5 important questions that home buyers forget to ask
December 2, 2016
Considering buying a home? If it's been a while or this is your first home, you may have some questions. Here's 5 of the top questions home buyers forget to ask right from the get go!
Hopefully our list will make your experience easier. For a stress free real estate experience combined with supporting your community, choose to work with Givepad real estate brand where a portion of their real estate earnings are donated to charity. There is no additional cost to the buyer or seller in the real estate transaction and givepad supports local and national 501(c)(3) approved Charities.
1. Where to begin?
You know the feeling you get before putting pen to paper? Sometimes you just stare at the blank sheet. Well, buying a home is kind of like that for some. It’s hard to know where to start, but once you do, the entire process can become much easier. Once you decide you're ready and able to buy a home, you should search for a mortgage banker. A mortgage banker can help you set realistic expectations and answer questions that come up as you continue your search for the perfect home. A mortgage banker also can prequalify you for a home and tell you how much the bank is willing to lend you. This comes in handy in getting the seller to accept your offer and may even give you an advantage in closing on the home, over losing out to someone more prepared. Ask your Givepad Realtor for their recommendation of a few good mortgage bankers they've recently worked with and/or had a great experience with.
2. What will my monthly payment be?
This is an important question because more than your mortgage payment goes into your monthly statement from the bank. You’ll likely receive a statement each month that includes your:
flood insurance (as applicable)
private mortgage insurance (as applicable)
If you don’t put 20% down on your new home, chances are that you’ll end up paying for private mortgage insurance, or PMI for short. This is insurance you need to carry in case you default on your mortgage payments. It protects the bank, not you. When you take out a car loan, the bank requires you to carry full coverage. PMI is a similar concept. It protects the bank’s investment. The cost of PMI will vary in every situation.
To get a mortgage, you’re also required to have homeowners insurance. If your home is in a flood zone, the bank may also require you to carry flood insurance.
Finally, you may have the option to add your property taxes to your monthly house payment. This makes it easier to break your total taxes due into manageable chunks. You can use online mortgage calculators to get a good estimate of what your total monthly payment will be. Talk to your mortgage banker to see what you’ll likely pay based on your unique situation.
3. Can I actually afford the home I want?
When you get prequalified for a mortgage, the loan amount you're pre-qualified for is not equal to what you can necessarily afford. The bank doesn’t know every aspect of your financial life.
Ask your mortgage banker to help you break down your potential monthly payment based on the terms of the specific mortgage you’re looking at.
Account for homeowners insurance, private mortgage insurance, and taxes. If you’re renting right now, compare that number to what you’re paying for rent. This is a good personal gauge. If a new house payment is a lot more, consider how this could affect other areas of your life. Can you swing the additional monthly costs?
Consider additional home maintenance and utility costs. Again, picture how these expenses may impact you.
If you’re feeling pretty good after placing yourself in these scenarios, you’re more than likely in a good position to buy. If you don’t feel so good, consider lowering your home purchase price range.
4. Does my down payment really matter?
Absolutely. Even if you qualify for a low to no-down-payment home loan, if you choose to skip the down payment, you’ll pay more in interest for every dollar borrowed over the life of your loan.
The more you put down, the lower your monthly payment will be. If you put down 20% of the total cost of the home or more, you won’t need to pay for private mortgage insurance each month.
Since most homebuyers pay this insurance until they’ve paid off 20% of the loan, this could be years of savings.
Even if you can’t afford 20% down, the closer you get to this number can reduce the length of time you need to pay for private mortgage insurance. Many first-time homebuyers take advantage of the a First-Time Homebuyer program, which typically requires 3% down. The down payment required will vary by loan program.
Where can you get additional money for your down payment? You can use gifts, such as money from loved ones. If you do make a down payment, ensure you have enough money left to cover unexpected expenses that may come up.
5. What do I need to qualify?
Getting a home loan is less complicated than you may believe. Some of the most common concerns people approach banks with are:
Can I have a cosigner? Yes
Can I qualify with student loans? Maybe
I have to have 20% down? No
What’s important is:
good credit history and rental history
incomestatus and employment
savings and assets
Your mortgage lender will review all these items. Know your financial health. Pull your credit score, analyze your spending habits, and maybe even review your budget (or create one).
Are you ready to get started?
We can help! Our primary concern is to negotiate the best deal on your behalf. Our real estate agents have been working with mortgage banks, lenders, title companies, home inspectors, appraisers, insurance companies and secondary lenders for years. We know what to look for and are here to make our clients home buying experience painless and enjoyable so they can focus on other important things like; packing, moving and creating new home party invitations for all their friends and family.
Contact us today to get started. If you've found a home you like online and want to go and view the home in person, we are here to assist.