Navigating the world of real estate may seem overwhelming, especially if it’s your first time buying or selling a home. As real estate professionals, it’s our job to guide you through the ins and outs of these processes. Some questions come up more often than others. That’s why we’ve put together this list of real estate FAQs to provide you with answers to the most commonly asked real estate questions.
Real Estate FAQ #1: What is the first step of buying a home?
The first step of the home buying process is getting pre-approved for a mortgage. You need a pre-approval letter from a lender to show how much money you can borrow. This lets you know how much home you can afford so you can narrow your search to houses within your budget. It also shows an estimate of how much will be required for the down payment and closing costs, which will help you decide if you need time to save more money, liquidate assets, etc. Additionally, having a pre-approval letter demonstrates that you are a serious buyer to sellers and your agent.
Real Estate FAQ #2: How long is the home buying process?
From beginning to end, the home buying process typically takes around 10 to 12 weeks. This is from the start of searching for homes online to closing escrow. Once you choose a home and your offer is accepted, it takes an average of 30 to 45 days to complete the escrow period. However, market conditions can greatly influence the length of the process. This process will also be much shorter for buyers paying with cash.
Real Estate FAQ #3: What’s the difference between a buyers’ market and sellers’ market?
In a sellers’ market, there is an increased demand for homes, which drives up prices. This may be due to an inflow of new residents, lower interest rates, or a lack of new construction that means fewer homes are available. A buyers’ market, on the other hand, involves declining home prices and reduced demand. Factors that can cause this include higher interest rates, high inventory of new homes, and natural disasters in the area.
Real Estate FAQ #4: How much do I pay my agent to help me buy a home?
The buyer pays little or no fees to their agent when buying a home. A buyer’s agent is compensated by the listing broker for bringing a buyer to the transaction. When a home is sold, the listing broker splits the agent fee with the buyer’s agent. Sellers must pay their agents a fee, but buyers do not typically pay their agents.
Real Estate FAQ #5: What kind of credit score do I need to buy a home?
Most mortgage lenders require a credit score of at least 620. If you have a higher credit score, a lender sees you as less risk. This often results in a better interest rate or a lower down payment. If you have a lower credit score, you may be required to bring more money to the table or accept a higher interest rate to offset the risk.
Real Estate FAQ #6: How much money do I need for a down payment?
The amount of money you need for a down payment can vary. The national average is 11 percent. However, first-time home buyers usually only put 3 to 5 percent down on their first home purchase. Many first-time home buyer programs, such as the FHA loan, do not require large down payments, and some programs require even less. For example, USDA and VA loans may require zero money down. For many years, conventional loans required a 20 percent down payment, but some newer conventional loan programs are available with only 3 percent down with private mortgage insurance (PMI). There are also down payment assistance programs available for buyers who need help.
Do you have more questions about buying or selling a home? Keep an eye out for Part 2 coming soon!
Our real estate professionals are here to help make the process as easy as possible for you! Reach out to us today to get in touch with an agent about your questions and to get the help you need to successfully buy or sell your home!