If you are thinking about buying a home you probably have lots of questions about how the process works and where to start. To help you start speaking the language, here are 5 common questions and answers for first-time home buyers.
A down payment is to the amount of money you will have to give to the mortgage lender also referred to as “put down” to buy a house. A down payment can range from 0 to 20 percent of the purchase price of the house. Eligibility for the lowest down payment options is required, for example if you are a veteran or live in a rural area you maybe be eligible for a 0% down loan option through the VA or USDA.
When you apply for a mortgage, you will have to disclose the amount of money in your bank account but also the source of the funds. The underwriter (the person at the mortgage company who determines how risky it is for them to lend you money for a house) will look at your regular balance in your bank account over the last 60 days and if there are irregularities in the amount of money coming in they may ask you for more documentation. For example, if you usually have a $400 balance in your savings account but you received $5,000 in contributions to your house fund as wedding presents then the underwriter may ask for gift letters for that money. This varies depending on normal balances, when you received the gift and how much it was and the underwriters discretion.
This question can also be asked as “What is your price range?”. To figure this out you will need to know some key financial information. Your annual income, an average number for your monthly debts and the amount you will have for a down payment. If you know those three numbers you can use an online affordability calculator to calculate a price point for the amount of house you can afford. This is a good first step but before you go out shopping for houses you should get a more detailed estimate from a mortgage lender and get pre-approved.
Is a REALTOR the same as a real estate agent?
A real estate agent is a licensed professional who you contract with to help you buy or sell a home. But not all real estate agents are REALTORs. REALTOR®, notice its in all caps, is a trademark of the National Association of REALTORS – a trade organization for real estate agents. If you are a member of this association then you can use the designation REALTOR® and you must uphold the standards of the association and its code of ethics” according to realtor.com .
In most cases, the seller pays the real estate agent. When the seller hires their real estate agent they define what percentage commission the buyer’s real estate agent will be paid so in that case as a buyer you don’t have to pay out of pocket for your real estate agent. There are some real estate agents who don’t work on a commission but rather a flat fee, like Redfin.
