Buyers & Sellers

Buying a Home

How Much Can I Afford?

A conventional loan typically requires a down payment.  It is not uncommon for buyers to place a down payment of 10 to 20 percent of the purchase price.  For example, on an $400,000 home, a down payment of $40,000 to $80,000 in cash if warranted.

Government-backed loans require 5 percent or less as a down payment.  Loans insured by the Federal Housing Administration (FHA) and the Veterans Administration (VA) are particularly useful to first-time home buyers.

The thing to remember is that the higher your down payment, the lower the risk you pose for the lender and therefore the lender may be able to offer you better loan terms.  The higher the down payment the lower you interest expense on the mortgage will be, thus a lower monthly payment.

Qualifying For A Loan

A REALTOR can help you determine what range and monthly payment you can afford.  The monthly payment typically consists of principle, interest, taxes and insurance - PITI, for short.  The monthly payment is calculated based on the loan amount, the interests rate, the term of the loan, the costs of any insurance, and taxes.

Deciding What you Need & Want

Make a list of your needs and wants.  Do you need an extra bathroom, a garage, a fenced backyard, lower utility bills?  Do you want a fireplace, a short drive to work, a lakeside view, or a downtown Condominium?

Once your list is made, go back over it and decide what is most important to your lifestyle.  Determine which items are a must and which you are willing to give up. This will streamline your priorities and your house hunting.

Types Of Loans

Private Versus Government Loans

Most mortgage loan are made buy savings institutions, banks and mortgage companies.  On government (FHA and VA) loans, the government does not actually loan the money but rather guarantees (or insures) to repay the lender if you default for some reason. Generally, a lender will require you to buy mortgage insurance, particularly if you make a ow down payment.  This insurance may be paid at closing or added to the loan amount.  VA loans require no mortgage insurance, but only qualified veterans may apply for them.  Mortgage insurance protects the lender to a degree, in the event of a default.

Government loans have important advantage-they generally require a lower down payment than conventional loans and often have a lower interest rate or  points.  On the down side, government loans limit the amount you can borrow, often take longer to process, and sometimes have higher closing costs.

Fixed Rate Versus Adjustable Rate

On a fixed rate mortgage, the interest rate stays the same over the life of the loan, usually 15 or 30 years. That means your payment will not change except for adjustments for taxes and insurance.

Adjustable rate mortgages go by a variety of names, but basically these loans have interest rates or monthly payment that can go up or down over time.  These mortgages typically start out with a lower interest rate, lower monthly payments, and lower fees and points than fixed rate mortgages.  They often appeal to first-time home buyers, younger couples who expect their incomes to grow in the coming years, and people who might not have much for down payment and closing costs.

If you consider an adjustable rate mortgage, ask the lender to explain the terms fully. 

Buying And Selling

Selling Your Home and Making An Offer

A Realtor can help you find your perfect home, but you can decide how much you want to spend.  The Realtor can supply you with information about the selling prices and marketing time of other houses in the area through a data base. A Realtor will determine and negotiate the right price according to the market and help submit an offer on your behalf.  In most all transactions you will offer a "good faith deposit" with an escrow agent.  This will show your sincerity in making a reasonable offer and abiding by the terms of the written contract. 

One of the most important things to do before putting your home on the market is to take care of the little things. Make a list of the things that need to be repaired. One of the key things that will sell your home or not sell your is curb appeal.  If buyers are turned off by the outside it will very difficult to get them into the home. Curb appeal will be key in making a good first impression.