Buyer’s FAQ

Am I ready to own a home?

You are probably ready to buy a home if you have a good credit score, money saved up for a down payment and closing costs, and make a stable income. However, answering this question requires more than just a knowledge of mortgages, down payments and credit scores. Home repairs and maintenance become your responsibility as a homeowner. Are you ready to get that leaky roof fixed, unclog that kitchen sink or replace that broken dishwasher?

Is my credit good enough to buy a home?

This question is especially important if you need a mortgage. You can qualify for a home loan backed by the Federal Housing Administration (FHA) with a 10% down payment and a minimum 500 credit score. However, the approval process may be difficult and you’ll pay a much higher interest rate than you would with a higher credit score. A higher credit score often leads to a smoother loan approval, and a much lower interest rate and monthly payment. Conventional lenders typically require a minimum 620 score, but they’ll likely reward you with a lower rate if your score is 740 or higher.

How much money do I need to buy a home?

You’ll need enough money to cover your down payment and closing costs, depending on the loan program you qualify for. Your down payment is an upfront lump sum you pay to a lender to buy a home. Standard loan program minimum down payments range from 0% to 3.5%.

Closing costs typically run between 2% and 6% of your loan amount. They often include one-time lender and title fees related to getting approved for a mortgage, and the ongoing costs of your home such as property taxes, homeowners insurance and homeowners association (HOA) fees.

What is the first step in buying a home?

The absolute first step is to get approved for a mortgage. Without being approved for a mortgage it will be quite difficult, if not impossible, to purchase a new home.

Should I sell my current property before buying a new one?

This is a tricky question, and the answer primarily depends on one’s funds and ability to find temporary housing. If you need more equity to purchase a new home or meet a mortgage plan, then it is best to sell your current home before purchasing your next one.

Should I do a home inspection?

Yes. A home inspection is one of the most vital steps when purchasing a property. A professional inspector has a keen eye for how well the house has been taken care of. The inspectors can comment on structural and cosmetic issues, along with any local code issues. Moreover, a home inspector will help you better determine the home’s value.

Should I do a final walk-through?

A final walk-through is not required but highly recommended. Final walk-throughs give buyers a chance to make sure nothing has changed since their initial inspection or previous visits. Also, if repairs were requested as part of the sale offer then a follow-up visit ensures all repairs are done according to the agreement and contract.

How does earnest money work?

Earnest money is similar to a deposit when renting a place. It is made in good faith to demonstrate to the seller that the buyer’s offer is legitimate. The amount is usually 1-2% of the selling price and essentially takes the property off the market. The money also gives the buyer extra time to conduct a title search, get an inspection and property appraisal, and financing.