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FAQs: First Time Buyers

Wednesday, January 20, 2021   /   by Madyson Woolhouse

FAQs: First Time Buyers

So, you've finally made the decision to upgrade from your too tiny, too expensive, too not-homey apartment?! CONGRATULATIONS! You are about to make one of the biggest purchases of your life. Scary, right? How do you know what you can afford? How long does it take to buy a house? What's the difference between an appraisal & an inspection? Do I have to pay for a Realtor®? So. Many. Questions. There is no such thing as a dumb question, so let's dig in! 

In order to ease the huge process of purchasing your first home, there's no doubt you will have to do some of your own research. While your Realtor® might be the expert, it's always a good idea to go into the process with a little bit of knowledge.

So our first tip to you is to educate yourself. Take the time to research the current housing market - is it a buyer's or seller's market? What about loans? Do I need to have a 20% down payment? While 20% is considered a favorable down payment, there are many options available if you cannot afford it at the moment. For example, you can avoid a down payment if you qualify for a VA loan. This type of a loan is a benefit available for veterans, active military & sometimes military spouses.

More options for lower down payments include the FHA, Conventional, & Renovation loan. 

- With this loan, you put 3.5% down & it gives you lower closing costs along with flexible credit requirements! 
Conventional - With this loan, you put 5% down. If you have a history of good credit, this loan is a great choice, however, private mortgage insurance is required on loans with less than 20% down! 
Renovation - Like FHA, you put 3.5% down with this loan. This is a great choice if you buy an older home & want to remodel it. 

The next step is to get pre-approved. Looking for a house without a pre-approval letter is like going to the mall without your wallet. You can look all you want, but when you find something you like, you won't be able to buy it (& that is just the WORST)! Talk with your bank & find out how much you can get approved for, this will also give you a better idea of what you should be looking for in order to stay within your budget. 

After you get that pre-approval, come find us & we will be more than happy to offer you our services for FREE! 

Once you've educated yourself a little bit more, gotten pre-approved, & found a Realtor, you will probably still have a lot of questions. Here's a list of the most frequently asked questions by first time home buyers:

1. How do I know what I can afford?
This is probably the most important question. The general rule of thumb is that a mortgage (including homeowners insurance & taxes) should not take up more than 25 to 30% of your net income. It is also a good idea to keep the cost of your home under two & half times your net salary. Remember to keep even the little costs in mind when thinking about your budget, such as: maintenance, property taxes & insurance, along with all your other bills. 

2. Do I pay my Realtor®
When you are the buyer, you can rest in the fact that the seller usually pays the Realtor® fees. When the seller pays the fees associated with selling the home, the Brokerage gets paid & then distributes the earned commission to all parties involved. 

3. How long does the process of buying a house take?
While every sale is unique, it's safe to say that the process might take longer than you think. The average closing day is about 30-45 days after an offer is accepted. 

4. What's the difference between an appraisal & an inspection?
The appraiser is the one who determines the value of a property, whereas the inspector is called once an offer is accepted & searches the house for any minor & major damages or concerns. It is important to remember that you will probably be paying for both of these services, so keep that in mind when creating your budget! 

Purchasing your first house can be very overwhelming, but we like to take that part off your hands & leave you with only the exciting parts of the process! If you have any more questions or want to start your search today, call us at (701) 261-9036! 

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