Buying a home is very exciting and is one of the largest purchases most people will ever make. There are a few things you should know before getting out your checkbook. The tools and information below will help you understand what you need to do to purchase a home in today’s market.
Unless you are able to pay cash for your home, most buyers will need to go through the process of applying for a mortgage. By contacting a mortgage loan specialist before you begin your search, you are able to determine the amount of loan for which you qualify. Typically, a borrower is pre-qualified for a loan that amounts to 28%, or less, of their gross monthly income. In addition, if you know the amount of the monthly payment you would be comfortable paying, a mortgage specialist can calculate the price range for your home search. Getting pre-qualified for a loan also increases your chances of your offer being accepted. A seller is more likely to accept an offer from a buyer who already has funding versus one who still needs to get a loan.
|Type of Mortgage||Pros||Cons|
|Fixed-Rate Mortgage||No surprises. The interest rate stays the same over the entire term, usually 15, 20 or 30 years.||If interest rates fall, you could be stuck paying a higher rate.|
|Adjustable-Rate (ARM) or Variable-Rate Mortgage||Usually offers a lower initial rate of interest than fixed-rate loans.||After an initial period, rates fluctuate over the life of the loan When interest rates rise, generally so do your loan payments.|
|FHA (Federal Housing Administration) Loan||Allows buyers who may not qualify for a home loan to obtain one Low down payment.||size of your loan may be limited.|
|VA Loan||Guaranteed loans for eligible veterans, active duty personnel and surviving spouses Offers competitive rates, low or no down payments.||The size of your loan may be limited.|
|Balloon Mortgage||Usually a fixed rate loan with relatively low payments for a fixed period.||After an initial period, the entire balance of the loan is due immediately This type of loan may be risky for some borrowers.|
|Interest-Only||Borrower pays only the interest on the loan, in monthly payments, for a fixed term.||After an initial period, the balance of the loan is due. This could mean much higher payments, paying a lump sum or refinancing.|
|Reverse Mortgage||Allows seniors to convert equity in their homes to cash; you don’t have to pay back the loan and interest as long as you live in the house.||Subject to aggressive lending practices and false advertising promises, particularly by lenders that prey on seniors. Check to make sure the loan is Federally insured.|
Figuring out what you need out of your home, what you want out of your home and how to differentiate between the two. There are certain features that you have to absolutely have in the home you purchase and there are some features that you may want, but could live without. Making two lists is the easiest way to discern between the two. This is an important part of the home buying process that you should take a little time with. It will also give you the opportunity to make sure you and your family are on the same page. Some items that should be on your list:
Finding the right Realtor® is critical when buying a home specially if it is your first time. Buying a house is a big decision and a lot of work. With the right Realtor® in your corner the process can be enjoyable and when there are bumps in the road you have someone that knows how to deal with them.
The best way to find the right Realtor® is to do a little research. You can find plenty of Realtors® online and through friends or family which is fine, but don’t be afraid to interview a couple before deciding which one is right for you. You can read reviews online from other buyers that have worked with the Realtor® in the past and ask for references from any Realtor® you interview.
Sign up for a listing manager account on our website to start your real estate search. This will allow you to save properties, save searches, get updates on new properties that match what you are looking for, instant notification if properties you save go under contract and makes it easy to communicate with your Realtor®.