Buyers

The following are the 10 key questions any home buyer should ask themselves:

        1. How Much Home Can I Afford?

As a home buyer, it’s important to have an accurate idea of how much money you can borrow for your new home and most importantly, how much you can afford. Sometimes those two aren’t exactly the same (depending on your financial situation), so always use what you can afford as your main metric for deciding how much house you should mortgage. One of the realities of home buying is the frustration of finding that perfect home only to discover that it is not in your price range. Finding out how much home you can afford is actually not that difficult.

      2. Should You Get Pre-Qualified or Pre-Approved?

Often a mortgage lender will tell a potential buyer they are “Pre-Qualified” for a loan. This can confuse home buyers, who think they will qualify for that amount. Not likely. With a Pre-Qualification, little information about your finances is verified (often none). You might find out later that the amount you were “Pre-Qualified” for is far different than what you actually will qualify for (or even afford). What you need is a “Pre-Approval” in which more information (your credit and other factors) is checked and you can have a better idea how much you can afford for your first home. With a Pre-Approval, you’re in a better position to negotiate because the seller knows that your offer is more solid. You’ll avoid wasting time looking at homes outside your price range.

     3. Should I Get A Credit Report?

Home buyers should obtain a copy of their credit report and review it. Your mortgage company will pull your credit, but it helps if you know before you start the process. If you find an error, it’s much easier to fix it before a house has been found, rather than dealing with it when trying to close on the loan. Your mortgage banker can even give you tips to help with any minor blemishes.

      4. What Kind of Mortgages Should You Consider?

For home buyers, mortgages can be confusing and a bit overwhelming. Ask your mortgage banker every question you can think of. There are no dumb mortgage questions,  A good mortgage banker will ask you numerous questions about your specific financial needs so that they can match you with the best mortgage.
The mortgage best for you will depend on:

• Your current financial situation
• Whether or not your financial situation will change in the next few years
• How long you want to stay in your home
• If your income is steady or fluctuating

      5. What Documentation Do You Need?

Almost always, you’ll need these items to complete your mortgage application:

• W-2s
• Pay stubs
• Bank and/or other asset statements
• Tax Returns
  

      6. What Is a Reasonable Offer?

Unless you are very familiar with your area and completely understand how to price an offer on the home of your choice, you might want to consider getting help from an expert. A Realty Executives Dillon agent can be very helpful in deciding how much your offer should be. In today’s market, your best reasonable offer might actually be lower than you would think. Have a Realty Executives dillon agent run comparable sales in your area and pay attention to prices per square foot for recent sales. This can give you a very good idea of how much to offer.

        7. What Is a Purchase Agreement?

The purchase agreement sets the amount of your offer and other terms, such as which appliances stay, inspections, who pays closing costs (seller can pay closing costs on some home loans) and when you’d like to take possession of the house. The seller (or selling agent) will have you sign the purchase agreement and offer “earnest money.” Earnest money is a deposit showing that you’re serious about your offer to buy the home; it’s usually three percent of the asking price and later applied as part of your down payment or other closing costs.

        8. Should You Have the Home Inspected?

Yes, you should. You should never buy a home without inspecting it, and most purchase agreements are contingent upon inspection. Spend a few hundred dollars and hire a qualified/licensed professional to inspect your new home (before you buy it) —it’s the only real way to ensure the home is in good condition. The home inspector should provide a very detailed summary report listing the condition of each item, and recommending repairs. You should always be there when the home inspection takes place. It usually takes a few hours and you’ll learn not only about the condition of the house but how everything works. Ask questions as you go along. If there are problems, the seller may adjust the purchase price of the home or simply repair the problems. There’s always the possibility that the home is in such bad shape or has some monumentally costly problem that it’s no longer the home you want. If that’s the case, get your deposit back and resume your house hunting. These are the cases when you’ll be most happy you got an inspection.
A thorough inspection includes:

• Heating and cooling systems
• Plumbing and electrical systems
• Structural integrity of walls, floors, ceilings, foundation, roof
• Condition of gutters, spouts, insulation and ventilation, major appliances, garage, etc.

        9. Do You Need Homeowner's Insurance?

Yes, you’ll need a valid homeowner’s insurance policy before you close on your home. You can’t get a mortgage without it.

        10. What Are Closing Costs?

This is probably the top asked question by buyers. All mortgage lenders are required by law to disclose in writing your estimated closing costs and fees, so you’ll know ahead of time.  This estimate is commonly called a “good faith estimate.” Keep in mind, various additional costs might apply depending on your state, mortgage type, and down payment amount. For instance, title companies handle most closings, but there are some states that require an attorney to conduct the closing. In those states, borrowers are not required to pay a title company closing fee.