If you’re here, chances are you or your client are thinking about buying their first home. Perhaps the process has begun already – either way, here are some of the frequently asked questions (with answers!) for first time home buyers. This post is a 2 part series, once you’re done with this one, check out part 2 here!
1. Can I get approved for a mortgage before I find a home?
Yes you can, and it’s wise that you do! It helps you know what you are able to afford and thus saves everyone time. Imagine looking at properties in one price range, only to realize you are in a different price range after speaking to the mortgage company. This process is called a pre-approval, and many real estate agents won’t even show properties unless a buyer is pre-approved. If you have a real estate agent in mind, they likely have a lender they recommend, but you can use any lender you wish. In order to apply for a mortgage there are a couple of things you will need. You will need to bring in at least 3 months of bank statements along with proof of employment, (either for yourself or your spouse) and 2 years’ worth of tax returns. Your lender of choice will certainly let you know all items needed.
2. What is a good down payment?
The general consensus regarding this is that at best, it should be between 20 and 40 percent, however it’s important to understand that every situation is different and you need to make sure you find out what the ‘gold standard’ down payment is in your area. More importantly is to realize that 20% is unrealistic for most people, and frankly, not necessary in many cases. In fact, some areas even have the option for mortgages with nothing down. These tend to be associated with specific types of loans (Like USDA or VA) but also can be through community specific or lender specific programs. A government backed loan like an FHA requires a lower down payment, but there are also some conditions that need to be met in order to qualify for a government backed mortgage loan. For more on loans, check out our post on how to get a mortgage without 20% down here.
3. When will I know if I’m approved?
This can vary based on the company policy and will likely be communicated to you upon sending the application. In most cases, you should hear back within 5 business days of sending in your application. As a buyer’s agent, you are the point of contact for any questions or concerns about the processing of your loan. As the buyer, you are responsible for ensuring that you’re following up if things don’t seem to be moving according to the outlined plan. You have to be your best advocate in this process, which literally revolves around you as a buyer.
4. What to do if there is a problem with the property I want – will I be able to fix it?
It depends on what’s wrong with the property, are we talking about a missing piece of trim or a hole in the roof? If there is no severe damage to the property, then it’s generally up to the seller about what they want to do. Sellers have the option to list their properties “as is” meaning what it looks like – take it as is, they are doing no repairs. Some may be open to creative ways around that and simply don’t want to spend money up front to sell. It’s always a unique situation but your real estate agent should be able to advise on the specific damages, and an inspection can reveal the deeper concerns and severity of the issue. It’s important that you understand that as a buyer’s agent, you should be in constant contact with your client regarding their purchase.
5. When can I move in?
As long as the home inspection is complete and you’ve had the chance to see everything there is to see and have met all of the required inspection deadlines outlined in your mortgage agreement, then you should be good for moving in on time! In nearly all cases, the buyer moves in after the closing date. Closing date is the date specified to close on the loan, as in sign the papers and get the keys to the property. Sometimes, and especially in hot markets, buyers are offering a “rent back” situation where the sellers are given the option to “rent back” the property they just sold from the buyer. This helps them to not have to find another property at the same time as selling the current home. It’s a very strong aspect to an offer and if the option exists for a buyer, it can give them an edge on multiple offer situations.
Make sure you check out the rest of the questions in part 2 here, and submit your questions for a part 3 by commenting below or reaching out here!
Having the right Realtor at your side through the process is also a great way to be sure that you’re able to have confidence in the buying process. If you’re looking to buy, sell or invest in the Tulsa area or Northeast Oklahoma, I’d love to serve you. Having me represent you as a buyer is completely free! You can reach me here and set up to jump on a phone or Zoom call!