What is the first step to the home buying process?

Getting pre-approved for a mortgage is the first step in the home buying process and gets the ball rolling in the right direction.

Here’s why:

You need to know how much you can borrow, it lets you know how much you will need down, and it shows sellers that you are a serious buyer.

How long does it take to buy a home?

From searching online to closing the deal, buying a home takes about 10 to 12 weeks. Once you choose a home and the offer is accepted, the average time to complete the escrow period on a home is 30 to 45 days (during normal market conditions). Although, well-prepared home buyers who pay cash can purchase properties faster than that.

Market conditions are a major factor in how fast homes are sold. In hot markets with a lot of sales activity, buying a home may take a little longer than normal. That’s because several parties involved in the transaction get behind when business suddenly picks up. For example, a spike in home sales increases the demand for property appraisals and home inspections, yet there will be no increase in the number of appraisers and inspectors available to do the work. Lender turn-around times for loan underwriting can also slow down. If each party involved in a deal takes a day or two longer to get their work done, the entire process can get extended.

What is a Seller’s Market?

In sellers’ markets, increasing demand for homes drives up prices. Some driving factors for home demand are economic conditions, low interest rates (or decreasing interest rates), and fewer homes on the market. Economic conditions are especially favorable when the local labor market heats up, bringing in an influx of people and a demand for housing. Low interest rates improve home affordability, creating more buyer interest, particularly for first time home buyers who can afford bigger homes as the cost of money goes lower. However, sometimes a short spike in interest rates can push on the fence buyers to purchase now in the belief that the rise in rates will continue. And low inventory is a matter of supply and demand, allowing sellers to raise the prices since there are not lots of options.

What is a Buyer’s Market?

A buyer’s market is characterized by declining home prices and reduced demand. Several factors may affect long-term and short-term buyer demand, like: Economic disruption - a big employer shuts down operations, laying off their workforce. Another factor could be interest rates trending higher - the amount of money the people can borrow to buy a home is reduced because the cost of money is higher, thus reducing the total number of potential buyers in the market. Home prices drop to meet the level of demand and buyers find better deals. Factors such as high inventory or natural disasters lowering property values can also contribute to a buyer’s market

How much do I have to pay an agent to help me buy a house?

Real Estate commissions are generally paid by the seller.

Listing brokers represent sellers and charge a fee to represent them and market the property. Agents who represent buyers are compensated by the listing broker for bringing home buyers to the table. When the home is sold, the listing broker splits the listing fee with the buyer’s agent. Thus, buyers don’t pay their agents.

What kind of credit score do I need to buy a home?

Most loan programs require a FICO score of 620 or better. Borrowers with higher credit scores represent less risk to the lender, often resulting in a lower down payment requirement and a better interest rate. Conversely, home shoppers with lower credit scores may need to make a bigger down payment or accept a higher interest rate in order to offset the lender’s risk.

Should I order a home inspection?

Yes! Home inspections are required if you plan on financing your home with an FHA or VA loan. For other mortgage programs, inspections are not required. However, home inspections are a good idea because they can reveal defects in the home that are not easily detected. They bring peace of mind to one of the biggest investments of a lifetime.

Do I need to do a final walk-through?

We absolutely recommend final walk-throughs to all of our clients. Final walk-throughs give buyers a chance to make sure nothing has changed since their first visit. If repairs were requested, as part of the offer, a follow-up visit ensures that everything has been completed per the terms of the contract.