For those looking to purchase a home, there are many questions that come along with the process in order to learn more about what should be expected. There are a number of common questions that new buyers ask, making it important to have the right answers before making such an important purchase. Check out our answers below to common questions such as considering buying vs. renting, the best types of loans and how much to offer on a home.
What Should I Do Before Buying a Home?
Before making an offer an a home, it’s important to get pre-qualified for a loan to ensure you have the necessary amount to make a purchase. Your credit score will also be looked up to prove you’ll be able to make payments on time.
Acquiring a loan will also entail saving up enough money for a down payment, which will require approximately 20 percent of the overall cost of the home. However, some loans do not require as much, but will allow a lower amount or even no down payment at all in some cases.
How Much Can I Afford?
The cost of owning a home is much more than a monthly payment. It can also include HOA fees, property taxes, landscaping and homeowners insurance. Twenty-eight to 30 percent of your overall income should go to the mortgage to ensure that you can continue to afford the cost without being financially strained.
Why Should I Buy Instead of Rent?
It’s important to buy a home instead of continue to rent because it’s an investment that will build equity instead of putting the money into someone else’s wallet. This money can even be taken out if it’s ever needed in the future, and can make it possible to sell for more than the home was originally purchased for.
How Do I Choose the Best Mortgage Loan?
It’s important to interview with different lenders while also obtaining comparisons of interest rates. Although it can get confusing with all of the information you need to obtain, the main factors to focus on most are the points on a loan, lender fees, and the interest rates.
You should be most concerned with the amount of years that the loan will take you to pay off, along with obtaining the lowest monthly payment possible. The type of loan you obtain should be dependent upon if you’re planning on living in the home for a long period of time and if you’re flexible with the mortgage payment amount changing.
Your income will determine the type of loan you’ll need, as FHA loans are the most popular to prevent loss from occurring, only requiring 3.5 percent down. Fixed-rate loans prevent the interest rate from increasing, as adjustable-rate loans offer a lower initial interest rate than fixed-interest rates.
What Should I Look For When Deciding on a Community?
The type of community you choose should be dependent on if you want to live close to schools, as well as shopping, most popular for those with children. If you want a quieter place to reside, it’s important to choose a desolate or rural area that is more isolated. The commute should also be taken into consideration, which will determine how long you’re away from the home each day.
How Do I Make the Right Offer on a Home?
An offer should always be made on a home as the seller is almost always willing to go lower. Make an offer that is five percent lower than the asking price and expect to haggle, but avoid doing it for too long to prevent missing out on the home.
Although the home buying process can be a difficult and challenging one, the best way to learn is by becoming educated and following the general guidelines to know what you can afford long-term. By obtaining the right type of loan and finding a community that is ideal for your interests, you can easily purchase a home with ease.