Quiz: How prepared are you to buy a home?

March 17, 2022

Do you have a solid grasp on home purchasing terms and responsibilities? Take this quiz to make sure you’re headed toward your homeownership goals with the right information.

 

There’s a lot to learn when it comes to homeownership, from how to handle closing costs to what you’ll be paying aside from your monthly mortgage. If you’re planning on looking at houses anytime soon, take this short quiz first to see just how prepared you are to start the homebuying process.

 

 

1. You’ve been pre-approved for a home loan. Congratulations! What does that big number tell you?

A. It’s the amount I can afford to spend on a home.

B. It’s the amount the bank will lend me for a home.

 

2. What should you look for in a real estate agent?

A. Good reviews/referrals

B. Strong knowledge of the area and market 

C. A sense of connection and trustworthiness

D. All of the above

 

3. What are you typically paying with your monthly mortgage payments?

A Principal and interest on my home loan

B Principal and interest on my home loan, plus real estate taxes

C Principal and interest on my home loan, plus insurance

D Principal and interest on my home loan, plus taxes and insurance

 

4 . What other expenses will you need to factor in each month aside from your mortgage?

A. There won’t be many changes beyond switching from my rent payment to a mortgage payment.

B. I’m factoring in yard maintenance, unexpected repair costs and more in addition to my monthly mortgage payment.

 

5. How much can you expect to pay in closing costs?

A. Nothing

B. Between 2-5%

C. Between 7-10%

 

6. How long do you expect the entire homebuying process to take?

A. A couple of weeks

B. About a month

C. Two months, minimum

 

(Answer key: 1: B. It is what the bank will lend you; 2: D. All of the above; 3: D. Principal and interest on my home loan, plus taxes and insurance; 4: B. I’m factoring in yard maintenance, unexpected repair costs and more in addition to my monthly mortgage payment; 5: B. Between 2 - 5%; 6: C. Two months, minimum) 

Buying a home is a huge investment. It’s important to be crystal clear about the process so that you can make informed decisions. The good news is that simply taking this quiz counts toward your information-gathering process. Keep reading and asking lots of questions as you continue the exciting process of finding your new home.

 

Fast facts: What you need to know about homeownership

  • Know how much you can afford: Your home loan amount is how much the bank will give you, but you need to look to your current budget to dictate how much you can actually afford to spend. Those two numbers may or may not be the same, but you won’t know until you do some number-crunching. Experts say 28 percent of your gross income should be your maximum mortgage amount. 
  • Homeownership costs go beyond mortgage payments: The cost of homeownership goes well beyond mortgage payments to things like new furniture, yard tools, plumbing repairs, furnace maintenance and more. Don’t forget to budget in a monthly contribution to an emergency fund. The homebuying process doesn’t happen overnight.
  • The process doesn't happen overnight: On average, it will take about a week to secure a loan, another week to find the right agent and six weeks to find the right home, according to the Home Buying Institute. Then comes a couple days’ worth of negotiations, plus another month or two before you close and get those keys. 
  • Plan ahead for closing costs: Closing costs are all the various fees associated with buying a home, which are paid at the close, or end of the process. This includes a lender fee, appraisal, real estate agent commissions and other various fees and taxes, generally totaling between 2 percent and 5 percent of the home purchase price. Formulate a plan ahead of time.

 

Feeling ready to buy your dream home? Get the homebuying process started today.

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Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.