Title: Navigating Your First Home Purchase: 5 Common Questions Answered

The journey to homeownership is rarely a straight line. Between managing your budget and keeping up with market trends, it’s easy to feel a bit underwater. If you’re just starting out, here is a clear look at the questions that tend to come up most often.

1. Do I really need a 20% down payment?

This is perhaps the most persistent myth in real estate. While 20% is great for avoiding private mortgage insurance (PMI), many first-time buyers are successfully closing with much less. Programs like FHA loans (3.5% down) or conventional products (with smaller % down) have made the dream much more accessible. 

2. What’s the difference between being pre-qualified and pre-approved?

Think of pre-qualification as an informal "estimate" and pre-approval as a "verified commitment." In a competitive landscape, sellers usually won’t consider an offer without a formal pre-approval letter, as it proves you have the financial backing to cross the finish line.

3. Who handles the costs of a real estate agent?

Many first-time buyers worry about adding a commission to their expenses. Now with the buyer broker agreement in affect, you as the buyer determine how you want to negotiate and strategize commissions in your offer. Many sellers are still cooperating with paying buyers agents commissions, but it is truly up to you on how you want it structured. This also means you can have a professional advocate handling the contracts, negotiations, and scheduling without it being an out-of-pocket cost for you if you so wish. 

4. What are "closing costs"?

Beyond your down payment, you should plan for closing costs, which typically range from 1% to 2% of the home's price. These cover the "behind-the-scenes" essentials: appraisals, title searches, loan origination, and taxes. If you determine you want an escrow account for future property taxes this may increase your costs to fund that account. 

5. How do I know if I’m paying a fair price?

It’s easy to get caught up in the emotion of a beautiful kitchen, but the data matters more. Looking at "Comps" (comparable homes that have sold recently in the same area) is the only way to ensure the list price matches the actual market value. This is were an expert is important, our market changes week by week so it’s important to know the data in real time. 

The path to your first home should be exciting, not exhausting. If you’re looking for a bit more clarity on the local market or just want to discuss your options, I’m always happy to help you find your way home.