question-mark-1750942_960_720 1. What is the first step in the home buying process?
The very first step is to get pre-approved for a home loan from a reputable mortgage loan company (we can help you find one). This will do several things. It will tell you how much home you can afford, which will save you time when looking at homes to buy; it will also estimate how much will be required for a down payment and closing costs. Being pre-approved for a mortgage shows your real estate agent and home sellers that you are a serious buyer. See our Buyer Services page for the rest of the process.

Most real estate agents require a pre-approval letter before showing you homes,  especially if you’re looking at luxury properties.

question-mark-1750942_960_720 2. How long does it take to buy a home?
Once you have submitted an offer on a home and it has been accepted by the seller, it will normally take 30-45 days for your home to close, unless you plan to pay cash.

question-mark-1750942_960_720  3. What stays with the property?
Generally, if the item has to be removed with a tool, it stays.” Some items, though, are specifically included in the contract.  Drapes, window treatments, & pool equipment remain without negotiation.  Refrigerators and the washer/dryer do not come with the house unless it is written in the contract. The stove, dishwasher, & any attached microwave or vent hood stays, as do all light fixtures.

question-mark-1750942_960_720  4. What is a seller’s market?
In a seller’s market, prices are higher because there are more buyers than homes for sale, and this drives the price of homes up. It is simple supply and demand. This can happen when interest rates are low, as they are now, which creates more buyers. Also, home inventory may be low due to a lack of new home construction.

question-mark-1750942_960_720  5. What is a buyer’s market?
Declining home prices and reduced demand create a buyer’s market. Some things that might create this scenario is some kind of economic disruption, such as company closures and/or significant layoffs. Other causes of reduced demand might be rising interest rates, which reduces the amount of money people can borrow because the cost of the money has gotten higher. You might also see prices reduced in older neighborhoods close to a brand new subdivision.

question-mark-1750942_960_720  6. How much does it cost to buy a house using a REALTOR®?
There is no cost to work with a REALTOR®, as the commission is paid by the seller to the Broker who lists the house for sale. This commission is normally 6% of the sales price. Your agent will be paid a portion of this commission.

question-mark-1750942_960_720  7.  What does my credit score need to be to buy a home?
Most lenders are going to require a FICO score of 620 or higher. The lower your credit score, the higher the risk for the lender, which may result in a higher interest rate and a higher down payment. There are many types of loan programs available, especially for first time home buyers, so be sure to contact us about your particular situation before throwing in the towel. If nothing else, we can advise you on ways to increase your credit score to help you buy a home down the road.

question-mark-1750942_960_720  8. What is required for a down payment?
There are first-time homebuyers programs that don’t require large down payments that are in the 3-5% range. FHA loans, for example, require a 3.5% down payment.  Some programs allow monetary “gifts” from family to include in the down payment.

VA loans and USDA loans offer zero down. but there are restrictions. VA loans are only made to former or current military servicemembers. USDA loans are available only to low to-middle income buyers in USDA-eligible rural areas.

Certain conventional loan programs offer 3% down, but the borrower must carry private mortgage insurance (PMI). Repeat home buyers usually have equity from their home and often choose to put 20% or more down.

question-mark-1750942_960_720  9. What is PMI (Private Mortgage Insurance)?
PMI is insurance intended to protect the lender in case the borrower ends up in foreclosure.  FHA loans require PMI, as do conventional loans with down payments of less than 20%. We suggest you call our preferred lender, Tyler Home Mortgage, with your questions, as there are exceptions and the fees vary from lender to lender.

question-mark-1750942_960_720  10. Would it be a good idea to sell my home before I  buy a new one?
If you have equity in your home and plan on using it for a down payment on your new home, then yes, it would be wise to sell your current home. If you can afford to make payments on your current home and on the new home, then you will be able to take more time to sell your current home.

question-mark-1750942_960_720  11. What is earnest money?
When you make an offer on a home, your agent will ask for a check of 1-2% of the purchase price to go with it.  Earnest money shows the seller that you are serious about purchasing the home.  The earnest money, basically, reserves the home for you. This money is deposited into an escrow account. If you and the seller come to an agreement and a contract is made for the purchase, your earnest money goes toward your down payment and closing costs. If a deal cannot be made, your money is returned to you UNLESS you and the seller agree upon a price and you back out of the deal. You will want to ask your agent how you can protect yourself from the loss of your earnest money.

question-mark-1750942_960_720  12. How long can the seller take to respond to my offer?
Written offers should stipulate the timeframe in which the seller should respond. Giving them twenty-four hours should be sufficient.

question-mark-1750942_960_720  13. What happens if my offer is rejected?
Sellers can, and do, reject offers, especially if the offer is significantly less than the asking price. More commonly, though, sellers return a counteroffer.  You and your agent will review it to see if it is acceptable to you. This step can go back and forth several times, especially if repairs are being negotiated. In the end, if you approve a counter offer, you will have the house under contract.

question-mark-1750942_960_720  14. Do I need a home inspection?
YES! You have no other way of knowing the condition of the home below the surface. In addition, FHA and VA loans require home inspections.  This is the biggest purchase you will ever make, and it is well worth the peace of mind an inspection will bring you! If the inspection turns up problems that you did not know about, repairs can be part of your negotiations with the seller.

question-mark-1750942_960_720  15. How do I know that the sellers will leave the home in good condition after the contract is accepted?
Your agent will schedule a final walk through the night or morning before closing. This will give you a chance to see that nothing changed since you made the offer. You can also check to see if negotiated repairs were carried out.

If you have questions that aren’t answered here, please email your question(s) to us and we will do our best to answer it quickly!