10 First Time Home Buyers’ Most Commonly Asked Questions

    If this is your first time buying a home you probably have a lot of questions in mind regarding the whole process of home buying. There are a lot of processes in the real estate transaction and it could be terrifying especially if you don’t have a lot of information. This guide will help you lighten the stress that comes along with home buying. Knowledge is power and if you know what to do and if you have a trusted professional agent working on your side, your home buying experience would be an enjoyable and stress-free one!

    faqs first time home buyers

     

    1What’s the first step of the home buying process?

    Get pre-approved. Unless you are paying cash, you will need to get a mortgage loan. Get a mortgage pre-approval so you know how much house you can buy. Getting pre-approved for a loan also enables you to move quickly when you find the right home. In a competitive market, this lets the seller know that you are a serious buyer and could prevent you from losing out to another potential buyer who already has financing arranged.

     

    2How much down payment is needed?

    The rate and terms of your loan will be based on your down payment, typically anywhere from 0 to 20 percent of the price of the home. Keep in mind more money down generally gets you a lower payment, better rates and eliminates or reduces mortgage insurance costs. FHA loans have a requirement of 3% down as well as other conventional loans. VA loan requires no money down. USDA loan also requires no down payment.

     

    3How will I know if I qualify for a loan?

    Order a copy of your credit report ( Experian, TransUnion or Equifax websites). A mortgage lender will review your payment history, as well as your credit score, to determine if you qualify for a home loan. Review your earnings history for the past two years, as well as your current income sources. To qualify for a mortgage loan, you should meet certain debt-to-income ratios.

     

     

    4What documents will I need when applying for a home loan?

    When you apply for a home loan, your lender will ask for the following documentations:

     

    • W-2 forms from the previous two years, if you collect a paycheck.
    • Profit and loss statements or 1099 forms, if you own a business.
    • Recent paycheck stubs.
    • Most recent federal tax return, and possibly the last two tax returns.
    • A complete list of your debts, such as credit cards, student loans, car loans and child support payments, along with minimum monthly payments and balances.
    • List of assets, including bank statements, mutual fund statements, real estate and automobile titles, brokerage statements and records of other investments or assets.
    • Canceled checks for your rent or mortgage payments.

     

    5What kind of credit score do I need?

    There isn’t a specific minimum credit score required for a mortgage loan, what is important is to maximize your score before applying for a loan in order to qualify and get the best lending terms. FHA loans typically have lower credit requirements than conventional fixed-rate loans and ARMS. You can get approved with 580 score but 620 score or higher is recommended.

     

    Talk to a lender today!

     

    6Should I get pre-qualified or pre-approved?

    It is better to be pre-approved. With a pre-qualification, little information about the buyer’s finances is verified which can sometime lead to buyer finding out later that they are not approved to buy a home. With a pre-approval all your finances and credit will be reviewed so you can shop with confidence. Getting pre-approved lets you know how much money you can borrow so you can narrows down your price range. It also allows you to correct any issues on your credit report and it will help you determine if you have saved enough for your down payment and lets you start saving for closing and other home buying costs.

     

    7Can I get pre-approved before I find the home I want to purchase?

    Yes. Most lenders offer preapprovals from 60 to 90 days. This will allow you to hold a great interest rate while you shop for a home. It will also only good if your financial situation does not change. It can be updated by re-verification of some of the documents. The more recent approval letter the better once you’re ready to give an offer.

     

    8How long does it take to buy a house?

    Once you have found the right home, it can take as fast as a week or as long as 60 days. Normally the loan process takes between 30 – 45 days but if you are pre-approved, your finances are healthy, and you do not have a lot of closing conditions, closing can take less than 30 days.

     

     

    9What are the other fees associated with buying a house?

    In general, the fees associated with buying a home include closing costs, loan discount points and prepaid items. The closing costs are based on specific line items related to your loan application and lender fees.

     

    For a detailed list of all home buying fees, you will find this blog helpful. Home Buying Fees Every Home Buyer Should Know

     

    10Do I need an agent?

    Once you’re seriously shopping for a home, it is better to work with an agent. An agent’s job is to act as a liaison between you and the seller. An agent can also help you find the right home since he/she has easy access to all other properties on the market. During the process, paperwork will be flying left and right, other part of the transaction also involved hiring inspectors, negotiating, and more. It is easiest to get through with all these processes with an agent by your side.

     

    Trackback from your site.


    One Response to “10 First Time Home Buyers’ Most Commonly Asked Questions”

    Leave a Reply