Homebuyer’s Frequently Asked Questions
1. Which is better? To buy or rent?
These benefits are not usually present when renting. A lot of people would rent because they do not have enough budget to buy a house of their own yet. Some would also prefer to rent because they are merely comfortable in doing so. However, there will be a time in our lives when we demand convenience and lifetime security. Thus, buying your own house offers a lot of benefits including:
- A sense of pride
- Capital gains
- Value appreciation
- Financial gains
- Tax breaks
2. Should I hire a realtor to help with the purchase process?
Yes, hiring a realtor is advisable. While you can go through the entire purchasing process on your own, it can get daunting because of the long and tedious paperwork. On the other hand, a realtor will do most of the legwork including paperwork, negotiations, and inspections. A realtor will also help you determine if the home you want to buy is a good deal or not.
3. When Do I know it is time to buy a house?
You need to ask yourself these questions upon choosing from a wide range of property options:
- Is my job stable enough to fully pay this property?
- Am I employed in a stable job for the past three to four years?
- How reliable is my income for me to pay my foreseeable expenses?
- Am I diligent in paying my bills for the previous years?
- Am I still dealing with some long-term debts?
- Can I really afford my utilities, taxes, insurances, and mortgages?
- Am I ready for a down payment?
4. What is a foreclosure?
A foreclosure is a property owned by a lender and is mostly sold “as-is.” Also known as REO, foreclosures are usually purchased by investors, who then fix it before selling to an owner occupant.
5. How much should I pay for a down payment?
Before anything else, you must save for a down payment. While it is one of the most challenging obstacles, it is an essential step to make before buying a home. Most lenders expect around five percent to twenty percent down payment.
Basically, the down payment will depend on the length and type of the loan and the requirements of the lender. Thus, you must set your goals, plan a budget, and stick with it. Sacrificing and saving is the key to coming up with your first down payment.
6. What is the difference between pre-approved and pre-qualified?
Pre-approved is based on a score of real credit, and it can also put sellers and agents at ease. The buyer makes more offer in coming up with a deal. In an extremely competitive real estate market, this is greatly beneficial.
On the other hand, being pre-qualified gives you, the buyer, a sign of how much you are qualified to borrow. The amount of mortgage, however, cannot be guaranteed since no information is verified yet.
7. What are the tax benefits of homeownership?
There are several tax benefits that come with owing a house. The main benefit is that the imputed rental income is not taxed. The usual deductions are real estate market taxes and interests of mortgages.
The other benefit is that the origination fees and loan discounted points are deductible. Furthermore, there are benefits of capital gains.