Most Common Homebuyer Questions
0:00:00.1 Speaker 1: Hello, I wanted to do a video about top real estate or home buyer questions, at least from a mortgage lender’s perspective, so let’s dig in. I googled and found the 10 most common home buyer questions, I’m gonna answer the first six here. So the first one, what’s the first step of the home buying process? Well, not just because I’m a mortgage lender, but because I think this truly is the first step, I think the first step is to get pre-approved for a mortgage, define what your boundaries are, how much you can borrow, what the limit is, not that you necessarily need to borrow the limit but establish that boundary and then work backwards from there. Then you can go and apply that to the marketplace and see what’s available for me in that price point, and what am I comfortable with, and should I take the next step? So let’s look at the next step.
0:00:55.0 S1: How long does it take to buy a home? Well, that’s a really… There’s a lot of variables to that one, you might get lucky, find a house your first time looking, make an offer, get your first offer accepted and wow, you’re underway immediately, and maybe you’re gonna close in 30 days, and the answer could be a month. The most recent home that I bought, which has been about three years now, I looked… My wife and I looked for two years, took us a week of offer, counter offer, counter offer, counter offer. The seller wanted a lengthier closing date, so we closed in 45 days, so that was a long time, that was two years and a couple of months. How long did it take me to buy a home? That’s the answer, two years and a couple of months, so that’s really a hard one to answer, it depends on how lucky you are in finding a place, and how quickly the seller wants to go to closing, and how prepared you are. What does a realtor do? That’s a tough one because it depends on what side of the transaction are you talking about, are you talking about as a seller or a buyer? They do different things and honestly, they do quite a bit.
0:02:12.8 S1: I think a lot of people think, “Oh, I can do what the realtor does, I don’t need a realtor, I’ll list my home on my own, I’ll negotiate to buy a home on my own.” I mean, you technically can but, boy, that’s a lot of steps. Let’s take a buyer, for example, ’cause I’m not really part of the sell side, I’m on the buy side, helping home buyers get mortgages. So what I see realtors do on the buy side, find the home. Yes, nowadays you’re gonna be searching quite a bit on your own online, but maybe they’re gonna help you, maybe they’re gonna help sort through, “Oh, you don’t want that house, I know that house, it was renovated two years ago, not a very good renovation, trust me, you don’t want it,” or “That doesn’t really fit what you told me you wanted, you said you wanted this neighborhood with three bedrooms with that parking and this isn’t it, you’re looking at the wrong thing, let’s circle back and have a better discussion and tighten up your parameters, I think you’re looking at the wrong stuff.” I think there’s a lot of value that realtors bring on both sides, certainly when you write a contract as a buyer, wow, now the value really kicks in.
0:03:26.5 S1: Negotiation, helping you with… If you need help choosing vendors, they may have a suggestion on a title company, a lender, if you don’t have one but at that point you would have one because you would have really should already be pre-approved for a loan by the time you’re making an offer, chances are, you’ve already chosen your lender. But you may need a home inspector, a roofer, movers, there are countless contacts that realtors have that they can help you with, they really… There’s such a deep bench of knowledge that the typical experienced realtor brings to the table, it’s really hard to say in a quick video answer, “What does a realtor do?” You really… It’s situational.
0:04:12.8 S1: I’m thinking of a place that I bought many years ago, I’ll just say this complicated transaction, tricky property for reasons I won’t outline here. I worked my realtor to the bone, I ran her ragged, I really did. It would take me 15 minutes to tell you what she did for me, what does a realtor do? Suffice it to say that in my opinion, it’s quite a bit, and I think having a professional realtor is a real value-add, that’s my answer. How much do I have to pay a realtor as a home buyer? Well, you don’t, directly the realtor commissions are paid by the seller, I think we all know that your traditional real estate commission is 6%, 3% to the listing agent, 3% to the buyer agent. The realtors themselves don’t get the full 3%, part of it goes to their employer, let’s say that you’ve got realtor Robin, who works for ABC Realtors. Well, realtor Robin might be on a 60-40 split, so realtor Robin might get 1.8%, and then 1.2% might go to the house or to realtor Robin’s employer, ABC Realtors. It’s a complicated answer, ’cause there’s other things that go into that. If you’re a listing agent, you’ve paid a lot of marketing expenses on your own, so.
0:05:46.5 S1: Do you get 3%? Well, no, ’cause you gotta give a split to your employer. Do you get 1.8 or 1.5 or 1.6? Well, no, because you’ve paid a bunch of expenses to get the home marketed and under contract, so how much you pay as a buyer, as a home buyer, technically it’s zero, and really that’s a discussion for the seller. And as you can tell, it’s a little bit of a complicated discussion for the sellers. What’s your best advice for first-time home buyers? Go slow, lots of education, patience, don’t buy the first thing you see. I see first-time home buyers get really excited over the first thing they see, and they jump on it, and maybe that’s okay. I just think that lots of data collection, lots of looking, lots of mortgage education, lots of real estate education, talk to both your realtor and your lender about financing contingencies, appraisal contingencies, home inspections, contract questions, pre-approvals for your lender, there’s a whole host of questions. My best advice is go slow and get educated, I mean a deep dive education, lengthy, detailed, go slow. What kind of credit score do I need to buy a home? Again, there’s really no short cut answers here, what kind of credit score do you need?
0:07:18.4 S1: I mean, you need at least the minimum, which I think for a lot of lenders, I would say is 620, there might be some lenders that would go lower than 620, but I think you’ll pay a steep, steep price on the interest rate. You might even pay a steep price at 620 so really, I think the question is, “What kind of score do I need, and how does that impact me?” Because then it’s like, well, it would be great if you had a 740, 760, 780 credit score, because then you might get the best mortgage terms, the cheapest mortgage insurance, if you don’t have 20% down and you might need mortgage insurance. So the credit score that you need to buy a home, that’s kind of a hard one to answer. The minimum is 620, and I would say the higher the better to get better terms and to have an easier time getting your loan through underwriting both at the pre-approval phase as well as when you’re under contract. So all these questions there really is no simple answer, and if you would like to get some of the detailed answers, go to my website and to start the process of becoming a home buyer, as I said with that first question, the best thing to do is to start by getting pre-approved. Go to my website, Getloans.com, click on the get pre-approved button, it takes you to an application, there’s no fee, there’s no obligation.
0:08:38.5 S1: It’s just a way for us to have the discussion. You go through the process, I collect some supporting documents, do all my number crunching, take you through the underwriting process, which can take a while, by the way, it’s not just a snap-your-finger one-day thing, it can be a week or two easily. It’s a very thorough process where you go through loan processing, underwriting, these aren’t just click-a-button type of things, it takes some time, so if you’re anywhere near thinking of buying, get pre-approved quickly, don’t let it wait until you find a house that you love, because to get a really thorough pre-approval, it takes a bit of time and you might miss out on the house. I hope these answers help, feel free to click on connect on my website and reach out and connect with me in many different ways, you can schedule a call, email, meet my team, connect with me on Facebook, lots of different ways to connect with me. And let me know if you have any questions that I didn’t address here. Thanks for watching.