Home Buying Quiz

Getting pre-approved by your bank for a mortgage is the first step of the home buying process. Getting a pre-approval letter from a lender gets the ball rolling in the right direction. Most real estate agents will require a pre-approval before showing homes - this is especially true at the higher end of the real estate market; sellers of luxury homes will often only allow pre-screened (and verified) buyers to view their homes.

A buyer’s market is when there are declining home prices and reduced demand. A buyer's market occurs when supply exceeds demand. In a buyer's market, real estate prices decrease and homes linger on the market longer. Typically, sellers will drop their asking prices to gain an advantage in the market. Several factors may affect buyer demand such as economic disruptions, large companies going out of business, etc.

Most loan programs require a FICO (Credit Report) score of 620 or better. Borrowers with higher credit scores represent less risk to the lender, often resulting in a lower the down payment requirement and better interest rate. Conversely, home shoppers with lower credit scores may need to bring more money to the table (or accept a higher interest rate) to offset the lender’s risk in loaning to them.

The national average for down payments is 11%. While the broad down payment average is 11%, first time home buyers usually only have to put down 3 to 5% on a home. That’s because several first-time home buyer programs don’t require big down payments. A longtime favorite, the FHA loan, requires 3.5% down. Some programs require even less. VA loans and USDA loans can be made with zero down. However, these programs are more restrictive. VA loans are only made to former or current military service members. USDA loans are only available to low to-middle income buyers in USDA-eligible rural areas.

Though the timeline for buying a home can vary widely, the average time it takes from start (Looking at available homes) to finish (closing escrow), is about 10 to 12 weeks. Once a home is selected an the offer is accepted, the average time to complete the escrow period on a home is 30 to 45 days (under normal market conditions). *Well-prepared home buyers who pay cash have been known to purchase properties faster than that.

When you make an offer on a home, your agent will ask for a check to accompany it (checks are the same as cash, and the deposit is typically 1% to 2% of the purchase price). Earnest money is made in good faith to demonstrate - to the seller - that the buyer’s offer is genuine. Earnest money essentially takes the home off the market to anyone else and reserves it for you.

Yes! Home inspections are required if you plan on financing your home with an FHA or VA loan. For other mortgage programs, inspections are not required. However, home inspections are highly recommended because they can reveal defects in the home that are not easily detected. Home inspections bring peace of mind to one of the biggest investments of a lifetime.