Real estate can be a confusing area to navigate on your own. This is why we've put together a short list of frequently asked questions that we get a lot at Hanu Reddy Realty. We want you to be as informed as possible about every aspect of the real estate business as a whole. We invite you to take a look below.
1. What is the first step in the home buying process?
- The very first step is pre-approval for a mortgage. Getting your pre-approval letter from your lender of choice is a great way to start the home buying process. This way, you'll know how much house you can afford. It'll give your realtor a starting point, too. It'll also give you an idea of how much money you need for a down payment and closing costs so you can get your finances together beforehand.
2. What does it mean when it's a seller's market?
- A seller's market refers to an area where the demand for housing drives the prices up. The sellers profit from this kind of market because they can get more money from the sale of their home. New residents want homes in the area faster than developers can build them, so they focus more on existing homes for sale.
3. Does a good credit score factor in?
- Yes! Your credit score is a good indication of your financial state. The higher your credit score is, the better interest rate you will get on your mortgage loan. Most loan programs require a credit score of at least 620 to qualify, but others require a higher one. Ideally, your credit score should be close to at least 700.
4. What is the average for a down payment?
- On a national scale, average down payments fall in the 11% category. However, it depends on your loan program and whether or not you're a first-time home buyer. Most first-time home buyers only put 3% to 5% down. Some loan programs only require 3.5%, and others can ask as much as 20%.
5. How long does the entire home buying process take?
- Again, every situation is unique. However, from the point of starting to search online for a home to the finish and closing of escrow, it typically takes 10 to 12 weeks. Once you pick a home, make an offer, and the seller accepts the offer, escrow usually lasts between 30 to 45 days.
6. What is earnest money?
- When you first put an offer on a home, your agent will typically ask for a check that amounts to 1% or 2% of the home's purchase price. This is earnest money, and it lets the seller know that the buyer is serious. This earnest money usually reserves the home for you and takes it off the market.
They deposit this earnest money in an escrow account and it'll get applied to your closing costs and down payment if the seller accepts your offer. If the deal falls through, you get your earnest money back. However, if you back out after you make an offer on a house and the seller accepts, they may be able to keep your earnest money.
If you have more questions for our agents at Hanu Reddy Realty, reach out and contact us!