6 Questions To Ask Before Buying a Home

Buying a home is a major financial undertaking. That's why it's essential that you cover all your bases and ask as many questions as you can. That way, you'll know that you're making an informed decision before making such a large purchase.

1. How Much of a Down Payment Do I Need?

When you take out a mortgage, you'll need a down payment that will go towards the purchase price of the house. But just how much do you need?

The answer to that depends on a few things, including the price of the home, the type of mortgage you're applying for, your income and debt, and your credit score. If you have a very good financial and credit profile, your lender may allow you to put down the bare minimum, such as 5%. But if you've got a ton of debt and your credit score is lagging, you may have to put a higher percentage down.

While saving up for a big down payment can be a challenge, it's important to keep in mind that the more you put down, the less you'll owe to your lender. That means lower mortgage payments.

That said, you shouldn't let a small down payment deter you from buying a home. There are options available for lower down payment amounts that will allow you to become a homeowner without having to put a huge amount of money down upfront.

2. What's My Credit Score?

Your credit score plays a key role in your ability to get approved for a mortgage. It also heavily influences the loan amount you can get, as well as the interest rate you can secure.

A higher credit score means you may get approved for a higher loan amount at a lower interest rate, and vice versa. As such, your goal is to make sure your credit score is as high as it can be before applying for a mortgage.

Generally speaking, anything above 680 should be good enough to get you a mortgage, though shooting for at least 700 or higher is best.

3. How Much Are Closing Costs?

When you buy a home, there are certain costs you have to cover in addition to the purchase price of the home. These can include any of the following:

• Property taxes

• Homeowners insurance

• Land transfer taxes

• Lawyer fees

• Home inspection fees

• Appraisal fees Mortgage underwriting fees

• Realtor commissions

Typically you can expect to pay anywhere between 2% to 5% of the sale price of the home, which you'll need to come up with at the time of closing.

4. What’s Included in the Sale?

"Fixtures'' are usually included in the sale of a home, including window blinds, dishwashers, and light fixtures. But there might be some things that are in the gray area. Ask the seller what exactly will be included in the sale and have them put it in writing in your purchase agreement so there are no unpleasant surprises at closing.

5. How Old Are the Appliances, Systems, and Other Major Components?

There are certain components of a home that can be very expensive to repair or replace. You'll want to ask the seller how old these items are, and what condition they're in, as you'd have to consider budgeting for their repair or replacement if they're in rough shape or due for some attention.

Some of the key components to ask about include the roof, air conditioner, furnace, plumbing system, water heater, and other appliances.

6. How Much Have Similar Homes Sold For Recently?

Knowing the current market is crucial to determine how much to offer on a home. Your real estate agent will come up with a list of homes recently sold in the area that are similar to the home you're putting an offer on. These "comparables'' will give you an accurate idea of how much the subject property is worth, and therefore how much you can offer.