You’re interested in buying a home, which means you probably have a lot of questions about the process. While there are dozens of questions that any first-time homebuyer has, this is a quick rundown of the most common questions about home buying. Below you will find the answers to those questions to help you get a better understanding of what to expect.
Is it cheaper to buy than to rent?
That is the 20,000 dollar question! The short answer is yes – kind of. If you pay rent for the same length of, say, a 15-year fixed-rate mortgage, your monthly rent payment is likely less than the monthly mortgage payment on a 15-year mortgage. But at the end of those 15 years, as a renter you don’t own the property; while as a homeowner, you do.
One advantage of being a renter is that you do not have to pay for upkeep and maintenance. If you bought a home that needed massive amounts of repairs, you may end up spending more than the renter over those 15 years. Still, even after paying more, you have an extremely valuable asset when the home is paid off. It can be resold for more than what you paid for it and you have equity that you can borrow against that a renter does not.
Can I buy a home even if I have bad credit?
Today, since the housing collapse, lenders have tightened up credit standards. However, it is always best to speak with a mortgage lender to determine exactly what you can be approved for. There are a number of different loan types that don’t require a sterling credit score. In short, don’t rule out buying a home until you’ve talked to a professional.
How much do I have to put down on a home?
Generally a lender will require at least a 5% down payment on your home. That number increases the more expensive the home is. A good rule of thumb is to only buy a home when you are able to put at least 20% down up front. That will reduce your monthly mortgage payment, give you some equity right away, and will help you pay off the loan faster. Also, with a down payment of 20% and up, you likely won’t have to pay Private Mortgage Insurance (PMI). There are some programs, such as the VA Loan, that can require 0% down.
What costs are involved with buying a home besides the down payment?
First of all, there are closing costs, which typically are less than 5% of the price of the home. You’ll also want to factor in inspection and appraisal costs. If you buy a condo or buy a home in a planned community, you may have to pay HOA fees or condo board fees. Lastly, you will now have to pay property taxes…on the plus side you will be able to deduct those costs on your taxes at the end of the year!
Should I use an agent?
Yes! It is possible to buy a home without using an agent, but why not get an expert advice if you can get it? An agent negotiates the deal on your behalf, assists you through the financing process, and has up-to- date market information to get you the best deal.
You can save yourself a lot of stress and wasted energy by finding a trustworthy experienced agent. Agent is more than qualified to help you with the entire home buying process. Give her a call now to get answers to your specific questions!