In a competitive market, you need a team that is looking out for you. Home Trust Team, with skilled professionals handles everything from paperwork to inspections, always making sure we negotiate the best deal on your behalf. We will work as a unit to simplify the process and remove the stress from buying a house. We will represent you from start to finish. We are always available to answer any questions you have about the home buying process.
1. FIND THE RIGHT HOME FOR YOU
Before a prospective homeowner can begin the quest towards purchasing a home, there are many factors to consider, most of which are determined by some basic facts and assumptions. How big is your family? What neighborhoods are you willing to consider? Are schools a factor? Is a single-family home a requirement or is a condo an option? Based on your income and assets, what kind of home can you afford?
For some home buyers, living in a specific neighborhood takes precedence above all else, whereas for others, the home itself is more important. In a perfect world, you'd find the ideal home, in your neighborhood of choice, at a price you can afford, but realistically, most people will have to make some compromises.
Make a list of the features you want in a home-number of bedrooms, a fenced yard, granite countertops, a garage, etc.-and then rank them in terms of priorities. Decide whether the house or the neighborhood matters more to you, or whether you're willing to make a longer commute in order to own a home with a larger lot. These kinds of decisions need to be made before beginning the search for your new home. Zillow.com is a great resource to view estimated home values, school information, crime stats and other important considerations. But don't place too much value on their "estimate" because often real world prices are different.
2. SAVE FOR A DOWN PAYMENT
Nearly all mortgage loans and lenders require some amount of cash as a down payment. The amount you've set aside for this will determine the kind of mortgage you qualify for. It will also impact how much you can afford to borrow for a home. If you're searching for "how to buy a house" you've probably already put away some savings so onward to step 3...
3. CALCULATE WHAT YOU CAN AFFORD
Consider Your Income
Many banks will require that your monthly costs can't exceed a percentage of your income (for example 28%). That means if you earn $50,000 per year, your total monthly housing costs should not exceed $1166 (28% of your monthly income). Using a mortgage calculator you can use this number to figure out how much you can afford.
Consider Your Debts In addition to your income, if you have recurring debts, the total monthly payments on existing debt plus new payments for your mortgage may not be allowed to exceed a certain threshold (for example 41%). Using the example above that would mean that if your monthly debt payments are in excess of $541 per month (bringing your total debt of $541 + $1166 = $1708 or 41% in total) Consider The Down Payment
Most lenders prefer a down payment of 20% or higher to qualify for a conventional loan, but there are loan options where you can put down less. However, you should be aware that with a smaller down payment, you'll likely be required to pay for mortgage insurance, and your loan application will be subject to greater scrutiny. Here are several loan types that allow a smaller down payment amount:
There are all kinds of online calculators that can help you determine what your down payment amount will be based on the type of loan, the price of your house, your location, and credit rating. But if you don't want to do all the math yourself, you might simply move on to step 4 which is arguably the most common step people skip!
4. COMPARE MORTGAGE LENDERS
One of the number 1 mistakes made by home buyers is NOT shopping around for a mortgage! Your Realtor knows a guy, or maybe your parents used a mortgage broker in the past. Don't fall into this trap. It can take some time, but you're going to have your mortgage for the next 30 years, so it's really worth prioritizing. Also don't assume you can shop one mortgage lender today and another one next week. There is market volatility in the mortgage market so you really need to sit down, and get ready to contact a few banks. If you do it now, odds are good you can lock in your rate for a while. To expedite this process, LendingTree allows multiple banks to compete for your business. Once you set aside some time to make a few inquiries, tell the truth. Mortgage quotes can vary based on your down payment, credit history, income, assets, and debt. Fill out the form with honest information to get a reliable quote. They're going to verify this information anyway so putting in misinformation won't help you at all in the long term. Qualifying for a mortgage loan in order to buy a home can often be a stressful and strenuous process. In the end, the pride, security, comfort, and freedom that comes from owning your own home makes all the effort worthwhile. COMPARE MORTGAGE LENDERS - GET A BETTER RATE >>
5. GET PRE-QUALIFIED
By this point, you should have a pretty good idea about what kind of home you're looking for, and the neighborhood you'd like to live in. You also know how much you've saved for a down payment, which in turn will determine the type of loan you should pursue. If you've compared a few rates you should request a pre-qualification letter. Getting pre-qualified for a mortgage loan requires that you select a mortgage lender to work with and obtain your loan. Essentially, mortgage pre-qualification is a promise from the lender that you're qualified to borrow up to a certain amount of money at a specific interest rate, subject to a property appraisal and other documentation. In today's competitive housing market, it is not uncommon for a seller to receive multiple offers on their home. Having a pre-qualification letter in hand could be the difference in your ability to purchase the house you desire. This proves unequivocally to the seller that you are serious, and provides you with bargaining power which is likely to give you an advantage over other buyers.
Q: Should I get a home inspection?
While buyers often wonder if a home inspection is truly necessary, most Realtors unequivocally say yes, yes, and yes. “A home inspector takes a weight off of your shoulders by looking into the condition of the roof, electricity, heating and air, plumbing," says Johnson. “Ensuring these things work prevents you from paying to fix them in the future. If some things are not up to par, you can negotiate with the seller to get those fixed before you sign the paperwork."
Q: When can I back out if I change my mind?
While buyers can always back out of a deal, doing so without good reason may forfeit their earnest money (the cash put down to secure the offer, typically around 1%-2% of the home's price). But there are some ways to walk with your earnest money in hand. “Contingencies are great loopholes," says Bridges. “For example, upon an unsatisfactory home inspection, the buyer can ask for their deposit back. Another loophole is 'subject to appraisal.'" That means you can back out if the lender for your loan doesn't think the property is worth what you offered.
Q: What do you think the seller will accept as a fair price?
As a rule of thumb, knocking 5% off the list price won't ruffle any feathers. If it's been sitting on the market for months, you can venture below that, but the bottom line is, “You never know how low a seller will go, as they have different motivations for selling," says Marc Castillo of Coldwell Banker in Atlanta, GA. If the sellers are eager to move, you could luck out and score a deal.
Q: How do I know if the property is a good deal?
While there's no crystal ball on whether a certain home is a bargain and will appreciate, rest assured that with research, you can keep surprises to a minimum. The best way is to check out comps—what similar properties are selling for in the area—“and whether those prices have been going up or down in the recent past," says Felise Eber, a Miami Beach real estate associate with Coldwell Banker.
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