Advice for First-time Homebuyers
As a first-time homebuyer, the process of buying a home can be exciting and frightening all at the same time. Sure, it’s easy to look at homes online, but what’s next? How do you start the process? And how much money are you going to need to buy a house?
Here are answers to seven of the most common questions first-time buyers have.
Do I need a Realtor?
Absolutely! An experienced real estate agent knows the ins and outs of the home buying process and will work on your behalf to get you the best deal. That advice and guidance is invaluable, especially when it comes to negotiating price and repairs.
As your agent, I can show you any home that is on the market, so it doesn’t matter which company it is listed with. You don’t have to reach out to the listing agent, I can get you in the door.
What is a Pre-Approval Letter & Why do I need one?
Before you start seriously looking for a home, you should talk to a mortgage specialist to determine how much you can afford. The lender is going to look at how much money you make and how much you have saved as well as your credit score. Then the lender will issue a written pre-approval letter for a set amount. If you are serious about buying, you must get pre-approved because you cannot put in an offer without a pre-qualification letter.
Myth: You must put 20% down to buy a house
It’s a common misperception. Many people mistakenly believe that they must have a 20% down payment to buy a house. While it’s fantastic if you can put 20% down, you don’t have to have that much money saved to buy a home. In fact, the vast majority of first-time homebuyers put 3.5% to 5% down. Veterans may be eligible for VA loans with no money down. Doctor’s loans also require very little, if anything down, and the value of the loan can be over a million dollars.
What are closing costs?
When you buy a home there are whole lot of things you have to pay for, and they’re lumped together in what we call closing costs. There are taxes, inspections, document preparation fees, insurance, etc. In Pennsylvania, they can add another 5 to 6-percent to the purchase price and that’s something you are going to have budget for in addition to your down payment.
What is Seller’s Assistance?
A lot of first-time buyers have saved enough money for a small down payment, but they don’t have enough money for closing costs, so they ask for seller’s assistance, which can significantly reduce the amount of money that they need to bring to the table. Seller’s assistance is where you ask the seller to pay for part or all of your closing costs. I always tell my clients that a seller isn’t just going to give you money out of the goodness of their hearts. Instead, they are going to add the cost of the closing costs to the sales price. For example, if you are buying at $200,000 home and are asking for $6,000 in seller’s assistance, that raised the purchase price of the property to $206,000.
How long does the homebuying process take?
Once your offer has been accepted, it’s usually 45 to 60 days before you close on the house and move in. That’s because it takes time to inspect the home, conduct an appraisal, and review your mortgage application. You can close in as little as 30 days, but that’s not as common.
Who pays the realtor’s commission?
The commission comes from the seller. It is divided between the seller’s brokerage and the buyer’s brokerage and that’s how your agent gets paid, since agents don’t earn a salary. They work on 100% commission. As a buyer, all you pay is an administrative fee which is usually less than $700.
Still have Questions? Reach out to me for a free Homebuyer Guide.
Even if you’re not ready to buy right now, that’s okay. The better prepared you are, the smoother the process will be when you are ready to buy a home.