Buyer’s FAQs

1. Why should I buy, instead of rent? Buying a home is an investment. When you rent, you pay a monthly bill and your money is gone. When you own a home, you can deduct your mortgage loan interest and property taxes from your federal income taxes and in some cases from your state taxes. In addition, the value of your home may go up over the years.

2. What are HUD homes and are they a good deal? When someone with a HUD insured mortgage can’t meet the payments, the lender forecloses on the home. Then HUD pays the lender what is owed, takes ownership of the property and sells it.

3. Can I purchase a home if I have bad credit and don’t have much for a down-payment? Possibly. You may be a good candidate for one of the federal mortgage or local home buying programs.

4. How much money will I have to come up with to buy a home? The amount of money you’ll have to come up with depends on the cost of the house and the type of mortgage you receive. In general, you’ll need to cover three costs: earnest money – the deposit you make on the home when you submit your offer, to show to the seller that you are serious about wanting to purchase 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 house. You may have homeowner association or condo association dues. You’ll definitely have property taxes, and maybe city or county taxes. Taxes are normally combined with your mortgage payment.

5. How do I find a lender? You can finance a home with a savings loan or a loan from a bank, a credit union, a private mortgage company or a other state government lenders. When looking for a loan, you can save money if you take some the time to look around for the best offer. Different lenders can offer different interest rates and loan fees. You should talk with several lenders before you decide which lender to go with. Most lenders need three to six weeks to complete the loan approval process. Your real estate broker will be familiar with lenders in the area and what they’re offering. In addition to the mortgage payment, what other costs do I need to consider? You may have homeowner or condo association dues. You’ll definitely have property taxes and maybe city or county taxes. Taxes normally combined with your mortgage payment.

6. So what will my mortgage cover? Most loans consist of 4 parts: principal — the amount you actually borrowed, interest — payment to the lender for the money borrowed, homeowners insurance — a monthly amount to insure your property against loss from fire, smoke, theft and other hazards required by most lenders and property taxes — the annual city/county taxes assessed on your property. Most loans are for 30 years (15 year loans are available). During the life of the loan, you’ll pay much more in interest than you will in principal. During the initial years you’ll pay mostly on your interest and pay on your principal in your final years.

7. What type of mortgages do lenders offer? Fixed rate mortgage — In this type of mortgage your interest rate remains the same for the term of the mortgage. Therefore, you will always know what your mortgage payment will be. Adjustable Rate Mortgage — In this type of mortgage, your interest rate and monthly payments usually start lower than a fixed rate mortgage, however, your interest rate and payment can go either up or down once or twice a year. There are also many government mortgage programs including the Veteran’s Administration and Department of Agriculture programs. Be sure to talk to your real estate broker about the different the different kinds of loans before you begin looking for a mortgage.

8. When I find the home I want, how much should I offer? Your real estate broker will help you with this. But there are a few things to consider: Is the asking price in line with prices of similar homes in the area? 2) Is the home in good condition? How long has the home been on the market? (If it’s been on the market for awhile, the seller may be more eager to accept a lower offer.) How much do you really want the home?

9. What if my offer is rejected? Negotiations on a price usually go back and forth many times before an offer is agreed upon.

10. So what will happen at closing? Your broker, the seller’s broker, the seller and a closing agent will most likely be in attendance. The closing agent will have papers for you and the seller to sign. (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’ll have to supply at closing and a list of all the documents you’ll need at closing.)

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