How much can I afford to spend on a house?
This depends on your income, credit score, debts, and the size of your down payment. Lenders typically recommend that your monthly mortgage payment not exceed 28-31% of your gross monthly income. Use a mortgage calculator or consult with a lender for a personalized estimate.
What is the difference between being pre-qualified and pre-approved?
Pre-qualification is an estimate of what you can borrow based on information you provide.
Pre-approval involves a lender reviewing your financial documents to confirm the amount they’re willing to lend you. Pre-approval is more reliable when making offers.
How much should I save for a down payment?
The standard down payment is 20% of the home’s price, but many lenders offer options as low as 3-5%. Keep in mind that smaller down payments may require private mortgage insurance (PMI).
What are closing costs, and how much should I expect to pay?
Closing costs are fees paid at the end of the home-buying process, including lender fees, title insurance, and escrow charges. They typically range from 2-5% of the home’s purchase price.
What is a home inspection, and do I need one?
A home inspection is an evaluation of the property’s condition, checking for structural, mechanical, and safety issues. It’s highly recommended, as it can uncover problems that might cost you later.
How long does it take to close on a house?
The average closing process takes 30-45 days, but it can vary based on factors like the lender’s efficiency, the type of loan, and any contingencies in the contract.
What is escrow?
Escrow is a neutral third-party service that holds funds and documents until all terms of the sale are met. It ensures that the buyer and seller fulfill their obligations before the money and title are exchanged.
What is the difference between a fixed-rate and an adjustable-rate mortgage?
Fixed-rate mortgage: The interest rate stays the same for the life of the loan, providing predictable monthly payments.
Adjustable-rate mortgage (ARM): The interest rate can change periodically, which might result in lower initial payments but more variability over time.
What are property taxes, and how are they calculated?
Property taxes are annual taxes based on the assessed value of your home and the local tax rate. Rates vary by location, and the cost is usually included in your monthly mortgage payment.
What happens if my offer is rejected?
If your offer is rejected, you can negotiate by adjusting your terms, increasing your offer, or asking the seller for feedback. If an agreement isn’t reached, you can move on to other properties.
