FAQs Answered! For First Time Homebuyers
Buying a home is one of the biggest investments a person will make in their lifetime. With the decision to buy a home comes a lot of questions. It’s important to do your research to make sure you’re ready to buy a home.
Our team meets a lot of first time buyers who, understandably, have questions about the process and if it’s the right time for them to move forward with the purchase. Below are some questions and answers to help you on your way.
Should I Buy Instead of Rent?
Buying a home often has many more benefits than renting. Some may include
- Tax breaks
- Financial gains
- Appreciation in value
- Builds Equity
- Capital gains
- Freedom to do what you please with the property.
Check out another one of our popular blogs Renting Vs Buying to weigh a full list of benefits.
Am I Ready to Buy?
Ask yourself the following questions when considering whether you’re ready to buy:
- Do I have a steady job?
- Have I been steadily employed for the last two to three years?
- Is my current income reliable for the foreseeable future?
- Do I have a positive bill-paying history?
- Do I have few outstanding long-term debts, like car payments?
- Have I saved for a down payment?
- Can I afford to pay a mortgage, taxes, utilities, and insurance?
Is My Credit Score Good Enough to Buy a Home?
A credit score numerically summarizes a person’s credit history and gives a snapshot of their financial standing to a potential lender. Mortgage lenders use the score to decide who receives loans and at what interest rate. The higher the score means the better the chance of getting a loan with an attractive interest rate.
If you have a lower credit score, don’t panic. It is not impossible to get a loan but it can take longer to be approved. Read about Qualifying for a Loan here.
How Much Do I Need for a Down Payment?
Saving for a down payment is often the hardest obstacle for first-time homebuyers. Most lenders expect between 5% to 20% for a down payment. It varies according to the lender’s requirements, and the type and length of the loan. Make a budget, set a goal, and stick with the plan. Saving and sacrificing is how most people come up with their first down payment.
How Do I Get the Best Mortgage Rate?
It’s time consuming to learn about the various rates and terms of different mortgages. Once you find your dream home, there is not always enough time to do your research. So do your homework before you start your search. A few tips:
Make sure you are working with a trusted mortgage lender. Read reviews or even contact the Better Business Bureau to ensure your lender is reputable.
Try using a mortgage broker to help you find the best mortgage for you. You can use the National Association of Mortgage Brokers or do a local search for someone near you.
Loans, Loans, Loans! Search for the best loans at your bank and other lenders. You would be surprised at who gets approved for certain loans. Some include VA Loans, FHA Loans, USDA Loans and conventional loans.
What is the Difference Between Prequalified and Preapproved
Pre-qualification: Getting pre-qualified for a mortgage gives first-time homebuyers an indication of how much they might be qualified to borrow. This mortgage amount is not guaranteed because no information has yet been verified. A letter from the lender may only state that you are “likely” to be approved for a mortgage.
Pre-approved: Better yet is getting pre-approved for a mortgage, which is based on a real credit score, and it also puts real estate agents and home sellers at ease. The buyer has more to offer when making a deal and in a competitive market this can be a big benefit.
Whether you are deciding to buy your first home or sixth, Coldwell Banker Carroll Realty experienced realtors can help make your dream a reality. Our professional, local agents will be there every step of the way in the home buying process to answer all of your questions and handle your concerns. We have real estate agents throughout Panama City, Panama City Beach, and 30a ready to serve you. Contact us today to start the search for your forever home!