Buying a Home
So you want to own a home–that is wonderful news! The benefits of homeownership are numerous, including building wealth, providing stability, and creating freedom, among others. But now that you have made the decision to buy…what are the next steps?
The market can be a confusing place. There is a LOT of information out there, and what does it all mean? When we work with a first-time home buyer, we explain the home buying process from beginning to end and take you from novice to sophisticate in no time flat.
One of the most confusing aspects of buying a home is learning the terminology.
Here are a few quick definitions to give you a head start:
Credit
Credit is the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. Your credit score measures the amount of risk a lender is taking by trusting you to pay. The lower the score, the higher the risk, and the higher the interest rate.
Down Payment
Your down payment is an important aspect of your offer when you go to buy a home. Most lenders require you to put some “skin in the game” or some of your own funds into the purchase. While a standard down payment is 20% of the purchase price of the house, there are loan programs that allow a down payment anywhere from 5% to as low as 1%.
Closing Cost
Closing costs are the fees associated with a real estate transaction. Closing costs cannot be financed by the bank; they are costs you must pay out of your pocket. Some costs might be paid by the seller, but you should try to anticipate covering all closing costs yourself. Altogether they typically range from 3 – 5% of the purchase price.
Financing
Financing is the process of obtaining a loan from a bank or other lender to cover the costs of your purchase. Like with any relationship, there are key to look for when choosing a lender: communication, timeliness, and product knowledge. Rates are fairly standard from lender to lender depending on your credit score, so service should be your deciding factor. This is a personal choice so don’t be afraid to interview different lenders to see whom you feel the most comfortable with.
Choosing Your Lender
A good lender will explain the lending process to you, be available to answer questions, and work with the rest of your real estate team to solve issues that may arise. When under contract, time is of the essence (remember this phrase) so your lender should be realistic in meeting deadlines, and most certainly should communicate immediately if they cannot do so (unexpected problems do occur in transactions). Finally, your lender should be able to analyze your financial situation and recommend the best programs for you.
Working with your realtor, your lender should have a couple of options on how to place you in the position to make the strongest offer possible.
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Testimonials
“I want to give a huge thanks to my realtor Howard Kees Jr for working hard for me and sticking with me for 6 months. If you have the desire to buy a home but don’t think you’ll qualify, he’ll tell what needs to be done in order to make it happen.”
-Leroy S.