Buying a home can be terrifying. Where do you start? How do you know who to talk to or what questions to ask? Is buying a home in your future? At High Country Realty we know how hard it can be so we are providing some of the basic information for you whether you have never owned a home or haven't purchased one in a few years.
First Time Buyers
Dreaming of owning your first home? Tired of shoveling out rent for a home or apartment that doesn't feel like yours?
Take heart, changing from renter to homeowner may be easier than you think.
First of all, learn the financing basics. Get pre-approved and become a smart shopper. When you buy your first home, making monthly payments probably won't be a problem. After all, you're already paying rent to your landlord each month. It's coming up with the lump sum needed for a down-payment that may seem impossible. Fortunately, there are options to make buying your first home a happy reality.
Programs for first-time buyers. There are several local or federal government programs that help first time buyers get into the housing market. Ask us about these options.
Your lender. Your bank or credit union may help as well. Are you debt free and own something free and clear, like a car? Your lender may lend you the down-payment by securing it against this asset.
Private contracts. Look for a seller to help you buy and finance your home. Some sellers are willing to carry the contract themselves and will waive the down payment. You may only have to pay the monthly mortgage installments.
Credit or tax problems. Do you have problems with your credit rating or owe money in taxes? Buying your first home is still a possibility. Check with your lending institution about options, such as paying a higher down- payment.
If necessary, contact a financial advisor or tax resolution specialist.
Buying With Zero Down
Not enough money for a down payment? Don't give up. It may not be the problem you think. Here are five tips that might make owning your dream home a reality.
Ask lenders about zero-down lending programs.
Search for mortgages online. Call all of the banks and mortgage companies listed in the yellow pages and ask about options. Ask your real estate agent for referrals to lending institutions.
Maintain a good credit rating.
Zero-down loans typically require a satisfactory credit history. Get a copy of your credit report and check for inaccuracies. Resolve any problems as soon as possible.
Talk to your county's housing department.
There may be federal or locally- backed financing programs with a zero-down option. Take advantage of these.
Check with your employer about financial assistance.
In some fields, like teaching or law enforcement, professional organizations offer financial assistance for home purchases.
Visit with the owners of the home you want to buy.
Are they willing to carry the loan? Sometimes, if you commit to pay more than the asking price — or pay a higher interest rate — sellers carrying the loan won't require a down payment.
The way you approach mortgage shopping can literally save thousands of dollars. Take time to understand the system and make educated decisions. Doing so may very well cost you less over a shorter period of time.
. The steps to successful financing
Get pre-approved. Don't skip this step. Getting pre-approved is fast, easy and free. A written pre-approval includes a completed credit application and a certificate guaranteeing you a mortgage to a specified amount. With one in your pocket, you won't waste time looking at homes you can't afford.
Instead, you can invest your time shopping for the home of your dreams - and in your price range.
Examine your finances. How much can you afford to spend? While a lender will tell you how much you qualify for, it's up to you to figure how big a payment fits into your budget. What monthly dollar amount do you feel comfortable committing to? Remember to consider related costs such as insurance and taxes, as well as interest and principle.
Consider what type of loan is best for you. Compare fixed-rate with adjustable rate mortgages. Look down the road. Where will you be in 15 years, 30 years? What obligations might you have? Take those things into consideration as you choose a loan.
Check your Credit Report. A lender will run a credit report on you (it only takes a few minutes), but you'll be ahead of the game if you acquire a copy first. You'll know exactly what's on it and be able to correct any inaccuracies.
Shop Around. When you're ready to get a loan, explore your options. You can choose either a direct lender or a mortgage broker.
A direct lender has money to lend and makes the final decision on your loan. Brokers are intermediaries who choose from many lenders. A broker may be able to help find you a loan if you have special financing needs, but he or she will also receive a percentage of what you borrow.
While you're shopping for a loan, also look for the best loan costs. These may include:
• Interest rates
• Broker fees
• Points (each point is one percent of the amount you borrow)
• Prepayment penalties
• Loan term application fees
• Credit report fees
• Appraisal costs
Be aware. Don't let hidden costs sneak up on you. Ask your lender for a written estimate.
Apply for a loan. Gather all the documents you'll need to verify your loan application. Lenders will want to know your job tenure, employment stability, income, assets (property, cars, bank accounts and investments) and your liabilities (auto loans, mortgages, installment loans, credit-card debt, household expenses and others).
You'll need to provide documents such as paycheck stubs, bank account statements and tax returns. Check with your lender or broker for more information.
Lock it down. With interest rates changing daily, locking down your rate can prove a big money saver. A rate lock - in writing - guarantees you a certain rate and terms for a specified period of time. Lock in all the costs you can, including interest rates and points. And try to set the lock at the time of application, not at approval. This will protect you from rising rates.
Your lock-in period should be long enough to allow for all processing time. Most lock periods range from 15 to 60 days. Make sure to check with your lender or broker about the average time it takes them to process a loan.
Ask about Pre-payment. You can shave years off the length of your mortgage by restructuring the way you pay back your loan. Simply paying more frequently can save thousands in interest. So can making a lump payment toward the principle - or paying a little more each month. These methods are called pre-payment.
Not all loans allow for pre-payment. If you want the option, discuss it with your lender or broker.
Clear up any financial problems. Do you have credit problems or owe money to the IRS? Buying a new home may still be a possibility. Contact a financial advisor or tax resolution service to find solutions.
With a little preparation, finding and purchasing your home can be a positive experience. But, if you stumble into some common pitfalls, the process can turn into a nightmare. This special report will help you avoid seven common mistakes buyers make.
1. Pleading financial ignorance
A little preparation goes a long way. Be a smart consumer. Learn financing basics before you start shopping. Explore your options. Ask questions. Know how to shop for a home loan that's right for you.
And it's always a good idea to get pre-approved by a lending institution. This simple step takes very little time and lets you know the price range that fits your lifestyle.
2. Buying on impulse
The last thing you need is to close a deal and realize you bought a house you don't want or like. Ask yourself what you're looking for in a home, before you shop. Think about size, commute time and necessary repairs.
3. Running up high debt
Don't make major purchases until after you buy your home. Pay down credit cards and don't apply for new ones. Remember, financial institutions evaluate your financial situation on your gross monthly income. Your total monthly house costs shouldn't exceed 28 percent of your gross monthly income.
4. Taking too much time
Sometimes homes sell quickly, so be ready to make fast decisions (this is why you prepare before you start your search). Be accessible to change terms and have easy access to your agent. Instant communication can mean the difference in purchasing the property of your choice.
5. Submitting a weak offer
Sellers want a fair price, and they want to know a potential buyer is serious. Submit a strong offer and include a substantial earnest money deposit. Sometimes offers are accepted based on the amount of the deposit.
6. Being too picky
Fewer contingencies mean a stronger offer.
7. Neglecting the homework
Skipping a few easy steps in the buying process can be disastrous in the long run. Make sure you know what you're getting — before you buy.
• Hire a professional building inspector or appraiser. Make sure the house is in satisfactory condition.
• Check zoning regulations and covenants. Good residential neighborhoods are zoned to keep out commercial and industrial users. Read any restrictive covenants; make sure they fit your lifestyle.
• Request an updated property survey. Be sure it clearly marks boundaries. Check for problems.
• Make sure you know what stays or goes.
• Your contract should be very specific about which items (appliances, etc) are included in the sale.
• Get agreements in writing. Make certain verbal agreements are written into the final contract to avoid any stressful and expensive issues later.
Choosing your real estate professional is, perhaps, the most important decision you will make when buying property. We believe the more you look around, the more you will see the value of working with us.
However, no matter whom you choose, these simple tips will help you find and purchase the home of your dreams more quickly and efficiently. If you're a first-time buyer you can find more information here.
Before you shop:
Be a smart consumer. Learn the financing basics. Know how to shop for a home loan that's right for you.
Get pre-approved. This takes very little time and lets you know the price range that fits your lifestyle.
Know what you want. The last thing you need is to close a deal and realize you bought a house you don't want. Ask yourself what you're looking for in a home, before you shop. Think about size, commute time and necessary repairs.
Keep your debt load to a minimum. Don't make major purchases or incur any additional debt until after your purchase. Pay down credit cards and don't apply for new ones. Remember, financial institutions evaluate your financial situation on your gross monthly income. Your total monthly house costs should not exceed 28 percent of your gross monthly income.
Be prepared to view new properties quickly. Sometimes homes sell quickly, so be ready to make fast decisions. Be accessible to change the terms.
Have instant access to your agent. Instant communication can mean the difference in purchasing the property of your choice.
Before you buy:
Submit a strong competitive offer.
Include a substantial earnest money deposit. Sometimes offers are accepted based on the amount of the deposit.
Try to minimize the number of contingencies. Fewer contingencies mean a stronger offer.
Hire an inspector. A professional building inspector or appraiser will make sure the house of your choice is in satisfactory condition.
Check zoning regulations and covenants. Good residential neighborhoods will be zoned to keep out commercial and industrial users. Read any restrictive covenants and make sure they fit your lifestyle.
Request an updated property survey. Be sure it clearly marks boundaries. Check for problems.
Make sure you know what stays or goes. Your contract should be very specific about which items (appliances, etc) are included in the sale.
Get agreements in writing. Make certain verbal agreements are written into the final contract to avoid any stressful and expensive issues later.