First Time Home Buyer 101- Top 3 Questions Most First Time Home Buyers Have

Question #1- How Much Money Do I Need?

  • You need at least 3.5% down with a FHA loan, 3% down with a Conventional loan, and 0% down with a VA loan.
  • There are government grants available for down payment assistance. Ask your lender. If you need a lender, I can refer you to a top professional in the business.
  • You need a decent credit score to approve for a home loan. I’ve seen 590 approve but the rate will be higher. You can work with a credit repair specialist to improve your credit score.
  • Expect to pay around 3% of the home in closing costs. Closing costs include the fees are the fees the bank charges for taking out a loan, title insurance, and escrow fees to change over the title.
  • Did you know that you don’t pay for your Realtor? Your Realtor is considered the buyer’s agent. The seller of the home negotiates a rate with the listing (seller’s) agent and the seller pays the buyer’s agent and the listing agent.

Question #2- How Do I Make An Offer On A Home?

  • After you get pre-approved with a lender and set a budget, you hire a Realtor to show you homes. Hire a Realtor with experience, good communication skills, knowledge of the market you are buying in, a good attitude, trustworthy, and someone who doesn’t push you into purchasing a home.
  • When you find the home you love, have your Realtor run comps on the property that way they can guide you on what an appropriate offer may be. Your Realtor will share what knowledge they have on the home itself and if anyone else is interested, that way they can set you ip in a position to have the winning offer.
  • You will sign a purchase contract with your Realtor outlining turns such as purchase price, down payment, concessions (this is what you ask the seller to pay for), when the close of escrow will be, and how long the offer is good until.
  • You can make offers on homes site unseen and never sign a physical piece of paper. Everything can be done electronically, even signing legal paperwork! Just make sure that your Realtor is tech-savvy for this convenience. In Real Estate, “Time is of the essence,” and everything is time sensitive and documents signed electronically is a big time saver when you are in a time crunch.

Question #3 What Happens After My Offer Is Accepted?

  • When your offer gets accepted, you will deposit your earnest money with the escrow company. Your earnest money is the good faith monetary value that ensures that you are serious about buying the home. You will then be in the period of “Due Diligence,” which is also known as the inspection period. Your Realtor will give you recommendations on inspectors and will facilitate the whole process.
  • After your inspection period is over (usually about 10-days after contract acceptance), your Realtor and you will write a “wish list” of repairs and the seller will have 5 days to respond to whether or not they will honor all or some of the repairs. This is also when you can ask for concessions/money from the seller to fix a problem instead of them actually fixing something before the close of escrow.
  • If the seller response is unsatisfactory, you can cancel the contract and you will get your earnest money back. The only money you would be out is the money you paid the inspectors to investigate the home.
  • If the seller response is satisfactory, the transaction continues. If using a loan, your lender will have an appraisal done to make sure the home is worth the amount they are lending to you.
  • If the appraisal comes up short, your Realtor can renegotiate the purchase price. If the home appraises at value, the loan gets approved and the loan gets clear to close and the documents will be sent to the title company. The title company will make sure there are no liens on the home and will issue the title insurance and get the loan and title documents signed so you can get the keys to your new home!
  • When using a lender, the whole process from offer acceptance to close of escrow is around 30-40 days.

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