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If you are in the
market to buy your first home and you don't know where to start,
you've come to the right website. Below you will find answers to many
common questions.
How do I find the very
best mortgage loan?
First thing you need
to do is ask yourself the following question, "What are my assets?"
Examples being your primary and supplementary sources of income,
investments, etc... all of which will communicate to your loan
officer that you'll be able to make the monthly mortgage payments on
your new home. You need to include such sources ofss income as any
overtime pay, bonuses, commissions, alimony, child support,
disability, weekend jobs, and so on into this equation. You'll also
need to prove to your loan officer that you've established a steady
history at work -- that you've remained at your current and previous
places of employment for a respectable period, and that your income
is steady and not subject to cyclical or seasonal factors.
Also, most first-time
buyers are renters. The best time to close on a house is when your
current lease ends. Don't sign another year-long lease if you expect
to buy a home before that lease period expires; otherwise you'll end
up with a dent in your pocketbook from writing rent and mortgage
checks. If you can't time your closing correctly, approach your
landlord about a shorter lease — say, three to six months in length.
One alternative is a month-to-month lease. Or you can ask your
landlord to include an escape clause in your new lease that will
allow you to get out of your lease with 30 or 60 days' notice.
Wait for the "Perfect"
home!
Many new buyers make
the mistake that they will, if they look around long and hard
enough, find a home that has a full 100% of their needs and wants.
With the thousands of variables available in housing, including
location, style, size, amenities and condition, this is almost
always an unrealistic goal. There are two probable problems with
this strategy: First, these buyers pass by homes that meet 90% or
more of their requirements only to eventually give up (often
purchasing homes with less of their requirements because they are
worn out!) and second, while they are waiting for the "perfect"
home, housing market prices (and often mortgage rates) continue to
rise, adding expense to their purchase. Instead, it makes sense to
determine the most important of your needs and the most desired of
your wants and selecting a home that meets the majority of them.
Research, research,
and more research!
This is one of the
most important financial decisions that you and your family will
ever make. Next to buying a new car or sending your kids to college
your mortgage could be with you for sometimes up to 30 years.
Research the neighborhood, research the rates, research various
lenders and brokers- RESEARCH!!!
Remember buying a
house covers many areas and has legal, financial and emotional
considerations to think about. It's good to learn from the mistakes
other home buyers have made so that you won't find yourself being
disappointed and spending $1,000's on the wrong house. There are far
too many variables--type of mortgage, term, lender and amount of
points to mention a few--not to investigate all of your options.
Don't simply accept the first plan presented to you, whether it is
from a mortgage broker, an Agent or on the recommendation of a
friend or relative. Spend time comparing to get the most
advantageous plan for your requirements and financial situation.
Don't get us wrong, owning a home can be a great and rewarding
experience. Take the time needed to make the best and wisest
decision. I know you'll be glad you did!
Buying in a neighborhood you know nothing about.
We're already touched
on this but again it is a very important factor to think about.
Sometimes first-time buyers will fall in love with a house in a
neighborhood that is inappropriate for them. Even though you'll live
in the house, you'll have to travel through the neighborhood to get
there. Is it a nice neighborhood? Is there graffiti on every wall?
Are there gangs? Is there a neighborhood crime watch group? Are the
neighbors your age? Are there families around the same age as yours?
Is it a transient neighborhood, or do families stay there forever?
To avoid making this
mistake, spend a lot of time in the neighborhood before you buy.
Drive to and from the house. Sit in your car and watch your future
neighbors come home from work. Listen to how loudly their children
play their favorite rock music. Walk to the local bar, restaurant,
grocery store, and cleaners. Think about whether or not this
neighborhood will make you as happy as the house.
Do
not over-buying the first time. . .
Being "house poor" is
a very uncomfortable existence. A large and beautiful home with
little or no furniture tends to be empty and cold. A life where
almost every dime of your earnings goes to the support of your house
wears thin very quickly and is a frequent cause of family stress.
Pushing yourself right up to--or beyond--your limits leaves you
highly exposed when the inevitable changes to the national or your
personal economy occur. Leave yourself some breathing room!
Don't choose the wrong mortgage.
Many first-time
buyers have heard from their parents that the only mortgage to get
is a 30-year fixed interest rate loan. That's because the generation
ahead of you didn't have the tailor-made financial options buyers
have today. Consider choosing an adjustable-rate mortgage (ARM) to
take advantage of super-low interest rates. Or pick a 10- or 15-year
fixed interest rate loan to maximize your deduction, and save you
hundreds of thousands of dollars in interest. Or you might want to
look into a two-step mortgage, which combines a little of the risk
of an ARM with the dependability of a fixed-rate loan. Explore all
the options. Have your lender show you on paper how much they'll
cost you and how they compare with each other.
Don't
take shortcuts with the inspection process.
This can involve
skipping a whole house inspection completely in order to save the
relatively small amount of money involved or it may involve using a
friend or relative with limited experience to conduct the
inspection. In either case, you run the risk of not exposing
potentially expensive or even hazardous defects in the property.
Protect yourself and invest the $200 to $500 for a professional
inspection.
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