Especially Helpful if you are a first-time buyer
Q. I’m thinking about buying a home. Where do I start?
A. The first step for those considering buying a home is a credit check. It’s always a good idea to keep an eye on your credit reports so you can spot any mistakes and dispute them but it’s especially important for those preparing to buy a home. You should also avoid running up high credit card bills in the months prior to buying a home. Click here for more on Credit Scoring, here for info on Credit Repair.
These two steps will help you in the next phase of your game plan, mortgage pre-approval. A full-service real estate brokerage such as our own can assist you with this portion of the plan. Pre-approval includes analyzing your income, assets, and present debt to estimate how much house you can afford. This means the lender has committed to loaning you money subject to the house you choose to buy. Obtaining pre-approval for a loan will make you more attractive to sellers and demonstrates you’re a serious and qualified buyer.
After you know how much you can spend, you’re in the homestretch. This is the time for you to decide what you want and need in a home. Put together a list of features and benefits you want in a home, and a neighborhood. Think of such things as pricing, location, size, and amenities. If you can’t get a home at the price you want with all the features you’re looking for, figure out what features are most important to you and rank them in priority so you know what you’re willing to give, and take. A solid game plan needs a good coach. Our agents can offer assistance and information on communities, neighborhoods, builders, to assist you through all steps of the plan, and to help you make the most informed decisions you can, every step of the way! Click here for 10 Tips For Homebuyers.
Q. How much do I need to put down to buy a house?
A. The answer to this question depends on a couple of factors including whether you intend to use a conventional mortgage to finance your purchase or an FHA insured mortgage, your credit score, whether you currently own a home, etc.
The Federal Housing Administration (FHA) issues loan guarantees for moderate-income home buyers. Down payments may be as low as 3.5 percent of the purchase price of the home. FHA requires buyers to have a FICO score of at least 580 to qualify for the minimal down payment for its guaranteed mortgages. If your FICO score falls between 500 and 579, you must make at least a 10 percent down payment for a FHA-insured mortgage. If your FICO score is less than 500, you do not qualify for FHA-guaranteed mortgages.
If you offer a down payment of less than a 20 percent toward a conventional mortgage, you usually must obtain private mortgage insurance (PMI). The amount of PMI varies in relationship to the size of the mortgage and the amount of the down payment, but often totals one-half of 1 percent of the total mortgage. As the home buyer, you pay the premiums for PMI, but the beneficiary is the lender. If you default on the mortgage, PMI insures that the lender receives payment in full. However, even with PMI, many conventional lenders require a FICO score of at least 620 to approve a mortgage. See Sources for Your Down Payment and Determining How Much Home You Can Afford.
Q. How do I choose between renting or buying?
A. Owning your home means that your monthly payment contributes to your own net worth (instead of your landlord’s) as the equity in your property builds up over time. Furthermore, your home is what’s known as a leveraged asset, that is if you purchased your home with a mortgage, you likely did so with a down payment of anywhere from 3.5%-20%. Let’s say you put 10% down and that the average rate of appreciation for homes in the area you’re considering is 4% per year… while you put just 10% down you would earn the appreciation on your homes total value and thus if you purchase a $200,000 home the appreciation you would earn in that first year of ownership would be $8,000 (rather than the $800 on your $20,000 downpayment)! And a fixed rate mortgage ensures that you won’t be subject to periodic rent increases, so you can plan your monthly budget with confidence. Renters are at the whim of their landlord, who can raise the rent each year without a renter’s input.
Low mortgage interest rates have enabled more Americans than ever before to realize their dream of home ownership and save on income tax. Homeowners can deduct 100 percent of their mortgage interest payments and their property taxes, and new tax law benefits have allowed many to sell a principal residence and bank tax-free profits of up to $250,000 per individual or $500,000 per couple. A home is not only a shelter for your family but also a tax shelter for your earnings! Click here for more on Renting vs. Owning or try this financial calculator that will help you analysis and compare the cost of each option.
Q. With the internet and real estate search sites that help homebuyers search for homes, why do I need an agent to help me find a home?
A. The internet is a great place to start your home search and for researching the local housing market. You can also find a great deal of information on communities, neighborhoods and individual homes but how will you know who to trust when it comes to financing your purchase, which builders to consider and which are known for building a quality product that they stand behind, which neighborhoods are on the decline and should be avoided and alternatively which are likely to see above average rates of appreciation? Starting your home search online isn’t a bad idea however, once you’ve looked at what’s available, it’s a good time to get a professional involved!
Finding the right home is the only part of the process and once you find the house you want, the work really begins. You’ll need help navigating negotiations, loan approval, seller’s disclosures, inspections, repairs, and much more. Our agents will save you time, money, and provide access to a wealth of information and resources to help find that special home.
Q. If I’m thinking about buying a newly-constructed house, why do I need an agent?
A. Building a home often requires hours of research and decision-making. You must first decide what area you want to build in (in real estate location is extremely important) and which builder you want to use. After these initial decisions, you still have many choices including; floor plans, building materials, which lot to build on, features you wish to include and the list goes on.
Personalization and freedom of choice are some of the benefits of building a home, but they can also be very stressful. Not only will you want to think about what you and your family want and need in a home, but also what a future buyer may want… that is what will be good for future resale. Our agents will guide you through the entire home building process and help you through every step of the process. You’ll still get to make the choices on your own, but your agent will be there to ensure you not only get the best deal possible on your new home but they will also offer experienced advice, protecting you and your families best interests. See Tips for Buying a New Home and How to Negotiate on a New Home.
** It’s important to note that buyer representation comes at no cost to you, and that builders will not reduce the cost of the home should you elect not to work with an agent. Do not pass up an opportunity for free professional representation and advice?
Q. Once I start working with an agent, they work for me, right?
A. If you meet the agent at an open house then technically the agent works for the seller and he or she represents the seller’s interest and not your own. When you first meet with an agent, they should have you sign a disclosure form, which establishes that they have explained this to you. Although this agent maybe the listing agent and thus is responsible to the seller of a house, this does not prevent them from representing you and assisting you in purchasing the home. In this situation the agent cannot share such information as what the sellers will actually take for the home, nor can they offer guidance on negotiations and the home’s true market value. If you’re not interested in the agent’s listing, he or she can assist you by determining exactly what it is you’re looking for and directing you to the right house at the right price.
Q. What is a Buyer’s Agent?
A. A Buyer’s Agent represents you and your interests and does not represent the sellers of the home you are interested in purchasing. Their job is to be your advocate and the agent’s sole responsibility is to you. There is no cost to you for this exclusive representation however, you do need to have an explicit arrangement and contract with your agent confirming this status. See Why Use a Realtor When Buying a Home?
Q. How are buyer’s agents compensated?
A: BUYER’S DO NOT PAY REALTOR COMMISSIONS. If you are a buyer there is no reason you should not be working with a Realtor! A real estate agent will help you understand everything you need to know about the home buying process and save you time and money.
A fee or commission is agreed to when the seller’s agent takes the listing. This commission is a percentage of the total sales price (usually 6%) and is shared between the seller’s (or listing) and buyer’s (or selling) agents. Thus it is actually the seller’s agent that pays the buyer broker and buyers do not pay commissions. (the same goes for new homes / new construction – a builder will not reduce the price of the home if you elect not to work with an agent and in fact builders encourage their customers to work with a professional real estate agent.)
Q. Should I apply for a mortgage even before I find the house I want?
A. It is an excellent idea to get Pre-Approved for a mortgage early in your house search. When you find a house you like, your offer to buy is much stronger if your agent can assure the seller (backed up by documentation) that you will not have a problem securing a mortgage. An actual mortgage application requires a specific house/address and thus cannot be performed until after the owner accepts your bid. Note: A pre-qualification is NOT the same as Pre-Approval.
Q. As a buyer, do I have the right to obtain past information about the property I’m interested in purchasing?
A. Yes. Sellers are required to disclose all known property defects. With your agent’s help, you can find out what has happened to the property in the past. You should make careful observations, examine the property, and request or otherwise obtain any other important records. Put these requests in writing. If you decide to put an offer on a home, it’s important to have a professional inspection completed before closing.
Q. Once my bid is accepted, what happens then?
A. Included in your purchase contract will be contingencies making your purchase subject to factors such as the home passing inspection and your approval for financing. The purchase contract will cover all terms of the purchase/sale including a closing date. Your agent will be able to go over all this with you on an individualized basis.
Q. What is involved in a Home Inspection, and why is it done?
A. Once you have found a house you like and have agreed on a price with the seller, you have the right to have the house inspected by a licensed home inspector. If you have this done (which I always recommend), you pay the inspector. The purpose of a home inspection is to identify major problems areas in the house, such as with the roof or heating system. It should not be used as a “laundry list for the seller to address every item that is turned up” and if the house is not new and has been lived in it’s likely to have minor items of note. If issues are found, your agent will help you determine which issues should be of concern and he or she will assist you in negotiating their repair with the seller. This may involve a change in the house price or having repairs made prior to closing.
Q. Do I need a lawyer?
A. It is not a bad idea to have a lawyer at least review your Purchase and Sale Agreement before signing it however, it is not required. It is a lengthy and detailed document that is legally binding, and once you sign it you cannot say you’ve changed your mind on some point or didn’t understand something and want to change it now.
Q. Why should I use Jason Opland and The Opland Group to buy my house?
A. We will take an active role in finding you the right house! Every aspect of purchasing your new home, from pricing to negotiations will get my highest level of attention. In our field, reputation is everything – we want a happy client who would recommend us to their friends and the only way we know how to do that is to provide exceptional service. Communication, effort, and attention to detail are what you’ll get when you buy with us!
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