First time Home buyer? Here are some common questions you might have.
By Chris Sandker
How much of a down payment is required?
Most first-time home buyers assume you need to have 20% for a down payment, but that is not always true. Most mortgage lenders are now offering Conventional Loans with as little as a 5% down payment to those who qualify and FHA Loans are still offering their 3.5% down payment.
What type of loan is best for my situation?
Most first time home buyers obtain either a Conventional or FHA Loan. Conventional Loans typically require higher credit scores and a higher down payment while FHA Loans are more lenient when it comes to credit scores and only require a 3.5% down payment.
What type of Closing Costs should we expect?
Typically buyers should expect to pay around 3% of the purchase price of their home in closing costs. These fees include loan origination charges, appraisal fees, recording fees, etc.
Should we purchase a Home Warranty?
If the home has older mechanicals, you should consider purchasing a home warranty. Sellers will often pay for a home warranty on behalf of the buyer. A Home Warranty can cost around $500, but could be well worth the money if your furnace breaks within the first year of ownership.
Can we get an inspection?
Yes, the vast majority of real estate contracts are contingent upon the buyer's satisfaction of a whole house inspection. A home inspection usually lasts about three hours and the inspector will inspect all the important areas of the home: Roof, Chimney, Foundation, Mechanicals, Mold, Termites, etc. It is well worth the money.
Are there any grants available?
Most major mortgage lenders will have access to down payments assistance grants. In Ohio, many mortgage lenders have offered what is called a "Welcome Home Grant" the past few years which is a $5000 grant towards your down payments. Many buyers have been able to take advantage and it could sometimes be the difference between whether or not a buyer can qualify for a mortgage.
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