Home buying is a huge milestone. As a major financial investment, it helps to know the basics before digging into the process. Save time and effort by reading the answers to the most frequently asked home buying topics:
1. Am I ready to buy a home?
Ideally, you should have been employed for at least three years prior to the purchase of the home. Plus, your foreseeable income and over-all fiscal strength should be on an upward trajectory. Your financial history must also show a record of timely bill payments, a few long-term debts, and a savings account that is reserved for down payment and closings costs.
2. What is the first step in buying a home?
A mortgage pre-approval will let you know how much you can afford. This is why you should first seek out a lender specializing in your chosen area before canvassing your desired neighborhoods searching for that perfect home. Credit scores of 620 or higher have better chances of acquiring lower interest rates, though some lenders still accept buyers with below average scores.
Note that getting pre-approved is different from getting pre-qualified. Pre-qualification only gives the buyer a preconceived amount that the lender may offer, while pre-approval means that the lender has already verified the buyer’s financial status and credit history, with an assurance that a specified amount of loan will be released for the home purchase.
3. Should I hire a real estate agent?
Ideally, you should hire a real estate agent especially if you are a first-time homebuyer. You will be able to save time looking for homes and maximize your home budget as well. Experienced agents know how to make a competitive offer and negotiate with any and all contingencies in the sales contract.
As the home buyer, you are not really compelled to pay your real estate agent. The payment will come from the 6% standard commission fee from the purchase price. The amount will be shared between the seller’s agent and your real estate agent, as payment for bringing in the buyer.
4. How long will the entire process take?
Home buying can be tricky and complicated, from mortgage shopping to home selection. If you have a proactive real estate agent, the process may become faster, as he/she will regularly coordinate with all the people involved in the transaction (i.e. lender, home inspector, seller’s agent, title company).
Typically, the closing process takes approximately 30 to 45 days after the offer has been accepted.
5. How much do I need to pay for the down payment?
Depending on the mortgage terms, your credit history, and the type of property, the home down payment can range between 3% to 5%.
6. What are the other fees involved aside from the down payment?
Home buying fees include loan origination or lending fees which lenders charge between 2% to 4% of the loan amount. Then there’s the earnest money which is 1% to 2% of the purchase price, which may be used as part of the down payment later on, or for the closing costs. Otherwise, the buyer may still need to pay the closing fees.
7. Are there home buying programs that can help me with my purchase?
Unbeknownst to some, there are a lot of homebuyer assistance programs out there. The most common are the FHA loans, USDA loans, and VA loans. In Oklahoma, there is the OHFA Advantage, REI Down Payment Assistance, and Native American Homebuyer Programs.
8. How do I make a fair priced offer?
Based on the similar houses recently sold in your area, your agent can help you determine a fair offer. Bargaining of up to 5% off the list price is usually acceptable.
9. What if I changed my mind, can I back out of the deal?
A buyer may back out if the reason is based on the contingencies stipulated in the contract, such as failed home inspections or inaccurate appraisal. Otherwise, the earnest money may be forfeited.
10. When can I receive the keys?
If everything goes smoothly, the keys are given at the closing day, after the loan has been funded.
If you are you looking for your own dream home? There are lots of great homes in Bryan County, Oklahoma. So let us show you around. Call or email us today.