Finding Your Dream Home
BUYERS
Preparation
Many potential homebuyers look at homes first, then
they determine how to pay for the new home. A less
stressful method of buying a home is in this order:
1. Find a REALTOR®
2. List your wants and needs
3. Shop for a mortgage lender
4. Check your credit
5. Calculate your down payment and closing costs
6. Determine what you are able to afford
7. Shop for homes
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Decide Your Wants and Needs
What do you need in a home? What do you want
in a home? What are you willing to compromise?
A family of 5 might need 4 bedrooms, however,
they may want an extra bedroom for guests or a
home office. If school districts are important to
you, make it a non-negotiable need. You may love
to have a pool (want), but would settle for a home
without a pool if it offered everything else you need.
You may prefer a home on the corner (want), but
it is not a deal breaker if you do not find it (as it is
not on your need list). List your wants on one side
and your needs (must haves) on the other side of
the included “Wants and Needs List” for an easy
shopping guide.
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Shop for a mortgage lender
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Ask your REALTOR®, friends, family and co-workers for referrals to professionals they have used with positive results. Ask about loan fees as they vary
greatly and affect your closing costs. Some loan companies charge higher origination fees and/or points with lower interest rates while others charge a small origination fee, no points and higher monthly payments. Know what is important to you, what you can afford and ask questions. Having slightly higher closing costs up front might be more attractive to you than paying a higher house payment each month or paying a few dollars more each month might help to lower your closing costs. When you know what you can afford to buy, shopping for a home is less stressful.
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Check your credit
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Knowing your credit score and catching errors or misunderstandings on your report before applying for a loan, is a smart move. Look at your income versus your monthly expenses remembering to include things such as; childcare, groceries, home maintenance, phone and internet charges and automobile costs (payment/gas/insurance etc.) when calculating your debt load. Knowing how much money you can safely afford for a house payment each month, along with how much you have saved for a down payment and closing costs, is probably the easiest way to determine how much you can spend. When you contact a lender, they can assist you with this analysis.
The three major credit bureaus you can request your credit report from are:
• Trans Union 1-888-503-0048
• Equifax 1-800-685-1111
• Experian 1-888-EXPERIAN (397-3742)
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down payment
A down payment is typically between 3% and 20% of the total cost of the home. The amount of the down payment depends on your credit history, income, the cost of the home, and the type of mortgage you choose. Most lenders want to know the source of your down payment and have restrictions regarding the amount that can come from gifts. Ask
whether the loan you are applying for has a reserve requirement (a minimum amount of mortgage payments saved).
Determine The Home You Can Afford
Work with your loan officer and REALTOR® to determine how much home you can afford. Based on monthly income and expense ratios, your lender will provide a mortgage amount and down payment you can comfortably afford.
Closing Costs
Closing, or settlement costs, are fees you pay when the loan transaction is closed and records. These include points, taxes, title insurance, escrow fees, financing costs, and items that must be pre-paid or escrowed. You will receive an estimate of closing costs from your lender after you apply for a mortgage.
House Hunting
Why Buy A Resale Home, Bank Owned or Short Sale?
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Housing styles have changed over time and you might favor more traditional layouts and features. Older houses and neighborhoods may have more character and charm. The trees are full-grown and the neighbors can tell you all about your new hometown.
OTHER ADVANTAGES INCLUDE:
• More land than newer properties due to changes in land-use patterns
• Established, more convenient metro areas rather than outlying suburbs
• The existing home can be a base for building a unique property through modernization or expansion
• Resales tend to be less expensive than new properties as they include items such as blinds, ceiling fans and landscaping
• Resale homes may have lower property tax rates; check with your REALTOR®
• Owners are not usually required to pay for the local bonds that are associated with new development such as for schools, parks, road or transportation improvements
• More traditional layouts such as formal living and dining rooms
• Buyers can usually purchase a larger home, for the same money, with a resale rather than a new construction build
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Why Buy A New Home?
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You may be considering a new home because you love the idea that you can be a home’s very first owner. Everything is new and shiny, the neighbors are probably also just moving in, and you can customize the floor plan and colors. Buying a new home can be fun and exciting.
HERE ARE SOME OTHER ADVANTAGES:
• New homes are built with new materials and appliances, therefore, less maintenance is required
• More safety features and fewer health hazards to conform to current building codes
• Many homebuilders offer warranties, or are required by statute, to protect against issues that may develop over time
• The home’s major appliances include manufacturers’ warranties
• Modern architecture and layouts such as great rooms, larger closets, and additional bathrooms
• Insulated well, use energy star windows, more efficient heating and cooling equipment
• Made with materials requiring less maintenance such as; aluminum siding, vinyl windows, and pressure-treated wood decks that resist rot and insects
• Easier to customize than resale homes due to the ability to choose many details ranging from floor plans and paint colors to faucets and light fixtures
• Wired with new technologies in mind such as pre-wiring for high-speed Internet connections, extra cable or satellite outlets and surround sound speaker systems
New homes and resale homes offer significant, but
very different, advantages. The selection process
should be focused on finding the property that will
best meet the needs of you and your family.
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