Top 5 First Time Home Buyer Questions Answered
March 17, 2023, By: Susan Kadilak
As a Massachusetts real estate agent with over 20 years of experience, I’ve helped many clients buy their first home. I’ve fielded lots of questions over the years about the home buying process in Massachusetts, and here are the top 5 questions I’m asked by first time home buyers.
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1: How much money do I need for a down payment?
A: Although we commonly hear that you need 20% down to buy a home, that’s not always realistic, especially in Massachusetts where our housing is so expensive. It’s actually pretty rare to see a first time buyer put down 20%. According to the National Association of Realtors, the average buyer put down 7% on their first home. There are many loan products available to first time home buyers that start at just 3.5% down (or 0% down if you are a qualified Veteran), so it’s important to take a look at all of the options.
2:How much are closing costs?
A: Closing costs are made up of fees, escrows, and payments that typically include (but are not limited to) appraisal fees, credit report fees, title insurance, escrows for taxes and insurance, attorney fees, underwriting fees, flood certificate, and more. The total amount of your closing costs are typically between 2% and 5% of the loan amount, but can vary depending on what type of loan you are using. It is important to get a Good Faith Estimate from your lender so that you have a full understanding of the breakdown of costs and how much cash you will need to close on your home.
3:How long does it take to find a house and close?
A: There are two phases to the home buying process that you want to keep in mind when planning out your move: House Hunting and Contract to Close.
House Hunting: According to the National Association of Realtors home buyers typically searched for 8 weeks and viewed a median of 8 homes.
Contract to Close: Once you have an accepted offer on a home it typically takes 45-60 days for the closing to happen.
4: What if the house fails inspection?
A: For most buyers, the biggest fear is the home inspection and what happens if things go wrong. It’s important to remember that here in Massachusetts we are dealing with older, used homes, so there is almost always a very long list of maintenance and other items that are sure to give you heart palpitations! It’s important to take a deep breath and assess what the issues are and the best way to address them. Sometimes, this means that the seller will agree to repair something prior to closing or give you a credit so that you can do the repairs yourself once you own the home. Other times, it means that the home inspection issues were a deal breaker. In that case, you can back out of the deal as long as you are within the parameters of your contract, and then get your initial deposit back. You would not recuperate any costs paid for inspections done on the home.
5:How can I get a good deal?
A: Every home buyer is looking for a good deal and here are some tactics that can help you make a smart home buying decision:
- Look at homes that have been on the market for a while. Just because a home doesn’t sell right away that doesn’t always mean that something is “wrong”. Chances are that there will be less competition, which puts you in a better position to negotiate a favorable deal.
- Good bones are a better investment than cosmetics. Things like an upgraded electrical panel, newer roof, or a new heating system are not very sexy; but they cost real money if they need to be replaced, and they often don’t give you a dollar-for-dollar increase in value. Homes with cosmetic upgrades often command more money because many home buyers will pay more for pretty things! If you keep an eye out for good bones and are willing to put in a little sweat equity you may find yourself a hidden gem!
Susan Kadilak is a licensed real estate agent based in Burlington, MA. She prides herself in providing the best home buying and home selling services to her clients and has over 20 years experience in the real estate industry.