Buying a home is one of the most exciting and significant milestones in life, but it can also feel overwhelming—especially if you're a first-time buyer. There are many questions that come up along the way, from figuring out what you can afford to understanding the ins and outs of the buying process. To help you feel more confident and informed, we’ve compiled answers to the top 5 most common questions home buyers ask. Let’s dive in!
1. How much can I afford to spend on a house?
This is the first question most home buyers ask. The answer depends on your income, debts, and the amount of money you can put down. According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Using online mortgage calculators can help you estimate your monthly payments.
2. What’s the difference between pre-qualified and pre-approved?
Pre-qualification is a basic estimate of how much a lender might be willing to loan you, based on self-reported information. Pre-approval, on the other hand, involves a more detailed examination of your finances and credit score, giving you a firm loan offer.
3. How much do I need for a down payment?
Traditionally, down payments range from 10-20% of the home's price. However, some loan programs, such as FHA loans, allow down payments as low as 3.5%. There are also first-time buyer assistance programs that may help reduce this amount.
4. What other costs should I consider besides the mortgage?
Along with your mortgage, consider closing costs (2-5% of the home's price), property taxes, homeowners insurance, and maintenance expenses. Don’t forget about moving costs and any renovations or repairs you might want to make.
5. How long does it take to close on a house?
On average, it takes about 30-45 days to close on a home. However, factors like your loan type, the lender’s schedule, and the home’s condition can affect the timeline. To help speed things up, make sure you have all your paperwork in order ahead of time.
Happy house hunting! Buying a home is a big step, but knowing the answers to these common questions will help you feel more prepared.