Q. What is the first step of the home buying process?

A. Getting in touch with a lender and getting pre-approved for a mortgage. (Knowing how much you can afford narrows down your search to suitable properties and also helps prevent disappointment  caused by falling in love with a home outside the budget). Being pre-approved demonstrates that you are a serious buyer to both your real estate agent and the person selling their home.

Q. How long does it take to buy a  home?

A. Under normal conditions, the average time to complete the sale of a home is 30-45 days.

Q). What is a seller’s market?

A). In a seller’s market, increase in demand for homes drives up prices. A  few reasons for this include. Low inventory, low interest rates and economic factors (A lot of new residents moving to the area).

Q). What is a buyer’s market?

A). A buyer’s market is characterized by declining home prices and reduced demand. Several factors may affect long-term and short-term buyer demand, like: Economic disruption – a big employer shuts down operations, laying off their workforce.                                                                                            Interest rates trending higher, natural disasters, and high inventory can create a downward pressure on prices.

Q). How much do I have to pay an agent to help me buy a house?

A). Home buyers typically pay little to no fees to an agent when purchasing a home (some brokerages do charge a small administrative fee). The agent’s commission is paid by the seller at closing.  Occasionally buyers can’t find what they are looking for on the market, so they start looking at homes that are for sale by owner or the agent finds them an off market property.  If the seller is not willing to pay your agent a commission the buyer can compensate their agent by including it in the closing costs or rolling it into their loan. (I am always willing to show a for sale by owner home if it looks like it could be a good fit. I would rather risk not being compensated than have a client go by themselves unrepresented).

Q). What kind of credit score do I need to buy a home?

A). Most loan programs require a FICO score of 620 or better. Borrowers with higher credit scores represent less risk to the lender, often resulting in better interest rates and or loan conditions.

Q). How much do I need for a down payment?

A). A common misconception is that you need 20% down to purchase a home, but first time home buyer’s down payment average is only 3 to 5%. Some programs even allow down payment contributions from family members in the form as a gift.                                                                                     VA and USDA loans can be made with zero down. However these loans can be more restrictive and not everyone will qualify.                                       Some loans require you to carry private mortgage insurance if you are putting less than 20% down.

Q). Should I sell my current home before buying a new one?

A). If the built-up equity in your current home will be applied to the down payment on the new home, naturally the former will need to be sold first.    Some buyers decide to turn their current home into an investment property. In that case your loan advisor will still need to evaluate your risk profile and credit history to determine whether making a loan on a new home is feasible while retaining title to the old home.

Q). How many homes should I view before buying one?

A). Only 3. Just kidding! This isn’t House Hunters. As many as it takes to find the one that is the best fit for your needs.

Q).  What is earnest money?

A). When you make an offer on a home you will need to put down a deposit for the home (the amount can vary, but 1% of the purchase price is common). Earnest money is made in good faith to demonstrate – to the seller – that the buyer’s offer is genuine. Earnest money essentially takes the home off the market to anyone else and reserves it for you. The earnest money will be deposited in an escrow account and is applied to the down payment or closing costs. If the deal falls through during your inspection period, the money is returned to the buyer.                                                            If the terms of a deal are agreed upon by both parties, but the buyer backs out, (after the inspection deadline has come and gone) the earnest money may not be returned to the buyer. Sometimes certain contingencies in the contract will still protect your earnest money from being forfeited and occasionally mediation is required to determine which party is entitled to the funds.

Q).  How long can the seller take to respond to my offer?

A). Written offers should stipulate the time frame in which the seller should respond. Giving twenty-four hours should be sufficient, but some circumstances may require a shorter or longer time frame. If an offer expires without a response from the seller and the buyer is still interested in the property you can extend the offer.