you get caught up in negotiations and agreeing to something more than you can afford.

What will happen at closing?

You and your spouse will go meet with an attorney and sign a lot of papers! Your lender should provide you with a “good faith estimate” so that you will know how much your closing costs will be and will also give you a list of anything else you need to bring to closing. Your attorney will go through each document with you and help you to understand what you are signing.

Further Important Questions and Answers: Offer & Acceptance

The purchase contract is the most important document in any real estate sale. It must reflect the entire agreement between the buyer and seller. This brochure examines issues arising during contract negotiations in residential real estate sales transactions. (Click here to read more)