Buying a home is one of the most important purchases you will make in your lifetime. With such an important decision comes important questions. We have compiled a few of the questions first-time homeowners often have when entering the home buying market:
What steps are involved in buying a home?
- First, you want to research, compare, and secure a lender. Until you are pre-qualified for a loan, you are limited to just looking around. Becoming pre-qualified tells sellers that you are a serious buyer and may give you a degree of confidence that home ownership is within your reach.
- After you have been pre-qualified, plan a budget and determine your purchase price range.
- Contact a real estate agent. Once you have an agent, he or she can begin showing you houses that meet your needs and are in your budget.
- Once you decide on a home, your agent will make an offer to the owner. This may result in a counter-offer, and it may take a few offers for you both to agree upon a price.
- After you agree on a price with the seller, your agent will get in touch with a title insurance agent and/or escrow officer to draw up and complete all the necessary paperwork.
- A date is scheduled for you and the seller to meet for closing. After closing is complete, ownership is officially transferred from the seller to you.
What is Title Insurance?
Title insurance is a one-time payment made during closing that protects you from defects in the title of the property. For example, if hidden or forgotten problems arise after closing such as errors, omissions, mistakes, forgery or undisclosed heirs, title insurance will protect you. It also remains valid as long as you or your heirs have an interest in the property.
What are the different types of homes, and what are the differences between them?
A single-family home is one that doesn’t share any of its walls with nearby structures or other homes. It is built on its own piece of land and is built from the ground up. When purchasing a single-family home, you buy the house and the land it sits on.
A townhouse is attached to one or more houses that are usually part of a bigger community. There are advantages and disadvantages to this type of home. For example, owners usually have access to certain amenities (pool, basketball court, exercise facility, etc.) and have less responsibility for repairs or upkeep, but privacy and freedom is sometimes limited.
Condo (or Condominium)
Condos are very similar to apartments. Owners usually pay a homeowner's fee each month for the upkeep of the exterior, and purchase prices are often much lower than a single-family home or a townhouse. Condos are, however, usually more difficult to sell and the owner has no freedom to change the exterior of the home whatsoever.
Manufactured homes are built on a separate site and moved to the land it will eventually come to rest upon. Afterward, the home functions much the same as a single-family home. Manufactured homes often cost less and can be moved again, though architectural options are limited.
What is a credit score, and how does it affect the purchase of a home?
Everyone has seen the commercials, but what exactly is a credit score - where does it come from? In a nutshell, your credit score is determined by the balances you owe and the payments you make on those balances. Credit scores are conducted by credit bureaus, not lenders, and is compared to the history of millions of other consumers before being reported each month. Your score tells potential lenders the likelihood that you will make your payments on time.
Some factors that determine your credit score include your payment history, outstanding balance and obligations, the length of time you have had a credit history, the types of credit you have used, and the number of inquiries that have been made about your credit. Generally, a higher credit score means lenders will see you as less of a risk.
These questions only scratch the surface of home buying. For other home buying terms, you can consult the Real Estate Dictionary. If you have any other questions, or you would like to get on the path to purchasing a home, contact one of We Florida Financial’s helpful loan officers.