If you are thinking that the purchase of your first home would be a hassle-free task, then you are in for a big surprise. Unless and until you are well versed in the real estate norms and other trivialities, the home buying process can be a long and confusing affair. The first home purchase is an emotional roller coaster ride, and just when you think you have seen through the process another issue will confront you. Home purchase is such a huge investment can make the most confident person, nervous. And there are bound to be many questions that would crop up in your mind prior to the purchase. In this blog, we would like to answer some of the frequently asked questions by the first time home buyers. We expect that the below questions and more importantly their answers would ease your tensions and frustrations, helping you sail through the process.
Question #1: Am I ready to own a home?
The answer would vary from one person to the other, but we are here to provide you a general overview of the situation. Well, there are few signals helping you understand whether or not you are ready to own a home. If you love the city you are putting up at present, and want to stay there for many years in the future then buying a home in the city is a wise idea. A home would help you settle down in an area of your choice. On the financial side, you need to have a smooth running savings plan that will not only allow you to pay off the debts but also keep the door open for some monthly savings. Maintaining a home is also one of the important criteria. If you have already got a hang of property maintenance, with the present rental occupation, then the home purchase is your next logical step forward.
Question #2: What is the first step in the home buying process?
No matter how much savings you have put together, you will need home loans to support such a large investment. So, it is important to start an in-depth research into the home loans and mortgage plans. You should start visiting different banks or mortgage brokers as soon as you have made up your mind. Learn about their interest rates, payback terms and other formalities involved in the home loans process. Try to get your hand at a pre-approved loan to speed up the process.
Question #3: How do I find the right lender?
To have a stress-free post home purchase period, you need to select a reputed lender. Reputed banks with their well laid out norms are the best bets in this regards. Make sure there are no hidden norms in your loan contract. Also, try to select a bank which charges minimum interest rates and offers a certain degree of flexibility.
Question #4: Can I get a loan if I have a poor credit score?
If you have a poor credit score then the home purchase process might get a bit difficult, but you can still own a home. In such a scenario, the lending organization might charge higher interest rates and shorten the payback period. In this regards, the best option would be to plan ahead and improve your credit score before taking the home purchase leap.
Question #5: How much down payment is needed?
The answer depends on the value of your property and the lender you choose. There are some lenders who will finance the bulk amount, requiring you to pay only 3-5% of the total property value. But, a wise decision would be to pay as much as a feasible upfront to reduce the monthly payments and cut down on the interest payments.
Question #6: What is earnest money or token payment?
It is a good faith deposit made by the buyer to the seller. It is a sort of confirmation that you have accepted the seller’s offer and are committed to buying the property. Once this payment is made, the seller would not seek other suitors for the property. The next step is property closing.
Question #7: How long does it take to close a property purchase?
A research suggests that the time is taken between initial talks between the buyer and seller, and the closing is between 50-55 days on average. Of course, the time may vary in your case, depending on various financial factors.
Question #8: What is property closing?
Also known as the settlement stage, here the buyer pays the amount that the seller owes. The seller in return hands over the deed of the house to the buyer. There is a lot of paperwork involved in the process, and on an average the new homeowner has to sign at least 20-30 times during the settlement. After that you will be handed over the keys to your dream home.
Hope, we have been able to show you a clear picture, which will guide you through your first home purchase process.