Real Estate 411: HOW TO BUY A HOUSE

 

 

Real Estate 411 – HOME BUYING FACTS

 

HOME BUYING FACT #1:  Get your finances in order BEFORE you start looking

As you think about buying a home and applying for a home loan, you need to consider your personal finances. How much you earn versus how much you owe will likely determine how much a lender will allow you to borrow. In a nutshell, most lenders don't want you to take out a loan that will overload your ability to repay everybody you owe. Although every lender has slightly different formulas, it is good to stick to the 28/36 rule.

 

Typically, your monthly housing expense, including monthly payments for taxes and insurance, should not exceed about 28% of your gross monthly income. If you don't know what your tax and insurance expense will be, you can estimate that about 15% of your payment will go toward this expense. The remainder can be used for principal and interest repayment.

 

In addition, your proposed monthly housing expense and your total monthly debt service combined cannot exceed about 36% of your gross monthly income. If it does, your application may exceed the lender's underwriting guidelines and your loan may not be approved.

 

Depending on your individual situation, there may be more or less flexibility in the 28% and 36% guidelines. For example, if you are able to buy the home while borrowing less than 80% of the home's value by making a large cash down payment, the qualifying ratios become less critical. Likewise, if Bill Gates or a rich uncle is willing to cosign on the loan with you, lenders will be much less focused on the guidelines discussed here.

 

Remember that there are hundreds of loan programs available in today's lending market and every one of them has different guidelines. So don't be discouraged if your dream home seems out of reach.

 

*Source:  Realtor.com

 

HOME BUYING FACT #2: Choosing the right real estate agent can save you time and headache!

Working with the right real estate agent will be one of your most valuable resources. Trying to do it yourself these days can lead to issues not being handled and problems not being discovered.  It is great to start your search for homes online and save yourself time by finding the properties you like, but once you find a home you are interested in, contact the agent, it will make the process much more fun and save you time!

 

• A real estate professional can help you determine how much home you can afford and even suggest ways to accrue the down payment and explain alternative financing methods.  In addition to knowing the local money market, also can tell you what personal and financial data to bring with you when you apply for a loan.

 

• A real estate professional is already familiar with current real estate values, taxes, utility costs, municipal services and facilities, and may be aware of local zoning changes that could affect your decision to buy.

 

• A real estate professional can usually research your housing needs in advance through tools and automated search engines that can pinpoint properties right in the location you want

 

• A real estate professional often can suggest simple, imaginative changes that make a home more suitable for you and improve its utility and value.  Remember, they are in hundreds of homes a month, use their expertise to help you find the perfect home that suits your needs

 

• A real estate professional is sensitive to the importance you place on this major commitment you are about to make. Look for a real estate professional to facilitate negotiation of a win-win agreement that will satisfy both you and the seller.

 

 

HOME BUYING FACT #3:  Being prepared helps to avoid home buying mistakes

The best way to avoid making a mistake it to learn from the mistakes others have made, so listen to your agent, they have worked through many home buying mistakes that can provide you with valuable information.  Buying a home in a desirable location is your best defense. Remember: location, location, location!  Being prepared and knowing what you want in a home is vital to making the right decision on the right home.

 

The average number of homes shown in a day is around 7, any more than that, and the brain is on overload. Therefore, don't expect to see 20 or 30 homes; although it's physically possible to do so, you probably will not remember specific details about any of them.

 

Studies show that your memory dramatically improves after consumption of carbs and slows upon consuming sugar. So, lay off the soft drinks and have a hearty meal of carbs before venturing out to tour homes. Be prepared for the day, bring along a camera to take photos of homes/features you like, wear comfortable clothing and shoes and eat well! 

 

 

Click here to view the complete Home Buyer’s Guide.

 

For more information and to access articles on Home Buying Basics, visit Realtor.com.

 

 

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To find a real estate professional who can help you get started on your next real estate transaction, contact

CENTURY 21 Judge Fite Company today!

Call 800-451-8055, or email 411@judgfite.com.