Frequently Asked Questions
Buying a home is a big commitment and one of the biggest financial investments you’ll make throughout your life. There are many things to consider before deciding to buy a house. Do you have a steady job? Have you been employed for the past two to three years? Do you have a reliable income? Do you pay your bills on time? Do you have any long-term debt? Can you afford a mortgage, taxes, insurance, utilities, and other bills? All of these are questions to consider before purchasing a home.
The decision to rent or buy a home comes down to a few questions. Do you have a steady job? Do you have reliable income? Do you have outstanding debt? Can you afford a mortgage, as well as taxes, insurance, utilities, and additional bills? These questions should determine if you’re ready to buy a house or instead rent until you’re financially stable to buy.
Yes, your credit score will impact your ability to buy, as well as the interest rate of your mortgage if you get approved. Your credit score is a glimpse into your financial standing. Mortgage lenders will use your score to determine if you’re eligible for a loan as well as the interest rate. Higher credit scores result in a better chance of receiving a loan with a lower interest rate. Buyers with low credit scores may have to wait longer to obtain approval and could have higher interest rates. It’s best to work on raising your score before starting the home buying process.
Down payments will differ depending on your financial situation and the cost of the home you want to buy. Saving for a down payment can be challenging, especially for first-time home buyers. The average down payment is between 3% and 20% of the home’s price but it can also vary according to lender requirements, as well as the type and length of the loan. Before you commit to buying a home, prepare financially by saving for a down payment.
This is a common question when it comes to home buying. Pre-qualification gives potential home buyers an insight into how much they can borrow for a mortgage. This information is not guaranteed but can help home buyers look at houses around that budget. Pre-approval involves pulling your credit report to determine if you qualify for a mortgage. This helps real estate agents understand what you can and cannot afford. Home sellers also feel more at ease with someone who is pre-approved for a mortgage because it ensures that they won’t back out of their purchase and can afford the home.
Receiving a mortgage can be a complicated process. It’s important to work with a reputable mortgage lender who will walk you through every step of the home buying process.
Before you decide to sell your home, you need to know how much it’s worth. If you decide to hire a real estate agent, they’ll use comparables to come up with an accurate price of your home. Agents use their experience and the neighborhood to price your house. If you’re going to sell your home on your own, you can come up with a listing price by searching for homes in your neighborhood or on home-buying sites. Compare your home to others for sale or recently sold to come up with a price.
A home buyer will normally pay for the majority of closing costs. This may include the application fee, credit report, title insurance, property taxes, escrow fees, origination fee, and underwriting fee. The home seller will normally pay the closing costs at the end of the transaction, which will also include the real estate agent’s commission. Commission is normally between 5% to 6% of the home’s final price. This money is split between the buyer’s agent and the seller’s agent.
Yes. This is called For Sale By Owner, and can sometimes be a challenging process. You may need to put a lot of time and effort into selling your house including pricing your home, prepping it for sale, listing it on the Internet, marketing the house, staging, holding tours and open houses, negotiating price, and closing on the house. Selling a house on your own can be difficult but it is possible.
Spring is the best season to sell a home. May is the top month for home buying due to the warmer weather and the start of summer. Warm weather causes a boom in the market because school has finished, landscaping looks better, and home tours and open houses can accommodate more potential buyers due to extended sunlight.
An appraisal is an approximation of your home’s worth. This is useful information to your loan officer because it shows how much value your home has and what it’s worth in the current market. An appraisal is done by a home appraiser and is typically conducted after the purchase has been agreed upon by the buyer and seller. An appraiser will walk around the home and take note of what features the house contains and the conditions these features are in. Home appraisals are usually paid for by the seller.
A real estate agent can be found through referrals, online searches, and other sources. Ask family and friends if they recommend a specific agent in the area. You want to choose an agent who you trust to make the home selling process as easy as possible. Since you’ll be spending a lot of time with your real estate agent, it’s important that you’re comfortable with them. HomeHunt can pair you with a reliable agent in your area if you’re not sure where to start looking!
Buying and Selling a Home
Many people sell their old house before buying a new one. This eliminates having to pay two mortgages and paying closing costs on two properties at once. The downside to selling first is that it leaves you without a home until you find a new one. The positives to selling a home before buying is that it leaves you with less financial stress, avoids two mortgage payments, gives you cash for your next home purchase, and may help you qualify for a new mortgage.
There are pros and cons of selling first, buying first, or doing both at the same time. Buying a home first will make your move easier. You can take your time moving into your new home and you don’t have to worry about renting a storage unit. You have more control over your moving timeline and you won’t have to find temporary housing after you sell your old home. You’ll have to pay two mortgages at the same time, which can be financially taxing, but it’s doable.
This may sound complicated but it is possible. If you choose to buy and sell at the same time, you need to remember that you’ll have to time the two transactions perfectly, negotiate with the buyer for a later closing date, and work with your lender to move fast to prevent any lag time between sales. Before you decide if you should buy and sell at the same time, consider the following questions: what can I afford? What kind of market is it (buyer’s or seller’s)? How quickly do I need to move? What condition is my home in? Buying and selling at the same time is possible if you work with the right people and have a team of professionals helping you every step of the way.
Buying and selling a home at the same time can be expensive. Before you commit to buying a home while still paying for your old one, determine if you can afford two mortgages at the same time. Work with your real estate agent to see how much money you can afford and if you’re able to own two houses at once before your old one sells.
A bridge loan is very helpful for people who are buying and selling their home at the same time, but have bought a new home before selling their old one. A bridge loan is a short-term loan that taps into the equity of your current mortgage to get the necessary down payment to complete your new home purchase. Talk to your lender about this option if you don’t have enough assets to complete your new home purchase without selling your old one first.
Yes. This will require the help of an experienced real estate agent and perfect timing between yourself, your buyer, and your seller. Unfortunately, closings can be delayed for a number of reasons so it’s important to always have a back-up plan to reduce the gap between closings. It can be difficult to schedule two closings on the same day, but with the right help, it can be done.
Finding the Right Agent
Hiring an agent who has experience in your neighborhood will help the home buying and selling process go more efficiently. The more experience an agent has, the better they’ll handle problems and negotiate with buyers and sellers. An experienced agent will help you contact other real estate professionals you’ll need to close on a new home or the one you’re selling.
All agents work differently and communicate with their clients in different ways. Be sure to ask a potential agent how they choose to communicate with their clients. You are the client and need to rule out what kind of communication you’re uncomfortable with and how often you want to receive updates. Whether you text, call, or email each other, it’s best to understand preferences before working with an agent.
You’ll be working closely with your real estate agent and need to know how successful they were with past clients. When you meet your agent, ask for a list of references to ensure they’ll meet your needs and are an excellent agent to work with. If they cannot or will not provide you with a list of references or referrals, be wary of hiring them.
Yes! This purchase is more than a financial transaction; it’s a big decision, and you need to open up to your agent about your wants and needs so they can help you find your dream home. Tell your real estate agent about everything you’re looking for, including your price range, ideal location, future goals, and anything else that will help your agent get to know you better.
Different agents handle different types of real estate transactions. The right agent for sellers will be proactive and technologically savvy to market your home professionally and efficiently. Social media experience is helpful to ensure that your home is being marketed on various platforms and to a broader audience. When searching for an agent, ask if they work specifically with sellers or buyers, or both. Focus on agents who work specifically with sellers because they’ll know the best ways to sell a house.
You’ll want to work with a buyer’s agent who has a good track record for closing deals. Great buyer’s agents will hunt down homes that are not on the market yet and get to know you to ensure that they find your dream home. They’ll contact homeowners in your desired neighborhood and try to make deals with owners who may be thinking about selling. You should trust your agent and communicate with them often to help the buying process go as smoothly as possible. Before hiring an agent, be blunt and ask if they’ll have enough time to help you. If they’re hesitant or won’t answer the question, find a different agent who can give you the time you need to find your dream home.