Quick answers to common homebuying questions
PropertySquares is a free, educational guide to help first-time homebuyers navigate the complex process of purchasing a home. We break down the journey into 48 manageable steps organized across 6 phases.
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While the steps are designed to flow logically, you can jump to any step at any time. However, we recommend completing earlier phases before moving to later ones, as each phase builds on the previous.
The timeline varies depending on your situation. Finding and closing on a home typically takes 3-6 months once you start actively looking. However, the preparation phase (saving for a down payment, improving credit) can take longer.
Spring and early summer typically have the most inventory but also the most competition. Late fall and winter may offer better deals with less competition, though inventory is lower. The best time depends on your local market and personal readiness.
Key readiness indicators include: stable employment for at least 2 years, enough savings for a down payment and emergency fund, manageable debt levels, a credit score above 620, and plans to stay in the area for at least 3-5 years.
Consider buying if you plan to stay 3-5+ years, have stable income, and can afford the total cost of ownership (not just the mortgage). Renting may be better if you need flexibility, are in a high-cost market, or are still building savings and credit.
School district quality, crime rates, proximity to employment centers, walkability, public transit access, and planned developments all significantly impact home values. Even if you do not have children, school districts affect resale value.
Down payment requirements vary by loan type. Conventional loans typically require 3-20%, FHA loans require 3.5%, and VA/USDA loans may require no down payment at all. A larger down payment can help you avoid PMI and secure better rates.
While requirements vary by lender and loan type, a credit score of 620+ is typically needed for conventional loans. FHA loans may accept scores as low as 580. Higher scores generally qualify for better interest rates.
Pre-qualification is an estimate of how much you might borrow based on self-reported information. Pre-approval is more thorough, involving a credit check and verification of your finances, and carries more weight with sellers.
The 28/36 rule is a guideline suggesting your housing costs should not exceed 28% of your gross monthly income, and your total monthly debt payments should not exceed 36%. Lenders use this to assess affordability.
Private Mortgage Insurance (PMI) is required when your down payment is less than 20% on a conventional loan. It typically costs 0.5-1% of the loan amount annually. You can avoid it by putting 20% down, or request removal once you reach 20% equity.
Fixed-rate mortgages offer payment stability for the life of the loan. Adjustable-rate mortgages (ARMs) start with lower rates but can increase after the initial period. Fixed-rate is generally safer for long-term homeowners; ARMs may work if you plan to move within 5-7 years.
Typically you need: W-2s from the past 2 years, recent pay stubs (30 days), bank statements (2-3 months), tax returns (2 years), government-issued ID, and Social Security number. Self-employed buyers may need additional documentation.
While not legally required, a buyer's agent can be extremely valuable. They provide expertise, access to listings, negotiation skills, and guide you through the complex paperwork. Best of all, their commission is typically paid by the seller.
There is no magic number, but most buyers tour 8-12 homes before making an offer. The key is to have a clear list of must-haves and deal-breakers so you can evaluate efficiently. Touring too many homes can lead to decision fatigue.
A single-family home is a standalone property where you own the land and structure. A townhouse shares walls with neighbors but you own the land. A condo means you own your unit but share common areas and pay HOA fees for maintenance of shared spaces.
Beyond cosmetics, check: water pressure, HVAC age, roof condition, foundation cracks, water damage signs, electrical panel age, window condition, and noise levels. Test everything you can - lights, faucets, doors, windows. Bring a checklist.
Earnest money typically ranges from 1-3% of the purchase price. In competitive markets, a larger deposit shows sellers you are serious. This money goes toward your down payment or closing costs at closing.
Contingencies are conditions that must be met for the sale to proceed - typically inspection, appraisal, and financing. Waiving them makes your offer stronger but increases your risk. Never waive the inspection contingency unless you fully understand the risks.
You can: negotiate repairs with the seller, request a price reduction or credit, accept the home as-is, or walk away using your inspection contingency. Focus on major structural and safety issues rather than minor cosmetic problems.
If the appraisal is below your offer price, you can: renegotiate the price with the seller, pay the difference in cash, split the difference, request a second appraisal, or walk away using your appraisal contingency.
An escrow account is used in two ways: 1) To hold earnest money deposits during the purchase process, and 2) To collect monthly payments for property taxes and insurance as part of your mortgage payment.
Closing costs are fees paid when you finalize your home purchase, typically 2-5% of the home's price. They include lender fees, title insurance, appraisal, inspections, and prepaid items like property taxes and insurance.
The Closing Disclosure (formerly HUD-1) is a 5-page document that details your final loan terms, monthly payment, and all closing costs. You must receive it at least 3 business days before closing so you can review it carefully.
Never trust wire instructions sent by email alone. Always call the title company at a phone number you looked up independently (not from the email) to verify instructions. Wire fraud is the most common real estate scam.
You must have homeowners insurance in place before closing - your lender requires it. Get quotes from multiple insurers, ensure coverage meets lender requirements, and provide the insurance binder at least a week before closing.
At closing, you review and sign all documents (30-60+ pages), funds are transferred, and ownership officially transfers to you. It typically takes 1-2 hours. Bring government-issued ID, your cashier's check or wire confirmation, and patience.
In most cases, you receive the keys after closing once the deed is recorded at the county recorder's office. This often happens the same day as closing but can occasionally be the next business day.
Change all exterior door locks immediately, locate water main and electrical shutoffs, test smoke and carbon monoxide detectors, change HVAC filters, update your address everywhere, and document the home's condition with photos for insurance.
A common guideline is to budget 1-2% of your home's value per year for maintenance and repairs. For a $350,000 home, that is $3,500-$7,000 annually. Older homes may require more. Set up a dedicated maintenance fund.