PURCHASE
Where do I start?
Start by doing what you are doing right now, educating yourself with advice from some of the most experienced home loan professionals in Southern Arizona. Your loan officer and realtor, if you choose to use one, will do their absolute best to keep you informed during the home buying process. Your loan officer will let you know about all the expenses you can expect and will do their best to solve problems before they even happen. Armed with knowledge, you can be more comfortable and involved during the home buying process.
Are you ready to buy your first home?
Buying a home is one of biggest decisions that you are going to make, and it is important to make sure that your finances are in order. You can start by reviewing all of your bank accounts and bills to know how much money you are making and spending each month. Also, if you are planning on buying a home with a partner or spouse, you will need to review their finances as well. If you are currently self-employed, you may need to provide more financial information.
Saving for your down payment
Knowing how much money you will need for a down payment will depend on the type of home loan and how much the home costs. The more that you put towards a down payment, the lower your monthly mortgage payment can be, and you will save on the amount of interest you will pay over the life of the loan. For example, conventional loans require a down payment of 5% of a home’s total price, where as an FHA loan requires as little as 3.5% down.
When you are budgeting for your down payment, you should also calculate in closings costs or fees that are associated with the processing and securing of your home loan. These are contingent on the price of the home and the type of mortgage you will secure. You should estimate an amount between 2% and 5% of the homes total value.
Receiving Approval
To start you will want to get pre-approved and not just pre-qualified. Receiving approval from a lender means that, based on all of the financial documentation that you provide, you are a good candidate for a mortgage. During the approval, you will receive an estimated amount for your home loan, possible interest rate, and what your monthly payment will look like. This will give you the perfect snapshot of what you can afford and to help you live within your means. Most mortgage lenders will suggest that you spend only 25% of your monthly income on housing.
How to find your home
A great place to start is by searching the areas you would like to live or searching online. By using a real estate agent, they can match you with homes that meet your criteria. They can also let you know about new homes as they become listed on the market.
When you find the house you want to call “home,” and then make an offer, a home inspector should complete a thorough evaluation of the home. Here are some red flags that you can look for yourself:
· Plumbing and electrical problems: Make sure to check all of the electrical outlets and light switches, to see if they are fully functional. Run the water to ensure that the faucets and toilets do not leak. Also look for water damage under sinks, on the floor, and ceiling.
· Existence of carbon monoxide, lead paint or radon: if you are purchasing an older home, ask the seller if the home has been tested for these elements. If the home has not been tested, you can ask your home inspector to test for these elements.
· Old appliances, existing chimney, and gas furnace: if any of these items are significantly older, or have not been serviced recently, you may need to have the cleaned, serviced, repaired, or replaced after purchasing your home.
· Gutters: if the home’s gutters have not been cleaned or are not working properly, this can allow rainwater to pool around the foundation of the home which, in the long run, can become an expensive problem to fix.
· Pool Inspection: if the home has an older pool, the inspector can review the pump system and the condition of the pool.
· Tree location: The home inspector will assess all trees on the property to find out the likelihood that the tree could possibly fall onto or damage the home during a storm.
