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| Buyer's Tips |
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Buying A home Is One Of The Best Investments You Can Make Home equity remains the largest single savings vehicle for most Americans. In addition to the tax incentives of home ownership, and the ability to tap into your home equity if the need arises, buying a home is a wise and prudent investment for most people. Know How Much You Can Afford For The House Review your budget and determine how much you want to pay each month. Lenders will consider the home's sale price and your down payment in determining how much to loan you, but your monthly payment is of primary importance. In addition, housing costs are usually more than just mortgage principal and interest, because they often include property taxes and insurance. As a general rule, your monthly housing cost should not exceed 28 percent of your gross monthly income. If you have outstanding long-term debt (things like car loans, student loans or credit card balances), that monthly debt plus your monthly housing costs shouldn't exceed 36 percent of your monthly gross income. It Is Very Important To Buy A Home That Will Go Up In Value Slow, steady home appreciation has been the rule over most of the nation's history, and many real estate investors became quite wealthy in that environment. They did so by very carefully analyzing the appreciation potential of their investment, and they invested for the long term. You should too. Even if you plan on living in your home just a few years, you will want it to have gone up in value when you put it back on the market. Current Home Prices Are A Less Important Consideration Than Interest Rates Try to buy and/or sell when interest rates are low. The amount of mortgage you can afford (and thus the price of the home you will consider) will change as the interest rates rise or fall. A certain asking price may sound expensive to you, but at a lower interest rate you might be able to afford it. You may own several homes over your lifetime, and the factors that will limit or increase the value of the home you will be selling will similarly affect the price of its replacement. Since those factors largely wash each other out, interest rates remain the most important factor. Home Inspections Buying a home is a major investment and should be treated as such. Therefore, we highly recomend that you invest in hiring a home inspector. A home inspector will thoroughly evaluate the pros and cons of the house in an unbiased fashon. The inspector will check the electrical system, Plumbing and heating systems, the roof, windows, insulation and foundation among many others. Signing a Contract of House Sale The Contract of Sale is a binding legal document! Your signature upon the contract means that you intend to purchase that home. Some buyers are under the false impression that if they change their minds, they can just walk away from the real estate deal. This is not true. If the seller has complied with all the terms of the contract and you as the buyer have not then you run the risk of a lawsuit for breach of contract. Home Closing Costs There are a number of costs and fees associated with the purchase of your new home. There may be a lender fee, a title insurance fee, insurance fee, etc. The fees normally range from 3% to 5% of the value of the home and will be paid at closing. Be sure to review with your loan officer and attorney the exact amount of real estate fees you will pay. |