First Time Buyer Questions

First Time Home Buyer Questions

Many Los Angeles First Time Home Buyers enter the market with a lot of first time buyer questions. We have put together a list of common questions and answers that are geared toward first-time home buyers who are just starting their search. Most first-time home buyers will not be purchasing their home with cash, so this article  is written for the first-time home buyer who will require financing for the purchase of a first home.

First Time Buyer Questions-#1

How do I know if I’m ready to buy a home?

Only you can answer that question. Purchasing a home is a big financial commitment. There are many factors to consider when purchasing your first home (which will be covered following this question), but the main question you must ask of yourself and answer for yourself is this: What are my long-term goals for this home? Many first-time home buyers purchase their first home and live in that home for many, many years. Others purchase their first home and rent it out only a few years after they purchase for the rental income. And then there are those who decide they don’t want to own a home and would rather sell the property and have the freedom rent in other desired areas. Whatever your reason for buying, it’s a good idea to think long and hard about your long-term goals for the home.

First Time Buyer Questions-#2

How do I know if I’m qualified for a home loan?

Prior to going out and searching for homes with a licensed real estate agent, a buyer must be approved with a lender. This not only tells the buyer how much he or she can afford, but it also lets the buyer’s agent know what types of homes the buyer should be looking for. A preapproval letter from a lender is necessary when submitting an offer on a home. A seller won’t even consider an offer without some sort of security in knowing the buyer is eligible for a loan. The approval will be based upon: credit score , work history, debt to income ratio and the funds you have available for down payment.

First Time Buyer Questions-#3

Am I better off purchasing or renting?

This all depends on your situation. If you prefer moving around often, then maybe purchasing is not the option for you. However, if you are certain you are ready to settle into a home, then the benefits of purchasing the home by far outweigh the benefits of renting. Yes, renting does offer the flexibility of up and moving if you aren’t happy, but that’s pretty much it. Homeowners, on the other hand, experience many benefits to home ownership. The first benefit is the tax write off. Unlike renters who cannot write off their year’s rent, homeowners can write off their mortgage interest along with property taxes. Homeowners also have the freedom to customize their home and decorate it as they wish. Renters often do not have this option. Also, homeowners benefit from the equity built over time when the home appreciates in value.

First Time Buyer Questions-#4

Home buyers agent: Can I save money without one?

Unless you’re buying a home with a “For Sale by Owner,” you will be using a Realtor/Home buyers agent. The question is, will you be using the seller’s agent (the person’s name on the for sale sign representing the seller) or your own home buyers agent (someone representing your best interest). Some buyers think they can get a better deal negotiating directly with the seller’s agent. Well, think again! Consider this: The seller’s agent (guy or gal on the sign) has a fiduciary responsibility (to act in the best interest of his or her client) to the seller. His or her job is to get the most $$$ for his client. With that in mind, he or she could never tell you that you are offering too much or should request his seller to fix this or that. If he did, he or she would be breaching his legal duty to the client (seller). On the other hand, the home buyer’s agent (a.k.a., buyer’s agent) has a fiduciary responsibility by law to represent YOUR best interest. Not only that, but a good buyer’s agent knows the entire local inventory and your neighborhoods of interest. And here’s a bonus for you Mr. or Mrs. Buyer—you do NOT pay your agent’s commission.

First Time Buyer Questions-#5

How much is a working with a real estate agent going to cost me?

Nothing! Your Realtor’s (agent’s) commission is paid through the seller’s proceeds from the sale of the home—not from your pocket! So it would be down right silly for you NOT to have someone on your side and negotiating on your behalf, especially if you are not paying them out of pocket. And Remember, your agent also does the searching and leg work for you. Yes, I know, in this age of technology, buyers are able to do a lot of searches themselves. However, a buyer’s agent should immediately give you access to his or her MLS (Multiple Listing Service). This is the only true and accurate inventory of all homes that are listed for sale. In truth, your agent will most likely be looking harder than you will for your home as they know how to navigate the available inventory, and your agent will also know the details of your loan, which may prohibit you from some properties. It is in your agent’s best interest to find you a home that you love and can afford.

First Time Buyer Questions-#6

How do I select a real estate agent?

It often works to ask friends, family and other associates for leads. However, if you are looking to purchase in a specific area, then you are better off finding an agent who focuses on your desired neighborhood. In such cases, the agent will not only know the housing market well, but will also know more about the neighborhood as a whole. And of course, you are looking to purchase here in the Los Angeles area, we’d love to be your first choice!

First Time Buyer Questions-#7

Home vs. condo: Which is better?

This is a very common question buyers are faced with now (especially Los Angeles First Time Home Buyers), often because there seems to be a lot more “bang for the buck” in square footage and property condition when you compare a home vs. condo One of the toughest pills for buyers to swallow is the HOA dues (Home Owner Associations dues). These fees cover the maintenance of the building/grounds, insurance and, most of the time, trash and water. On the other hand, if you’re strongly considering buying a home for sale in Los Angeles, there are also “Home Owner Dues”—but they’re not called “HOA Dues”—also known to home owners as “maintenance costs,” which can come in the form of a new roof, gardener, pool guy, and plumbing repairs! Ultimately, location, budget and space may be your deciding factor when choosing to buy a home vs. condo. But whatever you choose, it will be home for you, and you’re gonna love not paying someone else’s mortgage!

First Time Buyer Questions-#8

What is the MLS?

MLS stands for Multiple Listing Service. The MLS is a virtual warehouse that Realtors use to list homes, condos, townhomes and other types of real estate for sale. Here is access to our MLS.

First Time Buyer Questions-#9

What is a short sale?

A short sale is when the sale of a home’s net proceeds do not fully pay off the existing mortgage loan(s) and the lender is willing to accept a discounted payoff. The closing costs that are typically paid by the seller are paid out of the proceeds from the sale, including but not limited to commissions, escrow and title fees, and any negotiated buyer’s cost. Your home is sold and you avoid foreclosure.

First Time Buyer Questions-#10

How much do I need for a down payment?

First-time home buyers qualify for anFHA loan. An FHA loan is insured by the Federal Housing Administration (FHA). First-time home buyers can put as little as 3.5% of the purchase price down for the home. For conventional loans, buyers can put down as little as 5% of the purchase price.  learn more…

First Time Buyer Questions-#11

What is Escrow?

It is the period in which both the seller and buyer agree to the terms of a purchase agreement and entrust an escrow agent (a neutral third party) to carry out the instructions agreed upon by both the buyer and the seller. Funds will not be released until all terms of the agreement are met by both parties. Escrow typically lasts about 30–45 days.

First Time Buyer Questions-#12

What are closing costs?

There are fees in addition to the down payment that must be paid when purchasing a home. These fees are called closing costs. For example, closing costs cover title policies, recording fees, inspections, courier charges, reserves to set up an mortgage impound account, and origination fees that the lender charges. Closing costs can be typically be anywhere from about 2 to 3 percent of the purchase price. By the way, we like to negotiate for our buyers to have the seller pay those closing cost. Don’t be afraid to ask!

First Time Buyer Questions-#13

What is a good faith estimate?

It is the list of settlement charges that the lender is obliged by law to provide the borrower within 3 business days of receiving the loan application.