Chances are that you don’t buy a house as often as you buy a gallon of milk (it’s probably still true even if you’re lactose intolerant!). Some people may only buy one house in their whole lifetime!
The standard mortgage on a house is 30 years. That’s a long time! Yes, some of us go larger. Some of us downsize. Jobs move. Circumstances change.
It is completely natural that most people aren’t experts on buying a home because it just isn’t something they do every day. We’re here to always answer your questions, and today, we’re going to go ahead and answer some of the most common questions we get from buyers!
First House or Condo? Here’s What to Consider
This is clearly one of the most important things to understand. Home buying is a process that can take months (for some it even takes years). But, like every process, there is a starting point.
In this case, it is essential to figure out what you can afford. There is literally no reasonable way to start looking for a house if you don’t have this information first. And we’re not talking about how much you think you can afford, we’re actually talking about KNOWING how much you can afford.
That starts by working with a professional lender (mortgage company or bank). They will evaluate your financial situation to accurately determine how much you will be able to get approved for. That doesn’t mean you have to spend that amount on the house, it just lets you know what you’ll be able to buy when you do.
We recommend getting a quote from at least 2 mortgage lenders. It doesn’t matter if you check with 1 or 50 within a 30 day period; the federal government has limited the hard hits on your credit score when you’re looking for a mortgage in this time period.
If You Haven’t Worked with a Real Estate Agent Before
This is the best news that you’re going to get! As a buyer, you pay us absolutely nothing! The commission is paid by the seller once the transaction closes. However, we represent you in all phases of the transaction. Unless the listing is also ours, in which case we provide full disclosures. But as a buyer, you don’t pay us anything.
What is a Reasonable Down Payment
This is a great question that has a couple of different answers. In general, you will want to talk this over with the lender that you ultimately choose. 20% has been the standard for years and we recommend that if you can afford it (with 20% equity, you can avoid Private Mortgage Insurance which will add to your monthly payment). However, many lenders offer different programs that allow you to pay as little as 3.5% as a down payment.
What Should Your Credit Score Be
The better the score, the better the terms of the loan you will get. This is very important and can even result in lower monthly payments. We advise our buyers to have at least a 700 credit score, but we can help anyone in the mid to high 600s. In fact, there are even loan product so out there as low at 500 but they have much stricter guidelines. The bottom line is that there are many options but the first step is to speak to a lender to REALLY understand your buying power.
There are ways to improve your credit and you can speak with us about that or talk to the lender.
House, Condo or Townhouse?
This is a very personal question and only you can answer that… though we CAN help with questions you haven’t considered around your lifestyle. Many families try to find houses to grow into, while younger professionals and retired couples like condos (but a family friendly city like Downtown West Palm Beach is also a great place to have a condo and a family). We have two great blogs detailing the benefits of a condo over a house and of a house over a condo. Click here and here to access those articles.
The good news is, that no matter what you decide, we’ll be able to find you the perfect fit in West Palm Beach!