11 FAQs When Buying Your First Home

Buying a home is an exciting milestone in your life. If you’re going through the process for the first time, you may be hearing many unfamiliar terms and contemplating which of your many options best fits your situation. Especially when you’re navigating a difficult market, the process can become overwhelming. If this sounds like you, you’re in the right place! Doing some basic research is a good place to start. Here are the most common questions we receive from clients and a few resources to help you find the answers.

Do I need a Realtor® to buy a home?

While you’re not required to have a Realtor® to buy a home, they can be extremely helpful throughout the process. There are many factors to consider when choosing a home, and evaluating a whole market on your own can be overwhelming. Realtors® have the expertise to guide you through the home search, inspection and closing process, and they will even negotiate an offer on your behalf. Learn more about the role Realtors® play.

How do I determine my home buying budget?

Lenders take many factors into consideration when considering the size of mortgage you can afford, including your household income, cash available for a down payment, and your total debt. A good place to start is calculating your debt-to-income ratio. Check out this article to learn how to calculate your ratio and factor in other components to set your budget.

What are some hidden costs I should look out for?

In most cases, buying a home means you’ll no longer have someone else – such as a landlord or property manager – to call when things need repaired. Check out these articles for a list of hidden costs that appear when you buy and when you move in. Being aware of them ahead of time allows you to build them into your home buying budget!

How do I choose the right mortgage lender?

Like choosing a great Realtor®, choosing the right mortgage lender can be extremely helpful as you navigate the homebuying process. Your lender should communicate with you in a clear and timely manner, have the expertise to help you find the best solutions for your situation, and treat you with a personal level of service. This article dives deeper into what to look for in a lender.

What’s covered in a mortgage prequalification meeting?

Visiting with a mortgage lender is one of the first steps to buying a home. Most home sellers will want you to provide a prequalification letter, which you will obtain after this meeting. Be prepared to discuss your financials, including credit report, sources of income, loan options and rates, and more.

What’s the difference between a 15-year and 30-year fixed mortgage?

Two of the most common mortgage options are 15-year and 30-year fixed mortgages. As the names suggest, the number of years it takes to pay off these mortgages differs. Another major difference is that shorter-term mortgages often have lower interest rates but require a higher payment each month compared to longer-term mortgages. This video gives a great side-by-side comparison of the two options.

What’s the difference between a fixed rate and an adjustable rate mortgage?

A fixed rate mortgage maintains the same interest rate throughout the entire life a loan, while an adjustable rate mortgage begins to change – which can go up or down – based on the credit market. Both options have advantages and disadvantages, but especially during a low-rate environment or a volatile market, fixed rates are much more favorable to buyers.

What is an escrow account and escrow analysis?

An escrow account is used by homeowners and mortgage lenders to ensure adequate payments are made on homeowners’ insurance and real estate taxes. An escrow analysis is an annual review of your account to ensure you are not paying too much or too little, as property tax and home insurance rates can change over time. Find more information about how to read your first escrow analysis and what it means if you have a shortage or surplus in your payments here.

What is a homestead credit and do I qualify for one?

Homestead credit is a tax credit for homeowners designed to lessen the amount of property tax they pay. While eligibility varies greatly by state, in some states, such as Iowa, the qualifications needed to be granted a homestead credit are minimal. Be sure to check out this article to learn if you qualify and how to request your credit.

Is it OK to waive a home inspection to strengthen my offer on a home?

In a seller’s market when several buyers are already offering over asking price, you may be tempted to further strengthen your offer by waiving your right to a home inspection. However, this comes with risks, such as potential costly home repairs down the road. There are other ways to strengthen your offer without skipping this important step. If you’re considering waiving an inspection, be sure to read this article first.

If I can’t find my dream home, can I build it instead?

In today’s low-inventory real estate market, many home buyers are considering building instead of buying an existing home. Building a house can be a great way to get exactly what you desire for your dream home, especially when the market doesn’t include the style or size of home you’re looking for. Read this article for an overview of how construction loans work and how they compare to traditional mortgages.

While the homebuying process can be overwhelming, our experts are here to help. Find our team’s contact information below or stop by your local branch to speak to an expert about your homebuying journey!