Should I talk with a bank before looking at homes?
The answer to the question is YES! There are tons of reasons why you should talk with a bank and get pre-approved before looking at homes. First and foremost, talking with a bank before looking at homes can help you understand exactly how much you can afford. There is no reason to look at homes that are listed for $250,000 if you can only afford up to $200,000.
If you’re a first-time home buyer, talking with a bank before looking at homes is strongly suggested, as there are many first-time home buyer programs available. These programs can vary from state to state and county to county, so knowing exactly what’s available to you, is critical.
Another important reason to talk with a bank before looking at homes is so you understand exactly what costs are associated with buying a home. There are many home buyers who don’t understand the difference between a down payment, pre-paid items, and escrows, which can be thoroughly explained by a mortgage professional. A mortgage professional can give you advice on the type of financing you should be looking to obtain and also whether or not you should request the seller to contribute towards your closing costs, also known as a seller’s concession.
Should I buy or continue to rent?
Buying a home can be a very solid investment. This being said, renting can also be a better option for some, depending on the circumstances. The current interest rates are incredible. A 30-year FHA mortgage can be locked in at a rate of around 3.5%. Since the interest rates are so low, it actually can be cheaper to pay a mortgage right now than paying rent.
There are questions that you should ask yourself before deciding to buy a home. One of the most important things to consider is the length you plan on staying in a home, if you were to purchase. If the answer is only a few years, it’s likely the better decision is to continue renting. Another question to ask yourself is whether you are ready to take on the additional “responsibilities” of owning a home. When owning a home there will be general home maintenance that should be done, are you ready for that?
Buying a home is a great option in many cases, but not always.
Can I find a rent-to-own property?
Can you find a needle in a haystack? Of course you can, but the probability isn’t very high. The same can be said about a rent-to-own property. A common question from home buyers is whether rent-to-owns exist or whether an owner would consider that option. They are out there, but there are somethings that you need to know before agreeing to a rent-to-own.
When an owner is offering “rent-to-own” as a possible financing option, they are taking on a high risk since in most cases, a rent-to-own buyer has a credit score that is not impeccable. Since an owner is taking a higher risk the terms for a rent-to-own must be considerably favorable for the owner. This often leads to less than favorable terms for a buyer. When looking at a rent-to-own as an option you can expect to provide a considerable amount of money down and a higher interest rate than what a lender is currently offering.
If you’re able to purchase a home by financing through a bank or lender, you will be better off because the terms will be more favorable.
I own a home, should I buy another before selling my current home?
There is truly no concrete “correct” answer to this question. There are pro’s and con’s to buying a home before selling your current home and the same can be said about selling your current home before buying another.
Buying a home before selling your current home
The biggest benefit to buying a home before selling your current home is the fact that you have a suitable property lined up. This can reduce the stress and pressure of having to find a home once your current home is sold. This however also can create disappointment and heartbreak. If you are unable to purchase a new home without having to sell your current home, you’re purchase offer is going to be contingent upon sale and transfer of title of your current home. If your current home does not sell in a timely manner, this can lead to you getting “bumped” by a non-contingent buyer and you losing out on the home you’re looking to purchase, which can be devastating.
Selling your current home before buying a new home
The time it takes to sell your current home is unpredictable. There is no crystal ball that exists that can tell you exactly how many days it will take. Selling your current home before buying a new home will put you in an ideal position to negotiate on the new home you’re purchasing due to the fact you are purchasing without the sale contingency of your current home.
One risk of selling your current home without buying a new home first is the chance of not being able to have a place to live. There are options if your current home sellers before buying another though. A “rent-back” can sometimes be negotiated with the buyer of your current home. A “rent-back” would allow you to retain possession of your current home for a certain number of days after closing at the expense of paying the buyers mortgage. A “rent-back” allows for additional time to find a new home.
Do I really need a Real Estate Professional when buying a home?
When buying a home, it’s strongly recommended you have a Real Estate Professional. There are many reasons why you should have a Real Estate Professional represent your best interests when buying a home. Keep in mind, all Real Estate Professionals are not the same! When choosing a buyers agent, make sure you know how to properly interview prospective Real Estate Professionals when buying a home.
Attempting to buy a home without a Real Estate Professional can really make the home buying process more difficult. Having a Real Estate Professional is always recommended when buying a home. One thing not to do when buying a home is calling the listing agent because you don’t want to “bother” your Real Estate Professional. This is one thing that real estate agents hate.
Who pays the Real Estate Professional fees when buying a home?
One reasons why buyers ask the question about the need of having a Real Estate Professional when buying a home is because they don’t understand who pays the Real Estate Professional fees when buying a home. There are no guarantees, however, in most cases the seller pays the Real Estate Professional fees.
Questions Asked While “House Hunting”
What is a short sale?
Before getting involved with a short-sale, it’s important you understand exactly what it is and what to expect from a short sale. The easiest way to understand a short sale is the sale of a home in which the proceeds from the sale are less than the balance of debts secured by liens against the property and the home owner cannot afford to pay the liens in full.
Before purchasing a short sale, you should consider things such as the time it can take for a short sale response, the fact that a foreclosure is still possible, and that many short sale properties are in disarray. Short sales are not impossible to buy but you must be patient and be in no immediate rush to move.
What is a foreclosure?
Believe it or not, foreclosures can actually be a smoother transaction than a short sale. A foreclosure, sometimes referred to as a REO, is a property that is owned by a lender. If you’re considering the purchase of a foreclosure, it’s important to understand that most are sold “as-is.” Foreclosures, if not purchased by an owner occupant, are often purchased by investors, fixed up, “flipped,” and sold to a owner occupant.
How is the neighborhood/area?
When buying a home, a common question home buyers have is regarding the neighborhood/area. As a Real Estate Professional, there are rules against steering and providing personal insight into specific areas and neighborhoods. This doesn’t mean that your Real Estate Professional cannot provide you with tips to help you choose the right neighborhood when buying a home. Many buyers wonder about the growth of the local economy, crime statistics, taxes, and local amenities. If you have a top Real Estate Professional when buying a home, you should be able to receive all of the pertinent information to allow you to make an educated decision on areas and neighborhoods.
How are the schools?
This is another question that Real Estate Professionals should tread very lightly with. There is no doubt that schools impact property values. Just like tips for selecting a neighborhood, a top Real Estate Professional should be able to provide you with names or websites where you can find information on the local schools so that you can determine whether or not the schools are acceptable to you or not.
What are the average utility bills?
When buying a home, it’s important to know what additional costs will be in addition to the monthly mortgage payment. Utility bills are just one of the additional costs to consider when buying a home. Utility bills can be obtained from the homeowner and in some cases, from the local utility company, who can provide averages over the past 12 months. Keep in mind, everyone prefers to have their home temperature different, so the average bill could be different if you were to purchase the home.
Questions Asked While Placing A Purchase Offer
How much should I offer the sellers?
When buying a home, you are the only one who can determine how much you should offer a seller. Certainly, it’s suggested you ask for your Real Estate Professionals' advice and thoughts, but ultimately you are the only person who can determine how much you should offer.
What is an earnest money deposit?
An earnest money deposit is also frequently referred to as a good faith deposit. When a buyer purchases a home, they provide the seller’s real estate company a deposit to hold in their escrow account. The primary purpose of this deposit is to show a seller you are serious about purchasing their home. The amount that is deposited is subtracted from the final figure that a buyer pays at the closing table. In most cases, the larger the deposit, the stronger a purchase offer looks to a seller.
How long does the seller have to respond to my offer?
There is not a standard answer to this question. A purchase offer will have a “life.” The “life of the offer” can vary from 12 hours to 3 or 4 days. There are many circumstances that can affect the length of the “life of the offer.” Your Realtor should know how long of a “life” to give to your offer. If you’re looking to purchase a home that is newly listed and the possibility of multiple offers exists, a shorter life is recommended. If the home you’re looking to purchase has been on the market for 3 months and the seller is located out of town, a 2-day “life” may be necessary and/or recommended.
What if my offer is rejected?
When a purchase offer is submitted to the seller there are generally four possible responses. The first is an accepted offer, the second is a counteroffer, the third is a rejected offer, and the final is an offer that is not responded to. If your offer is rejected, meaning the seller says no and doesn’t counter, you have the right to place another offer. It’s not very common for an offer to be rejected or not responded to unless a seller is offended by a low-ball offer.
Do I have the option to have any inspections?
When buying a home, you have the option to perform several types of inspections. The purchase offer you write can be contingent upon a satisfactory home inspection, pest inspection, chimney inspection, radon test, and many other inspections. In most cases, it’s recommended that when buying a home, you at the bare minimum have a home inspection. There are home inspection findings that are more common than others, however, no two homes are the same so it’s a great idea to get the home inspected.
Questions Asked After A Purchase Offer Is Accepted
What’s the next step?
Congratulations! Your offer was accepted, now what? Between contract acceptance and the closing date, there are many things that need to be completed. In a nutshell, after an offer is accepted, generally any inspections will be completed. After the inspections, you complete a formal mortgage application and last but not least, the title, abstract, survey, and any miscellaneous paperwork is completed. When buying a home, finding the perfect home is only one part of actually becoming a homeowner. Throughout the mortgage process, you should expect the bank to require documentation, letters, and other items from you to satisfy the bank conditions, so don’t be upset or surprised when this happens.
Do I need to do a final walk-through?
As a buyer, you have the option to perform a final walk-through. Is a final walk-through a requirement? NO. Is a final walk-through necessary? YES. Generally, when buying a home several weeks go by between when you last walked through your home. Lots of things can change during that time. When doing a final walk through a few things you should check is that furnace is working, the toilets are flushing properly, and there is hot water.
When is the closing date?
When buying a home, the excitement level is extremely high. It’s important to understand that the closing date in the purchase offer is a target and not a guarantee. Before you hire the movers and take time off from work, know that the closing date in the contract isn’t necessarily the date you will own your new home. Many buyers will ask their Realtor this question, however, it isn’t up to the Real Estate Professional when a closing will be. The attorneys are the ones who have to set the closing date and time.