what you need to know when buying a house

by Neal Mueller DDS Published 2 years ago Updated 2 years ago

10 Things You Absolutely Need To Know About Buying A Home

1. Use a trusted realtor. ...
2. Remember that a house purchase involves a contract. ...

3. Don't necessarily buy for the life you have today. ...
4. Think about commitment. ...

5. Look beyond paint. ...
6. Buy the house you know that you can afford. ...

7. Don't fixate on the purchase price. ...
8. Consider your student loan debt. ...

More items

Full Answer

What are good questions to ask when buying a house?

Ask your tax advisor about that ... What about the federal income tax consequences of the bargain sale for you? Good question. To calculate your taxable gain or loss, subtract the tax basis of the home from the $250,000 sale price. Any loss is nondeductible.

What are some things to consider before buying a home?

What To Consider Before Buying A House

Debt-To-Income Ratio. A mortgage lender uses the debt-to-income ratio to determine if you can financially afford to make the monthly payments on the property you intend to take a mortgage ...
Duration Of Stay. ...
Job Security. ...
Down Payment. ...
Emotional Status. ...
Local Market Indicators. ...
Mortgage Rates. ...
Supply And Demand. ...

What are the most important factors when buying a house?

What Are the Most Important Factors When Buying a House

The Neighborhood. Paying attention to the neighborhood is smart because homes can be renovated and changed, but you can’t change your location.
Home Inspections and Future Projects. ...
Property Age. ...
Size and Number of Rooms. ...
Purchase Price and Mortgage Rates. ...

How long does it really take to buy a house?

The buying a house timeline can be tricky to predict. It typically takes anywhere from four weeks at the low end to six months (or more) to shop for and close on a house. But it can be quicker if you make a strong offer right away in a fast-moving market or slower if you have a hard time finding just the right place or keep getting outbid.

What are 5 things to know before buying a house?

Buying Your First Home: 5 Things to Know Before You Do#1 Your Down Payment May Not Be the Biggest Hurdle. ... #2 You Probably Will Have to Compromise. ... #3 Be Emotionally Ready for Financial Surprises. ... #4 A Mortgage Can Be Cheaper Than Rent. ... #5 Your Lifestyle May Call for Buying Instead of Renting.

What should I be aware of when buying a house?

Here are things to know before buying a house.Your credit score. ... How much home you can afford. ... Options for your down payment. ... How much you can borrow. ... Condition of your local real estate market. ... Where you want to live. ... Type of home you want.

What are the 3 most important things when buying a house?

Here's what to look for when buying a home.The Location. They say the three most important things to think about when buying a home are location, location, location. ... The Neighborhood. ... The Size and the Floor Plan. ... The Kitchen. ... The Closets and Storage. ... The Windows and Lighting.

What are the main things you need to buy a house?

Some of the most important requirements for buying a home include a down payment, a good credit score, and an acceptable debt-to-income ratio. Homebuyers also need to be prepared for closing costs, which are due before the final paperwork on the home is signed.

What should you not do when buying a house?

Top 10 things not to do before buying a homeDon't go with the first mortgage lender you talk with. ... Don't shop for homes without getting preapproved first. ... Don't assume you need a 20% down payment. ... Don't buy a house you can't afford. ... Don't make a big purchase using debt. ... Don't ignore your credit history.More items...•

Is it smart to buy a house right now?

Based on data, now is a good time to buy a house — and first-time buyers agree. According to Fannie Mae's National Housing Survey, more than 60% of renters would buy a home if their lease ended. Most expect rents to rise sharply in the next 12 months. The housing market may favor Fall home buyers.

What should you not say when viewing a house?

5 Things You Should Never Say When Viewing a House for SaleHold the criticism until after you leave.Avoid making an emotional decision.Don't ask intrusive questions.Avoid sharing too much.Don't say the price is unrealistic.

What questions should I ask when buying a house?

10 things to ask when you view a homeWhy is the seller moving? ... What comes with the property? ... How old is the roof? ... How old — and how efficient — is the heating and cooling system? ... Are there any disclosures? ... Are there any problems with the house? ... Have you made any additions or renovations? ... What's the water pressure like?More items...

What should I look for in a house walkthrough?

What To Check During a Final WalkthroughTurn on and off every light fixture.Run water and check for leaks under sinks.Test all appliances.Check garage door openers.Open and close all doors.Flush toilets.Inspect ceilings, walls, and floors.Run the garbage disposal and exhaust fans.More items...

What is the average down payment on a house?

With average housing prices in US metropolitan areas hovering around $250,000, the usual down payment on a house for a conventional 30-year fixed mortgage is around $12,500. That's equivalent to 5 percent of the total purchase price. There are benefits to paying more than the down payment average.

What are the 5 steps in the home buying process?

5 Steps of Home Buying ProcessStep 1 – Getting Pre-Approved Prior to Shopping for a Home. ... Step 2 – Assembling Your Home Buying Team – Knowing the Players. ... Step 3 – Purchase Offer Submitted. ... Step 4 – Conditions and Paperwork. ... Step 5 – Closing.

How long does it take to close on a house?

“By and large most transactions close within a matter of days of the estimated closing date,” Cullen says. “The average would be four to six weeks in total – it takes probably two or three weeks for the client to get their full loan offer and about three weeks to do the balance of the legal work.”

Is 2022 good year to buy a house?

But many experts note that, given the ongoing shortage of properties, home prices will still continue to go up in 2022 -- just at a slower pace. Plus, prospective new homeowners have to contend with relatively high mortgage rates, which keep monthly mortgage payments expensive.

What should you not say when viewing a house?

How do you know if a house is a good deal?

Consider Recently Sold Properties.Check Out Comparable Properties on the Market.Look at Unsold Comparables.Learn About Market Conditions, Appreciation.Be Wary of for-Sale-by-Owner Properties.Explore the Expected Appreciation.Ask Your Real Estate Agent.Ask Yourself: Does the Price Feel Fair?More items...

What questions should you ask when buying a house?

Step 1: Check Your Credit Report and Score

Before contacting a lender, it’s smart to check your credit report. By law, you can get a free report once a year through Annualcreditreport.com. T...

Step 2: Figure Out How Much You Can Afford

Or better yet, decide how much you’re willing to pay. Just because you can qualify for a larger mortgage doesn’t mean you want to have that kind of...

Step 3: Find A Real Estate Agent

This person will be your lifeline through the process. Not so long ago, people didn’t have much to go on when selecting an agent. A postcard in the...

Step 4: Get Pre-Approved by A Lender

It’s a smart move to get pre-approved for a loan early in your home search. Zillow has an easy-to-use tool that lets you find a licensed lender in...

Step 5: Start Looking at Homes

Let the serious shopping begin! By now you’ve talked things over with your agent and you both know what you really want and need in a home. Armed w...

Step 6: Make An Offer

For most buyers, this is when the butterflies really show up. Once you’ve found a home you want your agent will work with you to craft an offer. Re...

Step 7: Home Inspection Day

If your offer called for a home inspection, this is a big day. Sure, you get to have a home inspector look over the home to make sure there are no...

Step 8: Get Insurance and Establish Utilities

If you already own a home, simply call your insurance agent and let them know you’re buying a new home. They will handle writing a new policy. If y...

Step 9: Closing Day

This is the big day. You’ll sign read and sign papers and then read and sign some more. Even though you’re just sitting around a table, it can be e...

Step 10: Get The Keys and Move In!

This is it. You did it. You are now a homeowner! Your sale contract will specify exactly how soon you get to move in. Sometimes it’s by a certain t...

Red Flag No. 1: Too Much Scent

Don’t let those freshly baked cookies or potpourri simmering on the stove fool you. The more aggressive the scent, the greater the likelihood the s...

Red Flag No. 2: Poor Tiling

Inspect the tile in kitchens and bathrooms, suggests Eugene Gamble, a real estate investor and owner of WeFundYourFlips in Tampa, FL."If the gaps o...

Red Flag No. 3: Foundation Issues

Most houses have hairline cracks, which just indicate the house is settling into its position, but large gaps signal a bigger issue with the founda...

Red Flag No. 4: Signs of Deferred Maintenance

"When I walk through a home, I look for signs that the owner might have neglected routine home maintenance,” says real estate agent Malcolm Lawson,...

Red Flag No. 5: Nearby Water

That creek might look picturesque now, but it won’t when it comes cascading through your back door.“The increasing unpredictability of weather mean...

Red Flag No. 6: Wonky Windows

Take a second to pull back the curtains to check for lopsided frames, and then give the windows a tug to make sure they slide easily. If they stick...

Red Flag No. 7: Mold

To detect possible signs of mold while wandering through an open house, discreetly open bathroom and sink cabinets to take a look around water pipe...

Red Flag No. 8: Water Damage

A musty odor can indicate water damage, even if you don’t see standing water, says Supplee. Check walls and ceilings for water lines; they likely i...

Red Flag No. 9: Cosmetic Enhancements

That one freshly painted wall could be an accent wall, or it could be hiding something like a patch of mold, Gamble cautions.Supplee lifts up area...

Red Flag No. 10: Improper Ventilation

Without adequate interior ventilation, moisture sticks around, which can create mold and increase allergies. The tipoff: Look for condensation on w...

What to ask when shopping for a home?

So, while you’re shopping for a home, keep the future in mind and ask yourself questions. Do you plan to have children? Are you wanting to adopt a pet? Will you need roommates to help pay the mortgage?

How many people regret buying a home?

Overall, around 44% of homeowners end up regretting their home purchase, according to a Bankrate survey.

How much does closing cost add up to?

Closing costs typically add up to between 2% and 5% of the full loan amount. They include lender and broker fees that are set by your lender (examples: mortgage application fee, loan origination fee) and third-party fees set by, well, the third parties in the transaction (examples: transfer taxes, title and escrow fees).

How long does it take to recoup the cost of buying a house?

Many experts state it takes an average of four years to recoup the costs of buying a home. If you end up having to sell your home and buy a new one in just a couple of years because you outgrew it, you’ll be losing out on thousands of dollars.

Why do you work with a real estate agent?

This is another prime example of why working with a real estate agent is to your benefit. If you do want the seller to cover the cost of repairing the problem, a top agent will be able to handle the negotiation and keep the deal favorable to you.

What is the minimum down payment for a home loan?

If you expect to pay between 3% (the minimum for a down payment) to 6%, then some of your options include an FHA loan, a Fannie Mae HomeReady loan, or a conventional loan.

What is the standard down payment for a first time home buyer?

While 20% is named as the standard down payment amount, it’s a standard that’s rarely met by most homebuyers. According to a 2019 report by the National Association of Realtors, most first-time buyers only manage a 6% down payment.

How to detect mold in an open house?

To detect possible signs of mold while wandering through an open house, discreetly open bathroom and sink cabinets to take a look around water pipes or drains, suggests Frank Kirschner, a real estate broker in Fort Lauderdale, FL.

What are the signs that a homeowner might have neglected routine maintenance?

He cites issues such as burned-out lightbulbs, long grass, leaky faucets, or faded paint.

Why do houses have hairline cracks?

Most houses have hairline cracks, which simply indicate that the house is settling into position, but large gaps signal a bigger issue with the house foundation , says Gamble. Other tipoffs: sticking doors or windows, visible cracks above window frames, and uneven floors. How do you know if the floors are uneven? Roll a marble from one side to the other. (This might be more subtle if you have kids with you.)

Does realtor.com make commissions?

The realtor.com ® editorial team highlights a curated selection of product recommendations for your consideration; clicking a link to the retailer that sells the product may earn us a commission.

Do you have to be a home inspector to do an open house?

Think of the open house as a first date. You don’t have to be a home inspector to do your own preliminary home inspection and decide whether this property is worth seeing again—or if you should move along and never look back.

Is it easy to make a mistake when buying a home?

If you’re a first-time home buyer looking for a starter home, or if you just need to find a house you can afford, it’s especially easy to make a mistake in the home-buying process.

Is it nice to walk into an open house?

In competitive markets, you’ll often walk into an open house that has been deep-cleaned, upgraded, and staged with stylish furniture. That’s nice, but if you’re not careful, you may miss a multitude of problems. You shouldn’t be overly impressed by the fact that a house looks and smells nice. (You may, however, be rightly appalled by a home that looks and smells atrocious.)

What to do when you accept an offer to buy a house?

Once the offer is accepted, you’ll want to get an inspection and appraisal on the home you’re preparing to buy. These steps in the process will protect you and your lender from paying more than the home is worth.

What to look for when finding a lender?

The most important thing to look for when finding a lender is getting the best rate to save the most money, but other factors like loan terms, down payment requirements, property insurance and closing fees also vary offer to offer. You’ll want to compare these items in order to find a lender that best fits you and your financial situation.

What to know when negotiating a home?

Are the sellers in a rush to sell? Are they dealing with the stress of moving? A seller’s situation could be affecting the state of the home’s repairs or how strict they are with their asking price or negotiations. Have your real estate agent get to know the seller and feel out what they’re looking for as well.

How much down payment do I need to get a mortgage?

Your required down paymentwill depend on the type of loan you get. For example, the down payment for a conventional 30-year fixed is 3%. For an FHA loan, it’s around 3.5%. Of course, you can always make a larger down payment, which is what you’ll want to do if you can. That’s because the larger the down payment, the more you’ll save in interest and the more equity you’ll have in the home from the get-go. If you put down 20% or more, you’ll also avoid having to pay private mortgage insurance (PMI).

Why do you need a real estate agent?

Working with an experienced real estate agentis a great way to cut out some of the chaos and confusion that accompanies purchasing your first home. Not only will local real estate agents be helpful in finding you your dream home, but they’ll also have the real estate know-how to assess what are reasonable asking prices and how to negotiate with sellers – which can put some cash back in your wallet.

How to find a real estate agent you trust?

The most reliable way to find a real estate you trust is simply by asking your loved ones for recommendations – your friends and family will have your best interests at heart, and having that history will set a baseline of trust between you and your agent. If your recommendations aren’t working out, don’t be afraid to utilize the internet to its full potential: Snoop around on some local real estate agents’ websites and social media to gain a better sense of their personality and whether you think you’d be compatible. Lastly, keep in mind that you’re not married to every agent you talk to, so reach out or set up a few interviews. Meeting face to face is a great way to find out their knowledge of the area and gauge your working chemistry.

How much does closing cost on a home?

These may include application, appraisal, origination and underwriting fees, to name a few. While the closing costs vary, you can expect to pay around 3% – 6% of the purchase price. These are costs you’ll need to pay upfront, so you need to have that money available when you buy a home.

What is included in the purchase price of a house?

That includes the cost of insurance, homeowner association fees and real estate taxes - depending on where you live, those can quickly add up.

What does a realtor do when buying a house?

2. Remember that a house purchase involves a contract. When you're buying a house, there are papers to sign. And more papers to sign.

How old do you have to be to buy a house?

There's no rule that says you have to buy a house by the time you're 35 - or ever. Buying a home is a big decision and while it can be a sound financial investment, it’s not for everyone. There is a lot to consider, including the housing market, interest rates, timing and your future plans.

How long should I wait to pay down my mortgage?

Depending on the market and the terms of your mortgage, you may not actually pay down any real equity for between five and seven years: if you aren't sure that your house will be the house for you in a few years, you may want to keep looking. 4. Think about commitment. I'm not talking just about your mortgage.

How to get a cut on a home?

1. Use a trusted realtor. We all know that realtors get a cut of the sales price of a home which makes some buyers hesitant to use a realtor: they believe it drives up the overall cost. Keep in mind that the seller, not the buyer, pays the commission.

Is it expensive to change a room in your dream house?

It's often the case that your dream house has that one room that you're already fantasizing about changing. Willmes says to remember that it's fairly inexpensive to fix cosmetic issues (a bit of paint or some wallpaper) but making changes to kitchens and baths can be expensive.

What to think about when living in a house?

Does it get enough sunlight — or too much? Are you a comfortable distance from the neighbors? Consider the distance and difficulty of traveling from the driveway to the front door and whether seasonal changes will turn features like a steep driveway into a hazard.

What are the top features buyers look for in a home?

Today’s buyers are juggling many different priorities when it comes to buying a home, but, according to the Zillow Group Consumer Housing Trends Report 2020, some features stand out as very important or extremely important to most buyers.

Why are homes closer to the city more expensive?

Homes closer to core downtown areas tend to be more expensive, thanks to their shorter commutes. According to Zillow research, in 18 of the 35 large metro areas included in the analysis, buyers should expect to pay more for a home within a 10-minute rush-hour drive to the downtown core. However, keep in mind that home values in this bracket are also growing more slowly in much of the country as more buyers shift to remote work and place a lower value on shorter commute times. In 2017, homes in 9 of those metro areas had the fastest growing home values — that has since dropped to three.

What percentage of buyers go over their budget?

Still, Zillow research found that 27% of buyers went over their initial budget. Only 17% spent less than they budgeted.

Why do buyers narrow their search?

Most buyers start to narrow their search by price so they’re looking only for homes they can afford. As they start to tour online or in person, they develop a sense of the market, what’s available and what’s appealing to them.

How long does a homeowner stay in their home?

Zillow research shows that the typical homeowner stays in their home for 14 years before selling. When shopping for a forever home, think beyond your immediate needs. Make sure the home meets your long-term goals and plans.

Why do buyers look for move in ready homes?

Many buyers look for a home that’s move-in ready, so they can avoid costly repairs and updates — especially right after moving in. Many also like to add some personal flair. If you want to infuse the home with your personal style, you might want to avoid homes that can’t be changed enough to fit your preferences or those with recent upgrades that are selling for top dollar. (To see what constitutes minor repairs, see below .)

What do you need to buy a house?

As a home buyer, the question to ask yourself is, “Do I qualify for a mortgage?” If you do, odds are you’re in good shape to buy your first home.

What are the requirements to buy a house?

Income and employment requirements to buy a house. Next to credit, steady income and employment are other big requirements for mortgage approval. The lender must confirm that your income is consistent and enough to afford a mortgage payment.

How long do you have to wait to get a mortgage after bankruptcy?

These waiting periods vary by home loan program. For example: Conventional loan — You must wait four years from your discharge date after a chapter 7 or 11 bankruptcy, and two years after a chapter 13.

How long do you have to work to get a home loan?

For this reason, most lenders require 24 months of consecutive employment before approving a home loan application. This applies to self-employed mortgage borrowers, too, in which case you’ll provide your business and personal tax returns for the previous two years.

How long do you have to wait to file for a foreclosure?

The typical waiting period after a foreclosure is seven years, or three years if you have extenuating circumstances . FHA loan — You must wait two years from your discharge date after a chapter 7, and one year after a chapter 13. There’s no waiting period after a chapter 11 bankruptcy.

What is the first step to get a mortgage?

So when you’re ready to get serious about buying, your first step is to get pre-approved for a mortgage. Some home buyers make the mistake of shopping for a property before meeting with a lender. But with a pre-approval, you’ll know what you can afford before starting the process.

Do lenders take credit scores into consideration?

Lenders take more than your score into consideration. They’ll also review your credit reports, paying close attention to your most recent credit history.

What questions should I ask a real estate agent?

7 questions to ask when you interview agents 1 How long have you been a real estate agent? 2 What kind of experience do you have in this specific market area? 3 Do you usually work with buyers or sellers? 4 How do you usually communicate with clients? What should I expect for response time? 5 How will you help me search for homes? 6 What days and times are you typically available for showings? 7 How will you ensure transparency about any issues you see with a house?

What does a real estate agent want?

Your real estate agent wants to make the home buying transaction as smooth as possible. If they do not provide this information upfront, be sure to ask.

How to tell if walls are structurally sound?

Are the walls structurally sound? Look for cracks and look for evidence of cracks covered over by wallpaper that doesn’t look right or paint applied over filler.

What is the job of a real estate agent?

Real estate agents make offers on homes every day. Their job is to help you make the best offer while protecting you against potential risks with the transaction.

How does being approved for a home loan save time?

Also, be aware that being approved for a home loan saves time for everyone by ensuring that you, as the buyer, can actually afford the home and be able to follow through an offer.

What does it mean to contact a realtor for a house?

Contacting the agent listed on the for-sale sign of a house you’re interested in may not be the best way to protect your interest as a buyer. When you work with your own agent, that agent’s job is to represent your interests. They help research the house, find answers to all of your questions, and serve as your professional intermediary for communicating with the seller’s agent and homeowner.

Is buying a house a good investment?

As you well know, buying a house is a significant investment. Before you start house hunting, think through your goals for homeownership. Why do you want to buy a house?

Credit Score Qualifications To Buy a House

Many first-time home buyers worry their credit score may be too low to qualify for a mortgage. Most of the time, though, you can qualify with a below-average score.

Income Requirements To Buy a House

There are no set income requirements to buy a house, and your monthly income isn’t the only determining factor. To buy a home, you will need to provide lenders the following:

Cash Needed to Close On Your Home

Many people think you need a 20 percent down payment to close on a home, but that’s not true. The typical down payment for first-time home buyers is about 7 percent, but some programs can help you buy a home with as little as 3 percent or no down payment at all.

Build a Budget Before You Buy

Home buyer competition can be fierce. The buyers who win are the buyers who prepare. Knowing how much you want to spend on housing each month puts you in a powerful position — you’ll know when to push and when to move on to another home.

Learn About Mortgage Loans

Almost 9 out of 10 home buyers use a mortgage to purchase their home. You probably will too. That’s why it’s important to understand the different mortgage options available to you.

Get Mortgage Pre-Approved

Mortgage pre-approval is a dress rehearsal for your final approval. Savvy home buyers always get pre-approved before house shopping because pre-approvals:

Hire a Real Estate Agent

In the United States, a home buyer’s real estate agent is paid for by the seller. It doesn’t cost you to have an agent. Because you aren’t the one footing the bill, you should get the best agent you can find.

What are the three things that a buyer should consider when buying a house?

We’ve been there! But understand that real estate is about compromise. As a general rule, most buyers prioritize three main things: price, size , and location. But realistically, you can expect to achieve only two of those three things. So you may get a great deal on a huge house, but it might not be in the best neighborhood. Or you may find a nice-size house in a great neighborhood, but your down payment is a bit higher than you were hoping for. Or else you may find a home in the right neighborhood at the right price, but it’s a tiny bit, um, cozy.

How to find a realtor in your area?

You can search on realtor.com/realestateagents to find agents in your area as well as information such as the number of homes sold, client reviews, and more. Make sure to interview at least a couple of agents, because once you commit, you will sign a contract barring you from working with other buyer’s agents—this ensures the agent’s hard work for you pays off.

What is the minimum credit score required for an FHA loan?

An FHA loan will have looser qualification requirements than a traditional mortgage, but there are still certain prerequisites borrowers must meet like getting private mortgage insurance and having a minimum credit score of 500. 2. Pick the right real estate agent.

What is a contingency for a first time home buyer?

Another important first-time home buyer addition: a financing contingency, which gives you the right to back out if the bank doesn’t approve your loan. If they believe you’ll have trouble making a payment, a mortgage lender will not approve your loan.

What does pre-approval mean for a mortgage?

This means the bank will assess your credit history, credit score, and other factors, then tell you whether you qualify for a loan, and how much you qualify for. Mortgage pre-approval also puts home sellers at ease, since they know you have the cash for a loan to back up your offer. You can also decide if you’re going to apply for a loan ...

Do you need a real estate agent before making a massive payment?

All of which is to say, before you make a massive payment, you will want to have a trusted real estate agent by your side to explain the ins and outs of the process. Make sure to find an agent familiar with the area where you’re planning on purchasing; to her credit, the agent will have a better idea of proper expectations and realistic prices, says Mark Moffatt, an agent with McEnearney Associates in McLean, VA.

Does realtor.com make commissions?

The realtor.com ® editorial team highlights a curated selection of product recommendations for your consideration; clicking a link to the retailer that sells the product may earn us a commission.