To help you navigate this journey, we’ve gathered the most common questions that first-time buyers are asking right now. Use this guide to feel more confident and prepared as you move closer to getting the keys to your home.
How much do I need for a down payment?
One of the biggest myths in real estate is that you need a 20% down payment to buy a home. While 20% is a great goal, it is not a requirement! There are several low down payment options available for first-time and repeat buyers:
- Conventional Loans: Can require as little as 3% down.
- FHA Loans: Allow for a down payment as low as 5%.
- VA and USDA Loans: Often require 0% down for eligible borrowers (military veterans/service members and rural property buyers, respectively).
Note: While a 20% down payment helps you avoid Private Mortgage Insurance (PMI) on conventional loans, you can still secure your home with much less upfront costs.
What is a “Pre-Approval” and why is it so important?
A Pre-Approval is a formal document from a lender that states how much money you are eligible for borrow. This is based on a professional review of your credit history, income, and assets.
In a competitive market, a pre-approval letter shows sellers and agents that you are a serious and qualified buyer. In a competitive market, having a pre-approval letter is often required just to submit an offer.
At Southern Trust, we know how important a pre-approval letter is during your home search. That’s why we offer Priority Approval, a fully underwritten approval letter in 24 hours or less, so that you can make a strong, competitive offer and guarantee a quick closing.
How long does the mortgage process take?
The timeline for buying a home varies for everyone, but once your offer is accepted, the mortgage process typically takes 30 to 60 days.
The entire journey from your initial search to closing day can range from a few weeks to several months. Key factors that can influence your timeline include:
- Current market conditions and inventory
- Your personal financial readiness
- The length of your home search
What are closing costs?
Closing costs are fees associated with finalizing your home loan. These are sperate from your down payment and are due on the day you officially close on your home.
Common examples of closing costs include:
- Origination Fees (the cost of processing the loan)
- Appraisal Fees
- Title Insurance and Attorney Fees
- Prepaid Taxes and Homeowner’s Insurance
Typically, you should expect your closing costs to be between 2%-5% of the total loan amount.
How do I find a lender and real estate agent to work with?
The professionals you choose for your “Home Team” will make or break your experience. They will be your biggest advocates, negotiators, and guides.
Ask for Referrals: Talk to your friends, family, or colleagues. Word of mouth from people you trust is an invaluable starting point.
Do Your Research: Look for professionals who specialize in working with first-time buyers in your specific area.
Interview Your Team: Don’t be afraid to ask a lender about their communication or a Real Estate Agent about their experience in your preferred neighborhood.
Ready to start your homeownership journey?
Taking the leap into your first home is a big deal, but you don’t have to do it alone. With the right knowledge and a dedicated team behind you, your goal is well within reach.
