As a real estate agent in the Destin and South Walton area, a portion of my customers are embarking as first time home buyers, looking to establish their vision of the American Dream.
Frequently Asked Questions From First Time Home Buyers
& Other Valuable Information
What Is The First Step In Buying My First Home?
Step one in my opinion involves getting “pre-approved” by a local mortgage lender. This will involve the lender assessing your ability to borrow money for your first home. This process will allow you to actually see “what” you can afford” (which, by the way, is invaluable information needed in finding a home), and what, if anything, is impeding you from more purchasing power (credit issues, debit-income ration, etc.). By revealing what you can reasonably afford, your Real Estate agent will be able to effectively work with you to find your first home. Also, your lender will be able to inform you how to improve your credit if it is lackluster.
How Much Money Will I Have To Put Down?
(Before selecting the “type” of loan, do your homework. Not all loans are equal, and should be assessed completely before selection.)
-While several factors affect the amount of your down payment, it is possible in some areas to qualify for 100% financing and closing cost assistance on detached single-family homes (USDA).
-Buyers qualifying for VA loan programs will enjoy 100% financing in most cases, but are restricted to certain types of property uses(i.e. – cannot purchase property for income purposes.)
-Traditionally, conventional loans range from 5% down to 20% down on homes, while condo purchases typically range from 15-50% down.
-FHA loans can help first time home buyers with down payments as low as 3.5% with some closing costs included in the purchase price.
How Long Will It Take To Close On My Home After My Offer Is Accepted?
In a non-short sale purchase of a built home, a buyer can reasonably expect to close on a home within 30-45 days. The process of a home purchase involves several different parties working together to effectively help you close on your home. From the moment your offer is accepted, your agent will begin to notify your loan officer, the closing company, escrow company, inspection company, insurance agents, etc. to make sure you are buying what you intend to purchase… smoothly, and without any surprises.
In a short sale situation, the seller is in the early stages of “losing” their home to the bank if they do not move swiftly to catch up on payments or make a sale. The term “short sale” is derived from the fact that the home owner is “selling short” of the amount they currently owe on the property and is in no way indicative of the length of time it takes to purchase the property. Short sale transactions often take 120+ days t0 close and short sales lasting over a year are not unheard of.
I Have Bed Credit, Can I Still Buy A House?
In a word, maybe. By asking your lender of choice to “pre-qualify” your for a home, he/she will be able to unveil the true wounds in your credit history and be able to “coach” you in the ways to improve your credit score. While you may be able to qualify for some loans with a credit score above 620, it is probably wise to improve your credit score to less risky levels before applying for a loan. Talking with your lender is the best course of action to see if you qualify to purchase a home.
What Should I look For In A First Home?
“Location, Location, Location.”
A first home should be relatively affordable and not max out your budget. While it can be tempting to buy the biggest house on your list, purchasing well within your home-buying budget is very important in setting yourself up for success. Unless you are buying a new home, most first time home buyers will be looking for a “good deal”, in which a good deal of elbow grease and commitment will be needed to get the property up to prime shape. Having a realistic budget for your home (not the maximum approved amount), will allow you to make improvements, and have wiggle room for projects and emergencies along the way.
Savvy buyers always have the future in mind. When buying any home, keep in mind that you will likely sell it down the road. (i.e. – Homes with 3+ bedrooms and 2+ bathrooms are very popular, be weary of dysfunctional floor plans and disruptive “flow”, location, etc.)
I Want A Good Deal. What About Bank-Owned Properties?
Bank owned (REO) properties have long intrigued buyers from all sides. While looking like gold in a coal stack on paper, REO properties are often neglected and need work to get back into top shape. Talk to your lender about financing options for “fixer-uppers”, as some loan products offer some assistance in this area. If you have the cash on hand, know a few reputable subcontractors, and are pretty handy yourself, you may be able to create a fair amount of equity in your home very easily.
This Post is intended to be On-Going and Interactive. If you are interested in learning more information about purchasing a home, or want to submit a few Q’s for A’s, please email me.
Don’t Just Visit… Live Here