9 Common Questions We Get from New(or Returning) Home Buyers
THE 9 MOST COMMON QUESTIONS WE GET FROM NEW (OR RETURNING) HOME BUYERS WHETHER YOU’RE A FIRST TIME BUYER OR A FOURTH TIME BUYER, THE QUESTIONS SEEM TO BE THE SAME. HERE’S A QUICK GUIDE THAT CAN HELP YOU SEE THE WHOLE PICTURE QUESTIONS COVERED What's the first thing I should do to buy a house? How long does it take to buy a home? How much do I have to pay a Real Estate Agent to buy a home? Do I need to use a Real Estate Agent to buy a house? Should I buy now or wait until prices drop? What kind of credit score do I need to buy a home? How much money do I need to have for a down payment? What other fees are there, besides the down payment? When do I get the keys? What's the first thing I should do to buy a home? ANSWER: DON’T WAIT UNTIL YOU FIND A DREAM HOME TO GET PRE-APPROVED! YOU MIGHT LOSE OUT TO SOMEONE WHO’S BETTER PREPAREDThe first thing most people really do when they start thinking about buying a house is look at them. It’s fun. And that’s fine, but don’t get too excited until you’ve contacted a mortgage professional and gone through the rigorous process of getting pre-approved for a loan. Whatever you do, don’t make an offer on a home without being fully pre-approved (it’s unlikely you’d be allowed to anyway). Once pre-approved, make sure you have a letter from your lender in hand as proof to show sellers and include with your offer. If by some chance a home seller does accept your offer without proof of mortgage approval, and you later discover the bank won’t give you a loan, the experience could be emotionally and financially draining.Where Can I Find a Good Lender? I can recommend mortgage brokers, or you can ask your friends for recommendations. Select both a lender and a mortgage broker, then compare the offers from each. Be ready to dig through your financial life for a week or so as you get the paperwork together for the pre-approval. Need a great lender to speak with about HELOCs or a new mortgage? Call or text me at 260.897.1776 for fastest service! How long does it take to buy a home? ANSWER: BETWEEN 26 AND 60 DAYS (ON AVERAGE FROM ACCEPTANCE OF OFFER TO KEYS IN HAND)Buying a home doesn’t include the time it takes to FIND a home. That can take some people years. But once you make an offer, the time frame is usually between 30 and 60 days, an average of 45 days (about six weeks). Most of that time is spent satisfying the lender’s requirements, doing inspections, doing due diligence research, and getting the closing documents ready. Problems can and do frequently arise during any of these periods, which can lengthen the process. How much do I have to pay a Real Estate Agent? ANSWER: A FEE BASED ON NEGOTIATED AGREEMENTIt used to be that your agent’s fee was automatically paid by the seller from the proceeds of their sale, making your buyer’s agent free to you. However, that has changed, and now your real estate agent is required by law to have a separate agreement with all buyers before showing homes. The buyer is responsible for paying their real estate agent’s fee. In many cases, that fee can be negotiated in the real estate offer with a seller for the seller to pay the buyer’s agent fees. But not always, so buyers must be prepared to add real estate fees to their closing costs. Do I need to use a Real Estate Agent to buy a house? ANSWER: No, but....You can bypass hiring a buyer’s agent and go directly to the listing agent, but if you do that, you will be representing yourself in the sale. That will make you responsible for all paperwork, due diligence, time frames, repair negotiations, arranging title, managing escrow, knowing who to hire and when, spotting warning signs, and more. The seller’s agent will not represent you unless you also agree to pay their fee or arrange a fee from the seller. That means it will cost you the same, but you won’t get independent representation. THE TRAVELING METAPHOR Imagine traveling to a foreign country you’ve never visited before. You don’t know the language or customs. Sure, you could figure it out on your own with the help of Google, and you might have some interesting experiences along the way, especially getting yourself out of sticky situations.But suppose you had an experienced guide with you who could speak the language, introduce you to locals, help you with arranging visas, show you secret places, and prevent you from paying the “tourist tax” of inexperience. Wouldn’t that be a more rewarding trip? That’s what it’s like to have your own real estate agent. However, there’s one more thing that makes the real estate agent useful to you: a measure of protection against fraud.Real estate agents have E&O Insurance, which backs their ethics with financial and legal protections that extend to you. Should I buy now or wait until prices drop? ANSWER: Know ThyselfReal estate prices in 2025 are at an all-time high almost everywhere. And economic conditions favor them staying high for quite a while. Something drastic would need to occur in the world economy to change things (such as COVID, when prices rose, and the banking crisis of 2008, when prices fell).If you had bought last year, when everyone thought prices would fall, you’d have made money, because prices went up. Someone will always be caught making a decision just as economic factors change, but no one can actually predict the change. My advice, and the advice of most real estate professionals I know, is to buy when it’s important for your life, and as young as possible. That way you enjoy your house, gain equity by paying down the mortgage, and refinance if/when rates drop. True, the house you buy may drop (or rise) in value, but if you buy what you can afford now, then you’ll be able to keep your house, which is an asset that will serve you. If it drops in value, you still have the asset. Your plans may change with regards to that asset, but you still have it. The important thing is to only pay what you can comfortably afford! What kind of credit score do I need to buy a home? ANSWER: 580 to 800 generallyYou are probably aware that a higher credit score offers better lending terms (interest rate, closing costs). There are some lenders who will approve buyers with a 580 score, offering less attractive terms. The higher the score, the better the terms. Being financially responsible (as indicated by your credit score in this case), entitles you to better financial rewards. If your score is below 620, you may want to raise it before buying. It may mean a difference of tens of thousands of dollars in your purchase price. Talk to your mortgage professional for advice. How much money do I need to have for a down payment? ANSWER: 0% to 20%Some loans, such as the VA loan and some USDA loans in the US, may even allow 0% down. Some specialty loans can go as low as 3%. However, most conventional bank or mortgage broker loans are approved for between 5% and 20% down.You get better terms at 20% down, and putting 20% down eliminates an extra payment called Private Mortgage Insurance (PMI) that can add hundreds of dollars to your payment. But at today’s high prices, most buyers pay less than 20%.Do run a search for specialty mortgage programs in your area or for your industry. There are teacher loans and neighborhood revitalization mortgage and grants, for example. What other fees are there, besides the down payment? ANSWER: You know the answer is going to be "A bunch"These include up-front costs (before closing) like application fees, appraisal fees, pest inspections, and home inspection fees. These will typically run you between $750 and $1,500 for ordinary houses or condos.And then there are closing costs, including loan origination fees, title policy, real estate agent fees, closing agent fees, document fees, taxes, and more. These will typically run 4 to 7%. EXAMPLE COSTS The total cost estimate to buy a $500,000 home with 20% down:• Price: $500,000• Down payment 20%: $100,000(Loan amount: $400,000)• Before-closing fees: $1,000• Lender 1% origination fee: $4,000 • 4-7% closing costs: $16,000 - $28,000Total costs: $21,000 to 33,000 (not including the down payment) When do I get the keys? ANSWER: Generaly at closingIn our area, not everywhere, you'll generally get the keys at closing. In some states, you wait until the transfer has been recorded.In some instances, there is a time period the seller will negotiate after closing to transfer posession. At that point, I will be able to deliver the keys to you or you can pick them up at the title company. Ready to get started? Then I’m ready to meet with you by phone or in person for an initial consultation. That’s where I’ll answer all your questions and help you think of more that you might not even know to ask. WE’LL CREATE A PLAN OF THE NEXT STEPS THAT WILL GET YOU CLOSER TO YOUR HOUSE PURCHASE.
HELOC Do's and Don'ts
HELOC DO'S AND DON'TS WITH CREDIT CARD RATES AS HIGH AS 24%, A HELOC AT JUST AROUND 8.5% CAN MAKE A LOT OF SENSE. BUT BEFORE YOU RUSH OFF TO THE LENDER TO TAP YOUR SIGNIFICANT EQUITY, FIRST CREATE A PLAN FOR THE USE OF YOUR HELOC SO THAT YOU DON'T GET IN A BIND. HERE ARE THE DO'S AND DON'TS. DO CHOOSE A HELOC OVER A HOME EQUITY LOAN. With a home equity loan you are given a fixed amount of money and must pay that back at a fixed rate. Whereas with a HELOC (home equity line of credit) you can draw down the amount you need when you need it, similar to using a credit card but better, because the interest rate is much lower and it's variable. If interest rates fall (as they are at this moment) then your HELOC rate will also fall. Example: Suppose that over the course of next year you'll need to make $5,000 of repairs to your home. If you take a home equity loan of $5,000 now and put that money in the bank in preparation for your repairs, you'll start paying it back right away at a fixed rate. Whereas if you open a HELOC, you don't need to use $5,000 right now. You may only need $2,000 now, so you can take out just $2,000 and possibly benefit from a lower rate going forward. If rates rise, you can choose whether you want to use more of the equity line or not. DO USE IT WISELY FOR FINANCIAL REASONS. A HELOC is a financial tool. It should be used in a way that advances your wealth. That might mean using it to pay off more expensive credit card debt, but only if you have a plan that prevents you from accumulating more credit card debt again. Other ways to use a HELOC include remodeling your house, if it increases the value of the home significantly. Or making serious repairs or upgrades, if your quality of life is suffering. You might add an extra unit to your house if you can use it for income, or use it as a down payment on a new property, as long as the lender allows it and you can comfortably cover the HELOC payments on top of the new real estate debt. In other words don't treat your HELOC as a piggy bank that's easy to crack open whenever you want to, but rather treat it as a bank vault on a time lock. NEED A GREAT LENDER TO SPEAK WITH ABOUT HELOCS? OR GETTING A NEW MORTGAGE? JUST CALL OR TEXT ME AND I’LL SEND YOU MY BEST LENDERS. As with any loan you can shop around for the best rates and terms on HELOCs. There are many options out there, including online banks, your personal bank, your current mortgage holder, and your credit union. DO KEEP YOUR EYE ON THE FINANCIAL MARKETS. If it seems like interest rates are projected to rise significantly, you'll want to make plans, if possible, to pay down or pay off the HELOC debt you carry. The point is to use your HELOC strategically with a plan in place for how you'll benefit from the money, how you'll pay it back and how you'll monitor the financial markets to ensure you maintain the interest rate you're comfortable with. Need a great lender to speak with about HELOCs or a new mortgage? Call or text me at 260.897.1776 for fastest service!
My Top 15 Mega Tips for Home Buyers in 2025 and Beyond.
My Top 15 Mega Tips for Home Buyers in 2025 and Beyond. Buying a home is a huge process that involves so much more than simply finding a house you can afford. Home buyers today need to create a home-buying plan that incorporates many of these 15 factors. 1. Buy a home as early in life as possible. Then keep it or only trade it for a financially better situation. The earlier you buy, the better. Having more equity earlier in life is better than the alternative, giving you more opportunity to grow your investments. 2. Make sure your property is well-maintained over the years(buy right). If you need to sell because you fall onto hard times, or you want to sell because you're ready, or you want to tap your equity without selling, all those things will be possible with a home in good condition. You need to buy right, so that you afford the big expenses of owning a home. Or consider a condo where the condo fee spreads those costs over time as a fixed expense. 3. Buy as soon as you can afford a house, no matter the interest rate. Waiting for rates to drop only means that others are waiting, too. House prices won't drop in response to lower rates; they'll do the opposite. 4. That's not an easy ask. You have family nearby, you're familiar with the area, maybe you grew up here. But if you are not able to buy here, then consider relocation. Relocation brings new opportunities. You may love where you go, or you may simply bide your time until you can move back. Just remember the break-even point on most home purchases is 5 to 7 years. 5. As an alternative to relocation, consider buying an investment property in a more affordable location. Consider condos near colleges or small rental homes near large industries. The most important factors are that the rents will cover your mortgage and expenses, and the rental market is consistent. Meanwhile, you can pay rent for the place you live now, knowing that you're "in" the real estate market someplace else. 6. If you can afford it, and if these types of properties are available near you, buy a multi-family property. Live in one of the units, while renting out the others. Put 20% down, as this gives you the most leverage, ensuring that your renters are paying your portion of the mortgage, allowing you to live "free" while gaining equity. Contact me to see what's available. 7. Shop for mortgage rates before you buy Don't get sucked into an online promise of great rates, just because it's convenient. Go to different sources. Include at least these three sources: 1) A mortgage broker that your real estate agent trusts (contact me for some referrals). 2) Your personal bank. 3) Online mortgage companies. Compare fees and interest rates, not just rates. You may not get much difference, but even a quarter-percent might get you $50 to $100 more per month buying power. Just for shopping rates! 8. Ask family to help to by your home or investment. Consider ways to pay them back or consider it a gift. If you do plan to pay the money back, don't allow it to be formalized as a loan or the bank will consider that a debt. Clearly this involves a level of trust in your family, as well as the funds to make it work. But, if possible, don't be shy about asking. There are other rules for accepting (or giving) a cash gift, so do your research. 9. Put 20% down. This is an extreme stretch for many people. If you can't do 20%, do 10% or 7% or whatever you can. The reason? That pesky PMI (private mortgage insurance). Unless you're buying a home using a government loan or other alternative loan, you're likely going to pay PMI if you put less than 20% down. That's money wasted, thrown away, never to provide you with any value at all. (Except in rare circumstances. See my analysis of PMI in my November 2024 newsletter. Or ask me for a copy.) PMI insures the mortgage holder, not you. 10. Don't buy more than you can afford, just because you love the house. Ideally, you should shop below your highest approved price point, based on the quality of life you plan to have. If you know you're going to have kids, you'll want enough money for their many expenses. If you plan to travel a significant amount, you'll want to have more money to put into the experience. If you want to retire early, you'll need to invest more sooner. Don't be house poor! 11. Consider house-hacking. It's not the strange idea it used to be. Buy a house with a floorplan that allows you to comfortably rent out a room, or add an ADU (accessory dwelling unit, or granny flat). This can considerably lower your monthly expenses, without affecting your quality of life, if you buy the right property. Contact me for help figuring this out. 12. Get online and start hunting for down payment and mortgage assistance programs in your area. They may or may not exist and you may or may not be eligible. But it might pay to look. 13. Consider an ARM(Adjustable-Rate Mortgage). As much as 30% of mortgages today are adjustable-rate mortgages, so don't think this is an unusual concept. Many ARMs start with an initial low fixed rate for five to 10 years before rising. So, if you plan to sell in that time frame, an adjustable-rate mortgage might make great sense for you. Note that you must qualify at the fully realized future interest rate, even though you'll pay less on the front end of the mortgage. 14. Count your side income. If you've been making and selling cookies at the local farmer's market for the past couple years, making an extra $1,000/mo. profit, and you have documented your income and expenses, your lender might be able to count that towards your qualifying amount. Just make sure you're planning to continue that side income to ensure you can afford the home. Alternatively, spend the next year saving your side hustle money for a higher down payment. Remember, the higher the down, the lower your PMI and monthly payment. 15. Be clear about how you'll compensate your real estate agent. It's hard to buy a home without an agent. It's possible, but for the average home buyer, there are simply too many moving variables and potential pitfalls to "go it alone." That means hiring an agent to help you navigate and negotiate the purchase. Agents can be expensive, so discuss the fee structure with an agent ahead of time, in particular if you're expecting to ask the home seller to pay your agent's fee (which is traditionally how it's been done). Your Best Next Step Contact me for help to create your home buying plan that includes all these factors! I’m not just an agent. I’m your real estate-for-life advisor. Call or text me at 260.897.1776 for fastest service!
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