House hunting is a big job. But with the right real estate agent, it doesn’t have to be. A real estate professional can help you to generate your property wants and needs list and your price range. A good Buyers agent should:
In most cases you will need to obtain financing, in the form of a mortgage, to purchase a home. Mortgage lenders will examine a number of factors in detail when evaluating your mortgage application, and they will be most concerned with your creditworthiness, credit history, capacity to repay the loan (income), and collateral (loan-to-value ratio).
There are two basic categories of mortgages: the fixed-rate and the adjustable-rate mortgage. Within these categories, there are many variations.
Fixed-rate mortgage: This type of mortgage begins with a higher initial mortgage payment, with the trade-off that all future payments remain consistent and predictable. The interest rate on the loan does not change, making budgeting and planning for this type of mortgage simpler and less risky.
Adjustable-rate mortgage: This type of mortgage can be attractive because the initial mortgage payments generally start out much lower than those in a FRM. This early benefit comes with the risk of increased and fluctuating later mortgage payments, as the interest rate changes over the course of the loan.
Regardless of what the market says, you need to determine if now is the right time for YOU to buy a home. Know what you can afford – this is much more than just the home’s asking price. Consult a professional to get a complete picture of the expected expenses, how much you should borrow and how much cash you should have up front. While there are loans available for less than 20% down payment, it is advisable to save that amount first. Consult your real estate professional for referrals on financial planning professionals who can help you get into prime position for buying a home.
Obtaining a copy of your credit report, ensuring there are no errors, and applying for mortgage pre-approval is one of the smartest early steps you can take as a home buyer. Be sure to ask potential lenders about total costs to you at closing. The mortgage process can be slow and full of frustrating surprises. Arm yourself early. This process will also ensure that you don’t end up looking at homes outside your price range.
Buying a home is not the time to put on your DIY hat and play expert. The real estate market is fraught with confusing legalities, regulations and negotiations. Hiring a qualified real estate agent should be step one on your list. You may also want to hire a real estate attorney. Your agent can arrange professionals to conduct home appraisals and home inspections.
Your real estate agent will supply with a list of comps. These pricing comparisons will determine what similar homes have sold for in the area where you’re looking. This will enable you to make a fair offer, and increase your chances of having your offer accepted.
One of the major benefits to hiring an agent is that you don’t have to go it alone, don’t have to second guess everything, and don’t have to rely on your own potentially faulty research. Ask questions every step of the way. A competent real estate agent should be committed to helping you understand your position as a home buyer, and not just helping you find a great home.
Should you rent or buy a home? This is pretty much the first question you need to answer when it comes to housing. Everything else comes after you’ve decided on one or the other.
Know that the cost of buying a home is MUCH greater than the asking price. You’ll have closing costs, mortgage insurance, property taxes, legal fees, interest, property upkeep expenses, and more. Some of these costs can be difficult to plan for. Are you ready and willing to take on the financial risks and responsibilities of being a homeowner?
Comparing rent costs versus mortgage costs is not comparing apples to apples. A mortgage payment comprises a payment toward the balance of your loan and an interest payment. So, really, the comparison is between the amount you pay in interest and the amount you pay to a landlord. Neither of these payments will end up in your assets. Beware, however, that throughout the lifespan of a typical large mortgage, the amount of interest paid still exceeds the amount you would pay in rent for a similar home.
The single major benefit to home ownership over renting is equity. Though increased equity is certainly no guarantee, this leads many people to choose buying over renting on its potential merit alone.
Financial guru Suze Ormond says unequivocally that anyone with credit card debt and without 10-20% saved for a down payment is NOT ready to buy a home.
At the end of the day, there is no one right answer to the question of whether to rent or buy. The situation is different for every individual or couple, and factors will continually change.
If you're thinking about buying a property, it's best to find a local agent who can help!