BUYER FAQ
What’s the first step in the home search process?
The first step is simply deciding if you are interested in owning a home instead of renting. Next, you’ll want to figure out how much you could afford as a monthly payment for housing. From there you can connect with an agent who will help you figure out what types of homes you are likely to find in your budget. Based on your responses, you will create a custom plan for finding your first home!
How do I start finding the right home?
Go check out places you like! Once you’ve got a sense of your monthly budget and down payment, then you will know the price range of homes you can afford. Your price range, along with the most desired elements of your future house, will create your baseline search criteria. Online searches and properties your agent finds will give you options to chose from. You’ll want to see properties in person so you can make accurate judgements about the market and your preferences.
How do I know if I am ready to buy a home?
This is a very personal question. In fact, for most people, it has more to do with desire and commitment than finances. If you are thinking about it and can reasonably expect to find something you both like and afford, then chances are you are ready.
In its 2023 Buyers and Sellers Generational Trends report, the National Association of REALTORS® reports that 38% of buyers said their primary reason for buying a home was “it was just the right time” and only 2% of buyers “wished they had waited”.
How much money is needed as a downpayment on a home?
Technically you can buy a home with 3.5% of the purchase price as down payment. Ideally you would save 20% of the purchase price. There is a lot of flexibility with how much is required based on what loan option you elect to go with. Either way, though, the most important thing is to understand what your monthly payment will be. Making sure you are comfortable with your payment is the main factor to prioritize.
Your debt to income ratio (DTI) is simply all your debts divided by your pre-tax income and expressed as a percentage. This would include any credit cards, loans, auto, or housing payments ( rent or mortgage ).
For example if you earned $6,500 a month and paid 300 on student loans, 200 on your car loan, and 2000 in rent then your DTI would be 38%.
How does getting a mortgage work?
Getting a mortgage can be broken down into two parts - before and after your offer is accepted. The first part is to get pre-approved by the bank, which means they have looked into your finances and determined how much money you are eligible to borrow. To do this you submit a mortgage application along with your financial info ( tax returns, current debts, savings, etc… ) and have a credit check. Once completed the bank will issue you a pre-approval letter stating they have checked out your finances and indicate how much you are allowed to borrow.
The second part of getting the mortgage comes into play once you have a specific property under agreement. During that stage the bank underwrites the loans and also conducts their own research to ensure the property and condo association don’t have any red flags. They also assess the price independently with a bank appraisal. Once that is completed they will officially be ready to fund your purchase.
How long does it take to buy a home?
This process varies depending on how long it takes to find the right property. Some people find one in two weeks and for others it can take several months. However, once you get an accepted offer then you will typically be able to close on the property and move in between 45-60 days later.
When during the home purchase process do I need to make payments?
There are three times when payments are made. An earnest money deposit, typically $1000 is paid with the accepted offer. Generally, 5% of the purchase price will be paid about 7-10 days later when the purchase and sale agreement is signed. The remaining deposits are paid on the day of the closing.
Are home prices negotiable?
Some are! This depends on the property and the state of the market. There are homes which are priced just right and have the most sought after features, and those typically have some competition. With others there is room to negotiate. Your agent can advise about pricing and where there is room for negotiation.
How will I know if I am paying a fair price for a home?
This is part art and part science! If a home is perfect for you, then it would stand to reason that you would be willing to pay more than someone who thought it was average. Personal preference aside, though, looking at Comparative Market Analysis will show what similar homes are selling for. So long as you are around that range then you are likely paying a fair price.
What happens at a real estate closing?
At the closing you and the closing attorney will sign all the necessary documents to complete the sale of the property. They will also facilitate the payments to the seller. Once that occurs you will be the legal owner and responsible for the mortgage. The attorneys will record the change in ownership with the registry of deeds and you will be the proud owner of the home! Generally you will get your keys that same day once everything is officially on record.
How does working with a real estate agent help?
A real estate agent will make the process of finding and securing a home more enjoyable and brings clarity and strategic thinking to the process. An agent saves you time and money by utilizing their understanding of the buying and selling process, specific industry knowledge, and local market experience. In addition, they can help you with referrals to great lenders, attorneys, home inspectors, contractors, etc…
The idea is that the agent is a full time resource working together with the buyer as a team towards finding and getting the right home. An agent is a full time professional to help advise, coach, analyze, and actually get their client the outcome they want.
In its 2023 Buyers and Sellers Generational Trends report, the National Association of REALTORS® reports that 86% of buyers used an agent and 29% of buyers found the home they purchased through an agent.
What do I need to think about if I have a rental lease currently?
If you have a lease then the important thing to consider is how getting out of your contract early would work and how much it may cost. Is there a set fee and amount of notice needed? Would the owner let you out without penalty if you find a replacement?
Once you can isolate the costs associated with ending the lease early you know how much overlap with a home and a lease is possible. Since you never know when you will find the right home to make an offer on, you will want to start looking at least six months before your lease is up. Otherwise you may not have sufficient time to find before feeling the pressure of needing to renew your lease.
Coming up with a specific plan on how to handle this with each client is something covered in the initial buyer consultation.
How do I know if it’s better to buy or rent?
This is a very important - and personal - question. There is no set answer as people want to buy for lots of reasons including a sense of community, beginning a family, having decided they don’t want to pay so much for someone else's mortgage, etc…
Typically if you plan to own the property 3-5 years and/or feel that you would be be able to rent it out for enough to cover your expenses, it can make sense financially.
You may want to figure out how much you will spend on rent vs. the costs of ownership over time. There are a number of calculators in the resource section that will do this and allow for various inputs (from basic ones to really sophisticated). Should you want help devising an accurate model please reach out and we can go through a rent vs. buy comparison together.
