The attraction of buying a home is that it gives you use of your investment whilst you are paying it off and over time the equity in your home will increase. To realize this equity of course you either have to sell your home or take out a home equity loan. Buying a home is a very expensive decision to make and you need to take into consideration all of the factors you know today, such as interest rates, income and fixed expenses. In addition to this you need to also predict your home affordability into the future if interest rates rise and you have more fixed expenses, such as children. It is very easy to think that you can afford a home that costs you more than you can afford. Remember your dream can quickly become a nightmare if you do not consider your real financial capacity to afford the home.
In your regular repayments for your home, it is quite common you have three individual payments rolled into one payment. These repayments are for the mortgage, the property taxes and the insurance. The mortgage is your standard principal plus interest (or interest only if you took out that an interest only loan). The property taxes are usually levied by your local government over the building value and the land value. The property tax is a standard annual tax, however you do have the choice of paying this each time you make a home payment (a lot of people pay monthly). The third payment is your home insurance payment, which is also called hazard insurance. This insurance is to cover the loss of your home nor if it was partially damaged. This is usually mandatory insurance as it protects the lender in reclaiming their money if your home was destroyed or partially damaged.
Naturally all of these payments could rise over time and it is important that you will have the income to cover any such rises. In the recent credit crisis foreclosures increased by over 60% in February 2008 over the previous February 2007. A common marker to determine if you can afford a home is that 30% of your income is needed to repay the loan each repayment period. If the percentage to repay your loan is higher than this, you will find it difficult to repay this amount unless you are a high income earner and you can easily afford the repayment.
Home Buying 101 – Home Buying Guide Step-By-Step for first time buyers. First time buyers have tons of questions, one can understand being nervous of investing life time saving in home. All right, you have got nice idea of buying a home for yourself or for your family. How did you reach to this decision. Are you planning for a family, are you going to invest in real-estate or you buying under pressure from your peers. Because all of them have bought homes and you get pissed when you are asked repeated question in potluck parties, “when are you going to buy home”. The reason can be many, it can be right time to settle, favorable real-estate market, cash available, saving tax on high income, family status or not much difference in renting and owning (Depending upon city to city).
Whatever be the reason the home buying for first time buyers is a huge decision and they are confused and are looking for guidance and detailed information. The complete information and step by step details help first time home buyers. The gained information will help first time home buyers to understand the home buying process.
Check Your Credit Score and Financial Situation
The first thing before you start home buying process is to check your credit score. Your credit score will be major factor in getting a loan for house. In order to apply for a credit for house loan, first check your credit history and credit score. As of now with new legislation passed each consumer is entitled to get one free credit report from each three major credit score companies (Transunion, Equifax, Experian).
Under the federal law guidelines, each consumer can get one free credit report from major credit score companies after every 12 months. Use following link to get your free credit report. (http://www.annualcreditreport.com)
(Note: Beware of phony websites giving free credit report, there aim is to get your personal information. Please check the above url when you type or cut/paste, that it goes to same site. Some time with few spelling mistake it can go to different site with similar look and feel. Again beware of people looking for personal information. Your personal information is your identity on internet.)
Your credit score will give information to future lenders about your creditworthiness. This tells them how good you have been in maintaining your records, such as paying bills on time, no defaults, how you manage your credit cards and other debts. Is their any negative remarks against your name etc.
In case you find a suspicious activity against your name on credit report, report immediately in writing to all three major credit score companies. This report also can be used to fix any wrong address or name in credit report. Bottom line this report lets you know where you stand on credit rating and how good chances are of getting a loan on a decent interest rate. The higher credit score means more attractive loan offers from lenders.
Once you have checked your credit score and are satisfied with the needs of lending companies, next thing comes checking your financial situation. First thing what is your current assets vs. current debts. Are you in position to keep a large portion of salary aside for future mortgage payments without disturbing current obligations.
Do simple math, if your salary take home is $5000 and your current expenses including any debt payments are around $2000(including rent $1000). That means you are left with $3000 in your bank. If you are looking a house for which monthly payment will be $2000 and after deducting from remaining balance you are left with $1000. Next deduct your property tax from $1000. Let’s assume another $400 dollars (Property tax vary from state to state). You are left with $600. You still need to factor in home insurance, landscaping, misc. cost related to owning a home.
In total you are left with $1600 to manage rest of the expenses. This is not the ultimate exercise, but will guide you to come up with your list of expenses and tally them and see if you can afford monthly house payment. This is good exercise, you will be surprised how many hidden expenses will surface, once you go through this exercise.
Typically your debt should be less than 50 percent of your income. Also it is advisable to keep 4-6 months of house payments aside before going for house option. The reserve money will be handy in rainy situation, such as job loss, health related issues etc.
Time to find Real-Estate Agent
The first question what exactly a real-estate agent does for home buyer. First he has access to homes on sale. This list will come to first realtor network before it is published on web or in print. Your local real-estate agent will have more information on current market trend and the way market is going in your area. He will be the first to know any good home coming to your choice of area.
Get agent listing from net, or get referral from your friends or relatives. Make a short list of realtors and select few real-estate agent and talk to them about your needs including your budget for future home. Be frank and let them know you won’t be interesting in higher bidding. You want home and not at the cost of loosing your mental peace. Give your specs, such as 2,3,4 bedrooms, what school area, any restriction to cross street etc. the more information you provide to real-estate agent, it will help him/her to understand your needs. Talk to him what banks he will advise for applying a loan. Most of the realtors or real-estate agents have tie up with financial institutions and can help you in paper processing.
Beside all the knowledge, experience, professional approach, hawks eye a realtor brings on table , he is the one will take you to property tours. This is important part of home buying. Don’t be upset if you have not find right home after few visits. It takes some time before you get your first dream home.
Be careful, when you go out for looking home, every home you tour looks great, specially if you have been living in an apartment. This is common apartment complex syndrome. Always match home specs with your specs, what you want not what is shown to you.
Where to get mortgage or where to apply for a loan
Almost 99 percent of home buyers finance home through mortgage companies. Only 1 percent of wealthy people may buy home with cash down payment. So we all are in same boat. You may be wondering which loan is best for you or where to shop house loan. The bottom line you want a loan which is on lower interest rate and with zero points.
You can get loan from mortgage brokers, mortgage banks or commercial banks. Each entity deals in a different manner. Where as you may get a better deal with mortgage brokers as they are the broker between the buyer and lender and they have personal interest of making money from either party or from both parties. These types of brokers are independent and they work in association with large brokers or banks. The important thing to watch are paper documents, what are terms and conditions, what are rate lock period, any points being applied to your loan and what kind of fees are added to your loans. Since they operate independently, there standards also vary. For small gain you don’t want to inherit a bad loan.
The next option is to go through a broker banker, this type of broker works with a particular bank or for many banks and will help to get better rate from banks. The chances of negotiation are little as he has to go with bank policies. The fee structure will be standard and no discounts will be available. The paper work will be more trust worthy as being done in association with bank.
Another option is to deal directly deal with commercial banks such as Fremont bank, Citi bank or bank of America. Some of the advantages doing loan with your personal bank is that they will give you competitive rates since you are doing already business with them.
Some of other options are credit unions or private lenders. If you are part of any credit union, check with them what are your options. You may have better chance in getting a attractive loan from them if you meet there selection criteria.
Regardless which option you choose for applying a loan, finally you have to decide on what loan product you are comfortable. Do you want to go for a 80/20 loan product, which means you will be paying 20 percent of house price as down payment and rest 80 percent will be financed by bank. The other popular products are 85/15 and 90/10, for high price market. Till recently even 100 percent interest free loan was available to buyers. After housing market meltdown this option has been discontinued by all lenders. The loan factor you have to factor in your plan for buying a house. You have to be comfortable for paying a down payment without impacting other obligations.
Time to look for dream home
Well, we have taken care of initial dilemma about buying a home, we have taken care of finding a real-estate agent. Getting your facts and specs verified from real-estate agent. We have covered loan option. The next big thing is to hit road and look for property.
Buying a brand new home
Why would you go for a new home, simply it is new?. Many people don’t like to inherit the previous owners taste and likings. They don’t like how interiors and the colors on wall. There choice of kitchen style may vary etc. If you fall in this category and don’t want to spend good amount of money on upgrade then new home is choice for you.
First scan for new properties in your area of choice, visit model homes and then zero it on a model plan which you have finalized. Once your choice is in place, look for real-estate agent which will represent you for buying a new property. Do not use builders broker, they are paid to work for builder and they don’t get any extra commission from house sales. Moreover their loyalty will be towards builder then you. Chances are your real-estate agent will be paid commission by builder in order to lighten his house inventory.
Some of the things you want to check during buying a new home
Do not use Builders broker as your real-estate agent Do not use builders lender for borrowing a loan Check upgrade pricing before you sign the documents check contingency section Check warranty period and what all is covered under warranty check builders past performance Get home inspection done, even if home is new.
Buying a old home You have already made mind for existing home and you don’t mind in moving to previous owners choice of landscaping or interior styles. You also don’t mind to go for future upgrade if needed. By now you should be clear of location where you want to buy home. The less confusion about choice will make you more focused in buying a home. If your preference is only for town homes then there is no point in going for open homes for Single family homes. The more you focused on your needs, you will pick up good home. Dedicate few weekends for open home visits with your real-estate agent. Few things you might want to check while looking for homes.
Is house on street What is noise level Is it too close to school area Check when was roof replaced How good is fence, many sellers just paint fence to give new look Get pest control done what is the status of air conditioner If carpet is old, is seller going to replace or give discount Check for dishwasher, Garbage disposal, Electric and Plumbing fixtures When was last paint done
It is sometimes disheartening to see most of us get weighed down by our problem on down payment preventing us to transition from a renter to a homeowner. With the way things are going in the real estate market, it seems we are getting even farther away from our dream home.
Your available equity that is used as down payment will have bearing on the types of loans which you can attain. In general, a traditional or generic mortgage loan, one that is guaranteed by Freddie Mac or Fannie Mae, would require a minimum equity of 5% from the home buyer as a cash down payment. This increase in the bottom protective cap is in response to the falling values of real estate in most states in a predominantly declining real estate market.
Tips in Securing a Down Payment
1. Use Your Personal Savings
Make a serious effort to save up for your down payment by reducing your monthly expenditures. It would be wise to enroll in an automatic savings plan with your bank where a fixed portion of your payroll is automatically deducted and transferred to your savings account.
2. Borrow From Your Retirement Plan
Study the provisions of your retirement plan. You can qualify for a policy loan from a 401(k) plan which you can use as down payment. You may also opt to withdraw funds from your Individual Retirement Account. When you decide to use either of these two approaches, be sure that you understand the tax consequences, attendant penalties and charges, as well as applicable repayment terms.
3. Use Gift Money from Family for Down Payment
Your parents and other members of your family may be willing to help you out in raising the amount required for down payment. They may give you a gift to cover a portion or the entire amount of down payment.
4. Borrow From Your Employer
You employer may also have some funds for you to borrow which you may use as down payment. Some employers extend small loans based on payroll deductions to be used by their employees to cover portion or the entire amount of down payment.
5. Grants from Down Payment Assistance Charities
There are charities that extend to qualified home buyers money for down payment that does not have to be repaid. The home buyer-grantee, however, are required to contribute to the fund an equal amount upon closing or soon after closing. This can be a great option for those who don’t have other options available in securing a down payment.
6. CHDAP, ACCESS & Other Loans
These financial programs are supported by Federal, State or City bond programs. It usually comes with an upper cap based on the household size. Eligible home buyers are provided with a low interest second and third mortgage which can be used for a specific type of loan program.
7. ‘Carry-Back’ Type of Mortgage
You can make arrangements with the seller to loan you part of his equity. In this scenario, the seller agrees to “carry back a second mortgage” from the sale of the real estate property. In this setup, you get financing for the majority of the loan from a traditional mortgage lender and finance the remaining balance with the seller of the real estate property. This is an attractive term of the deal which you can toss up on the negotiation table with the seller. Under the prevailing circumstances, the seller would most likely accede to this arrangement just to lock in the deal.
Before, bathtubs can only be seen in hotels and in the homes of the rich and famous. It was considered as a luxury item. But nowadays, bathtubs have become a nice add-on item to most houses.
A tub does not only serve as bathing fixture but can also add a more wonderful look to your bathroom. Searching for a new bathtub can be a difficult task as there is a wide variety of bathtubs for you to choose from. Read on the tips below and be able to get the perfect bathtub for your home.
Start looking for bathtubs by visiting home depots or by browsing via the Internet. Take note of the prices of the models that caught your attention and then make comparisons. Choosing a bathtub can be confusing as there are so many options available. It is important then to make the proper planning and eliminate your choices.
One important thing that you have to consider in choosing a tub is the size. Before you begin shopping, you should know the dimensions of the place where you will position the tub. Otherwise, you might be buying one that is too big for your bathroom. Make sure that it is of the right fit for your bathroom.
The material from which it is made of is also another consideration. Some materials used in bathtubs are marble, porcelain, acrylic, cast iron, fiberglass and wood. Choosing the type of material depends on your lifestyle and the frequency of your usage. Fiberglass-type tubs are cheaper but they may not last long as compared to the other types. Cast iron, wood and marble are more durable but are quite expensive and needs some maintenance.
Bathtubs also come in different colors. In choosing the color, make sure that the bathtub color matches the color of the bathroom. Pastel and natural colors are more relaxing to the eyes.
The shape and style of the tub are other considerations. Some common styles available are rectangle, oval, round, square, and heart-shaped. If you prefer to have another style that is not very common, you should pre-order early.
Before deciding on which bathtub to buy, you should also compare the prices, maker and most especially the quality. Do not just buy the one that first caught your attention or else you will end up wasting your money. You have to take into account some important things when buying and you will surely get the perfect bathtub for your home.
After the last piece of wedding cake as been eaten, and the bouquet has been tossed to a crowd of swarming women, the bride and groom must now return home…but where to? Perhaps an apartment? Or possibly even their first home? Due to the tax advantages that abound for homeowners, the decision to purchase a home will be one of the best financial decisions a newlywed couple can make. With mortgage rates that have been at their lowest in years, purchasing a home in this market may look even more attractive for those who are seeking to own their first home.
So where does a newlywed couple begin looking for that perfect home? The following tips answer some of the most common questions posed by those who have jumped over the threshold to marital bliss and wish to purchase their first home.
What’s the first step when buying a home?
Before you begin looking for a home, the first thing you want to do is pre-qualify for a home loan. A pre-qualification will help you determine what kind of home you can afford. Once you know what you are looking for, you can save time and money down the line.
How do I find a real estate agent to meet my needs?
There are thousands of real estate brokers and agents whose mission is to help you meet the many needs of your home buying experience, however, finding the right one may prove to be challenging. A great place to start is by asking your family and friends for recommendations. Once you have found your real estate agent, give them the opportunity to educate you. Any good real estate agent will walk you through the buying process before showing you properties or discussing a specific transaction.
From obtaining the mortgage to saving on a home that comes equipped with new hardwood floors, your real estate agent should be able to provide you with a list of “one stop shopping” services that meets the needs of most homebuyer’s during and after the transaction.
How do I spot a good buy?
The only way to accomplish this is to first figure out what kind of house you need. Take into consideration certain factors such as the amount of bedrooms and bathrooms. Also, do you prefer a more compact or spacious workspace in the kitchen? Are you a fan of a lot of windows, or a space that has few? The little details make all the difference.
Your next step is to determine how much work is required to make your home livable. Will you pay someone else to do this, or will you do it yourself? Finally, stick to the old adage: location, location, location. A good home buy is only a good buy if it meets your current and future living requirements.
Is there a right time to buy?
There are certain trends that your real estate agent should be aware of. For instance, many homebuyers tend to move during the spring and summer, which causes the market to heat up as early as February. The market will then cool down around late summer and long into November and December, however, these are also great times to seek out bargains during relatively slow periods of home buying.