Top Homebuyer Questions: Answered
As a homebuyer, you likely have a ton of questions swirling around in your head. That's a good thing, as you want to make sure you go into a real estate deal armed with as much knowledge as possible.
Some questions tend to be more commonly asked than others, including the following:
What's the Best Time of Year to Buy?
This is a tough one to answer since you can get a great home at a good price any time of year, as long as you work with an experienced real estate team. That said, there are arguments to be made for each season.
For instance, summer might be really busy since kids are out of school and parents may want to move into their new home before school starts. On the other hand, winter may be a good time to look for a home, since the weather often hinders some buyers from starting the process, so there may be less competition.
Ultimately, there is no "best" season to buy a home. As long as you're ready to make the leap, have a plan in place so you're prepared to move quickly when you find a home, and have your finances lined up, don't let a specific season of the year hold you back from house hunting.
How Much Should I Put Towards a Down Payment?
The bigger your down payment, the less you'll have to borrow on a mortgage. That means your mortgage payments will be smaller, and you'll have a better chance of getting approved at a lower rate.
That said, you don't have to wait until you have a hefty amount of money saved. Depending on your credit profile and financial strength, you may be able to put down as little as 5%. Keep in mind that down payments of less than 20% of the purchase price are subject to mortgage default insurance, which can cost anywhere from 1.8% to 4% of the mortgage amount.
How Much Should I Save For Closing Costs?
When you finally find a home and close a deal, you'll need a certain amount of cash on hand to cover your closing costs. This covers things like lawyer fees, home inspection fees, title insurance fees, and land transfer taxes, among others.
Generally speaking, you could be paying anywhere from 1.5% to 4% of the purchase price on closing costs. To put this into perspective, a home price of $800,000 means you'd be paying between $12,000 to $32,000.
Should I Buy and Sell at the Same Time?
Ideally, your closing dates for the sale of your current home and the purchase of a new one would line up perfectly. That way, there's no risk of you being stuck carrying two mortgages temporarily, or being without a home until the closing date of your new home arrives.
The decision to buy or put your home up for sale first ultimately comes down to the current market and your financial situation. For instance, some homeowners are not financially able to put in an offer on a home without first selling their current home.
Your best bet is to speak with a mortgage specialist to see what you can do based on your finances, then communicate with your real estate agent, who will give you the best advice on how to proceed.
Can I Back Out of a Deal if I Change My Mind?
When you sign a purchase agreement, you're entering into a legally binding contract. That means you need to comply with the clauses of the contract to keep up your end of the bargain. That said, there are protections you can include in your contract that give you a legal way out in case something doesn't sit right with you before closing.
This is where conditions come in. There are many conditions you can include in your purchase agreement that give you a chance to back out of a deal for various reasons. The most common conditions include home inspection, financing, and Status Certificate conditions. If either one of these conditions are not fulfilled or waived by the due date, the contract will become null and void.
No matter what question you may have, we have the answers. Reach out to The Lotus Group today!