By George Raymondo
Why should I buy instead of rent?
A
home is an investment. When you rent, you write your monthly check and that
money is gone forever. But when you own your home, you can deduct the cost of
your mortgage loan interest from your federal income taxes, and usually from
your state taxes. You can also deduct the property taxes you pay as a
homeowner. In addition, the value of your home may go up over the years.
Finally, you'll enjoy having something that's all yours - a home where your own
personal style will tell the world who you are.
Can I become a home buyer with bad credit and very little
for a down payment?
There
are several programs available for first time home buyers with poor credit and
limited savings for a down payment. Request a FREE
Consultation.
Are there special home ownership
grants or programs for individuals with low income?
There
are programs available for people with limited funds and lower income. Start by
becoming familiar with the home buying process and choose a lender who you feel
comfortable working with. The decision whom to work with is crucial. Your Loan
Officer will help guide you through your options based on your particular set
of circumstances. Although as a single parent, you won't have the benefit of
two incomes on which to qualify for a loan, consider getting Pre-Qualified, so
that when you find a house you like in your price range you won't have the
delay of trying to get qualified.
Should I use a Real Estate Broker?
How do I find one?
Using
a real estate broker is a very good idea. The best way is by referral. All the
details involved in home buying, particularly the financial ones, can be
mind-boggling. A good real estate professional can guide you through the entire
process and make the experience much easier. A real estate broker will be well
acquainted with all the important things you will want to know about
neighborhoods being considering, the quality of schools, the number of children
in the area, traffic volumes, and more.
How much money will I have to come
up with to buy a home?
The
answer to this question depends on a number of factors, including the cost of
the house and the type of mortgage you get. In general, you need to come up
with enough money to cover three costs:
- Earnest money - the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house.
- Down payment - a percentage of the cost of the home that you must pay when you go to settlement
- Closing costs - the costs associated with processing the paperwork to buy a house.
When
you make an offer on a home, your real estate broker will put your earnest
money into an escrow account. If the offer is accepted, your earnest money will
be applied to the down payment or closing costs. If your offer is not accepted,
your money will be returned to you. The amount of your earnest money usually
varies. Ask your Realtor for more information.
How do I know if I can get a loan?
If
you curious, you can start by using our mortgage calculators to see how much
mortgage payment you could potentially handle. If the amount you can afford is
significantly less than the cost of homes that interest you, then you might
have to wait awhile longer. Another good idea is to get pre-qualified for a
loan. That means you go to a lender and apply for a mortgage before you
actually start looking for a home. Then you'll know exactly how much you can
afford to spend, and it will speed the process once you do find the home you
want. The quickest way to see what you qualify for is to Request a Free
Consultation.
In addition to the mortgage payment, what other costs do I need to consider?
You
will, of course, have your normal monthly expenses like your utilities. If your
utilities have been covered in your rent, this may be new for you. In addition,
you may have homeowner association or condo association dues. You will
definitely have property taxes, and homeowner's insurance which are normally
rolled into your mortgage payment. The funds collected in your payment such as
your properties taxes and insurance are called an impound account. With certain
types of loans, these can be paid separately by the homeowner.
What is included in my mortgage
payment?
- Principal: The amount due and payable to satisfy a mortgage loan, less any interest or charges.
- Interest: The percentage charged by a lender on a loan, that must be paid in addition to the principle.
- Homeowners Insurance: Is a type of insurance that covers a private residence against loss against loss from fire, smoke, theft, and other hazards. The premium is divided into 12 installments and collected incrementally in your payment in preparation of the policy being due and payable the following year.
- Property Taxes: City/County Taxes assessed on your property.
The
most common repayment period for home loans is 30 years, although 15-year loans
are available, too. During the life of the loan, you'll pay far more in
interest than you will in principal - sometimes two or three times more!
Because of the way loans are structured, in the first years you'll be paying
mostly interest in your monthly payments. In the final years, you'll be paying
mostly principal.
I know there are lots of types of mortgages - how do I know which one is best for me?
There
are many types of
mortgages, and the more you know about them before you start, the better.
Most people use a fixed-rate mortgage. In a fixed rate mortgage, your interest
rate stays the same for the term of the mortgage. The advantage of a fixed-rate
mortgage is that you always know exactly how much your mortgage payment will be
because future national rate changes will not affect your loan.
Another
kind of mortgage is an Adjustable Rate Mortgage (ARM). With this kind of
mortgage, your interest rate and monthly payments usually start lower than a
fixed rate mortgage. But your rate and payment can change either up or down, as
often as once or twice a year. The adjustment is tied to a financial index,
such as the U.S. Treasury Securities index. The advantage of an ARM is that you
may be able to afford a more expensive home because your initial interest rate
will be lower. Talk to us about the various kinds of loans before you begin
shopping for a mortgage.
When I find the home I want, how
much should I offer?
There
are several things you should consider:
- Is the asking price in line with prices of similar homes in the area?
- Is the home in good condition or will you have to spend a substantial amount of money making it the way you want it? You probably want to get a professional home inspection before you make your offer.
- How long has the home been on the market? If it's been for sale for a while, the seller may be more eager to accept a lower offer.
- How much mortgage will be required? Make sure you really can afford whatever offer you make.
- How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In some cases, you may even want to offer more than the asking price, if you know you are competing with others for the house.
What if my offer is rejected?
Having
your offer be rejected is not uncommon! Don't let that stop you. With your Real
Estate Broker's help, they will help guide you as to the best method of negotiating
an offer. You may have to offer more money, but you may ask the seller to cover
some or all your closing costs or to make repairs that wouldn't normally be
expected. Often, negotiations on a price go back and forth several times before
a deal is made. Just remember - don't get so caught up in negotiations that you
lose sight of what you really want and can afford.
What will happen at closing?
Typically,
after your loan has been approval and you have met all your loan approval
conditions, your final loan documents will be ordered. At this time, you will
be contacted by your escrow company and asked either to come in to sign your
loan documents or have a Notary come to you. If you'd like, you can have your
loan officer or real estate broker sit down and help explain the documents you
are signing. For the most part, the loan officer should have already gone over
the majority of these documents, so it should just be review. In addition to
your required signatures, the seller and both agents will also be required to
sign specific documents. At this point you will receive your final closing
statement which should be very close to the Loan Estimate and Pre-Closing Disclosure
you have already reviewed and signed. The final step for you is to bring in
your funds to close. After all documents have been signed and returned to the
lender, the funding department of your mortgage company will review the
documents then send out their final funding conditions. Usually this consists
of correcting mistakes on your closing statement or missing signatures. Once
these final conditions are satisfied, your loan will be funded. After the
lender wires the funds to the title company, they will in turn confirm with the
escrow company that the wire transfer has been received and escrow will record
the Deed of Trust that will verify that you are the new owner. Request
a Free
Consultation.
