Common Questions from Inexperienced Home Buyers
Home buying can be stressful and confusing to people who are new to the process. There are fees, there are legal terms, there are inspections; for prospective homeowners, and especially for first-time prospective homeowners, it's easy to get overwhelmed by just how much information is out there. Asking the right questions can help first-time home buyers get through the experience with less trouble and stress.
What are the common expenses associated with home buying?
The most common expenses associated with home buying include:
- Earnest money. Earnest money is often around 1-2% of the sale price of the home, although the exact amount can vary. Earnest money is placed into an escrow account and held as a deposit on the home throughout the home buying process. When the purchase closes, earnest money is applied to the down payment or closing costs.
- Down payment. The down payment is a buyer's contribution toward the sale price of the home. This may be as much as 20% of sale price of the home, though some mortgage lenders will accept less.
- Closing costs. Closing costs include a number of fees. Because some closing costs depend on the cost of the house, this amount can vary. Sometimes closing costs are paid for by the seller if this can be worked into the contract during negotiations. Home buyers are encouraged to talk to their real estate agent if they would like to make a deal with the seller.
- Inspection. The home inspection may cost several hundred dollars and typically cannot be wrapped into the closing cost of the home. Instead, the inspection of a home must be paid for during the escrow period.
- Moving. Moving can cost hundreds or thousands of dollars depending on distance and other factors. Budget-minded home buyers are encouraged to start packing and investigating possible moving options early in the process to get the best deal possible.
What's the process for getting a mortgage?
Home buyers who need to know more about getting a mortgage should call their bank and/or mortgage lenders in the area. To obtain a mortgage, home buyers must collect financial paperwork like bank statements and tax returns for the last several years. It's also important to shop around for the right mortgage lender, so home buyers are advised to call several lenders before settling on the right one for them.
How long does it take to close on the purchase of the house?
Typically a home purchase will take 30–45 days, but sometimes purchases take longer. A longer close time may be negotiated into the contract if the seller or buyer would like additional time. Sometimes the close time is extended if the buyer experiences difficulty securing a loan, and other times the closing period will take longer if the home buyer requests repairs to the house before the sale closes.
Is it important to get a home inspection?
Home inspections help home buyers go into the home purchase with open eyes. Knowing what is wrong with a house and how much it will cost to make repairs may help a home buyer decide whether or not they would like to go through with a purchase. In addition, getting a home inspection can help a home buyer line up contractors for repairs to begin work as soon as the sale of the house has gone through. While an inspection may not be a necessity, it is highly advisable.
Is it important to have a real estate agent during the home buying process?
The real estate agent is the ally of the home buyer throughout the purchase process. Agents can negotiate the cost of the home and help homeowners navigate the complicated waters of property sale and purchase. While it is not an absolute necessity to have an agent for a home purchase, it is highly recommended.
For more information about the home buying process and for more answers to common questions, talk to your real estate agent. They can give advice throughout the acquisition of a new home and help prospective home buyers understand the process from start to finish.