When it comes to taking the leap and buying your first home, the process can feel nothing short of overwhelming. With a wish-list in one hand and a budget in the other, there are hundreds of questions flying through your mind day and night. The process can be a wonderful experience if you are working with a realtor who understands your goals and communicates in an effective and timely manner. The process can also work wonderfully when you know what to expect throughout the homebuying experience. Getting (and staying) informed will alleviate extra stress and confusion. We wanted to make things as smooth as possible for you, so, here are the answers to some of the most frequently asked first time home buying questions.
Who qualifies as a first-time buyer?
If you’ve never purchased a home before, you’re automatically placed in the first-time home buyer category. Those who have purchased a home in the past can be considered as a first-time buyer again after 3 years from their previous homeownership.
What questions should I consider before making the big purchase?
There are various questions that you should reflect upon before deciding if it is the right time for you to begin the first-time home buying process. Consider asking yourself these before moving forward with pre-approval and home search.
- Does my current income allow me to purchase the home size that I need?
- Do I have money saved for a down payment?
- What does my credit score look like in detail?
- Will I need a co-borrower?
- What are my plans over the next 3-5 years?
How much will my down payment be?
In most instances you will need to put money down when purchasing your home, but the amount differs based on mortgage loan type. On average, Americans put about 6% down when purchasing. This can easily be calculated by determining what the percentage equals in dollar value based on the total sale cost of the home. For example, 6% of a $250,000 home loan would equate to a down payment of $15,000. Oftentimes, though, home loans for new buyers range from 0% down (VA and USDA) to 3.5% (FHA). To learn what loans you qualify for, contact a mortgage specialist to walk you through the approval process. Once approved, you begin the new home hunt.
What credit score qualifies me for home purchase?
Credit can play a huge role in your buying power. As with most purchases, the higher your score is the better the rate you receive will be. Credit score is considered when looking at general loan approval odds, amount of loan approval and interest rate percentage. For a conventional home loan your score should be about 620 or above. In some instances, FHA approves those with scores of 580+.
Once I have a mortgage pre-approval how do I begin my home search?
The mortgage pre-approval is the first big green light on your home buying journey. At this point you know the range you can spend on your new home. Next, you can begin searching for available homes in your desired area. Working alongside a trusted realtor, you can take virtual or in-person home tours of houses that spark your interest. Once you decide on a home that fits the bill for you, you can move forward with submitting an offer for purchase.
What is “closing” and how long does it take?
Closing is the final step in your home buying process. During the time of home purchase contract completion, between you and the homeowner, a date for closing is decided upon between both parties. In general, closing can take anywhere between 30 to 45 days. The closing date marks the day that the home officially belongs to you and you can begin moving in.
We understand that the road to homeownership may feel tremendous in feat. It is a new chapter that you are beginning for yourself and your family. We can assure you that once you move through the process, it is quite incredible to experience. Work with a realtor that can walk you through all stages of the process while easing stress and anxieties that may pop up along the way. To learn more about the value of first time homeownership, or to get started on your home buying process contact us today.