Occasionally the time arrives when we need to buy a new home. Perhaps you need additional space, perhaps you need to downsize because your children have grown and gone, or perhaps your present home has become too expensive for you to maintain. Whatever the reason, you will need a sound understanding of home-buying basics to avoid losing money. Rent or own? Unless you live in a locality where renting is the norm, it is always better to own than to rent - if you can afford it. Homes are investments. They generally appreciate in value. Money expended on mortgage payments and improvements add value and are recouped at the time of sale. Most of the time, home ownership reaps more profit than loss. How big a home should you buy? Determining how much home you can afford is a detailed process. Lenders can prequalify you and help you determine how much you can borrow. Before determining the highest amount a lender will allow you to borrow, he must consider the amount of your current debts. The monthly total of debt payments combined with your mortgage payment should never exceed 38 percent of your monthly gross income. Nevertheless, remember that just because a mortgage company is willing to qualify you for X dollars does not mean that X dollars is a sum you can afford. You should take into account many other factors regarding your financial situation before determining your housing budget. Lenders will not consider the size of your family, the educational and vocational needs of your children, your charitable or missionary contributions, or other financial obligations. Nor will they consider your age or retirement needs. They do not know how secure your job is. They care nothing about family crisis or other unexpected expenses. For these reasons, lower considerably any ceiling offered by a mortgage lender if you want a home you can reasonably afford. How to determine a monthlymortgagepayment? You might do well to play with scenarios on a mortgage calculator before you head out to prequalify. You can find such a calculator on the Web site of any lending institution. The calculator determines monthly payment information based on different types of mortgage options. We'll explain more about that later. For now, just play with figures: size of mortgage, length of mortgage, and interest rate. You'll gain at least basic understanding by performing this exercise. In addition to making monthly mortgage payments, a home owner will have to make prorated payments that are attached to his monthly payment. These payments cover property taxes, home owner's insurance, mortgage insurance, and, sometimes, a home owner's association fee. These payments collected by the mortgage company with the monthly mortgage payment are deposited into an escrow (no interesting-bearing) account. Your mortgage company holds these additional funds in escrow until tax and insurance payments come due, generally annually. Property tax is assessed by the country. Homeowner's insurance, which we'll discuss in a later chapter, protects the home and valuables. Mortgage insurance is required for anyone who borrows more than 80 percent of the total value of a home. It is a protection to the mortgage company, ensuring payment in the event of the death or disability of the home owner. Some neighborhoods or communities also assess another fee called the homeowner's association fee. This fee is generally confined to exclusive neighborhood with communal yards, gardens, recreation centers, swimming pools, golf courses, and so forth. If you are considering moving into such an area, ask about the cost of the homeowner's fees. Never allow yourself to be blindsided by fees you did not expect. If you have a good credit rating and make a substantive down payment, and you are not a first-time home buyer, you do not need to have funds held in escrow. You can place them into your own interesting-earning account and pay them yourself when they come due. This becomes your option when your equity becomes greater than 22 percent of your home's market value. Equity is the residual balance of your home's market value minus the principal portion of your mortgage. You may need to prove to your lender that you will actually pay your taxes and insurance. This is easily done. You can have your bank arrange an automatic monthly transfer of funds into a designated savings account, or you can do so yourself when you deposit your paycheck. In addition, once you meet this same qualification you can cancel your mortgage insurance policy. Monte Mohr, realtor from the Mohr Group, is an expert when it comes to real estate properties. Visit the website for more details: http://www.tennesseedreamhomes.com/ ...read more
By Nashville Real Estate Adviser August 13, 2012
Real estate agents can only base success on the number of sales closed in a year. There is no award or money given for effort. Effort must produce results. Prospecting for new clients, especially new homes to list, is a must. The number of real estate listings an agent has is closely tied to his/her i... ...read more
In older neighborhoods you can easily find newer homes. For a lot of people this makes a great option; it allows you the charm and ambiance that a lot of newer neighborhoods lack with the innovation and solid construction of a new house. ...read more
