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FAQ'S Buying a Home

By Bill Gassett | December 10, 2019

What Are The Most Frequently Asked Questions From Buyers to Real Estate Agents?

1. Should I buy a home or continue to rent?

One of the most frequently asked questions buyers will ask themselves is should I buy a home. In the long term, buying is going to be better than renting. But whether it is right for you will come down to your unique situation. How long do you intend to stay in the area? If it is less than five years, you will probably be better off renting.

How much can you afford? Do you have money saved for a down payment and the other expenses involved in purchasing? Will your income cover the mortgage payments for the house you want? If you have the money and anticipate staying in the area for a long time, buying is likely the better option.

Every now and then, a great opportunity will present itself like buying a foreclosure property. If the deal is too good to pass up, don't let it pass you by.

What are the most frequently asked questions when buying a home?

2. Is Rent to Own a Good Option?

Sometimes buyers ask a real estate agent what they think about renting to own a home. It may be that they are not yet in a financial position to purchase a home but have identified a property they can see themselves living in both the short and long term. Before jumping into this kind of contact, it is worthwhile to understand the pros and cons. At times renting to own is not all it's cracked up to be.

Sometimes the downsides outweigh the upsides. It may be that working on your finances and continuing renting is a much better plan.

3. What is earnest money when buying a home?

Some of the most common FAQ's when buying a house concern earnest money. When you find a house that you like, you can make an offer to the seller and sign a contract. So that the seller knows you are genuine or earnest in your offer, they require a deposit. This is known as an earnest money deposit and allows the seller to take the house off the market, confident that they have found a serious buyer.

Quite often, buyers get confused about the difference between a down payment and earnest money. These are two different things. Buyers should be keenly aware of how they differ.

One very critical considerations for buyers to understand is that both a down payment and earnest money needs to be from verifiable sources. Lenders will check to make sure the money is yours.

Buyers also put their earnest money at risk when they don't perform according to the purchase contract. Understanding earnest money is essential when buying your first home.

4. How much of a down payment do I need?

Mortgage lenders used to require a 20 percent down payment in many loan products. That is no longer the case. In fact, it is a significant mortgage myth at this point.

It is quite common to find conventional loans that require only five percent of the purchase price to be paid. Some government-backed programs could reduce this amount further to three and a half percent. The FHA mortgage is one of the most popular mortgage products for first-time buyers.

There are even a few no down payment loan programs, including a USDA loan and a VA loan. The USDA loan is for those who are buying in a rural area. A VA mortgage can be used if you have served in the military or are serving. Take a look at a handful of the best mortgages for first-time buyers reviewed.

5. Is there a difference between a real estate agent and Realtor?

Yes, there is a difference! Most consumers and even agents interchange the words real estate agent, Realtor, and broker interchangeably. They each have different meanings. The article at Maximum Real Estate Exposure does an excellent job explaining the difference between a real estate agent and Realtor. You will also learn how a broker is not the same as well.

Whether you are buying or selling a home, the agent you work with will have a significant bearing on your satisfaction. You must do your due diligence when choosing an agent. Make sure you take the time to conduct a thorough interview process.

6. Should I call a real estate agent before looking at homes?

Yes - you absolutely should! Experienced real estate agents can help you in many ways and would be an excellent place to start your property search. They can give you help in understanding what the best time to buy is and enable you to pinpoint better what sort of property you are looking for. They can help with finding a lender, among many other things as well.

What you want to do is hire an experienced buyer's agent that will provide numerous services for you both before and during a transaction. Going directly to the listing agent is one of the worst things you can do. You create a situation known as dual agency where you don't have buyer representation in the sale. All the benefits of dual agency go to the real estate agent. It has been banned in some states.

Don't become the next victim who is harmed by this awful practice. There are many smart reasons to have a buyer's agent.

7. Is there a difference between being pre-approved and pre-qualified?

The answer is yes, and no. What the heck does that mean? Getting pre-approved is what every buyer should be doing. At most lending institutions, the term "pre-approved" means that the lender has verified the borrower's income, their place of employment, and checked on their credit score.

The term pre-qualified for most lenders means a borrower has stated their income to a lender, and based on that, they have said to the buyer they are "pre-qualified" for a specified amount.

For a home seller, a pre-qualification is worthless as it doesn't give a reasonable determination if a borrower gets a loan. Where it becomes confusing is some lenders use the terms interchangeably.

As a buyer or real estate agent, it is essential to understand the distinction between the two mortgage terms.

8. What Mistakes Should I Avoid?

Obviously, there must be some common mistakes that many first-time buyers make, right? There sure are! When you do anything for the first time, it is easy to make blunders. Here are some things you should not do when purchasing your first house. Avoid these common mistakes to keep your stress levels at bay.

9. Are online estimates like Zillow accurate for home values?

Sites like Zillow provide an indication of how much a home might be worth. The problem is that they are giving this assessment using only the data available to them. This data may be out of date or even incorrect, leading to an estimate which isn't accurate.

Naturally, it isn't able to take into consideration unique factors about the property, either. An online real estate value estimate is only going to give a very rough guide to what the property might be worth. It shouldn't be used as a definitive estimate.

Zillow is notoriously off on their estimates of value. Both buyers and sellers should take what they see with a grain of salt. There are Zestimates off by over one-hundred thousand dollars on some properties.

10. How much will my closing costs be?

The closing costs can range from around 2 percent up to 5 percent of the purchase price. On a $300,000 property, this would mean you need to have between $6,000 and $15,000 available at closing.

The amount you will have to pay depends on your state's rules, the house you are buying, and the loan you are using.

11. Are there any tax deductions when buying a house?

One of the most frequently asked questions from home buyers relates to taxes. They will often ask what are the tax deductions when buying a home. A very smart question for sure! Understand what's taxable is critical because if you don't take the deductions, you'll be throwing money out the window. There are some pretty significant tax benefits for owning a house.

12. What stays and what goes with the house? Will things like curtains and the fridge stay?

Generally, fixtures remain in the house when it is sold. Fixtures are considered anything which is attached to the property or modified to fit.

A fridge that is built into a kitchen should stay, whereas a freestanding refrigerator is considered a belonging and will likely go with the seller. Curtains, which are easily slid off the rail, are treated as the owner's belongings and won't usually stay. Blinds and rods are considered to remain because they are "attached" or affixed to the home.

If there is something you want in the house, that isn't a fixture; you may be able to come to some arrangement with the seller. Some of the most common disagreements in real estate sales happen because buyers and sellers don't understand what stays and what goes.

The best real estate agents educated their clients upfront to minimize any disputes.

13. What are the most important inspections to have?

One of the most vital things you can do when purchasing a house is to perform a home inspection with a professional company. A pest control inspection, to check for termites, is also often important to get if it isn't already included in the home inspection.

Other types of inspections may be important depending on the area and the house you want to buy. The real estate agent should be able to inform you about risks in the area. Some of the more essential inspections when purchasing a home include the following:

  • Checking for high radon levels in the house.
  • Checking to make sure the quality and quantity of the water are adequate.
  • Making sure there is no mold present in the home.
  • If there is a child under the age of six living in the home, performing a lead paint inspection.

Here is a handy home inspection checklist of things to think about when going through the process.

14. How long does it take to close on a house?

The house closing process can take less than 30 days, but this is only if you are lucky. The average house purchase now takes around 45- 60 days to close. There are many things which can delay the process and the time it takes seems to be getting longer.

Delays are frequently related to the loan you need for the property. If there is anything wrong with the paperwork or the appraisal is lower than expected, this causes holdups.

Final Thoughts

Hopefully, you have enjoyed most of the most popular FAQ's buyers have when purchasing a house. If you are a first-time buyer, make sure you do all the necessary due diligence, so you end up a happy camper for years to come. Some of the biggest mistakes are made by rushing into things prematurely.

Other Helpful Realty Biz News Articles

  • Go from renting to ownership - see some excellent tips and considerations on how to go from being a renter to a homeowner. You will love the excellent guidance.
  • What you should do when moving - one of the most stressful parts of buying and selling a home is the move. Learn how to make the process go a whole lot smoother with the advice found here.

Use these additional resources to make sound decisions when you are buying your first home. Best of luck!

Bill Gassett is an authority in the real estate industry with 38 years of experience. Bill is well respected for his informative articles for buyers, sellers, and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, the National Association of Realtors, Inman News, Newsbreak, Credit Sesame, Realty Biz News, and his own authoritative resource, Maximum Real Estate Exposure. He has been on of the top RE/MAX agents in New England over the last two decades.
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