Thursday, December 15, 2022 / by Brian Armstrong
Buying a home is a complex process, so to close out the year, we built this FAQ guide with the top 10 most common questions we heard in 2022!
What is Pre-Qualification?
Pre-qualification is one of the first steps you should take when looking for a home! Your mortgage lender will help you through the pre-approval process and show you what type of home you can afford! Pre-approval also lets sellers know you are ready to make a purchase, leaving you in a strong position to negotiate!
Do I Need a REALTOR® To Buy a Home?
While it is not required to use a REALTOR®, you may be missing out if you elect not to use one. A Realtor is there to help you and will walk you through every part of the home-buying process, so no stone is left unturned! You will not only benefit from having a knowledgeable resource you can reach out to, but they also do the heavy lifting to find you the perfect match!
Where Are Vermont Home Prices Headed?
If only we could peer into the future and see where home prices will go, right? With that said, Vermont homes have shown steady growth and resiliency to market disruptions in the past. Due to the interest rate hikes, demand for homes has slowed down, which will likely cause prices to fall in the short run!
How Do Interest Rates Affect My Purchase?
Interest rates have an inverse relationship with purchasing power, so keep an eye on their movement. When Interest rates rise, your purchasing power decreases! Even incremental changes can impact the affordability of your home and your ability to get financing! Learn more in our blog discussing interest rates!
How Big of a Deposit Do I Need?
Minimum deposits are usually determined by the type of financing you receive and typically range from 3-5% of the purchase price. Additionally, Veterans Administration loans are also available for Veterans with 0% down, which can help them get over the hurdle to home ownership.
Can I Back Out of a Purchase?
Buying homes is a complex process, and you may run into a situation where you decide you don't want to close on the house. If your offer includes contingencies that weren't met, you may terminate the contract.
In other cases, you may lose what is known as "Earnest Money", or a deposit made with an offer. But beware, while you may be able to back out of your arrangement, you could still be liable for liquidated damages depending on the contract terms. Make sure you understand the agreement terms of your purchase!
How Long is The Overall Process?
Buying a home is not a very fast process. Your search can be one of the lengthiest stages of the process, but not always the longest. On average, closing on a home can take several months, but in some situations, closings can take over a year due to contingencies, inspections, repairs, estates, legal challenges, etc. If you are thinking of moving soon, plan and start your search early!
What Additional Fees Will I Pay?
On top of your deposit, which is the largest fee, there are several other fees you should expect to pay when buying a home. Be prepared to add 2-5% of your loan amount to cover loan origination fees. This will come out at the time of closing. Additionally, you may need to cover fees for appraisals, inspections, and underwriting depending on the home and your purchase terms!
When Can I Move Into My New Home?
You have found your dream home and naturally, you are ready to move in! In most cases, you should be able to start moving in directly after closing. On the flip side, some contracts utilize a rent-back agreement in which a seller remains in the home for a certain amount of time after closing. This often happens when the seller is also working on purchasing a property at the same time they are selling!
What Type of Homeowner Insurance Do I Need?
Insurance is a must-have when it comes to a home. From incidentals to natural disasters, having coverage of major assets is a no-brainer, but how much should you insure your home for? While 100% of the value is ideal, many insurance companies require you to cover at least 80% of the replacement cost of your home. Keep in mind that replacement cost usually only applies to your home, which can be drastically different than the market value for your home and the land!
Have more questions that we didn't answer above? Our team of local real estate experts is ready to help! Give us a call at (802) 735-2167 or email us at firstname.lastname@example.org!