F.A.Q. Residential Home Buyers

🏠 Residential Home Buyer FAQ

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1. What’s the first step in the home buying process?

Get pre-approved for a mortgage. It shows sellers you're serious and gives you a clear idea of your budget.

 

2. How much home can I afford?

A general rule: your monthly housing cost should not exceed 28-31% of your gross monthly income. A lender can provide a more accurate estimate based on your income, debt, and credit.

 

3. What’s the difference between pre-qualification and pre-approval?

• Pre-qualification: An informal estimate of how much you can borrow.

• Pre-approval: A more formal process involving a credit check and documentation. Stronger when making an offer.

 

4. Do I need a real estate agent?

While not legally required, an agent helps negotiate, navigate paperwork, and protect your interests—especially helpful for first-time buyers.

5. What is earnest money?

A deposit (usually 1–3% of the purchase price) that shows you're serious. It's credited toward your down payment or closing costs.

 

6. What’s included in closing costs?

Closing costs (2–5% of the loan amount) may include:

• Appraisal

• Title insurance

• Loan origination fees

• Taxes

• Homeowners insurance

• Recording fees

 

7. What inspections should I get?

A general home inspection is a must. Depending on the location and property, you might also consider:

• Termite inspection

• Radon test

• Sewer scope

• Mold inspection

 

8. What’s the difference between an appraisal and an inspection?

• Inspection: Evaluates the property’s condition.

• Appraisal: Determines the market value for the lender.

 

9. How long does the buying process take?

Typically 30–60 days from offer acceptance to closing.

 

10. What if the appraisal is lower than the offer?

You can:

• Renegotiate the price

• Pay the difference out of pocket

• Walk away (if your contract allows)

 

11. Do I need homeowners insurance?

Yes, lenders require it before closing. It protects your home and belongings from damage and liability.

 

12. What is escrow?

Escrow is a neutral third party that holds funds and documents until the deal is complete.

 

13. Can I buy a home with a low down payment?

Yes. Options include:

• FHA loans (as low as 3.5%)

• Conventional loans (as low as 3%)

• VA and USDA loans (0% down, for eligible buyers)