In part two of our blog series for first-time homebuyers, we’ll look at three more of your most burning questions to help you along the road to homeownership.
Q: Is it a good idea to buy a “fixer-upper?”
A: Buying a “fixer upper” is a good idea if you love DIY projects, have time before you need to move in (or can live in limited space and cope with the remodeling), and have the funds to do so. It can also be a good idea if you want more house than you can afford – for example, you can buy a larger home at a discounted price and fix it up over time, spreading out the cost.
Q: What is a “spec home?”
A: A spec home (short for speculative) is a term used to describe a house that is built by a homebuilder to completion (or almost to completion) before someone purchases it. A home designer is used to choose the options, like exterior elevation, interior options like bay windows, tray ceilings, and other upgrades, as well as appliances and flooring. While these homes are different from model homes, in that they are not furnished and decorated, they are well-planned and show off well. A spec home is perfect for buyers who don’t want the hassle of choosing everything during construction but want to buy a new construction home on a short timeline.
Q: How much money do I need for a down payment on a mortgage?
A: The traditional down payment amount is 20% of the price of the house. This shows lenders that you are a good risk to take on since you’ve been able to save enough money and you’ll have some equity in the house right away. If 20% seems daunting, there are loans that only require as little as 3.5%. These are called FHA (Federal Housing Administration) loans and are designed for first-time home buyers, buyers with moderate incomes, and buyers with less-than-perfect credit scores.
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