6 Common questions on home buying process
If you’re planning to buy a home for the first time, then it is quite obvious that you’ll have a number of questions on the home buying process. Getting the answers to your questions is as much necessary as knowing the steps involved in buying your first home. You can read through this article to find the answers of 6 common questions on the home buying process.
1. Why do you need to hire a lawyer?
A real estate transaction involves a number of documents that make the process quite complex. Therefore, it is advisable that you hire a real estate lawyer, who can guide you in every step. If you hire an experienced lawyer, then he/she can save you from making costly mistakes throughout the home buying process. Before hiring a lawyer, make sure that he/she has enough experience in real estate dealings.
2. What is the difference between pre-approved and pre-qualified?
Pre qualification is an estimate of your borrowing power, which is based on the information you provide to your lender. The lenders do not verify the information to pre qualify you for a loan. However, pre approval is an actual loan commitment that is issued by your mortgage lender. It is an evaluation that determines whether or not you actually qualify for a mortgage loan. It often refers to the maximum loan amount that a lender is willing to offer you.
3. What is meant by PMI?
PMI or Private Mortgage Insurance is actually a guarantee that protects your mortgage lender if you default on your home loan. Usually, you need to purchase a PMI if you’re unable to make 20% down payment on your home. PMI is usually based on a percentage of your mortgage loan, which you’re required to pay every month. Therefore, your PMI will depend on the amount of you mortgage loan and your credit risk. Instead of you purchasing the PMI, your lender can also buy it; however, you’ll have to bear the cost as your lender will add the amount with the mortgage loan interest.
4. Do you need a home inspection?
Getting your home inspected is an essential step in the home buying process. A home inspection executed by a qualified home inspector will help you to determine the actual condition of your house, which may not be apparent otherwise. It will help you judge whether or not it’s worth paying the home price.
5. What purpose does a purchase contract serve?
A purchase contract is a legal document that governs the entire home buying transaction. Both the parties need to sign it in order to make it valid. However, you should get it reviewed by a real estate lawyer before your sign a purchase contract. Once signed, you are compelled to fulfill the clauses mentioned in the contract.
6. What closing costs do you need to pay?
You need to pay certain closing costs when you take out a mortgage loan in order to purchase your home. The closing costs depend on a number of factors, such as, the purchase contract, type of mortgage, the title insurance, settlement fee and the professional fee that you need to pay to your real estate attorney.
You can take help of forums to discuss your queries regarding the home buying process. You can simply post your queries in the forums and the community members will answer them. It will help you a lot in the process of buying your first home.
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