Buyer Questions 101
Whether you are looking to buy a home or sell a home, you will most certainly have questions when it comes to the process. We have compiled a list of the most common questions asked by a buyer to help you navigate the sometimes-confusing world of real estate.
1. Should I talk with a loan officer before looking at homes? The short answer is, YES! You most certainly want to speak with a lender before looking at homes. Currently we are in a sellers’ market with historically low inventory which means that there is far more competition for homes right now. You don’t want to wait until you’ve found the perfect home to get your prequalification letter (which is needed to submit an offer) because by then the house may already be snatched up by another buyer who already completed this critical first step. Talking with a mortgage lender will also give you a tremendous amount of insight into your buying power and the best lending option for purchasing a home. If you do not speak with a lender before looking for a home there is no possible way you could, with 100% certainty, know if or how much you qualify for. Lenders will look at several things including your credit score, income, and debt ratio and assets. Using this information (and others things), the lender will communicate to you your financial qualifications. Once you have learned the amount you qualify for, the lender will speak with you about your loan options. This may include a first-time home buyer program, conventional loan, or another program that suits your financial needs. After determining your loan options and maximum loan amount you will have a better understanding of what costs will be associated with purchasing your home. These costs do not just include your loan; but also include closing costs, appraisal and inspections costs, and the earnest money deposit amount. If you have not caught on yet, speaking with a lender is the most important step to purchasing. If you do not have a lender, your agent can provide you with one of their trusted lender partners.
2. Am I ready to buy a home? There are a few things to really consider when purchasing a home. Do you have a steady, reliable income? Can you afford a mortgage, taxes, utilities, and insurance? Are you in debt? Do you have any savings? Having a steady, reliable income is not just something that will put you at ease; it is a requirement for the lenders to ensure that you will be able to make your monthly payments. These payments include your mortgage, utilities, and insurance, plus now you will have property taxes included in the total budget. Are you drowning in debt? Multiple credit cards with high balances? If so, taking on another large balance may not be the best choice for you. But if this is not the case and you have been able to afford your bills and still put money away then purchasing a home could be in the cards for you after all. Having savings is essential for purchasing a home. You will want funds for the appraisal, inspection, closing costs and for any other unforeseen costs.
3. Should I buy instead of rent? Taking the leap to buy instead of renting can have some tremendous benefits which include:
• Tax breaks – interest and property taxes
• Financial gains – property values increases
• Equity – you can cash out this equity when refinancing or pocket if you sell your property
• Security / privacy – renters won’t ask to gain access
• More stable and predictable then renting – renters can increase rental amount whereas mortgage amounts stay consistent
• Closer ties to your community – you’ll be invested in events and happenings as they will directly affect you. As a renter all these benefits will be gained, not by you but by the landlord. Why not take advantage of these gains for yourself?
4. Should I hire a real estate agent? An experienced agent is incredibly beneficial when purchasing a home. Agents will have access to more listings in the MLS (multiple listing system) as well as connections with other agents to get early access to “coming soon” properties. They can set up walkthroughs of listings, including pre-screening homes for you. They negotiate the price and contingencies such as adding warranties, miscellaneous items such as a fridge or washer/dryer units. Agents can recommend services for the home to include different inspectors to make sure the property is structurally sound. An agent provides guidance through paperwork which can be overwhelming and confusing to someone who hasn’t come across it before. These are just a few of the things that an agent assists with in the home buying process.
If you are interested in buying a new home soon and have questions, please reach out to Shelby at 520-213-5201 or [email protected].