Home Buying FAQs
- Can I buy a home and sell my current one at the same time?
- How quickly can I close on a mortgage?
- Can I keep my current home and use rental income to qualify for a new home?
- How to determine the mortgage amount I can afford?
- How do I find out if I qualify to buy a home?
- How to I start the process of buying a home?
- How much down payment do I need to buy a home?
- Are loans available for lower income borrowers?
- Can I qualify for a loan if I don't have established credit?
- Whats the difference between a second home and Investment property?
- Are there tax benefits to buying a second home?
- Should I use an ARM (adjustable rate mortgage) when buying an investment property?
- Can I use my IRA when buying a second home or investment property?
- Can I use a co-borrower when buying an investment property?
- How many investment properties can I finance at one time?
The short answer is yes but it does include some risk. If you buy a new home before you selling the own you already own, you may find yourself financially overextended. Consequently, If you sell your home before you close on your new home, you may need to rent during the interim. However, there are ways to successfuly do both at the same time. Be sure to ask your realtor, your Personal Mortgage Advisor, and your attorney for more information related to your particular real estate transactions.
Typical escrow periods can range from 30 to 45 days. Having your required income documents (W2s, pay stubs, and tax statements) readily available can help expedite the process.
The short answer is yes. However, qualification factors will be different depending on the loan program you choose.
It depends on your income versus your other financial obligations (debt).
We can walk you through the qualification process for buying a home and answer any additional questions you might have including:
- Reviewing Credit
- Obtaining Income information
- Reviewing the funds that will be used to purchase
- Getting a verified Pre-Approval
Get a Verified Pre-Approval: Unlike a pre-qualification, a verified pre-approval will look at your actual credit history along with verifiable income and assets to determine your true ability to repay a mortgage. Having a pre-approval helps you understand how much you can afford before you actually start looking for a home. It also carries far more weight than a pre-qualification in the eyes of a seller and can help you more effectively compete against cash buyers.
Find a Real Estate Agent: Find a real estate agent who represents the buyer and who knows the areas that you’re looking to purchase a home in. The agent advertising a property or working at an open house is usually the “Listing Agent” and represents the seller. A “Buyer’s Agent” works just for you, the buyer and represents your best interest in the transaction. You always want someone who will represent your interests as the buyer, especially in such a large transaction as buying a home.
Start Looking for Homes: Once you have your Verified Pre-Approval and have a Realtor, you can start shopping in your budget range, either through your agent or online. Think about how much house you’ll need today and how much house you’ll need in the future to determine the number of bedrooms, bathrooms, preferred location, size of property and the style of home that you want. Compare neighborhoods, school districts, and compare the value for the money. Look at as many homes as you need to before making the decision to buy. A good real estate agent may also know about homes that aren’t even on the market yet. These are called “pocket listings” and you may be able to get the jump on your competition.
Down payments will vary depending on the loan program, your credit profile, as well as your income and asset qualifications. A down payment for a typical conventional loan may be 20%, however there are programs like FHA that require as little as 3-1/2% down. If your a veteran you may be eligible to buy a home with zero money down and zero out of pocket costs.
Yes, there are many programs and products available for low-to-moderate income earners including down payment assistance programs. THere are often local grants available on a city by city basis as well as federal and state programs.
Yes. There are programs and products available for home buyers with new or limited credit profiles, especially for first-time home buyers. If you haven’t established credit at all talk to an accountant or a Personal Mortgage Advisor on the best ways to start building credit.
It’s important to understand the distinction between a second home and an investment property, since it will most likely affect the type of home loan you’ll qualify for.
A “second home” is a single family house, condominium, or townhouse that you intend to live in for part of the year, in addition to your primary residence. Usually, second homes are used as a vacation home. With a “second home loan,” you need to qualify for both your first home and your second home without consideration for potential rental income. Interest rates on second home loans are usually the same as traditional mortgages.
The classification of “investment property” is used when you are buying the property strictly to rent out for additional income whether it’ s a traditional long-term rental or the increasingly popular short-term rental. To determine if you qualify, your lender will need to know the rental history of the property or the property’s rental income potential. Mortgages for investment properties commonly have a higher interest rate than is charged for second home loans due to the risk of inconsistent rental income.
The mortgage interest tax on your second home may be deductible but there may also be deduction caps and limitations. We recommend talking with a tax professional for more information.
In addition to the traditional fixed rate mortgage, there are two types of ARM loans; a fully amortizing ARM and an Interest-Only ARM. A fixed rate mortgage has the same payment for the entire term of the loan, unlike an adjustable rate mortgage (ARM) that has a more competitive starting rate that can change after the fixed period, which could increase or decrease your monthly mortgage payment. If you’re only going to have the investment property for a few years, you may consider the ARM loan. If you plan on having the property long term, it may make sense to finance the property over a longer period of time with a rate and monthly payment that’s consistent.
Yes. You can use a “Self-Directed IRA” to purchase a vacation rental or rental home. There are some federal guidelines to consider when using your IRA and it’s important to check with your tax professional or CPA to understand all requirements and restrictions beforehand, as there may be a loss of IRA benefits.
Yes, co-borrowers can assist you in purchasing an investment proerty, especially if your debt-to-income ratio is too high to purchase the investment property on your own. Buying an investment property with a co-borrower is a little more complicated than buying a primary residence. We suggest talking with a Personal Mortgage Advisor for more details.
Qualified investors can finance up to 10 properties simultaneously.
Here’s a breakdown of the home-buying process. You can swap a couple of the steps like getting pre-approved before finding an agent, but you don’t want to find the perfect place before getting pre-approved, only to have a better-prepared buyer beat you to the punch.