5 First Time Homebuyer Questions

I love working with my first time homebuyers. They're excited, eager, and full of energy. Buyers of all ages have different types of questions, and I love being able to walk my clients through the process.

1. Is it a good time to buy?
This will depend on what your local market is doing and what your finances look like.

A buyer’s market means that there are a lot of homes listed for sale so homeowners need to price competitively to get their home sold. ​Buyers have more homes to choose from.

A seller’s market means there is less inventory on the market, so buyers have fewer homes to choose from and therefore have less negotiating power.​ Sellers do not need to price as competitively.
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​Another thing to consider is where you are financially. Speak to a lender and see if a mortgage will be more cost efficient than renting in your market. Lenders take into account income, debt, credit score, and more.

2. Should I talk to the bank before looking at homes?
Yes. I don’t want to waste the buyer’s time looking at homes that are not within their price range. It’s not only a waste of the buyer’s time, but also the Realtor’s time. Showing a house that the buyer falls in love with but can’t purchase is not a good way to start out.

​If you’re not sure where you stand or who to talk to, then try asking your bank. I recommend speaking to a few local mortgage lenders. In my experience, local lenders are easier to communicate with, are more flexible, can close faster, and overall I’ve had more pleasant experiences with lenders that I’ve had worked with before.

3. Do I really need a Realtor to buy a home?
Yes, it's free to the buyer! The seller pays the buyer agent’s commission. So as a buyer, you can hire a professional at no cost to you.

​Now be aware, that you could write an offer on a house using the listing agent, but this means the listing agent would be representing you and the seller. This could be a conflict of interest. Make sure your agent explanations Agency.

​You can read more about each of these here “What Does Agency Mean?"

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4. What is it going to cost me to buy a home?
There is the obvious mortgage payment that you will begin paying monthly once you move into your new home, but what about the costs before that?

1. Earnest Money - Good faith money given at the time of an accepted contract
2. Inspections - Various inspections will be recommended on the property, consider focusing on the HVAC, roof, electrical, and foundation
3. Appraisal - If you are using a loan, your lender will need to make sure the home is appraising for equal or more value than the contract price
4. Down payment - This could be 0%, 3.5%, 5%, 10% or more depending on the type of loan
5. Closing costs - Mortgage insurance, homeowner’s insurance, loan origination fees, prepaid, recording of the deed, taxes, title insurance

Explore "5 Costs Before You Close" for more details.

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5. Can I buy a home if I have bad credit?
The short answer is no. How do you define “bad credit?” Usually the "magic number" lenders are looking for is 620. Although through certain lenders you can obtain a loan with less than a 620 credit score. Your FICO score is calculated by taking into account:

Have you missed a bill payment?
How much debt do you have?
How long have you had a credit score?
How many credit cards do you have?
Do you owe any debt collectors?

Debt To Income Ratio - An important term that lenders use to determine if you qualify for a loan. The ratio varies for different loans so talk to your local lender. If you have $100,000 in student loans and only make $40,000 in income, it may be difficult to obtain a loan because you have a high debt to income ratio.