Frequently Asked Questions
Thinking about buying a home? Below are some answers to the most commonly asked questions.
Q. Is it always better to own than rent?
In most cases you’re better off owning than renting. However there are a few exceptions. If your rent is lower than average and you expect it to stay that way, or if you’re planning on moving in the next few years. When mortgages rates are low, it may actually be cheaper to own than to rent.
Q. Should I contact a bank prior to looking for a home?
It’s a good idea to consult with a mortgage loan officer prior to your home search. They’ll be able to explain the different types of mortgages that you qualify for and help you decide which is best for you. They’ll also provide you with a written preapproval.
Q. How many homes should I look at before I make an offer?
There is no specific number of homes that you should look at before you make an offer. It’s not unusual to find a home right away. It’s also not unusual to look at a number of homes before you find the right one. You’ll know when it’s the right one.
Q. How much should I offer the seller?
How much you offer and the terms of your offer will depend on a number of factors. Your agent will be able to address all of your questions and concerns.
Q. How much money will I need to put down?
How much you’ll need to put down is dependent on the type of financing you’re using. In some instances you may be able to purchase a home with nothing down. Most first time home-buyer programs require anywhere from 3% to 5% down. In addition you’re going to have closing costs and prepaid charges as well. It may be possible incorporate these additional charges into your mortgage to minimize the amount of money you’ll be required to bring to the closing. See our Finance your Home section for a breakdown of the different ways to finance a home.
Q. How long will the entire process take?
Unless you’re looking for something very specific, you should be able to find a home and close within 90 days. The financing itself generally takes anywhere from 45 to 60 days. If you’re considering building a home, the time-frame can be anywhere from six months to a year.
Q. If I currently own a home, is it best to sell it, or should I purchase my next home first?
There really is no correct answer. There are pros and cons for both. If you sell your home first, you’ll be in a better position to purchase a home. However, if you purchase a home and your current home takes longer than expected to sell, you run the risk of having more than one house payment. Also, the current lending regulations have made it more difficult for sellers with existing mortgages to obtain financing on a new home without the existing mortgage being satisfied.
Q. Am I required to have an inspection of the property?
A home inspection is generally not required. However, a home inspection by a licensed professional home inspector is highly recommended. You may also want to have the home tested for the presence of radon, lead, asbestos, mold or other potential health concerns. Depending on the state in which the property is located, the right to inspect, and the right to test may be considered separate contingencies.
Q. What are closing costs, and who pays them?
Closing costs are simply the charges paid to the lender to obtain financing. Including, but not limited to… an application or origination fee, an appraisal, a survey of the property, a lenders title policy, a tax service fee or a number of other charges that could arise during the course of the transaction. In addition to any closing costs charged by the lender, a borrower will also be responsible for any prepaid costs relating to the borrowers escrow for mortgage insurance, property taxes, homeowners insurance or any interest due through the end of the month. Although these charges are the responsibility of the borrower, it may be possible to incorporate all or a portion of these costs into the mortgage reducing your actual out of pocket costs.
Q. What happens at the closing, and when do I get the keys?
The closing is the final step in the process. Some sections of the country refer to it as escrow. In either case, it’s the point of the process where the buyer and seller sign all of the necessary documents, and the appropriate disbursements are made. Unless prior arrangements were addressed in the offer, or in a subsequent amendment to the offer, it’s also the time that you get the keys to your new home.