Home Buying FAQ

A Realtor is a must when you’re buying a home; especially if you are a first-time home buyer. Your Realtor will be your partner throughout the entire real estate process. You’ll have a licensed guide to help you understand your options and make decisions that benefit you. Realtors know what homes are for sale right now and will put homes in front of you that match your wish list. They’ll be by your side through negotiations, closing, and beyond too.

After making an offer, buyers typically take 1-2 weeks to schedule a home inspection and negotiate based on the inspection’s results. Once the offer is accepted, you will have somewhere between 10 – 14 days to sign the Purchase & Sale Agreement. In that time, you will also apply for a mortgage. This is where the wait comes in. It can take lenders up to a month to issue a mortgage commitment, and they may need additional information at that point too. So, for most home purchases, there will be almost 60 days between your offer being accepted and closing. Upon closing, you’ll receive the keys to your new home.

Your credit score will come into play when you are talking to mortgage lenders. If you have a high credit score, you will likely be offered good lending terms. If you have a really low credit score, you may be offered poor lending terms (high interest rate) or refused a loan all together. When buying a home, a credit score of 620 or higher is recommended.

The largest cost you need to be prepared for is the downpayment on your new home. The cost of your downpayment will really depend on the type and length of loan you get. While there are a few loans that require no money down, most home buyers have to put down 3%-5%.

The second largest cost to home buyers is their lending fees. Lending fees will again depend on the type of loan you get. Talk to your loan officer to get a precise idea of what you will owe. You should expect a loan origination fee that is 2%-4% of your loan. Some loans may have a lower loan origination fee but they typically require a larger downpayment to compensate.

The first step in the home buying process is obtaining financing. Before you start looking for and at new homes, you need to speak with a lender about getting a mortgage. Getting pre-approved will help you:

• Understand the costs associated with buying a home (including down payment, escrow, real estate tax, and many other costs often overlooked by first-time homebuyers).
• Catch & correct any credit errors affecting your credit score.
• Close on your new home faster. Pre-approved buyers can close quicker than pre-qualified buyers because they are several steps further into the mortgage process with their lender.
• Set budget expectations. Pre-approval will give you a solid idea of the price ranges you should be looking at.

Your Realtor can tell you more about why getting pre-approved before looking at homes is important.

The offer that you make has a “life”. The life of your offer may vary from 12 hours to several days. Your Realtor can help you determine the best life span for your offer based on the specifics of your purchase. For example, if you like a newly listed home that likely has other offers, your Realtor will likely recommend an offer with a shorter life. On the other hand, if the home you want has been on the market for several months and is located fairly far away, you may want to allow a couple of days before the offer expires.

Once you make an offer, you’ll receive one of the following responses:

• Accepted
• Counter Offer
• Rejected
• No Response

Most likely, your offer will be accepted or you will receive a counter offer. In a few instances, your offer may be rejected or go without a response. This is often associated with sellers feeling low-balled.

Sellers want to sell their homes. That’s why offers are not typically rejected. Instead, most buyers expect a counter offer. If a seller does reject your offer, you can make a new offer. Since most sellers only say no to offensively low offers, if your first offer is rejected, you should re-evaluate with your Realtor before making a second offer.

An accepted offer means you’re halfway there. However, there’s still a lot to do between contract acceptance and closing before you become a homeowner; including:

• Inspections – you have the choice between several types of inspection when you’re buying a home. In fact, your offer will likely hinge on satisfactory inspection results. At the very least, a home inspection is necessary. You would be wise to consider other inspections including pest inspection, radon test, chimney inspection, etc.
• Mortgage Application – the mortgage process will require a lot of documentation on your end. If you’ve been pre-approved, you’ve likely provided the bank with the majority of this information already. This will make completing the mortgage process quicker.
• Title & Misc. Paperwork – as you inch closer to completing the closing on your new home, you’ll need to take care of the title, abstract of title, house survey, and more paperwork.

You’re Realtor and Lender will be a valuable resource throughout the entire home buying process.