Getting Started

You’ve made the decision to purchase a home, but you don’t know where to start!? Here are seven questions that you should consider before you make the plunge. If you need help, ask me or a professional realtor of your choice. None of us can afford to make a mistake when we have so much at stake, and being prepared will make your purchase go smoothly and with no unpleasant surprises.

1. How much house can I afford?

The answer to this has a lot to do with your income and the amount of your debt load. As a rough rule of thumb, most home buyers purchase houses that cost between 1 1/2 and 2 1/2 times their annual income. For example, a home buyer earning $40,000 per year would buy houses costing between $60,000 and $100,000. There is, however, a degree of variation due to the individual market prices of the area in which you are interested. In some areas, there may not be houses available within that range, so you may need to spend a bit more. In general, however, your monthly mortgage payment cannot exceed approximately 28%-29% of your gross monthly income. Your total debt payments (car payments, credit card payments, etc. plus the monthly mortgage amount) cannot exceed approximately 36%-40% of your gross monthly income. These ratios will depend on the type of mortgage for which you are applying..

2. Do I really need to use an Agent to buy a house?

Yes, for two reasons. First, in almost all situations, the buyer does not pay a commission, so the services of an Agent working for you are paid for by the seller. Second, without an Agent, you may be missing valuable representation of your interests

3. What First Time Buyer Programs are available?

There are literally hundreds of different programs available, depending on your location and the mortgage source that you use. The requirements and benefits vary greatly from program to program. Consult your Agent or your lender for possibilities.

4. How much will my closing costs be?

The amount of closing costs will depend on what items are customary for buyers and sellers to pay for in your area. Traditions vary greatly from one area of the country to another. In some areas, for example, the buyer pays for title insurance. In other areas, it is the responsibility of the seller. In still other areas, the cost is split between buyer and seller. Your Agent can give you specific information on the items that are customarily paid for by buyers in your area.

5. How much should I offer for a house?

There is no simple answer to that question, since each property stands on its own. A particular house may be overpriced (you should make an offer BELOW the listing price), “on-the-money” (you should make an offer at or just below the listing price) or under priced. Your agent can help you evaluate the market. And while the agent can’t tell you what you offer, he/she will give you the tools to make that decision for yourself..

6. Should I spend the money to have a home inspection?

Absolutely. The $200 to $500 that a professional home inspection costs could be the best money you ever spend on your house. Not only does the home inspection seek out any defects (and gives you some peace of mind), the home inspector will often give you tips on maintaining and repairing your house..

7. What is an appraisal? Will I need one?

An appraisal is an opinion of value of the home you want to purchase. Virtually every lender will require some sort of appraisal before the loan is approved.

      1. Keep track of your credit report
      2. Develop a budget
      3. Get your financial picture in focus
      4. Familiarize yourself with the various terms you will hear relating to buying a house.
      5. Investigate mortgage pre-qualification and approval
      6. Get mortgage offer comparisons
      7. Get a full understanding of how agency works when working with an Agent
      8. Find and choose an Agent
      9. Compare housing types to choose the best for you: Single family, townhouse or condominium
      10. Find the Right Home
      11. Check Home Listings and Prices Online
      12. Determine the Value of a Home
      13. Save Money on Homeowners Insurance
      14. Arrange for a Professional Home Inspection
      15. Make your moving Plans