FAQ
FAQ
Frequently Asked Questions
Am I Ready to Be a Homeowner?
Purchasing your first home is a major milestone and not a decision to be taken lightly. It’s a huge financial commitment that can take months of preparation—searching for the right home, making an offer, going through the mortgage application process and closing on the home. Then you have the actual business of home ownership, which is a whole different story.
If you’re a first-time home buyer, you’ve probably asked yourself, “am I ready to be a homeowner?” Don’t worry—homeownership is a big step and the brownwoodsrealtors.com team is here to help.
Am I Ready to Be a Homeowner?
Financial stability is one of the most important contributing factors to successful homeownership. Buying a home is one of the biggest financial decisions you’ll make. You need a steady source of income that can easily cover your mortgage payment—experts recommend that your home cost no more than 20 to 30% of your monthly income.
You’ll also want to minimize any debtor financial obligations that can reduce your ability to afford a mortgage. Finally, you’ll need income or savings to afford home repairs, furniture, homeowners’ insurance and other assorted expenses.
Is Renting or Buying Better?
There is no definitive answer as to whether renting or owning a home is better. The answer depends on your own personal situation—your finances, lifestyle, and personal goals. You need to weigh out the benefits and the costs of each based on your income, savings, and how you live.
Renting provides much more flexibility. However, if you have returned to the office, either full-time or partially, and assume you’ll remain in your current job for a few years, then buying might be wiser. A common rule of thumb is if you plan to stay in the home for five to seven years, then buying is a good option.
What Is the Lender's Formula?
Your debt-to-income ratio (DTI) is all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the monthly payments to repay the money you plan to borrow. Different loan products and lenders will have different DTI limits.
What Do I Look for in Homes?
- Roof Condition
- Reliable HVAC
- Plumbing Issues
- Water Damage and Mold
- Noise Level
- A Good Foundation and Home Exterior
- Outlets and Appliances That Actually Work
Do I Need a Home Warranty?
A home warranty is a contract between a home protection company (a.k.a. “home warranty company”) and a homeowner in which the warranty company promises to repair or replace parts of a home system or certain appliances, such as washers, dryers, ovens, and refrigerators.
The difference between homeowner insurance and homeowner warranty: A home warranty covers you primarily for normal wear and tear of certain major appliances and systems. On the other hand, homeowners insurance covers damage to the house and contents due to covered perils.
What Should I Expect at Closing?
Closing, also called settlement, is a meeting where the final documents are signed, the closing costs are paid, and ownership of the home is officially transferred to you.
On closing day, the ownership of the property is transferred to you, the buyer. This day consists of transferring funds from escrow, providing mortgage and title fees, and updating the deed of the house to your name. Basically, come closing day, you and the seller sign all the necessary papers to officially seal the deal.
What Is Pre-approval?
In lending, pre-approval is the pre-qualification for a loan or mortgage of a certain value range.
A pre-approval is a preliminary evaluation of a potential borrower by a lender to determine whether they can be given a pre-qualification offer. Pre-approvals are generated through relationships with credit bureaus which facilitate pre-approval analysis through soft inquiries. Pre-approval marketing can provide a potential borrower with an estimated interest rate offer and a maximum principal amount.
Am I Ready to Rent?
Are you living with your family and thinking about moving into your first apartment? Or maybe you did live independently, but you got hit by the economy and moved back in with your parents. If you’re considering moving out for the second time, you’re not alone.
Moving out into your first rental is a big step, and you need to be financially prepared.
What Should I Offer?
It’s tough to determine exactly how much you should offer on a house. You have to consider what’s a fair offer and how far below the asking price is reasonable. In general, it’s best to offer 4-8% below the asking price on a house, assuming the asking price is close to the fair market value.
Can I Ask You for Advice?
- Do you have a firm grasp of your overall financial situation?
- How much should you spend monthly?
- What will you spend on repairs and maintenance?
- Are you prepared for increasing costs?
- Are you informed about tax benefits?
- What do you really want in a home?
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