FAQs

Rely on the experts!

Be cautious of advice given by individuals who are not actively working in the real estate industry. Real estate is a highly discussed topic and many people believe they have valuable insights to share. However, the most knowledgeable sources are those who are actively involved in the industry. Experienced real estate agents have a vast experience of selling hundreds or even thousands of properties, giving them a better understanding of what to expect and what to be aware of. On the other hand, friends and family members may have only bought or sold a couple of homes, making their advice less reliable. It is important to not be swayed by well-meaning loved ones who may not have enough experience in real estate and could potentially lead to disappointment for first-time buyers.

You may be ready to buy a home if you have a good credit score, money saved up for a down payment and closing costs and make a stable income. However, answering this question requires more than just a knowledge of home loan types, down payments and credit scores. Home repairs and maintenance become your responsibility as a homeowner. Are you ready to get that leaky roof fixed, unclog that kitchen sink or replace that broken dishwasher?

If you’re tired of worrying about security deposits for pets or rent increases every year and want to paint the walls in your home whatever color you wish, you may be ready for homeownership. Homeownership provides tax benefits that renting doesn’t, which is good news if your income is on the rise due to promotions or bonuses.

Your monthly payments will build equity in a home you own, instead of a home your landlord owns. And when you pay off your mortgage, you officially own a home that you can pass onto future generations.

The 43% DTI ratio rule may be a good measure of the lender’s definition of affordability, but may not match your monthly budget needs. When you’re preapproved for a mortgage, lenders don’t consider:

• How much your electricity, water or gas bills are
• How much you pay for car insurance
• What your monthly grocery bill looks like
• Soccer camp, ballet lessons, tutoring costs or other extracurricular expenses
• Savings plans for retirement
• Future medical bills, like braces or an unexpected injury

This question is especially important if you need a mortgage. You can qualify for a home loan backed by the Federal Housing Administration (FHA) with a 10% down payment and a minimum 500 credit score. However, the approval process may be difficult and you’ll pay a much higher interest rate than you would with a higher credit score.

A higher credit score often leads to a smoother loan approval, and a much lower interest rate and monthly payment. Conventional lenders typically require a minimum 620 score, but they’ll likely reward you with a lower rate if your score is 780 or higher.

You’ll need private mortgage insurance (PMI) if you make a down payment of less than 20% on a conventional loan. The insurance covers lenders, not you, and claims are only paid if you default on your mortgage and the lender has to foreclose on your home.

If you’re applying for an FHA loan, you’ll pay two types of FHA mortgage insurance regardless of your down payment; VA and USDA loans, meanwhile, don’t require mortgage insurance. However, eligible military borrowers may pay a VA funding fee that offsets the cost of home loans backed by the VA, while the USDA charges two types of guarantee fees for USDA loans that work like FHA mortgage insurance.