Feb. 5, 2019

Answers for the Big First-Time Home Buying Questions

From the Credit Check to Getting the Keys:
Answers for the Big First-Time Home Buying Questions

(Image credit: Jacqueline Marque)

New to the home-buying process? If you’re ready to start looking for your dream home—or if you’re just looking to learn more about how buying a home works for the future—there’s a lot you’ll need to know. The process is long and can be as stressful and confusing as it is exciting. Sometimes you’ll feel like celebrating, while other times you’ll feel like you’re drowning in paperwork, but in the end, when you finally close on your new home, it’ll all be worth it. In the meantime, you’ll probably have a lot of questions come up, so here’s what you need to know.

What’s the first step in the process?

If you haven’t started doing research about homes and mortgages or saving up money, those should be your first steps. But, if you’re ready to really get into the home-buying process and have some down payment money saved up, your first step is to talk to your bank and different mortgage companies and mortgage brokers to find out your lending options and get pre-approved for a loan.

Can I buy a home if I don’t have great credit?

If your credit score is below 700, you’ll be at a disadvantage, but that doesn’t mean you can’t buy a home. You may have to pay a higher interest rate, or you may be able to qualify for a Federal Housing Administration (FHA) loan if you have poor credit that’s still above a score of 580, but you’ll have to pay mortgage insurance (which protects the lender) which will cost you.

What are points?

Points, or discount points, are fees that the buyer pays to the lender during closing in exchange for a reduced interest rate on their mortgage. One point is the equivalent of 1% of your mortgage amount, and while they cost money up front, they can save you potentially thousands of dollars in the long run.

What is a foreclosure?

When a homeowner fails to pay their mortgage, their home is foreclosed on—it’s a legal process in which the homeowner gives up the rights to their home. If the homeowner can’t pay the balance or sell the home, it goes to auction. Prospective homeowners can buy foreclosed homes—it’s one option for getting a great deal on a home, but it can also be extremely risky. If you’re considering buying a foreclosure, HomeFinder has a great breakdown of all the related issues.

What does a Realtor do?

Realtors handle negotiations between home buyers and sellers. When Realtors represent buyers, they help their clients find the best property for them at the best price, and navigate them through the offer and closing process. Realtors representing sellers market their client’s property, help them find qualified buyers, and help them get the best price for their property.

Who pays the Realtor?

According to Realtor.com, the seller is generally responsible for paying the Realtor’s fees and commissions, since the Realtor represents them and helps them make the sale. The seller’s realtor typically splits their commission with the buyer’s realtor—that’s how the person representing the buyer makes money on the deal.

What is earnest money?

An earnest money deposit, or good faith deposit, is a deposit the buyer makes once their offer is accepted in order to show the seller they’re committed to buying the property. The deposit means that it’s unlikely a buyer would enter into multiple purchase contracts on multiple homes at once (which would take all of those homes off the market). Once the sale goes through—a.k.a. at closing—the earnest money deposit is applied towards the down payment.

How long does it take to close?

A 2016 study from Realtor Mag shows that the average closing time is around 50 days, and the time to close depends on funding, appraisal disparities, and more. You can help speed up your closing by addressing any title issues and repairs.

What happens at closing?

At closing (also known as the settlement) the buyer provides a check for what they owe on the home, the seller signs over the deed to the home to the buyer, the title company registers the new deed to the home, and the seller receives any proceeds they earned from the sale. According to the Home Buying Institute, it’s a lot of paperwork and you’ll likely sign your (full) name anywhere from 10 to 30 times. Get your arm ready.

Who pays closing costs?

Both the seller and the buyer have closing costs to pay, but they differ a lot. According to Zillow, the seller’s costs are usually higher (since they pay the Realtor’s commission) but they cover less costs in general. The buyer, on the other hand, pays for more line items. Those items include several fees, from appraisal fees and origination fees to bank processing fees and title insurance.

How much does the inspection cost?

According to HomeAdvisor, the average cost of a home inspection in 2016 was $318, but could cost as low as $200 or as much as $470.

Who pays for the inspection?

Since the inspection is to benefit you, the buyer, you’ll pay the cost of the inspection (it’ll likely come out of pocket ahead of your closing)—although you may be able to negotiate to have the seller pay it, but it’s unlikely.

What and when is the final walk-through?

The final walk-through takes place after the inspection and is usually scheduled for the day before closing. This is your opportunity to check the house before the settlement, to make sure everything is in good shape and that any repairs the seller was required to make were completed.

Do I need homeowners insurance?

It’s often required, but not always (although, even if it’s not required in your area, it is a good—nay, really good idea). Homeowners insurance can help protect your home in case of damage from fire and natural disasters like floods and earthquakes, also from liability in case someone gets injured on your property, and it generally doesn’t cost that much to get a policy.

When do I get the keys?

Usually, you’ll get the keys to your new home at closing, or after closing if you need to wait until your county officially records the title (which could take a few days) or if there’s a delay with your loans. It all depends on local laws and your mortgage.

Re-edited from a post originally published 1.5.2017 – TW


Posted in Home Buying
Jan. 9, 2019

Insights about Home Buying

Having been in the residential real estate industry for 'a lot' of years, I often get asked the question, "Does it make sense for me to buy a home?".  My answer is, consistently, 'It depends.'

Our current real estate market looks like this:

      • Home prices are rising, but not 'rocketing',

      • Interest rates are rising slowly and projected to keep rising for the foreseeable future (although they continue to be 'historically low'),

      • Inventory levels are moderate, making it neither a 'buyers market' nor a 'sellers market',

      • Most new housing being constructed in the area is priced above (or well above) $400,000,

      • The area is seeing a steady increase in employment opportunities, placing additional demand on available housing,

      • Even with the addition of hundreds of new rental units to the market, rents continue to climb, 

      • THE BABY BOOMERS ARE HERE - retiring into the investment properties they purchased years ago.

If you are planning on being in this area for only another year or two, renting is probably your best alternative.  But if you're planning on being in this area longer than that, it may make sense to buy. It really depends on your housing budget and your desire to not have to move around.  Like few other places in the country, the increase in local rental costs have exceeded the increase in housing prices.  We are finding that many of our clients have house payments at or near what they were paying for rent. 

There is no question that, for the foreseeable future (there's that term again), those interested in purchasing a home will be paying more for it the longer they wait.  But that doesn't necessarily mean that waiting is bad.  Having additional money to put down will lower your mortgage payments (currently by about $5.00 a month for every additional $1,000 of mortgage.)  If you're working to repair credit, that could help you secure a lower interest rate.  And if you're expecting that big raise or a promotion, that could give you more flexibility on what you can afford.

Of course, monthly payment is only one of many factors.  Being able to find something that you like in an area where you want to live can be a challenge.  And then there is the variable of ongoing maintenance and repairs.  On the other side, there is a nice deduction for mortgage interest and property taxes...and if you work out of your home, there are even more deductions available.

In today's mortgage market, there are numerous financing options.  If you are a Veteran, you can buy a home with no money down.  If not, there are mortgages that require as little as 3.5% down.  To further encourage home buying, credit score requirements have also relaxed a bit, increasing the number of mortgage options for many people.  And lest we not forget, every mortgage payment you make includes a payback on the 'principal' you borrowed, so you are building equity with every payment you make.

If you feel like buying a home is in your future, the first place to start is to contact us and we will put you in contact with an excellent Mortgage Broker.  Compared to banks and credit unions, mortgage brokers work with dozens of lenders, each with their own unique underwriting requirements, interest rates, etc.  They shop around for the best package for you and your unique circumstances.  They will also help you determine what your financing might look like, what you can expect in terms of a TOTAL monthly payment, and how much of a house you can comfortably afford - all good things to know before you start your search.



We share your enthusiasm about buying your first home. The questions and concerns you have are very different than those who have been through the process before.  To start with, you probably haven't worked with a mortgage company or home inspector before.  You may not even know much about single family homes, town homes, or condos in general, other than having rented them.  

We are totally hands on when it comes to coordinating activities with the seller and their representatives, the mortgage lender, title company, and all other parties involved.  We walk you through and protect your interests every step of the process, from your initial discussions with a Mortgage Broker, through the inspection, at the moment you get your keys, and well beyond.  You will always be up-to-date on what's happening and we're always there to answer your questions and help resolve 'opportunities' that may arise on the way to the closing table.  We make sure your home buy experience is fun and exciting, the way it should be!



Have questions?  Think you may want to wait?  Are you ready to get going?  Call us!  Whether you want to start the process, are looking for suggestions, or just want to kick ideas around, we are here for you!  561-371-7550



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