FREQUENTLY ASKED QUESTIONS ABOUT THE HOME BUYING PROCESS
SHOULD I BUY NOW OR IS THERE ANOTHER HOUSING BUBBLE?
No one knows if and when there will be another “bubble” in real estate values. All we know is that the previous bubble was mostly caused by easy financing terms that opened a floodgate of under-qualified buyers, thus driving up prices to disproportionate levels. In this market, financing terms are still strict by comparison. Growth in Central Ohio values seem to be solidly based on our healthy local economic base and the supply of housing. Now is a great time to buy given the historically low interest rates.
DO I NEED A 20% DOWN PAYMENT?
No. Some buyers choose to make a 20% down payment to avoid PMI (Private Mortgage Insurance) but many lenders are now offering 5% down payment conventional loans that do not include PMI payments. FHA loans only require 3.5% down payments. VA requires no down payments. You can discuss what mortgage program makes the most sense for you with a qualified mortgage lender. There is a list on this web site.
HOW LONG DOES IT TAKE TO BUY A HOME?
Most buyers will take between 2-3 months to finally be in their own home. The first step is meeting with a professional buyer’s agent who can understand your housing needs and expedite the process. The search process will take one or two months, depending on how well you know what you want and how much time you have to devote to the search. Finally, once you are in contract with a seller, you will need almost one month to perform your inspections and get your loan approved.
WHEN WILL MY FIRST MORTGAGE PAYMENT BE DUE? I DON’T WANT OVER-LAPPING PAYMENTS WHERE I’M RENTING.
There is typically a 30-45 day span from when you close on your new home to when the first mortgage payment is due. For example, if you closed December 15, your first mortgage payment will not be due until February 1.
IS THE LISTING PRICE NEGOTIABLE?
Definitely. In fact, there are about many different terms in a typical real estate contract that are negotiable. These terms include price, closing date, possession, financing, fixtures, seller concessions, warranties, earnest money, title insurance and the list goes on! Make sure you have retained an experienced buyer’s agent who can structure the contract to best represent your interests.
SHOULD I BUY A BANK-OWNED HOME OR A HUD HOME?
Bank-owned homes, or REO homes (Real Estate Owned), are some of the best deals on the market today, but they are also represent a whole set of dangers and caveats. See the article that addresses buying a REO property in this section of the web site.
SHOULD I BUY A SHORT SALE HOME?
That depends on how long you have to wait. Short sales are homes being sold for less than the principal balance of the loan and are subject to third party approval. A short sale transaction can take an extra few weeks to an extra six months. There is not even a guarantee that the bank will even approve the sale! But short sale homes also represent some of the best deals on the market today. If you need a home fast, a short sale is probably not for you. If you have a flexible living situation and can wait it out, then a short sale may be a good option.
WHAT IS THE MOST IMPORTANT PART OF THE BUYING PROCESS?
Find and retain an experienced buyer’s agent. A professional buyer’s agent can only save you money as the agent is paid by the listing company. Most real estate is today sold through the co-op program whereby a listing agent agrees to split his commission with a buyer’s agent who brings a qualified buyer. An experienced buyer’s agent knows the contracts, the neighborhoods, home styles, warranties and inspectors. Buying a home is like white water rafting. It can be a great experience, but you want a guide to help you through the process. You really don’t want to “shoot the rapids” on your own.