Financing—The First Step in Buying a Home
Homeownership is the American Dream and you are about to embark on an exciting process. Mortgage rates are currently favorable and there are an increading number of mortgage options to make the dream a reality for you. One of the main advantages of homeowenrship over renting is that your interest payments are tax deductible (ask your tax advisor for more details). Further, your home will be one of your largest assets and most likely will appreciate in value over the life of ownership.
Determining how much you can afford before you begin your home search will save you valuable time.
Prequalification vs. Preapproval
Prequalifying for a mortgage generally helps you determine how much house you can afford.
Most lenders require that your monthly mortgage payment, including principal, interes t, taxes and insurance, range between 25 and 28 percent of your monthly gross income.
Remember, being prequalified does not necessarily mean that you will be approved for a loan of that amount.
Preapproval from your lender means that you have provided them with the necessary paperwork, and they have approved your actual loan amount.
Having preapproval for a home loan will put you in a much better negotiating position, because the seller knows that you are able to obtain your loan to purchase their home.
Down Payment
Most lenders require a 5 to 20 percent down payment; 25 percent or higher down payment may qualify you for a lower percentage rate.
The Dulcie Crawford Group can help you locate a lender who will assist you in finding a financing package that best meets your needs. We collaborate with some of the best in the industry and only deal with those who we can work with personally. Contact us today if you would like a referral, to get you started in your home search.
Selecting an Agent
Most homebuyers enlist the services of a real estate agent or broker to help them with this complex transaction. A real estate agent is a person licensed by the state to handle real estate sales. A broker, also licensed by the state, is the person who may own a real estate company or has overall responsibility for the agent's actions.
The buyer's agent is generally paid a commission or percentage of the sale by the seller. This person can research homes in your price range and with your specific needs in mind. Agents can preview the homes for you narrowing the list for you to see. They will assist you in negotiations when you are ready to make an offer on a house. The agent will write up a contract that presents your offer and any conditions you require. The agent presents the offer to the seller or their agent and negotiates any counter offers between you and the seller.
It is important that you select an agent that you can trust and who will do business with your best interest in mind. Get referrals from friends and family. Agents are a dime-a-dozen these days, but finding one that you can truly work with clears the first hurdle when searching for your dream home.
FIRST-TIME HOMEBUYER? FOUR THINGS YOU NEED TO KNOW ABOUT HOME INSPECTIONS
Buying a home is one of the most important purchases you will make in your lifetime, so you should be sure that the home you want to buy is in good condition. A home inspection is an objective visual evaluation of a home’s condition by a trained expert. During a home inspection, a qualified inspector takes an in-depth and impartial look at the property you plan to buy, from the physical structure and systems of a house, from the roof to the foundation. The inspector will:
- Evaluate the physical condition: the structure, construction and mechanical systems.
- Identify items that should be repaired or replaced.
- Estimate the remaining useful life of the major systems (such as electrical, plumbing, heating, air conditioning), equipment, structure and finishes.
After the inspection is complete, you will receive a written report of the findings from the home inspector, usually within five to seven days. The standard home inspector’s report will cover the condition of the home’s heating system; central air conditioning system (temperature permitting); interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; the foundation, basement and structural components.
A home inspection is not only a great way to find out about the home’s systems, but it can also be a crucial tool in negotiation the most equitable price on the home.
Why do I need a home inspection?
Buying a home could be the largest single investment you will ever make. To minimize unpleasant surprises and
unexpected difficulties, you’ll want to learn as much as you can about the
newly constructed or existing house before you buy it. A home inspection
may identify the need for major repairs or builder oversights, as well as the
need for maintenance to keep it in good shape. After the inspection, you will know more about the house, which will
allow you to make decisions with confidence.
If you already are a homeowner, a home inspection can identify problems in the making and suggest preventive measures that might help you avoid costly future repairs.
If you are planning to sell your home, a home inspection can give you the opportunity to make repairs that will put the house in better selling condition.
To help homebuyers and sellers alike make the best educated
decision, here are some tips from HouseMaster, one of the first and largest
home inspection franchisors in
- Inspect the Inspector. Only hire a home inspector with an excellent reputation and credentials. Ask how long the company has been in business, ask about specific formal training and ongoing education the inspector has and verify the inspector carries professional liability insurance also known as “Errors & Omissions” (E&O). If the company doesn’t carry this insurance, it could indicate a poor track record or lack of experience.
- Ask for a sample report. The credential of the inspection company and the quality of the final inspection report will be important. A poorly prepared report without pictures or clear, concise details addressing all the various systems and accessible elements of the home is less likely to be taken seriously by a home seller.
- Inspect ancillary systems. It’s hard for first-time home buyers to know what they need, so be sure to ask what additional services the company offers. If the home you are considering has a septic system for example, a professional home inspection company may offer septic system inspections or can coordinate that service for you. Generally, the company will offer you a multiple services discount as well as the added convenience of only having to attend one inspection appointment. Other common services offered by home inspectors are termite inspections, mold screening, water testing and radon testing.
- Go along on the inspection. Ask the inspection company if they encourage buyers to tag along on the inspection. If the inspector discourages you from going along and asking questions, find another inspector. A home inspection is not simply a laundry list of what is wrong with the home. In addition to documenting issues and needed repairs that may exist, a professional home inspector will also show the new buyer how to operate the various systems in the home and provide tips on improving energy efficiency and maintaining the home in general. And being present in the inspection will make the final written report that much more meaningful.
Do not let cost be a factor in deciding whether or not to have a home inspection or in the selection of your home inspector. The sense of security and knowledge gained from an inspection is well worth the cost, and the lowest-priced inspection is not necessarily a bargain. Use the inspector’s qualifications, including experience, training, compliance with your state’s regulations, if any, and professional affiliations as a guide.
Also, do not be afraid to ask for a referral from your Realtor. Experienced real estate agents often have a few recommended home inspectors who they have worked with in the past and is familiar with the way they do business. Find an agent you can trust and use their expertise and connections– it doesn’t cost you anything to ask questions and you will make the home buying process a lot easier and even enjoyable.