Common Questions from First-Time Buyers

If you've been renting your whole life, taking the first step to purchase your first home can be met with great hesitation. My advice is to take baby steps. Making an investment that large is extremely stressful and you must be well educated with the process before you begin. There are so many things that must be in line before you sit down at the closing table, and here are a few answers to the common questions that many first-time home buyers may have:

What do I do to get a loan?
You can easily get online and use a mortgage calculator to figure out how much you could afford. As long as the amount you can afford equals the prices of the homes you're interested in then you can qualify for a mortgage. Talking with a mortgage broker is the first step to starting a mortgage. They will let you know what kinds of mortgages the lenders are offering and will research to see if you qualify for any other programs that might be right for you. My suggestion is to go to a mortgage broker prior to viewing homes just to see how much you can afford to spend before you go out and spend countless hours driving around looking at homes.

How do I search for the right lender?
Like any large purchase, finding the right lender requires a great amount of shopping around. Shopping for different lenders is tedious, but can save you a lot of money in the end if you find the right one. Different lenders offer different rates, fees, and points. You can find many on the Internet, but your real estate agent should have the names and numbers of many great lenders. It typically takes 4-5 weeks to be approved for a loan.

What other costs are involved with buying a home?
Unfortunately, the costs associated with buying a house are expensive. First of all, when you submit an offer you must provide an earnest money deposit, which is roughly 1% of the purchase price. However, the down payment is something completely different than the earnest money. At closing, there are attorney fees, lender fees, and every other nickel and dime fee known to man. Of course, you will pay for the utilities every month during ownership of the home. Depending on where your home is located, you could have homeowner's association dues that are either billed monthly or quarterly. And don't forget Uncle Sam. You'll definitely have property taxes, which will also include city or county.

Should I use a real estate agent?
Of course. As I mentioned before, buying a home is a large investment and since it's your first time then you need the assistance of someone that can guide you through the process and make the experience much easier. A real estate agent has a wealth of knowledge about the market conditions, school systems, and communities that might be suitable for you. And don't fret-the commission is paid by the seller, not the buyer. The agent will save you hours of wasted time driving around looking for homes or studying the classified ads. They have the software and technology that allows them to search and pinpoint homes that area ideal for you. They'll also provide you with financial advice and can point you in the direction of a mortgage broker.

Once I find the house, what happens from there?
When you find the house and successfully go under contract, the process is just beginning. This is when you will fill out your loan application and get the ball rolling on your financing. The loan will take 4-5 weeks to process and close. Meanwhile, with the home your real estate agent starts the process of setting up inspections and attorney dates. You will have a series of inspections including a termite inspection, home inspection, and radon inspection. The bank will also require an appraisal during this time period.

What happens at closing?
This is one of the scariest, but most exciting, moments of your life. You're minutes away from being a homeowner but you have a stack of paper in front of you that says if you don't pay the loan off you'll be in big trouble. At closing, you'll sit with your broker and the closing attorney. Sometimes the mortgage broker attends the meeting but this rarely happens. The closing agent will go through the closing statement and make sure that it matches what you received as your good faith estimate from your mortgage broker. They will then proceed to go through each document and explain the importance of each, all of which require initials or a signature. Don't hesitate to ask questions. Good luck with the house hunting and remember seek professional help in any area that you're not familiar with.