7 Frequently Asked Questions About Buying a Home
At Equity Assets Realty, we believe in helping people realize their dreams of owning a home. For many people, this an important life goal that takes plenty of research and preparation.
As with any major life decision, buying a home comes with plenty of excitement and possibility, but also with many questions. The following are a list of some of the common ones prospective homeowners might find themselves asking.
Can I afford a home?
The answer to this question lies mostly in what your current financial situation is like. Accounting for your income and various bills/payments is only part of the equation. Once you’ve determined what your budget is, you will still have to meet with a bank or other lender to see what size of home loan you will get approved for.
Getting pre-approved will go a long way in making you a more attractive buyer. Once you have a lender’s feedback, you can combine the cost of their loan offer with the additional costs that come with being a homeowner including taxes, utilities, furniture, and maintenance. Adding these together will give you a clearer understanding of whether your budget allows for it.
What should my bid be in relation to the list price?
This is dependent on two factors: the current situation of your local real estate market and whether the price was set in line with the true value of the home. In a situation where the selling price is much higher than what the home is actually worth, bidding below a listed price is a fine strategy, as there is little risk of your bid being ignored.
On the other hand, if the home you are bidding on is in a hot neighborhood, you can’t realistically expect a low bid to be taken seriously. It will be expected that you bid high in order to stand out amongst other buyers.
Thoroughly researching and understanding the local market will help ensure that you make the correct type of bid for the house you want.
Should I view multiple homes in my search?
The answer here is dependent largely on your personal tastes. On average, most people looking to buy a home will visit around 10 houses in person. Still, this is not necessarily the norm and how long people are willing to search for the right house will also impact the number of homes they view.
If you plan on putting weeks or months into your search, then you should be prepared to visit a larger number of available houses. For those looking to expedite the process, focus on a certain neighborhood and the homes available there and this will help limit the number of properties you check out.
Is it possible to sell my home and buy a new one simultaneously?
This is definitely a delicate juggling act to pull off because it requires that a number of things be timed perfectly. Failing to do so will create uncomfortable scenarios, but none that are necessarily impossible to handle.
If you buy a new home before selling the one you currently have, it will put a strain on all but the most extensive of budgets. However, selling before you have purchased a new house can leave you having to rent or scrambling to find other temporary housing.
One way to avoid being caught between two homes is to put a “sale contingency” into any contract you sign. Essentially, this means you will only buy if/when you are able to sell your current home.
While this does protect you, it is still within a seller’s power not to agree to this type of provision. The main reason a sale contingency arrangement could be rejected is if the seller was looking to make the sell within a certain time frame.
What is the “up front” amount I will need when I have picked a house?
The good news is that you won’t be expected to pay the total price of the house all at once. You will be required to provide a good amount, however.
This starts with the “earnest money deposit”, essentially a show of good faith that you are indeed a serious buyer. The amount won’t be a huge percentage of the price of a home and is usually between 1-2% of the list price. A seller will not be able to cash the check right away, especially since they should be made out to escrow companies and not the actual individual seller themselves.
This deposit can be lost if you decide not to buy and offer no valid reason or one that is not covered by your contract.
Once you have decided on the home of your dreams, you will then have to hand over the down payment. The amount you will have to pay upfront can vary from house to house, but most sellers will generally request 20 to 30 percent down.
Finally, additional upfront costs will include everything associated with closing including fees and mortgage points. Expect the total to be in the thousands.
What is the quickest time frame for me to “close” on buying a house?
Closing is the final act of transferring a house from seller to a buyer. It happens only once both sides have met all requirements of a contract and the deed has been recorded on a house.
Naturally, once everything has been done, the hope is that closing happens quickly. In most cases, this takes in the range of 30 to 45 days. This allows everything associated with a home loan to be completed and for a thorough inspection of the home you have purchased.
What if I change my mind?
While it might not be what a seller wants, a buyer is always able to back out of a deal. There are any number of reasons why you might choose to do so, but it can come at a cost. Walking away from a sale can leave you without your earnest money deposit. If your reason for canceling a contract is not deemed valid, you won’t see that money again.
But, there are ways for you to recoup your deposit if you decide you no longer want the home. One is asking for your money back after inspecting the home and reporting that something fails to meet satisfactory standards.
Additionally, if a home is deemed “subject to appraisal,” that can be a means of getting your earnest money returned to you. In this scenario, a property is deemed by your lender to not be worth the offer you put forth, allowing you to walk away from a deal.
This is by no means an exhaustive list of what you will have to consider when looking to buy a home. There are many moving parts to these transactions and there is often not much margin for error between a good and bad purchasing experience.
That is where Equity Assets Realty comes in. We have plenty of experience and success in helping individuals find their dream home in McAllen.
Call us today at 956-994-9455 and find comfort in knowing that our team of McAllen realtors will help make buying your new house a beautiful memory you’ll never forget.