Home buying FAQs
Your Questions, Answered – Clarity Starts Here!
How much house can I afford?
Most experts recommend spending no more than 25-30% of your monthly income on housing. Use a mortgage affordability calculator to factor in your income, expenses, and down payment.
What is the first step to buying a home?
The first step is to check your credit score and get pre-approved for a mortgage. This gives you an idea of how much you can borrow and strengthens your offers when making bids.
How much do I need for a down payment?
Typically, lenders require a down payment of 20%. However, some loan programs, like FHA loans, allow for as little as 3.5%, while VA loans may require no down payment.
What is the difference between pre-qualified and pre-approved?
Pre-qualification is an estimate of what you can borrow based on self-reported information. Pre-approval is a more official process where a lender verifies your financial data.
How long does it take to buy a home?
The home-buying process can take anywhere from 30 to 60 days once you’ve found a home and made an offer. The entire process, from searching to closing, can take several months.
What’s included in closing costs?
Closing costs can range from 2% to 5% of the home’s purchase price and include fees for appraisals, home inspections, title insurance, and lender fees.
What does a home inspection cover?
A home inspection checks the condition of the property, including the roof, foundation, electrical systems, plumbing, and more. It’s done to uncover any potential issues before purchasing.
What is a fixed-rate mortgage vs. an adjustable-rate mortgage (ARM)?
A fixed-rate mortgage has the same interest rate for the life of the loan, while an ARM has a variable interest rate that can increase or decrease after an initial fixed period.
What happens if my offer is rejected?
If your offer is rejected, you can either make a counteroffer or move on to other properties. It’s essential to stay within your budget and avoid overbidding.
Can I back out of a home purchase?
Yes, but it depends on the contract. If you’re within the contingency period, such as inspection or financing, you can back out without penalty. Outside of that, you may lose your earnest money deposit.
How do property taxes work?
Property taxes are based on the assessed value of your home and vary by location. They are typically paid annually or semi-annually, and can sometimes be included in your monthly mortgage payment.
What is private mortgage insurance (PMI)?
PMI is required if your down payment is less than 20%. It protects the lender in case you default on your loan and is added to your monthly mortgage payments.
How can I improve my credit score before buying a home?
Pay bills on time, reduce debt, avoid opening new credit accounts, and regularly check your credit report for errors.
These FAQs can help guide first-time homebuyers through the process, but it’s always good to consult with professionals, such as real estate agents or mortgage lenders, for personalized advice.