Buying A Home – FAQs - Lake Ray Hubbard Properties
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Buying A Home – FAQs

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If you’re looking into buying a home, there’s nobody better qualified than The Dream Connectors to get you on the path to owning your dream home!  But what might that path look like?  Whether you’re looking to buy your first home or your fifth home, these frequently asked questions might give you a little bit of insight into what you might expect to encounter…

 

Should I contact a lender before starting my home search?

Absolutely.  And the biggest reason why…  You need to know how much home you can afford.  It wouldn’t make too much sense to start looking at homes in one price range and fall in love with a property, only to find out you can’t get approved in that price range.  Not all lenders are created equal, and when you use one of our recommended lenders, you can be assured that we’ll help you find the right fit.

 

How much home can I afford?

There are many cases in which people qualify for loan amounts that are just a little bit above what they should spend.  Financial experts usually advise people to spend less than 28% of their monthly income on their home loan – that includes taxes, insurance, and other fees that are typically rolled into your mortgage payment.  This decision is ultimately up to you and depends on what you’re comfortable with.

 

What is an appraisal?

An appraisal is a professional opinion of the value of a property.  An appraisal is based on the condition and features of the property and the current local market conditions at the time of the appraisal.

 

What’s the difference between an appraisal and the Tax Assessed Value of a home?

An appraisal gives you the Fair Market Value (FMV) of a property, and the Tax Assessed Value (TAV) is usually a percentage (typically 80-90%) of the FMV of the home.  This percentage varies state to state.

 

What is an option period?

This is a period of time where, as a buyer under contract, you’re given the opportunity to back out of that contract without any financial or legal penalties.  The option period starts at the signing of the purchase contract and the length of the option period is negotiated between the buyer and the seller.  There is typically a small cost when an option period is agreed to.  If an option period ends and you want to terminate the purchase contract, you risk losing your earnest money unless the reason for termination is specifically outlined in your purchase agreement.

 

Why should I use a Realtor when buying a home?

Would you go to your neighbor for dental work?  Maybe use your aunt to fix that plumbing issue?  For the same reasons you shouldn’t use just anybody to provide professional services like these (unless your aunt is an expert plumber!), you shouldn’t go it alone, or use advice from a well-intentioned friend or family member, when buying or selling your home.  Here are 7 more reasons to work with a realtor.

 

Should I sell my home before buying another home?

There’s really no right answer on this one, but there are advantages and disadvantages to either situation.

 

Buying before selling.

You found that perfect home…  Congratulations!  Since you haven’t sold yours yet, you don’t have to worry about a short-term rental situation or shacking up with family.  All of that stress is gone, but…  What if your accepted offer is financially contingent upon the sale of your home?  This means that although you have a deal in place, the transaction can’t be completed until the sale of your old home is.  You’re also at risk of a non-contingent buyer swooping in and buying the home out from underneath you.

 

Selling your home before you buy.

Congratulations again!  You’ve sold your home.  Now you’re unencumbered by submitting a contingent offer when you find the home of your dreams.  But what if that dream home isn’t available yet?  There are always options, and finding a short term rental might be the best one.  But we’re also here to help!  We can negotiate the option of a rent-back clause in the sale of your home to ensure that you’ll be able to find a suitable place to live – or maybe buy you enough time to find that forever home!

 

How much should I offer?

After you find out how much you can afford, and of course that dream home, this is one of the trickiest parts of the home buying process.  We’re here to help make sure you get the best deal possible, and don’t over pay, while making sure you stay in your comfort zone.  We have decades of experience in helping our clients buy and sell, and we have an acute knowledge of all of the factors that come into play when it comes to local real estate values.

 

What is earnest money?

This is a small deposit, usually a percentage of the purchase price of a home, to show that you’re a serious buyer whose offer is made in good faith.  This also protects the seller when they take a property off market due to an accepted offer.  There are instances in which, when a deal falls through, the seller keeps the earnest money to compensate for the time the property was unlisted.  If the sale of the property does go through, the earnest money is applied toward the down payment.

 

What is a property survey?

Property surveys include a map of a property that shows the boundary lines of that specific property, as well as a written description of the property.  They also include important features such as easements between properties and right-of-ways – typically used for access to telephone lines,  power lines, etc…

 

What should I expect at closing?

The last step before you buy your home…  The closing!  This makes your transaction final both legally and emotionally – plus you get those shiny keys to your new home.  Closing practices vary state to state, but typically you can expect to have these people present at the closing table:  The seller’s real estate agent, the title company representative, a closing agent, and you!  You’ll sign documents related to the mortgage agreement and ownership of the property and pay any closing costs and escrow payments.