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Steps to Buying a Home Steps to buying a home - There are many steps involved when you are buying a home. Many first time home-buyers need a little assistance with trying to get through the home-buying process on their first home. The first step a person should take when looking to buy a home is to sit down with their husband/wife/significant other, etc... and figure out a budget and calculate the maximum amount that they can "comfortably" afford for a mortgage payment. Remember to include property taxes and homeowners insurance into your monthly mortgage payment estimate. Also remember to include your utility payments when calculating your budget with all of your monthly expenses when your are trying to calculate how much of a mortgage payment you would feel comfortable making each month. This is a very important step for homeowners to go into the transaction knowing what they can comfortably afford to pay each month so that they
don't fall into the very common trap of buying more house than you can afford. After you make an offer on a home and it is accepted, one of the next steps to buying a home is for your mortgage professional to order an appraisal. The appraisal fee is one of the few upfront fees you will have to pay upfront. The appraisal protects the lender and you, the home buyer. It allows the lender to ensure the home is worth what they are lending on it. And it lets the buyer know that the home is worth what he or she is paying for it. Once you determine the amount you feel comfortable paying every month, you might find that there is nothing available in that price range. Some Realtors have a Accredited Buyer's Representative designation meaning they have specialized training in assisting buyers find homes. When you are beginning the search for a Realtor, be sure to ask about the A.B.R. designation. Once you have established what is comfortable for your monthly budget, next contact a mortgage professional to get pre-approved for your mortgage. Based on what you are comfortable with for a monthly payment they will be able to let you know what price range of house you are able to purchase, as well as the maximum loan that you would qualify for. Keep in mind that the maximum you qualify for may be more per month than what you feel you can afford. It's your responsibility to make sure you stay within your budget, and can make the payments on the home you are purchasing. Next, you will want to find a Realtor to work with. If you don't have one in mind, ask the mortgage professional you are working with to provide a referral. Buying a home with nothing down - Buying a home without putting any money down is becoming increasingly popular and even easier than ever before. There are many different mortgage options available for financing a home without a down payment. You can go with an 80/20 combo loan or you can go with a 100% 1 loan. You can choose to have a fixed rate, an adjustable rate or even an interest only type loan. You could also go with a 15, 20, 25, 30, 40 or even a 50 year mortgage option. Therefore, as you can see there are many choices available and you should consult the help of a mortgage professional to find out what is the best mortgage option for you. There are additional programs and features available to help you pay for closing costs as well. Many of the 100% financing programs allow what is called a "seller assist" this can be either 3% or 6% of the purchase price, depending on what you qualify for. There are also 103 or 107 programs that allow you to finance 103% or 107% of the purchase price to help pay for closing costs. Buying a home with nothing down is becoming the norm for first time home buyers. Although you are putting no money down on the home, there are still closing costs that need to be paid. Sometimes the seller will pay part of your closing costs to facilitate the transaction. Also, a family member can "gift" money for closing costs. Upfront Costs When Buying A Home - There are numerous costs buyers must pay upfront when purchasing a home. These include appraisals, inspections, earnest money, lenders fees ,title company fees, and attorney fees. Buyers need to plan for these costs. Borrowers sometimes confuse no money down loans with a loan being no cost. The no money down only means the buyer does not have to pay a portion of the purchase price but is still responsible for other costs to purchase the home. How much will you owe as your share of the property taxes? Property taxes are usually required to be paid in full when the loan closes. Property taxes are pro-rated, so you only pay your share of the annual bill. The difficulty in determine how much you will owe lies in the fact that every county has different due dates for the taxes. Be sure to ask you mortgage broker or title attorney how much you will owe as your share of property taxes. As a borrower you can ask for a seller concession to cover your closing costs and pre-paid items so that you have to come up with little to no money for closing costs and such when buying a new home. A seller concession is worked into the purchase agreement to buy a home and the seller actually ends up paying for a certain amount or all of your closing costs. A seller concession is usually either a flat fee or it can be listed as a percentage of the loan amount. An example of a seller concession would be if you were trying to buy a home for 150k and you requested a 3% seller concession in your purchase agreement, the seller would pay $4500 towards your closing costs and/or pre-paid items. Pre-paid items generally consist of pre-paid interest and escrows. Consult your loan professional to find out more information regarding your closing costs and possibly obtaining a seller concession. Your broker will be able to let you know which, if any, of the closing costs you will be responsible for paying out of your own pocket. Many lenders require that your appraisal be paid for upon completion, or that you pay for your first years homeowners insurance prior to closing. If you may have difficulty paying for any of these charges be sure to let you loan officer know right away.
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Information listed above is to be used for educational purposes only and is not guaranteed
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