Financing—The First Step in Buying a Home
Homeownership is the American Dream and you are about to embark on an exciting process. Mortgage rates are currently favorable and there are an increading number of mortgage options to make the dream a reality for you. One of the main advantages of homeowenrship over renting is that your interest payments are tax deductible (ask your tax advisor for more details). Further, your home will be one of your largest assets and most likely will appreciate in value over the life of ownership. Determining how much you can afford before you begin your home search will save you valuable time.
Prequalification vs. Preapproval
Prequalifying for a mortgage generally helps you determine how much house you can afford. Most lenders require that your monthly mortgage payment, including principal, interest, taxes and insurance, range between 25 and 28 percent of your monthly gross income. Remember, being prequalified does not necessarily mean that you will be approved for a loan of that amount.
Preapproval from your lender means that you have provided them with the necessary paperwork, and they have approved your actual loan amount. Having preapproval for a home loan will put you in a much better negotiating position, because the seller knows that you are able to obtain your loan to purchase their home.
Most lenders require a 5 to 20 percent down payment; 25 percent or higher down payment may qualify you for a lower percentage rate.
The Dulcie Crawford Group can help you locate a lender who will assist you in finding a financing package that best meets your needs. We collaborate with some of the best in the industry and only deal with those who we can work with personally. Contact us today if you would like a referral to get you started in your home search.
Selecting an Agent
Most homebuyers enlist the services of a real estate agent or broker to help them with this complex transaction. A real estate agent is a person licensed by the state to handle real estate sales. A broker, also licensed by the state, is the person who may own a real estate company or has overall responsibility for the agent’s actions. The buyer’s agent is generally paid a commission or percentage of the sale by the seller. This person can research homes in your price range and with your specific needs in mind. Agents can preview the homes for you narrowing the list for you to see. They will assist you in negotiations when you are ready to make an offer on a house. The agent will write up a contract that presents your offer and any conditions you require. The agent presents the offer to the seller or their agent and negotiates any counter offers between you and the seller. It is important that you select an agent that you can trust and who will do business with your best interest in mind. Get referrals from friends and family. Agents are a dime-a-dozen these days, but finding one that you can truly work with clears the first hurdle when searching for your dream home.