What should I
know before
I buy my first home?
Buying your first home can be
intimidating with terms like closing costs, escrows and PITI (principle,
interest, taxes and insurance). There will be other questions but be assured
there are professionals to help you at every step, from realtors and mortgage
bankers to lawyers.
How much house can you afford?
This
is determined by three things: your monthly income, the amount of down payment
and your current long-term debt load. Generally 28 percent of your gross monthly
income can go for housing expenses and 36 percent for housing and long-term
debt. These can change depending on the mortgage program you choose and the
amount of down payment.
How much savings will you
need?
Enough
for your down payment (5 to 10 percent of the sales price), closing costs,
prepaid escrows and a reserve of two months housing payment.
How long do you expect to
live in this home?
This
helps you determine the type of mortgage program to choose. If you know you will
be subject to transfer in the next several years, look at a short-term mortgage
product, one to three year ARM. If you will be there longer, consider a mid-term
product, five to seven year balloon.
What type of loan should you
apply for?
If
you have Veterans Administration eligibility, this is the way to finance.
Maryland and Virginia have programs for first-time buyers and FHA is always a
viable alternative.
How does your credit report
look?
In
applying for a mortgage, your credit report is very important. If a person can't
make a $50 monthly payment, would you think they would be a good risk for a
$1,000 mortgage payment?
What effect will buying have
on your taxes?
You will now be able to write off the interest and property taxes you pay
against your federal and state taxes.
How do you find the right
real estate agent?
Interview
them. Real estate agents are there to help you. They want your business and make
no money unless they help you buy a home. Find one you feel comfortable with and
be honest with them. A good agent can save you a lot of heartache.
What happens at settlement?
Settlement
or closing is when the title of the property is transferred to you and you pay
the remainder of the down payment, closing costs and prepaid items. Your agent
will help you.
Do you need a lawyer?
You
will need a lawyer or settlement agent to conduct the settlement. Your agent
will help you also.
Where do you go from here?
Find
a professional realtor to help you and interview him or her. Fill out a
mortgage application with the realtor. Then you can discuss with your agent what
you can afford and what type of house you want. Please call (888) 237-4039
and let us get you started to answer some of your questions without obligations
on your part and be assured of our commitment to get you the right answers.