Buying a house can be both exciting and stressful. In fact, it just might be one of the biggest investments that you will ever make. For this reason it is important to find the right house for you to live in for years to come. I strive to give you the best service available in the market today.
One of the most important things you can do is to make a checklist as you search for, find and buy a home. By keeping on top of your game-plan at all times you will greatly increase your chances of success.
This section contains helpful and informative information that I hope will help you in your decision making process. Whether you need a better understanding of how much you can afford, or you need a house hunting checklist, I hope that I can help you in your search.
Services for Buyer that I Provide as Your Agent
- Help you determine your property requirements and expectations. Provide information about alternatives and sources. Provide information about available properties in the area. Provide data on real estate values, property taxes, etc. Check applicable zoning and building permit availability. Show you properties that meet your wants and needs. Provide information on schools, churches and the community. Discuss the benefits and drawbacks of each home in relation to your specific needs. Offer the properties without discrimination. Respond honestly and accurately to questions about the property. Prepare a Comparative Market Analysis to ensure property value. Help you write a purchase offer at the price and term you direct. Present all offers to the seller promptly. Negotiate with the seller’s agent for the best price and terms. Help you get the best interest rate. Disclose material facts about the property. Keep you updated at every stage of the transaction. Handle all the detail work and help you understand written documents.
- Attend closing, assist process, explain basic terms/ forms
How much Can I Afford?
Loan Information
before beginning to search for any property, it is best to first determine the price range that you can qualify for. This can eliminate wasting valuable time looking at houses you cannot afford to buy. With accurate information from you, your lender should be able to estimate fairly closely how much house you can qualify for. A lender can also explain all the different loan options that are available as well as point out any possible financial situations that could affect your borrowing strength. Lenders will often consider your credit history.
Your home is collateral for the loan, which is also a legal contract you sign to promise that you'll pay the debt, with interest and other costs, typically over 15 to 30 years. If you don't pay back the debt, the lender can take back the property and sell it to cover the remaining amount of the loan. Therefore, it is very important that you accurately determine what you can afford.
Your payments will typically include the principal, interest, taxes, and insurance. The sum of all of these together is generally known as PITI. The principal is simply the sum of money that you borrow to buy your home. The interest is what the lender charges you to use the money that you borrow. The lender may charge you additional loan costs which will be included in your monthly payment. Taxes are the property taxes your community levies. Taxes are based on a percentage of the value of your home and vary widely from community to community. Insurance covers your home and personal property against losses from fire, theft and other events. Lenders won't let you close the deal on your home without insurance as this is their protection against loss of collateral. If your home is in a federally designated high flood risk zone, you may also have to buy flood insurance.
When determining what you can afford, most lenders actually consider two rules:
- Your total monthly mortgage payment which includes the total loan payment including principal, interest, taxes, insurance, and homeowner's association dues, if any. The total should not exceed 25 to 28% of you monthly gross income.
- The sum of your total mortgage payment plus the sum of all other monthly payments on long-term debts (those that require payments for more than 9 months) should not exceed 33 to 36% of your total monthly gross income.
Whether the lender uses the top or the bottom of the range depends on the size of the down payment you plan to make. For example, if you are paying 10% down, lenders probably will use the 28% and 36% figures; if you are paying 5% down, they will use the more conservative 25% and 33% figures. These rules can also vary with the type of loan. All lenders have other additional requirements that must be met.
Up-Front Costs
Up-Front costs must be considered thoroughly when determining how much that you can afford for your down payment. A larger down payment can reduce your mortgage payment, but most first-time buyers cannot afford to put all of their savings into a down payment because of the "up-front" expenses. Most of these are closing costs (bank fees, points, insurance, escrow amounts, state and county fees, survey, title insurance, and inspections). Other possible up-front expenses include moving costs, minor repairs and furnishings (towel bars, shelving, and so on), and money paid to the seller for items not included in the purchase offer (drapes, porch swings, special light fixtures, appliances).
What About My Credit History
Your credit history can be a very important factor in determining the amount of credit you can be approved for. It’s important to verify that your report is accurate. There are three major credit reporting companies: Equifax, Experience, and Trans Union. Obtaining your credit report is as easy as calling and requesting one. Once you receive your report, double check the 'high credit limit', 'total loan', and 'past due" columns. If you find a mistake you should try to correct it as soon as possible. You will need to write to the reporting company, point out the error, and provide proof of the mistake. You may also request to have your own comments added to explain problems. Lenders are usually understanding about legitimate problems. You probably won't know which company will be providing your lender with a report so it’s best to get copies from all three companies to make sure that there are no mistakes. Fees usually range from $5-$20 a report, but some states have laws that allow you to obtain a free one. In order to obtain your credit report, call one of numbers listed below:
CREDIT REPORTING COMPANIES
Experience 1-800-682-7954
Equifax 1-800-685-1111
Trans Union 1-800-916-8800
If you found this information helpful, and would like assistance buying your home, please call me at 541.999.7044, or email me.
