Buying
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| Find an Agent | Get Pre-Approved | Find a Lender | Real Estate Dictionary |
Buying vs. Renting
Each time you make that monthly rent payment, you are building equity in your landlord's property. Instead, that money could be going toward building equity in a home of your own. With today's low interest rates, many renters are finding house payments to be lower than what they pay in rent! There are many benefits to owning a home, including the following:
Home Atmosphere |
You choose a home environment and location of select choice. Enjoy the quietness without common walls, utilize the basement shop, obtain more space, or simply relish the privacy of your very own back yard. | Financial Independence |
The majority have found home ownership to be the best start to financial independence. Payments can remain level over the life of the mortgage, whereas rent typically increases over time. |
Investment Value |
Instead of rent, you are acquiring and building a major asset. As improvements are made around your home, the value of such increases more and more each day. |
Tax Advantages |
The property taxes paid and interest on your mortgage is tax deductible each year reducing your taxable income. |
Cash Equity |
Real estate property can appreciate each year in order to keep up with inflation, with rates typically higher than savings accounts. |
How Much House is Affordable?
Most mortgage companies use qualifying rations to determine how much they will lend you. Two common ratios used are 28/36 and 29/41.
The first number in the ratio represents the percentage of your monthly gross income (income before any deductions) that the lender would consider acceptable as a monthly mortgage payment. For example, if you make $2,500 per month, the bank may consider a $700(2,500 x .28) per month mortgage payment including principal, interest, taxes, and insurance.
The second number in the ratio considers your debt. Your total debt should not exceed this percentage of your gross income. For example, if you make $2,500 per month, as above, the bank may like to see your total debt under $900(2,500 x .36) per month.
The more debt you have, the less you typically qualify for.
The Pre-approval Process
A pre-approval is a guarantee that you can qualify for financing to a maximum purchase price and loan amount. In a competitive environment, being pre-approved could mean the acceptance of your offer rather than another buyer's offer on a house you may become interested in.
Many factors influence your financial options and the financing program best suited for your financial position and goals. Your monthly income, monthly expenses, available down payment, credit history, savings, and employment history all have a direct impact on the different programs for which you may qualify. Pre-qualifying your financial options have become an important first step in the real estate buying process.
If you are interested in using a prequalification calculator to estimate how much you can afford, CLICK HERE. If you would rather meet with an agent to get pre-approved at your earliest convenience, CLICK HERE.
Mortgage Pre-approval Checklist
- W-2s for the past two years (or complete tax returns if self-employed)
- Most recent pay stubs covering the last 30 days
- 12 months of mortgage payment receipts or cancelled checks
- Last 3 months bank statements of all checking, savings, and asset accounts
- Names, address, and account numbers of all creditors
- Certificate of Eligibility (VA loans only)
- Residency information for the past two years
- Copy of student transcripts for full-time student within the past 2 years
Real Estate Tips
While taking the advice of a good realtor is the best way to ensure sound real estate investing, there are a few real estate tips which should be followed in almost every real estate purchase.
Getting Started
Before you actually look at homes, it's important to ask yourself the basics. Your neighborhood of choice, proximity to schools and shopping, distance to work, price range, property needs, and property wants must all be carefully considered. You may want to browse real estate ads and the Internet to get a feel for the types of homes on the market and what they cost. It could be beneficial to visit a few open houses on the weekends, too. Either way, it's important to start saving money and avoiding additional debt.
Get Pre-Approved
A pre-approval is a guarantee that you can qualify for financing to a maximum purchase price and loan amount. In a competitive environment, being pre-approved could mean the acceptance of your offer rather than another buyer's offer on a house you may become interested in.
Many factors influence your financial options and the financing program best suited for your financial position and goals. Your monthly income, monthly expenses, available down payment, credit history, savings, and employment history all have a direct impact on the different programs for which you may qualify. Pre-qualifying your financial options have become an important first step in the real estate buying process.
If you are interested in using a prequalification calculator to estimate how much you can afford, CLICK HERE. If you would rather meet with an agent to get pre-approved at your earliest convenience, CLICK HERE.
Work with a Realtor
Working with a realtor is advantageous and will be rewarding to you for several reasons. They are familiar with the dos and don'ts of buying a home and can answer your questions and concerns.
- They will help you explore your financial options and work directly with your lender to help you buy a home
- They have access to various databases of information on homes for sale, including those of other realtors in your area
- They can set up appointments to show you any home that may interest you
- They will help you with all the paperwork needed during the offer process
- They will be with you at the home inspection and help you assess the condition of the property
- They will be with you at closing to help you with questions and work with the closing agent to address any problems that may surface
Choosing a Realtor
While there are a number of real estate agents in your area, it's important to consider an agent who will benefit you during the home buying process. Since most buyers spend a considerable amount of time with their realtor, it's important to select a realtor you're comfortable with and one who understands your specific needs and expectations. The following questions may help you decide if a particular realtor is right for you:
- Are they easy to communicate with?
- Do you feel comfortable spending time with them?
- Do they seem knowledgeable about the industry?
- Do they explain things clearly?
- Do they fully understand offer paperwork?
- Do they have access to technology to reach your real estate goals?
- Do you consider them an asset to your real estate investment?