A REALTOR® fields many questions each day. This is because buying or selling a house is a huge milestone in someone’s life. Having a seasoned, knowledgeable REALTOR® can make the process less intimidating and easier because their job is to protect your interests in the transaction, and they understand the “ins and outs” of the home buying journey.
There are many questions that come up often, so we’ve shared the most frequently asked questions here:
What is the first step of the home buying process?
Unless you plan to pay in cash, the first step of the home buying process is getting pre-approved for a mortgage. This means you will need to go to a lender and get a pre-approval letter. This will not only show you how much you can borrow but also help you narrow down your home search.
How long will it take to buy a home?
Ideally, when you begin looking for a home to the point of closing escrow, it should take about 12 weeks. The escrow period itself is always around 30 to 45 days for those who are financing. If you have very specific requirements, the market is highly competitive, or there is low inventory, the process may take longer.
What is a “seller’s market”?
In a seller’s market, there will be an increase in demand for homes, which means it is beneficial to sellers. This occurs due to economic factors, interest rates going down, and low inventory. This can make finding and securing a home very competitive.
What is a “buyer’s market”?
In a buyers market, you will see declining home prices due to reduced demand. Many factors might affect this, such as economic disruption, interest rates being higher, and an increase in inventory. It may also be due to recent natural disasters in the area, such as fires.
How much do I have to pay an agent to buy a house?
When buying a home, you should pay no fees to your agent. This is because the seller always pays the agent fees. The listing broker will charge the fee to advertise and for their time spent. The buyer’s agent will be compensated by the seller.
Do I need good credit to buy a home?
Typically, if you plan to go through a loan program, then you will need a FICO credit score of 620 or higher. If you have a higher score, you represent less risk to the lender, which may affect the amount of down payment required as well as afford you a better interest rate.
How much should I plan to have for a down payment?
While a 20% down payment is considered ideal when purchasing a home, the average for down payments is about 6%. As a first-time home buyer, it could be much less. This means you may be able to put down anywhere from 3 to 5%. FHA loans only require 3.5% down, which is incredibly low.
Alternatively, VA loans and USDA loans can sometimes be made with zero down. These programs do require you to be either a military service member (VA loan) or be a low to-middle-income buyer (USDA loan).
Ready to get started on your home purchase journey? Working with the right REALTOR® is vital. Contact us today to learn more!