Frequently Asked Questions

Why should I buy, instead of rent?

Answer: You’ll love the feeling of having something that’s all yours – a home where your own personal style will tell the world who you are. You can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. And interest will compose nearly all of your monthly payment, for over half the number of years you’ll be paying your mortgage. This adds up to a hefty savings at the end of each year. And you are also allowed to deduct the property taxes you pay as a homeowner. If you rent, you write your monthly check and it is gone forever. Another financial plus in owning a home is the possibility its value will go up through the years.

I have bad credit, and I do not have much for a down payment. Can I become a homebuyer?

Answer: You may be a good candidate for one of the federal mortgage programs that are available. A good place for you to start is by contacting one of the HUD funded housing counseling agencies. Look in the yellow pages of your phone directory for your local office of housing and community development.

I’m a single mother. How would I go about buying a home?

Answer: Although you won’t have the benefit of two incomes on which to qualify for a loan, there’s no reason that you can’t become a homeowner. Pick a good real estate broker, and think about getting pre-qualified for a loan.

Should I use a real estate broker?

Answer: Using a real estate broker is a very good idea. All the details involved in home buying, particularly the financial ones, can be mind-boggling. A good real estate professional can guide you through the entire process and make the experience much easier. A real estate broker will be well-acquainted with all the important things you will want to know about a neighborhood you may be considering…the quality of schools, the number of children in the area, the safety of the neighborhood, traffic volume, and more. They will help you figure the price range you can afford and search the classified ads and MLS for homes you will want to see. When it is time to make an offer on a home, the broker can point out ways to structure your deal to save you money. They will explain the advantages and disadvantages of different types of mortgages, guide you through the paperwork and be there to hold your hand and answer last-minute questions when you sign the final papers at closing. You do not have to pay the broker anything! The payment comes from the home seller, not from the buyer.

Home much money will I have to come up with to buy a home?

Answer: That depends on a number of factors, including the cost of the house and the type of mortgage you get. In general you need to come up with enough money to cover three costs: earnest money-the deposit you make on the home with you submit your offer, to prove to the seller that you are serious about wanting to buy the house; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and closing costs, the costs associated with processing the paperwork to buy a home.

When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies.

The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20% of the purchase price. That is why many first-time homebuyers turn to a first time homebuyers program.

Closing costs which you will pay at settlement average 3-4% of the price of your home. These costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs, so you will not be caught by surprise.

What do I need to take with me when I apply for a mortgage?

Answer: You should have: 1) social security numbers for both you and your spouse, if both of you are applying for the loan; 2) copies of your checking and savings account statements for the past 6 months; 3) evidence of any other assets like bonds or stocks; 4) a recent paycheck stub detailing your earnings; 5) a list of all credit card accounts and the approximate monthly amounts owed on each; 6) a list of account numbers and balances due on outstanding loans, such as car loans; and 8) the name and address of someone who can verify your employment.

What happens at closing?

Answer: Before you go to closing, your lender is required to give you a booklet explaining the closing costs, a “good faith estimate” of how much cash you will have to supply at closing and a list of documents you will need at closing. If you do not get those items, be sure to call your lender BEFORE you to closing. You will be at a table with your broker, the broker for the seller, the seller and closing agent. The closing agent will have a stack of papers for you and the seller to sign. While they give you a basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to make sure you know exactly what you are signing.

 

What do I need to know before buying my first home? ?

Answer: Contact the Home Loan Counseling Center at www.hlcc.net or call 646-2005 for homebuyer workshops and information .