There are a lot of questions when buying your first home, but sometimes new home buyers don’t know what they should be asking. Here are the seven questions to ask as a first time home buyer.
How Much Can I Afford?
It may seem like an obvious question, but you’d be surprised at how many home buyers get started looking at homes before they know what is in their budget. And with the housing market the way that it is right now, including so much volatility in prices and mortgage rates, it’s especially important to know your limit. So, every first time home buyer needs to know what kind of monthly payments they can meet.
And don’t forget that there are more costs to buying a home than just your monthly mortgage payment. You’ll have closing costs and property taxes, homeowners insurance and possibly private mortgage insurance. All of these things need to be considered in addition to just the purchase price.
How Does a Mortgage Work?
It may be embarrassing for first time buyers to admit, but often you don’t understand all the working parts of a mortgage until you’ve been through the process. Don’t be afraid to ask!
You’ll want to know the difference between types of mortgage: a fixed-rate mortgage and an adjustable rate mortgage. What is a good interest rate in the current market? How do you spot a trustworthy mortgage lender? How long does it take to get a mortgage and what paperwork do you need? All of these are questions your real estate agent can help you with.
What Are the Closing Costs?
We mentioned it above, but closing costs (the price you pay for things like realtor fees, home inspection, appraisal, loan origination, title search, and so on) are often overlooked. Asking what the closing costs are going to be is one of the most important first time home buyer questions. When you find a real estate agent, make sure to ask. Remember: the real estate agent should be on your team!
How Much Will It Cost To Move?
Again: more costs! So many first time home buyers don’t recognize how many hidden costs there are to purchase a home.
Moving costs could be as small as borrowing some friends’ trucks and getting some extra hands to help, or it could be as major as hiring a trucking company to pack and load all of your stuff and move cross country. The difference could be tens of thousands of dollars-it can add up quickly. So make sure you factor moving costs into your home buying calculations.
What Happens If Something Goes Wrong?
Are we going to talk about another cost? We are. First time home buyers are coming from renting or leasing, and odds are good that if there was a problem with their rental property they’d turn to their landlord.
But when you buy a home, if the furnace breaks, it’s your problem. When the pipes leak, that’s your responsibility. Having an emergency fund is important when you buy a house. Ultimately, you need to make sure that you don’t spend every last penny buying the house and leave yourself with no safety net should anything bad happen.
What Kind of Insurance Do I Need?
If you’re a renter who’s had renter’s insurance, you’ll probably be familiar with the idea of homeowner’s insurance. It’s a very necessary cost, and you’ll want to know exactly what is covered. But what about private mortgage insurance? Many first time buyers don’t even know what that is, or who is required to get it. Asking your real estate agent about insurance is important.
What is a Buyer’s Agent?
There’s more than one kind of real estate agent. A buyer’s agent is a realtor who is bound (legally) to only be helping the buyer, not the seller. Some realtors are both buyers and sellers and that means that they might have a hidden interest in making a deal that is not good for one or the other. But if you have a buyer’s agent, you’ll be represented throughout the home buying process by someone who only has your interests at heart.