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Common Homebuying Questions
How much money do you need to buy a house?
To get a mortgage and buy a house, you’ll typically pay a percentage of the purchase price upfront. The 20% down payment is a well-known rule of thumb — and a significant hurdle to homeownership — but it’s also a myth. In fact, qualified borrowers may put as little as 3% down, and no down payment is required for certain government programs. If you know what loans you’re eligible for, you can determine the down payment you need to buy a home.
What are the hidden costs of buying a home?
Your mortgage and down payment aren’t the only costs you must pay as a homeowner. The hidden costs of buying a home include upfront expenses like closing costs, as well as ongoing expenses like maintenance and emergency repairs. Beyond the mortgage principal and interest, your monthly payment also includes taxes and insurance. Depending on your situation, you might need to pay homeowners association fees or private mortgage insurance as well.
Should I buy a house now or continue renting?
Your decision regarding when to buy a house will depend on the real estate market and your personal situation. There are many benefits to homeownership, including:
- A path to build equity and credit.
- The ability to deduct mortgage interest and property tax payments from your taxes.
- The freedom to renovate your space, own pets, and more.
But you must be prepared for the long-term commitment in different areas of your life. For example, homeowners might have less flexibility to relocate for a promising career opportunity, or get stuck paying an expensive mortgage in hard times. That’s why it’s important to consider all the pros and cons of renting vs. buying a home.
What questions should you ask your lender when buying a home?
Your relationship with your mortgage lender can last up to 30 years — or more — so establishing a good rapport from the beginning is crucial. Make sure to understand the different loan options, how to qualify, and what to expect from the homebuying process. Here are important questions to ask your mortgage lender when you’re purchasing a house.
What do you need to know before buying a home?
One of the key initial steps for buying a house is getting a mortgage preapproval. This comes in the form of a preapproval letter that explains how much a lender is tentatively willing to let you borrow. Preapproval doesn’t ultimately guarantee a loan offer, but since you must provide credit and income information to get preapproved, it shows sellers that you can likely secure financing. In fact, sellers may require a preapproval letter to accept your offer on a home.
Preapproval letters typically expire in 30 to 60 days after being issued, so it’s important to make sure you’re prepared to buy a house before applying.
Can you purchase a house with no credit?
While purchasing a house with no credit is possible, the process can be more complicated for both borrowers and lenders. Instead, making the effort to build credit over time pays off financially, because borrowers with higher credit scores generally receive the lowest mortgage rates.
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