A home is a financial asset and more: it's a place to live and raise children; it's a plan for the future; it's an investment in your community. This article will provide you with tips on how to buy a home.
Buying a home is one of the most complex financial decisions
you’ll ever make.
Real estate agents represent the seller not the buyer.
Consider hiring an agent who works for you, not the seller.
Get prices on other homes. Knowing the price of other
homes in a neighborhood will help you avoid paying to much.
Have the property inspected. Use a licensed home inspector to carefully inspect the property before agreeing to buy it.
Shopping around for a home loan or mortgage will help you get
the best financial deal. A mortgage, whether it’s a home
purchase, a refinancing, or a home equity loan, is a product,
just like a car, so the price and terms may be negotiable. You
will want to compare all the costs involved in obtaining a
mortgage.
Shopping, comparing, and negotiating may save you thousands of
dollars. Mortgage financing options are much more diverse than
many borrowers think.
There is a wide variety of mortgage products, adjustable rate mortgages (ARM), FHA loans, VA loans, interest only mortgages, jumbo mortgages, two-step mortgages, balloon mortgages, assumable mortgages, construction mortgages, no down payment mortgages and seller financing.
When Shopping For A Home Mortgage:
Research current interest rates. Check the real estate
section of your local newspaper, use the Internet, or call at
least six lenders for information.
Check the rates for 30-year, 20-year and 15-year mortgages. You can save thousands of dollars in interest charges by getting the shortest-term mortgage you can afford.
Ask for details on the same loan amount, loan term, and type of loan from multiple lenders so you can compare the information. Be sure to get the Annual Percentage Rate (APR), which takes into account not only the interest rate but also points, broker fees, and other credit charges expressed per month.
Ask whether the rate is fixed or adjustable. The interest rate on adjustable rate mortgage loans(ARMs) can vary a great deal over the lifetime of the mortgage.
An increase of several percentage points might raise payments by hundreds of dollars per month.
If a loan has an adjustable rate, ask when and how the rate and loan payment could change.
Find out how much down payment is required. Some lenders
require 20 percent of the home’s purchase price as a down
payment. But many lenders now offer loans that require less.
In these cases, you may be required to purchase private mortgage
insurance (PMI) to protect the lender if you fail behind on
payments.
I PMI is required ask what the total cost of the
insurance will be. How much will the monthly mortgage payment
be when the PMI premium is added and how long you will be
required to carry PMI?
Ask if you can pay off the loan early and if there is a penalty for doing so.
In addition, there is a long list of sources for mortgages
loans: mortgage banks, mortgage brokers, banks, thrifts and
credit unions, home builders, real estate agencies and Internet
lenders.
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