The Ultimate Homebuying FAQ
You have the questions. We have the answers.
Homebuying is commonly seen as this complicated hurdle – causing soon-to-be homebuyers to hunt all over the internet for answers. At Guaranteed Rate, we want to show you that mortgages don’t have to be hard. To help first-time buyers or owners who are looking for an easier way into their next home, we’ve answered the six most common questions homebuyers want to know.
1. What’s the first step in buying a house?
Quick answer: Applying for a mortgage.
If you’ve doubled-checked your monthly finances and have seen that buying a home makes financial sense for you – you’re ready to take your first step.
You’ll want to start by shopping and comparing mortgages. GRaffordable is the easiest way to do this. It guides you to the preferred loan for your situation by asking a short series of simple questions. It only takes a minute or two and you don’t need to have any tax records or bank statements prepared.
Find more info on homebuying’s first steps here.
2. How do I know I’m ready to buy a house?
Quick answer: You see the signs.
Maybe you’re wanting to set down roots and grow your family, maybe it’s wanting to treat yourself and your dog to a big backyard. Whatever your sign may be, get the proper financial help.
If you have 20% down at the ready – that’s great! If you don’t, there could be a bunch of options for you. There are down payment options that start as low as 3% down or you can try and turn to The Bank of Mom and Dad. Millennials (having been hit with high amounts of student debt) are turning more and more to their parents for down payment assistance, and parents are helping.
3. What is title insurance when buying a home?
Quick answer: Insurance that covers you from disputes over the title.
There are two main types of title insurance policies:
- Owner’s - Assures the new owner that the title is correctly vested and free from potential legal hurdles.
- Lender’s – Covers the lender in the transaction of the mortgage, deed, or other security instrument.
Title insurance ensures you’re covered in case of problems such as: unreleased mortgages, fraudulent acts, and/or mistakes in the public record. If you’re caught without title insurance and something bad happens you’ll be tasked with having to hire an attorney, fight the case, and run the risk of losing your home.
Get the facts about title insurance here.
4. Is buying a foreclosed home a good idea?
Quick answer: Yes, but do your research.
Foreclosed homes run the gamut of ‘diamonds in the rough’ to ‘money pits.’ If you know your way around a set of tools and want to renovate the place, they can be very successful purchases. However, you should know more than the fundamentals of homebuying before investing.
Start with the acronyms of homebuying here.
5. What are the tax benefits of buying a house?
Quick answer: There are a bunch.
To list everything, you could potentially get a tax break on:
- Mortgage Interest
- Property Taxes
- Home Improvement
- Mortgage Points
- Energy Efficiency
- Home Office
- Private Mortgage Insurance (PMI)
Each tax has its own set of rules for how the benefits work. They’re typically based on aspects such as: married or single, primary or secondary home, mortgage amount, etc.
Find out how your taxes improve your neighborhood here.
For more info about homeowner’s deductions, go to IRS.gov
6. How do I sell a house?
It’s very important to track how the market is doing in your neighborhood. There is always a chance that the market isn’t as strong as it was when you first bought your home. This helps when meeting with an agent and setting a price. Make sure not to anchor yourself to a net gain or selling for a certain amount. It can blind you to good offers relative to the market you’re in.
Be sure to listen to your agent about how to stage your home. It’s a key factor in making your home look appealing and helping the next buyer envision how they’d set up their home if they were to buy it.
Any other questions you may have about how much you can afford can be answered by our mortgage calculator. For any specific-to-you questions, contact a loan officer about your homebuying needs.
“Get an official Loan Estimate before choosing a loan. Your actual rate, payment and costs could be higher. All data is based on your inputs and not today's rates.” In reference to mortgage calculator.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information.
Guaranteed Rate does not provide tax advice. Please contact your tax adviser for any tax related questions.