This can be incredibly daunting for first time homebuyers or even those that have not purchased a home in some time. The questions are endless and we answer those below and also provide some more resources.
Below is just the tip of the iceberg when it comes to questions from first time home buyers. There are hundreds of questions that one could ask so we’ve compiled a list of ongoing questions that buyers have so that we can focus on EDUCATING buyers BEFORE they make one of the largest purchases of their life.
This is why it’s important to choose a real estate team that knows real estate and can help you navigate the process of purchasing a new home.
A FIRST-TIME HOME BUYER IS DEFINED AS AN INDIVIDUAL WHO HAS NOT OWNED AND OCCUPIED A PRIMARY RESIDENCE WITHIN THE PAST THREE YEARS.
So even if you've purchased a home in the past, for financing purposes, if you haven't owned a home in the past 3 years, you're considered a first time home buyer.
There are different programs available to homebuyers depending on annual income, credit score and other factors. Some programs available throughout the year are the Down Payment Assistance program (available by county), State Housing Initiatives Partnership program (SHIP), which provides funds to local governments as an incentive to create partnerships that produce and preserve affordable homeownership and multifamily housing, Florida Bond Program and other programs we have available through our lenders that help with closing costs. Each program has limitations but can be an option for new homeowners.
When you start considering the opportunity of owning your own home, contact a real estate professional to help you get the process started. At Waypointe Realty, we conduct Buyer Consultations with each of our buyers to explain the entire process from beginning to end as well as take down the buyers criteria for a home.
Throughout this process, we recommend lenders for the buyers to choose from in order to get pre-approved to see what they can afford.
Yes, as long as you get pre-approved from a qualified lender so you have a good idea what you can afford. You don't have to apply for a loan until you go under contract on a property.
We offer free buyer consultations to all of our buyers to go over the details of the home buying process, but the main steps to buying a house are:
That depends entirely on the buyer. We've worked across the spectrum of time with buyers from finding a home and closing within 25 days to over 2 years. If a buyer has the motivation and means to close soon and finds exactly what they want, we can close as soon as 14 days, but typically 30 days. If a buyer wants to take their time and is not in a rush, it can take much longer.
In general it takes an average of 30 to 60 days to shop for a house, and 14 to 60 days to go from contract to closing. However, this number varies widely from area to area, and it's crucial that you have a handle on how long it'll take you.
How much a home buyer can afford is based upon income, credit score and debt to income ratio. Once you get that number from a lender through the pre-approval process, the only way to move the house budget higher is by asking the lender if you'll qualify. We don't want to have our buyers become house poor. Buying a house over your pre-approved amount can put a strain on your budget and remove the joy of homeownership. Costs to consider above and beyond the downpayment is the closing costs involved.
The main difference between FHA and conventional loans is the government insurance backing.
Conventional loans loans are not insured or guaranteed by the federal government, while the FHA program does receive federal backing. FHA has lower limits for credit scores and PMI is automatically added. The only way to remove that private mortgage insurance fee is by refinancing, while in a conventional loan it will automatically be removed once the 20% equity has been reached.
Note: A conventional mortgage loan can also be insured.
PMI (private mortgage insurance) is a type of mortgage insurance you might be required to pay for if you have an FHA loan (3.5% down payment) or a conventional loan with less than 20% down. The traditional way to avoid paying PMI on a mortgage is to take out a piggyback loan. In that event, if you can only put up 5 percent down for your mortgage, you take out a second "piggyback" mortgage for 15 percent of the loan balance, and combine them for your 20 percent down payment. Most people will just end up paying the PMI in their loan and drop it when they are able to refinance their home.
It's important to interview who you want to help you make the most important purchase of your life. We interview our buyers through our Buyer Consultations to make sure we're a good fit for the customer. Here are some questions to ask:
The inspection is the buyer's piece of mind. It is not required, but highly recommended. A buyer pays for the buyer's inspection and no one else needs to see the report unless authorized by the buyer. The only reason that would be requested is if we negotiate any repairs on the property based on the inspection report.
Inspections can range from $200-500 based on the square footage and add-on inspections (4-Point Inspection, Wind Mitigation, WDO Inspection, Septic, Water Testing). Some inspections will give you a discount on homeowners insurance
Many times buyers think the downpayment is the only expense when it comes to purchasing a home, however, closing costs are a big expense that is part of the home buying process.
Now this can be negotiated from the seller but it's not always guaranteed or even an option if there are multiple offers on the table.
Closing costs to the buyers are fees related to closing on the house such as your mortgage fees and title. For a more comprehensive list, we have created a blog specifically outlining closing costs for a buyer.
Closing costs are typically about 3% of the total purchase price, but your lender will be able to verify the exact amount based on the home.
When we represent our buyers, we always try to negotiate closing costs into the purchase price when possible, except when it can cost the buyer the deal. We never want to risk losing out on an offer by asking for closing costs, but we still try to make sure we are competitive, but aggressive in our offers.
The property taxes and insurance are based on the property. Each county has different tax millage which in turn affects the property tax amounts. You also cannot base the taxes from the current property owner because different exemptions, including the longevity of their ownership plays a role in the total price.
For any property you are interested in, make sure to submit it to your mortgage lender to get an idea of your monthly expenses which will include an estimation of your property taxes and insurance.
The simple answer is that if you're ready to buy, it's a perfect time to buy. For an actual market update to see what is going on in real estate, contact us to get a quick market report.
There are several things to ask before submitting an offer but, we've compiled 10 of the most important questions.
A knowledgeable real estate agent is well versed in asking and verifying these questions before submitting an offer and even before going to see the home.
Short sale and bank owned properties can be a great opportunity for a good deal, but may not be exactly what first time homebuyers are looking for. Many short sale properties need some repair and TLC as they are considered distressed. Here we have provided more information on short sales properties.
It's easy to get caught up in the aesthetics and beauty of a home, but there's much more to a house than just the paint and trimmings.
One of the most important things is can you afford it? Does the total monthly payment (taxes and insurance included) fit your budget?
Second most important thing to consider are the mechanics of a home:
Lenders who check your credit report will learn about a Chapter 7 bankruptcy for up to 10 years after the filing, while a Chapter 13 bankruptcy will stay on your credit report for up to seven years. Still, filing for bankruptcy doesn't mean you can't ever get approved for a loan. Depending on where your bankruptcy is filed, you may not be able to get credit during the bankruptcy without permission from the court. But once your bankruptcy is completed, your ability to get credit depends on your credit score and other factors.
Whenever you are ready to start the home buying process let us know.