Frequently Asked Buyer Questions
Being a buyer’s agent, I get asked all types of questions! When I tell you there really are no stupid questions in real estate, there really are NONE! Buying a home is not something that you learn in school, so it’s important to ask ALL the questions! This post will give you examples of all of my frequently asked buyer questions & hopefully some of the answers that you’re looking for!
The easiest way to break these up is into stages; pre-approval & pre-search, searching & offer process, & under contract to closing.
Pre-Approval & Pre-Search
“What is a pre-approval?”
A pre-approval is a letter from a financial institution saying that you have had income, credit & employment verification & are able to qualify to purchase a home up to a certain dollar amount. It’s basically a verification that you are approved to buy a home, which sellers like to see. You cannot make an offer on a property without this letter in hand, so it’s a good idea to start this process early!
“What are the requirements for a pre-approval?”
You’ll need to have your last 2 years of tax returns, last 2 months of pay stubs, bank account information, & employment verification. Essentially, anything having to do with your money & credit, your lender will want to see. Your lender will verify this information & pull your credit to determine what type of loan you’ll qualify for.
“What are my options if my credit isn’t excellent?”
You have a couple! The minimum credit score to qualify for a loan is 560. I am no financial expert, so it’s always a good idea to chat with your lender or financial advisor if you have one. They’ll be able to give you an idea of what to focus on. Whether that’s paying off some debt, building your credit as an authorized user, or working with what you got!
“When is a good time to meet with a Realtor?”
Ideally, you’ll want to have started the pre-approval process prior to setting up an initial consult. If you need lender suggestions, you can obviously reach out before for those. Typically, I suggest meeting with your Realtor for the first time about 6-9 months before you’re prepared to buy. This helps establish the relationship & give yourself a good timeline in case it takes a bit longer than expected. This doesn’t mean you have to start touring homes immediately! It just sets you up to gain market insights from a professional & have a place to go for guidance & advice.
“How much money should I have saved up to buy a home?”
It really depends on the type of loan you’re using! Some loans require as little as 0% as a down payment. The typical amount is anywhere from 3% – 5% of the purchase price. So if you’re qualified for $350,000, you’ll need at least $10,500 for that down payment. Now, some first time home buyers receive gift money to use towards or for their down payment. Just talk with your lender about the best way to handle this.
On top of your down payment, you’ll want to budget around $400 – $600 for inspections, $300-$400 for your appraisal, & around 1-2% of the purchase price for your closing costs. There are options to ask the sellers for help in paying your closing costs, however, it’s always good to prepare to pay in full.
Searching & Offer Process
“What is the searching process like?”
Once we know what your budget is, you’ll get set up on a home search that will alert you when a home you may like hits the market. You’ll receive all the information about the house, along with photos, to help you decide if you’d like to see it in person! If so, we’ll either attend an open house or we’ll set up a private showing, depending on the showing instructions from the seller.
“What is putting an offer on a home like?”
Once you’ve decided to put an offer in, it’s a lot of paperwork! I’ll reach out to the listing agent to gain any tips on strengthening your offer. I’ll also touch base with your lender to get an updated pre-approval letter with the offer price on it & confirm a timeline to close with them. Then, we’ll virtually sign the purchase & sales agreement (contract) & the disclosures the seller provided. Lastly, we’ll send all the forms & an earnest money check to the sellers via email.
“What is earnest money & escrow?”
These are two terms you may never have heard before. Earnest money is basically an incentive for the seller to review your offer. It’s the first money to be sent to the seller as a “good faith” deposit. Typically this is between $1000 – $2000 & can be part of your down payment. Both your earnest money & part or the rest of your down payment are deposited into an escrow account. An escrow account is where your money is deposited & held until closing. At closing, the funds will be transferred around by the closing attorneys to ensure the money gets to where it’s going!
Under Contract to Closing
“What’s the process once our offer is accepted?”
Inspection period: you have 10 business days to complete any & all inspections on your new home. This is where we’ll negotiate for repairs if necessary.
Complete your formal mortgage application during inspections
Appraisal: ordered by your lender & typically done right after inspections are completed.
Home Insurance: shop around for home insurance quotes during inspections & appraisal. You’ll need a home insurance binder in order to close.
“How long does it take between under contract & closing?”
Typically, 1 – 1.5 months. Depending on how the inspection period goes & how fast your lender can get your loan closed.
Sometimes closings are delayed for any number of reasons. Just be aware of this before giving notice to your landlord that your closing date may be moved even a few days before closing.
While these are a good chunk of my frequently asked buyer questions, I know it’s not all the questions! It can be tough navigating getting pre-approved, home searching & moving without knowing anything about the process. That’s why it’s so important to have a Realtor & mortgage lender team that you trust. It’s important to have a trusted team to answer your questions & help guide you through the process. I’m always on call to answer my clients’ questions, so don’t hesitate to reach out!