Tips for Buyers

Buying a home or other property is a momentous decision for most buyers deserving of thoughtfulness and expert guidance. With over 30 years in appraisal, banking and real estate brokerage, I’m the real estate agent who can guide you to a wise real estate investment. I’m glad you are here on my real estate website that is brimming with useful information for buyers, sellers, and investors. I’m up to date on the latest technology and can help you on your terms.

With the economy now recovering from the recession, housing and property values are beginning to rebound. However, significant inventories of foreclosed property remain in the control of large commercial banks and government controlled financing agencies like FNMA, Freddie Mac, and HUD. In addition, property owners under financial pressures are competing with normally marketed inventory with short sale offerings. It is vitally important that you consider complete market information and full market knowledge as you narrow your property choices.

Some important questions to consider for your real estate investment include:

1. Decide how much home you can afford
Generally, you can afford a home priced 2 to 3 times your gross income. Remember to consider costs every homeowner must cover: property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care if you plan to have children. Another useful measure is that your monthly payment of principal and interest including your escrow payments for taxes and insurance (PITI) should be no more than 25% to 28% of your gross monthly income.
2. Develop your home wish list
Be honest about which features you must have and which features you’d like to have. Accessibility for an aging parent or special needs child is a must. Granite countertops and stainless steel appliances are in the bonus category. Come up with your top-five must-haves and top-five wants to help you focus your search and make a logical, rather than emotional, choice when home shopping.
3. Select where you want to live
Make a list of your top-five community priorities, such as commute time, schools, and recreational facilities. Ask your Agent to help you identify three to four target neighborhoods based on your priorities. You’ve heard it before; the three most important things in real estate are location, location, and location.
4. Start saving
Have you saved enough money to qualify for a mortgage and cover your downpayment? Ideally, you should have 20% of the purchase price set aside for a downpayment, but some lenders allow as little as 3% down. A small downpayment preserves your savings for emergencies.Consider purchase of a HUD home if you have no downpayment. But…………you really should have some savings for moving and the expenses of setting up a new household.

However, the lower your downpayment, the higher the loan amount you’ll need to qualify for, and if you still qualify, the higher your monthly payment. Your downpayment size can also influence your interest rate and the type of loan you can get.

Finally, if your downpayment is less than 20%, you’ll be required to purchase private mortgage insurance. Depending on the size of your loan, PMI can add significantly to your monthly payment. Check with your state and local government for mortgage and downpayment assistance programs for first-time buyers.
5. Ask about all the costs before you sign
A downpayment is just one homebuying cost. Your Agent can tell you what other costs buyers commonly pay in your area—including home inspections, attorneys’ fees, and transfer fees of 2% to 7% of the home price. Tally up the extras you’ll also want to buy after you move-in, such as window coverings and patio furniture for your new yard.
6. Get your credit in order
A credit report details your borrowing history, including any late payments and bad debts, and typically includes a credit score. Lenders lean heavily on your credit report and credit score in determining whether, how much, and at what interest rate to lend for a home. Most require a minimum credit score of 580 for a home mortgage.

You’re entitled to free copies of yourcredit reports annually from the major credit bureaus: Equifax, Experian, and TransUnion. Order and then pore over them to ensure the information is accurate, and try to correct any errors before you buy. If your credit score isn’t up to snuff, the easiest ways to improve it are to pay every bill on time and pay down high credit card debt. Get advice from your loan officer before closing any accounts; even if they are paid off. Also, while on the free credit report site, you can pay for a FICO score report. Alternatively, your loan officer can share it with you. PRINT your credit report information to a pdf file in addition to a paper.
7. Get prequalified or BETTER ….. get a PRE-APPROVAL LETTER from your loan officer
Meet with a lender to get a prequalification letter that says how much house you’re qualified to buy. Start gathering the paperwork your lender says it needs. Most want to see W-2 forms verifying your employment and income, copies of pay stubs, and two to four months of banking statements. Taking these additional steps now will give you confidence to buy and will be a positive factor that a seller will consider when reviewing your purchase offer that includes your PRE-APPROVAL LETTER.

If you’re self-employed, you’ll need your current profit and loss statement, a current balance sheet, and personal and business income tax returns for the previous two years.

Consider your financing options. The longer the loan, the smaller your monthly payment. Fixed-rate mortgages offer payment certainty; an adjustable-rate mortgage offers a lower monthly payment. However, an adjustable-rate mortgage may adjust dramatically. Be sure to calculate your affordability at both the lowest and highest possible ARM rate.


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