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Frequently Asked Questions
When Buying a Home

How much money do I need to buy a home?

Not having enough money saved to buy a home is the biggest limiting factor for non-homeowners. So just how much money do you need to buy a home in Tucson? There are three categories that all the costs fall into:

  • Up Front Costs: These are the costs that you will need to have in order to submit an offer, and be able to proceed through the buying process.

    • Earnest Money Deposit: This amount will vary based on the home that you are buying, but a good rule of thumb is 1% of the purchase price. This amount is due as soon as your offer is accepted by the seller. This deposit is to show good faith to the seller that you plan to follow through with the contract, and if you don’t you could lose this deposit. But don’t worry there are a lot of ways to get out of the contract and get the deposit back. The deposit is applied to your down payment when we go to close.

    • Inspections: During the first 10 days after your offer is accepted, you will want to have the home inspected by varies inspectors, and each one will want to be paid for their time. I always recommend a general home inspection ($400-$650), a termite inspection ($50-$75), and a roof inspection (Free). Then depending on the age of the home, the inspection report, and home features, there may be a few more inspections that we would want to do. Heating and Cooling Inspection ($125), Sewer Inspection ($125), Pool Inspection ($100), and Solar Inspection ($250).

    • Appraisal: The appraisal is when the bank sends their inspector out to the home to verify that the home is worth the amount you are buying it for. The bank wants to know this because they are using the home as collateral to lend you the money. This is due when the lender orders the appraisal, and will cost between $500 and $700. If it needs to be rushed, or the home is unique, it may cost more.

  • Down Payment: The down payment is the portion of the purchase price that you are not getting a loan for. This amount is due at the end when you go to the title appointment to sign all of the legal documents. The minimum amount of down payment needed depends on the type of loan you are getting.

    • VA Loan: This is a loan solely available to members of our military. This loan has no minimum down payment. The borrower can finance 100% of the purchase price. The borrower is still obligated to pay closing costs and inspections. But the saying there is no such thing as a free lunch still holds true here. The lender will charge a “Funding Fee” that is added to your loan amount. The size of the fee depends on how much money you are putting down, and if it is your first time using a VA loan or not.

    • FHA Loan: The minimum down payment required for an FHA loan is 3.5% of the purchase price, but if your credit score is below 580, your minimum down payment is 10% of the purchase price.

    • Conventional Loan: The minimum down payment on a Conventional Loan is 3%, but not everyone qualifies for the 3% down option, if you don’t, the minimum down payment would be 5%. If you goal is to avoid mortgage insurance, you will need to put down 20%

    • Second Home Loan: This varies from lender to lender but expect to see the minimum down payment between 10% and 30%.

    • Non-Owner-Occupied Loans: The minimum down payment for a Non-Owner-Occupied loan is 20%-30% depending on the lender.

    • Down Payment Assistance: If you do not have enough money for a down payment, there are a ton of Down Payment Assistance programs available to you. These programs can give you up to 5% of the purchase price to use towards your down payment.

  • Closing Costs: The closing costs are where the people involved in the transaction are paid, along with a few other miscellaneous charges. The closing costs are due at the end when you go to the title appointment to sign all the legal documents. There are a lot of variables when it comes to calculating your closing costs, but you can estimate your costs to be $3000 + 1% of the loan amount + any lender points you used to buy down your rate.

    • Don’t have the money to pay for your closing costs? We can negotiate for the seller to pay your closing costs.

Do I need a Buyer's Agent?

No, it is not required to have a buyer’s agent to purchase a home in Arizona. You can represent yourself if you choose. But here are a few reasons to use a buyer’s agent:

  • They are a Fiduciary. A buyer's agent has a legal responsibility to put your interest ahead of anyone else’s, even their own. A buyer’s agent will be battling for you, to make sure you get the best terms and price when you buy a home. The seller’s agent is a fiduciary duty to the seller and is legally obligated to look out for the seller’s interest, not yours.

  • They know what to look for. A successful agent is looking at dozens of homes every week. This gives them the trained eye to find potential problems you otherwise would have missed.

  • Knowledge of the local real estate market. A full time Realtor spends a lot of time analyzing the market. This knowledge gives them the ability to quickly determine if the house you want to buy is overpriced, or if it is underpriced and will be sold quickly. They will also be more likely to find you a home faster, as they know where to find the home you are looking for.

  • Understand the Process and Paperwork. This will save you time and money. Understanding the process will keep the transaction on schedule and avoid any costly delays. Understanding the paperwork will save you money, by keeping you out of legal trouble, and give you the upper hand in negotiating the terms of an offer.

  • List of Trusted Professionals. An experienced buyer’s agent will likely have a trusted person for just about anything you need. This is because they have been through almost every situation and have weeded through the good and the bad companies with that experience. Again, saving you time and money.  

Before moving on, I want to discuss two common myths when it comes to using or not using a buyer’s agent when purchasing your home.

  • Myth 1: It’s Free to Use a Buyer’s Agent. This is not true. The misconception comes from the fact that the buyer agent’s commission is often paid by the Listing Agent. So, it appears to cost the buyer nothing. One of the forms you will sign if, and when, you hire a Buyer’s Agent is a Buyer Broker Agreement. This form will tell you what the Buyer's Agent’s Commission is and explains how they get paid. In short, you will pay the buyer’s agent the difference in the amount of commission you agreed upon and the amount the Listing Agent agreed to pay the Buyer’s Agent. If you ever want to know how much the Listing Agent is paying towards the Buyer’s agent, just ask your agent and they will tell you. 

  • Myth 2: Using the Listing Agent will save you money. Again, this is not true. The misconception comes from the idea that if there isn’t a Buyer’s Agent, that the seller will be saving money by not paying a Buyer’s Agent. Here is how it really works. When the Listing Agent is hired by the seller, the seller agrees to pay the Listing Agent a commission. The contract then states that the Listing Agent will pay a Buyer’s Agent a set amount from their commission. If there is no Buyer’s Agent, the Listing Agent keeps the entire commission. So, whether there is a Buyer’s Agent, or note, it will cost the seller the same amount, and there is no savings to pass on to the buyer. 

How do I choose the right buyer's agent?

I was just going to say hire me, but the truth is, I may not be the right Realtor for you. You want to find an agent that you get along with and trust. Buying a home can be very stressful and working with someone you don’t along with or trust, will just add to the stress. I can’t tell you what questions to ask to see if you get along with the agent. There may be specific questions important to you or it may be a gut feeling. What I can tell you are the questions to ask to cut through the fluff of a sale pitch to find the agent’s true results.

  • How many buyers have you helped in the last year?

    • A lot of Realtors like to tell you how long they have been in the business, but someone could be in the business a long time and only work with a couple clients a year. By asking how many in the last year, will tell you have active they are in the current market.

    • A number too low may tell you that they are not experienced enough. While a number too high may mean that they are spread too thin.

  • Will I be working with you individually, or with a team?

    • Real Estate Teams are a big thing in the real estate industry, and it’s important to understand what working with the agent will be like.

    • Individual Agent: The benefit of this is that you will be working with only one person the entire time. There is no confusion about who is who, and there is only one person to hold accountable.

    • Team Agent: The benefit of working with a team is that they tend to be more efficient than single agent as there are multiple people taking care of multiple tasks all at once.

  • What is your strategy to find me a home?

    • This will likely be the question that separates average agents from elite agents. Most agents will answer this question by saying that they will set up a search on the MLS to send you homes that match your search as they hit the market. In other words, they take a passive approach to finding you a home. Elite agents will have a multiple point plan to find you homes on top of just waiting for a home to hit the market. Elite agents take a more active approach.

  • On average, how much money have you saved your clients?

    • This question cuts straight to the point. The two most important jobs your agent has are to find you a home and get you the best terms. This will tell you how good of a negotiator they are.

    • This will be the amount their buyers paid under list price; plus, how much seller contributes they got their clients.

    • A good benchmark will be about 2%.

  • Are you a Full-Time or Part-Time Realtor?

    • This is a hot topic in today’s real estate world. And honestly, I’m not sure if I am even ethically allowed to say it, but I am going to because you need to know. With the slow down in the real estate market over the past year, a lot of agents had to go get second jobs and do real estate on the side.

    • There is a difference between a part-time and a full-time realtor. The more time you spend in real estate, the more knowledgeable that agent will be. The full-time agent will be able to find and show you homes faster, and they will be better equipped to negotiate on your behalf.

  • Have you helped other buyers in this area, or price range?

    • There are a bunch of submarkets in the Tucson Market, and each one acts differently. By working with an agent who is familiar with what you are looking for, will usually result in a quicker smoother process.

  • Why should I choose you over another agent?

    • This is my favorite question. This will show you who was prepared to meet with you, and who is flying by the seat of their pants. Who takes the job seriously, and who is doing it on a whim. There is not one right or wrong answer. But how they answer it will tell you all you need to know.

How long does it take to buy a home?

It depends on when we start the clock. I see the home buying process as three different steps. Getting ready, house hunting, and Escrow.

  • Getting Ready to Buy: We recommend starting the process about 6 months prior to when you want to move into the home. This will give you time to get all of your ducks in a row and make sure you have a smooth process when it comes time to buy. During these 6 months, you should talk with a lender to see if there are any potential problems that need to be addressed, and to create a game plan to get you the best loan. You should also be working with a realtor, to keep you up to date on the market, and help you narrow down exactly what you are looking for.

  • House Hunting: Once you are about 2 to 3 months from wanting to move into your new home, and you have been pre-approved with a lender. It is time to start house hunting. Depending on what you are looking for, and how many homes are available for you to look at. It may take a week to find a home, or it could take a couple months. Based on the conversations you have been having with your Realtor during the getting ready stage, your realtor will let you know how long it should take to find the right home.

  • Escrow: When we do find the right home, and get the offer accepted, the closing process will take anywhere from 2 weeks to 45 days. If there is no loan, closing can be as quick as 2 weeks. But if there is a loan, closing is traditionally 30 to 45 days. In some instances, closing can be delayed longer than 45 days if both parties agree to a delay closing.

How much will my mortgage payment be?

This is more of a question for a lender, but I can give you a quick calculation to estimate your payment for when you are doing research. This estimate is for your mortgage payment, taxes, and insurance.

  • Purchase Price x 0.007 = Estimated Monthly Payment

  • Example: $400,000 x 0.007 = $2800/mo payment

Do I qualify for a mortgage?

Again, this is more of a question for a lender, but I can give you some insight into how the lender will determine if you qualify for a mortgage, and how large of a loan you qualify for.

  • Credit: Credit is the key that unlocks the door to getting a mortgage. The first thing the lender is going to do is run your credit. They are looking at two things:

    • Credit Score:  This will tell them right off the bat if you qualify for a mortgage or not. Obviously the higher the score the better. But depending on what your credit score is will determine which loan program is best for you. For the best loan terms, lenders will be looking for 720 or better. A score of 640 is still doable, but you won’t get the best terms. If you have a score under 640, the loan may still be possible, but the lender will have to get creative.

    • Credit Report: In addition to your credit report, the lender also wants to see what is in your report. They will be looking for things like Short Sales, Foreclosures, Bankruptcies, Collections, and late payments. Depending on how many you have and how long ago you had them, will determine which loan program, if any, will work for you.

  • Debt-to-Income Ratio: If credit is the key to the door, Debt to Income Ratio is what determines what’s behind the door. If you pass the credit portion, you will most likely qualify for a loan, the question now is how much you will qualify for. And for that lenders will look at your Debt-to-Income Ratio.

    • Debts: The lender will want to know all the debts that you have. Anything from car loans, student loans, to credit cards, and any child support. They are looking at minimum monthly payments, not the total balance.

    • Incomes: The lender will count all of your taxable income. If you didn’t report it on your taxes, it doesn’t exist in eyes on the lender. They are looking at your gross income before taxes. Depending on how you get paid, the lender will calculate your income differently. Salary is most straightforward. Commission, hourly, overtime, and bonuses can get tricky.

    • Ideal Ratio: Once the lender has both your income and your debts, they will calculate your debt-to-income ratio. For the best loan programs, you want a debt-to-income ratio under 43%. Above that will limit which programs you qualify for. The highest Debt-to-Income ratio you can have is 56.99%

  • Loan Amount Calculation: To find how much you qualify for, you will need to talk to a lender, but for research purposes here is a quick calculation to estimate how much you qualify for.

    • Multiple your income by 50%

    • Subtract your total monthly debt

    • This number is the max monthly payment you can have for your mortgage.

    • Take that number and divide it by 0.007

    • The result is the max amount that you will qualify for

    • Example:

      • Household Gross Income is 7,000/mo, with $1000/mo in Debt​

      • $7000 x 50% = $3500

      • $3500 - $1000 = $2500

      • $2500 / 0.007 = $357,000

Do I have to sell my current home before buying my next home?

The short answer is yes. But it depends. If you are trying to sell your home and buy your next home, you will fall into 2 categories:

  • You can qualify to buy your next home even if you don’t sell your current home. This situation is much more manageable. If this describes your situation, we can proceed as normal. Once we find and close on your next home, we would start the process on selling your old home. To find out if you can qualify to buy your next home without selling your current home, speak with a lender. They can let you know. And if you are worried about potentially having two mortgage payments, understand that with how mortgages are paid, you may have 30-60 days of no mortgage payments on your new home. That buys us some time to get your old home sold. If all goes well, you may not have double payments, and if you do, it may just be one.

  • You have to sell your current home in order to qualify for the home you are buying. In today’s market, this proves to be more challenging. If this situation describes you, all of the offers that we write will be contingent on you selling your home. This puts us behind the eight ball, if we are competing against other offers, because our offer has an added layer of risk to the seller. I would recommend looking at homes that have been on the market longer than a month, as these sellers may be more open to accepting a contingent offer. And if they are open to accepting a contingent offer, they will at least want to see that your home is on the market, and in some cases require that your home is already under contract. Having to have your home on the market prior to writing offers provides its own challenges. Your home could sell quickly, which would put you in a position to have to find a home quickly. And with the low supply of homes for sale, there may not be too many options to choose from. You may want to consider finding temporary housing that can bridge the time between selling your home and finding your next home.

What are the components of an offer to buy a home?

When it comes time to submit an offer on a home, knowing the ins and outs of the purchase agreement and uses every aspect of it, will be key for getting you the best terms. Obviously the most important aspect of the offer is the price, but here are the other aspects that we can negotiate.

  • Earnest Money – this is a check that is made out to the escrow company that tells the seller you are serious about buying the home. The seller can keep this check if you cancel the purchase, for any reason not allowed in the contract.

  • Loan Type – Some sellers look at how you will be paying for the home as a measure of the risk. For instance, a cash buyer is less risky to a seller than a buyer with a loan because there is zero chance the loan will fall through (because there isn’t a loan). This is where being pre-approved gives you a leg up. A pre-approved buyer is less risky than a prequalified buyer, making your offer stronger.

  • Seller Paid Closing Costs – In your offer, you can ask the seller to pay for some or all your closing costs. But remember, the seller’s number one concern is how much money they will make from the sale of their house, so the more you ask is closing costs, the weaker your offer will be. Sometimes, if you absolutely need the closing costs, you may need to offer a higher sales price to offset the closing cost.

  • Home Warranty – I recommend to every buyer to have a home warranty. There are too many unknowns when you buy a house, and the home warranty will give you peace of mind. You can pay for it yourself; you can ask the seller to pay for it, or you can split it. But again, everything you ask to seller to pay for will weaken your offer.

  • Personal Property – What is considered part of the house, and what is personal property? Our rule of thumb is if you turn the house upside-down, whatever falls out is personal property. Of course, there are exceptions. The most common personal property we see included in an offer is the Fridge, Washer, and Dryer. But it can literally be anything. I have even seen a dog included in an offer.

  • Inspection Period The contract states that the inspection period is 10 days long, but this is negotiable. 10 days is usually enough time to perform all the inspections, but if you are buying a large piece of land, you may need more time for the survey and well inspection.

  • Closing Date – This part of the offer is extremely important and often gets overlooked. Sometimes a quick close can save the seller money (one less mortgage payment), and sometimes a delayed closing can save the seller money (don’t have to move twice). If you are flexible in when you can close, finding out what is most helpful to the seller can make your offer more attractive.

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