Home Buyers: what to expect + where to start

Welcome to my home buyer Q&A blog! Whether you're just starting to explore the idea of homeownership or diving into the process headfirst, I’m here to answer your questions and provide expert guidance every step of the way. I leverage my knowledge and experience to help clients navigate the nuances of buying, guiding you to making a smart move. The goal is to make homeownership more accessible and affordable for all individuals. By providing additional support and incentives.

• What is the first step?

  1. Preparation (2-6 months before buying):

  • Find a real estate agent to represent you.

  • Obtain a mortgage pre-approval to understand your purchasing power. Your realtor can connect you with local lenders.

  • Assess your finances and determine your budget. Your lender can advise here.

  • Research neighborhoods and housing preferences. Your realtor can help you narrow down your parameters by school districts, proximity to work, neighborhoods, zip codes, average price points and so on.

  2. Home Search (1-3 months):

  • Begin searching for homes that meet your criteria. Your realtor will curate a custom online portal that alerts you anytime a new home within your preferences hits the market.

  • Your realtor will schedule private viewings of homes you wish to see.

  • Make note of features and amenities that are important to you during your showings.

  • Narrow down your options and consider making offers on properties of interest. Your realtor will help you make an informed decision and guide you through every step of the offer stage.

• What is the typical timeline from start to finish?

  Loans require a minimum of 30 days from the moment you enter into a contract to complete inspections, finalize the loan processing, and coordinate with the title company. By the 30th day, you'll be signing the final documents, wiring funds, and officially transitioning into the role of a homeowner! A loan typically takes around 30 days to process, BUT buyers have the flexibility to choose their own closing date.

• How much of a downpayment do I need?

  Most home buyers only need anywhere between 3%-5% down!

• Are there any other associated costs outside of the downpayment?

  Yes….

  • Loan application: Loan application fees typically amount to approximately $375. The payment schedule varies among lenders. While some may require payment at the time of application, usually within 5-7 days of offer acceptance, others may include it in your closing costs, which are settled at the end of the transaction on the closing date.

  • Earnest money: 1% of your purchase price due within 4 days of accepted offer. This will be deducted from your down payment at closing which is great! You can think of it as a security deposit in a way. There are some caveats here though.

  • Home Inspection Cost: typically around $400 due at the time of inspections which is usually within 5-7 days of offer acceptance.

  • Appraisal Fee: This fee typically ranges from $400 to $500 and is usually due within the first two weeks of offer acceptance. This fee covers the cost of an appraisal conducted by a professional appointed by your lender to determine the value of the home.

  • Closing costs: The amount of closing costs fees varies depending on your purchase price/title fees + lender fees, but a rough estimate averages around $5,000-$6,000. During the initial offer stage, we can sometimes negotiate for sellers to cover these costs on your behalf. We'll dive deeper into this aspect when the time comes.

  • Broker processing fee: $265 will be due at time of closing along with your downpayment and closing costs.

  ***However, it’s important to note that there are various incentives available for buyers to alleviate some of these costs. Feel free to explore the next question to learn more!

• Are there any incentive programs for buyers?

  Yes!

  • Seller credits: In this scenario, the seller agrees to cover the buyer’s closing costs, including expenses like appraisal fees, title insurance, and loan origination fees. The concession can make the purchase more affordable for the buyer. There are limits with a maxim seller concession between 3%-6% of the home sale’s price.

  • Home warranty inclusion: Sellers can sweeten the deal by including a home warranty as part of the sale. This could offer peace of mind to buyers, as they’ll have coverage for potential repairs or replacements of major home systems and appliances during the initial home ownership period.

  • Loan incentive programs: These programs typically provide incentives such as down payment assistance, reduced interest rates, or grants to qualified buyers. Speak with your lender for more information on these loan programs.