by Michael Perna
on Wednesday, October 7th, 2015 at 2:28pm.
Whether it’s your first time buying a home or you’re just starting to think about buying a home, you may have many questions and concerns about the process. The most asked questions from buyers include the process, fees, and advice – here are the 10 most frequently asked questions, and their answers.
Unless you are paying cash for a house, you will need to get a mortgage. In order to know how much home you can afford, you will need to get pre-approved for a loan. This is the first-step in the home buying process.
How long does it take to buy a home?
Answer: Around 30 days
The timeline for finding a house varies greatly from person to person. Once you find a house and have an accepted offer, it usually takes around 30 days to close.
What does a REALTOR® do?
Answer: Almost everything
A REALTOR® is your most valuable asset when buying a home. They will walk you through every part of the home buying process. They will educate and inform you of all your options. They will represent you throughout the transaction and beyond.
There is a difference between a REALTOR® and a real estate agent; many people do not know this. A REALTOR® is regulated by the National Association of REALTORS® and subscribes to a strict Code of Ethics. A real estate agent does not. It is recommended that you work with a licensed REALTOR® to avoid potential problems.
How much do I have to pay a REALTOR® as a homebuyer?
In most cases, you do not have to pay your REALTOR® anything to help you purchase a home. The sellers pays their REALTOR® a fee, and then that listing agent pays the buyers agent for bringing the buyer and facilitating the transaction.
What’s your best advice for first-time homebuyers?
Answer: Trust the Professionals
Beware of advice from people who do not work in the industry. Real estate is a popular topic and almost everyone feels like they have some great insight to offer. In reality, the people who know best are the people that work in the business. Good REALTORS® have sold hundreds (maybe thousands) of properties. We know what to expect and what to look out for. Friends and relatives have only bought and sold a few homes, if any at all. Buying and selling a couple of homes does not make someone a well-rounded source of information. I’ve seen too many first-time buyers become persuaded by well-meaning friends and family, only to be disappointed later. Be confident in your decisions and trust the professionals.
What kind of credit score do I need to buy a home?
A 620 credit score, or higher, is recommended. As you are probably aware, a higher credit score offers better lending terms. This is an ever evolving topic, however, as loan requirements are constantly changing. There are some lenders who will approve buyers with a 580 score, sometimes even lower. Your loan officer will be the best source to give you a current answer for today’s lending requirements.
Are there special home buying programs that I should know about?
There are some great home buying programs to research. The main ones would be VA loans, USDA loans, and FHA loans. Knowing the difference between these loan types is very important. Other local options would include the The El Paso County “Turnkey” Mortgage Program and the CHFA SmartSteps Plus Purchase Mortgage Program. Both provide down payment assistance under certain conditions.
How much money do I need for a down payment?
Answer: It depends on your loan type. Usually 3% to 5% down.
The most common answer is 3% to 5% of the purchase price. FHA loans just dropped their requirement from 3.5% to 3.0%. There are also some conventional loans that only require 3% down. Veterans are usually eligible for a VA loan, which requires no money down. Properties in rural areas are usually eligible for a USDA loan, which also requires no money down.
What other fees are there, besides the down payment?
Answer: Mainly loan origination and closing costs.
The downpayment is usually the largest cost associated with buying a house. Lending fees are the second largest costs to homebuyers. Most lenders will charge between 2% to 4% of the loan amount for loan origination fees, depending on the loan type. Conventional loans usually have lower loan origination fees, but require more money down. Your loan officer will be able to help you determine how much you can expect to pay towards loan origination and closing costs.
When do I get the keys?
Answer: At Closing
Under normal circumstances, you will get the keys at the closing. A closing typically takes about an hour. In some cases, the lender will need time to fund the loan and you will need to pick up the keys after the loan has been funded. If you have a Friday evening closing and the loan cannot fund until Monday, you may not get the keys until Monday. Make sure to coordinate your closing to get the keys on the same day, if that is what you need.