Buyers Steps To Take
Step 1
Save enough money for a Down Payment and closing costs. FHA currently is requiring 3.5% of the purchase price to be paid by the buyer at closing. Conventional loans are requiring a minimum of 10% down. Less than 20% down will require Premium Mortgage Insurance. This insurance insures the lender in case of buyer default. Unfortunately it is paid by the buyer but with no benefit to the buyer. This upfront cost is 2.25% of the amount financed and has a monthly charge of .75%.
Closing costs are often negotiated to be paid by the seller. Lenders do allow sellers to pay for buyers closing costs from 3% up to 6% on many types of loans. Although, the more money you can put down the less money you will spend in interest payments over the life of your loan.
Step 2
Meet with a qualified Mortgage professional early to find out what terms a financial institution will lend money to you. Make sure to come away with a Good Faith Estimate and a Truth in Lending Disclosure. These documents will show you the fees associated with the loan and the Buyers Closing Costs involved. You can use the Truth in Lending Disclosure to compare loans with other banking institutions. Most lenders will lend on a debt to income ratio of 48% or less.
Step 3
Search for your home. Team up with a qualified Realtor® like Paramount Real Estate Services to help you find the right fit for you. Pay close attention to area, location within the area, and functionality of the home. These are items that are difficult or impossible to change. Home ownership is also an investment, so thinking ahead to when you may want to sell that home will be important. If there are major challenges, then it could be difficult or impossible to sell in a buyer’s market.
Have a vision for potential. Many homes can be bought at a great price just by looking past some of the minor challenges. Often times many people don’t want to deal with issues, so they continue looking. The best ones sell quickly, but often times a diamond in the rough makes a great investment.
Step 4
After finding the right home, have your Realtor® do a CMA on that home to make sure the value is right. Comparing Zillow® estimates is not enough. Paying close attention to location, functionality and condition are key elements. Keep in mind that the house needs to appraise at or above purchase price to satisfy the lender.
Following these few steps will ensure that you are making wise choices in finding your new home.
