Hey everybody, it’s Stacey Christopherson with C4 Elite Real Estate Team and Coldwell banker. Today I want to go over five questions I frequently get from buyers when they are purchasing a home. Whether you are a First Time Home Buyer or a repeat buyer, answers to these questions are helpful to keep the process smooth. As we state in every blog, never hesitate to ask these or any questions you may have. Buying a home is the biggest investment you will make in your life time. Understanding the process and what each step involves in key to keeping stress levels low. This blog Is very user friendly, so be sure to click the links in blue for more information on those topics.
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1. Should I talk to a Lender First?
The answers, of course, yes. The most important thing that you find out when you talk to your lender is how much home you can afford. They will sit down with you, go over your income and then go over your budget. Additionally, they can tell you how much monthly mortgage payments will be on different prices of homes. These numbers will give you a good idea of what your monthly payment will be and whether a mortgage payment fits in your budget.
Also, when you talk to a lender, you find out the type of loan program you want to use. Are you a First Time Home Buyer? If so, you might want to look at the FHA program. Are you a US veteran or currently serving in the military currently? Then you will want to know more information about the VA loan program. Perhaps you have been saving money for a long time and intend to make a large down payment. Ask your lender about a Conventional Loan program. Interest rates and credit scores will affect your mortgage payments as well. Ask about these at this initial meeting. This first question and answer is the most important step in starting your home buying process.
2. Rent or Buy?
Many First Time Home Buyers are currently renting a home or apartment. The next question they often ask is whether they should continue to Rent or Buy a home of their own? The answer to this question varies and is on a case by case basis. As a buyer you will want to sit down and crunch numbers. Be sure to click on the link on whether you should rent or buy to check out a previous blog where we go into more detail on this. As with mortgage payments, qualifying for a mortgage depends again on your credit score and Debt to Income (DTI) ratio. If you can qualify, of course, there are many benefits to owning a home. Although there are some disadvantages to owning a home, the same applies to renting. You will want to explore your different options when deciding to Rent or Buy. Again, talking to a lender and having all your income vs. debt numbers available will help you make this decision.
3. Should I Hire a Buyer’s Agent?
Click the link to read more information on a Buyer’s agent, however, I highly recommend you hire a Buyer’s agent. The agent you hire has a fiduciary duty to you, the buyer. They must be loyal to you and keep your best interest in mind throughout the entire process. You will NOT save money or get a discount on a home if you do not have a Buyer’s agent. If you call the listing agent, and ultimately write an offer on that home, the agent is representing both you and the seller. It almost always ends up with a conflict of interest. Especially since the listing agent started the process representing the seller, not you, the buyer. The commissions for both the selling and Buying agent are already part of the contract with the seller. In Utah, sellers pay all commissions for the buying agent and the listing agent. As a buyer, hiring a buyer’s agent is FREE. They represent you and solely you and have your best interests in mind. We are here to protect you through the process and make sure that everything goes smoothly.
4. What are Short Sales? Foreclosures?
We have done a previous blog on foreclosures and how to buy a foreclosed home, so be sure to click on the link and read about that. A short sale is different than a foreclosure in that the seller is still involved in the process. A seller owns a home and needs to sell but the market has negatively adjusted, and they will not be able to pay the mortgage company the full balance owed when the home sells. This is a short sale. When an offer comes in, the seller and buyer negotiate like in a traditional sale, however, the bank must approve the offer and the terms. The bank, in a short sale, is going to be who loses the money. The seller walks away with nothing, but the bank will actually lose money because the full mortgage will not be paid off in full.
Short sales tend to take more time than a traditional sale. They can take anywhere from one month to six months for a house to close. This is purely because of the banks requirement to approve all offers and terms. If you decide to look at short sales or put an offer on a short sell home, be sure to have plenty of time for the process. Also, have plenty of patience as well as short sale homes can be frustrating.
5. When is Closing?
When you put an offer on a home and it is accepted by a seller, you go into escrow. Click on the link to learn more about what escrow is. The amount of time that passes between writing an offer and closing is all negotiated in the contract. When the offer is written, you will want to talk to your buyer’s agent about the dates that work best for you. Not only closing but for your due diligence, where you do a home inspection, and any other items you want to know about the house. Finally, the appraisal and financing deadlines which go through your lender. In Utah, we do split closings. The buyer has a title company and the seller has a title company. Each party deals with their own title company throughout the process.
The day you signed paperwork in Utah, is called settlement. This is the day we go to the title company and you sign your paperwork, wire funds and switch utilities etc. Again, in Utah, you do not have possession of the home on the day of settlement unless it has previously been negotiated. Be sure to talk to your buyer’s agent about when you will have possession. Typically, if you sign paperwork on Monday, you will have possession in the afternoon on the next business day or Tuesday. Do not schedule your moving truck on the day you sign paperwork. Additionally, do not schedule carpet cleaning or anything for the day. You are signing paperwork only on the day of settlement. I highly recommend that you wait two business days after settlement, in case there are any delays. You should be safe to plan on moving in etc. on that second business day after settlement. In Utah we call closing when the loan funds and the property records at the county. The title company takes care of all of that. However, like I said, it is typically the next business day after you sign paperwork.
NO Question is a Bad Question
Here at C4 Elite Real Estate Team, we want to you to ask any and all questions. It is our job to ensure you understand the home buying process. As I said in the intro, the questions in this blog are the most frequently asked. However, you may have a question about something different. Do not hesitate to call us or ask us in person, anytime.