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10 FAQs for the First Time Home Buyer
Dated: August 13 2020
There’s nothing we love more than working with someone who is buying a home for the very first time. Sure, the home buying process can seem complicated and complex, but our goal is to also make your experience fun, knowledgable, and exciting all at the same time.
But before you get started with your first time home buying experience, learn more about the process, home loan financing options, how much of a down payment you'll need, what to expect during the closing, and why working with us is the best first step you can take!
What can I buy with FHA financing?
FHA financing allows buyers to purchase a primary residence, or a family member a primary residence. Under FHA guidelines, you cannot purchase a vacation home, a second home, or a rental property with an FHA home loan.
Are FHA loans a good idea for first time home buyers?
FHA loans are a good idea for first time home buyers because they provide low to moderate-income home buyers a more affordable way to purchase a home. FHA loans only require a 3.5% down payment, as opposed to a 10 to 20% down payment with a conventional mortgage program.
How much money will I need for a down payment on a house?
In most cases, first time home buyers will need anywhere from 3 to 20% of the sales price. How much money you’ll need for a down payment is largely determined by whatever financing option you choose, or are approved for.
How long does it take to buy a house?
Buying a house can take a long time. On average, home buyers usually spend between 30 and 60 days looking for a home, and then an additional 15 to 45 days to close on whatever house they end up choosing.
How do I rent and save for a house at the same time?
Renting and saving for a house at the same time can be challenging, but doing things like paying down credit card debt, getting a roommate, and getting a part-time job are all great ways to save money and put you in the best possible position buy sooner rather than later.
What is debt-to-income ratio?
Debt-to-income ratio helps determine what kind of mortgage payment a prospective home buyer can afford. DTI is calculated by dividing recurring monthly debt payments by gross monthly income, which is then expressed as a percentage that shows how much of a person’s gross income is already committed to existing debt.
What is a down payment?
At its core, a downpayment is a lump sum of money that is paid upfront, which acts as somewhat of an incentive for eventual home buyers to make monthly payments so that money isn’t lost in a foreclosure. A downpayment can range anywhere from 3 to 20% of the purchase price of a home.
What should buyers know about closing costs?
Closing costs can range anywhere from 1 or 2 percent of the purchase price all the way up to between 5 or 6 percent. Closing costs include bank fees, mortgage funding fees, title fees, state taxes, and various other expenses that are typically related to buying a home.
What is the closing process like?
The closing process usually takes anywhere from 45 to 60 days. In that timeframe, you’ll need to schedule a home inspection, sign the loan documents your lender provides, have the home you’re buying appraised, and also have the title company make sure there are no liens or judgements on the property.
Why would you need a home inspection?
A home inspection is an additional way to protect home buyers. Home inspections often uncover flaws in a home or condo, and provide home buyers with a better understanding of what kind of condition a property is in before purchasing it.
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