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| What Every First Time Home Buyer Must Know |
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| Written by Oscar Acosta |
| Friday, 16 October 2009 08:49 |
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First time home buyers are in the dark on many basic areas of the home buying transaction. To keep from making mistakes and possibly losing money, get to know the glossary of terms used. It is imperative to understand the five areas of the buying process. There was a time when 100 or more different programs existed and everyone could fit into a home loan. Not anymore. The FHA is the most popular since you only need 3.5% down and it can be gifted by a family member. Generally 10-20% down is best, if possible. A 20% down payment saves you from paying monthly mortgage insurance. Pre-qualification is the first step to getting ready to make an offer. Three financial areas are considered in this important evaluation. The income, assets, and your credit will be evaluated for affordability and credit behavior. This process also has to do with determining how much house you can buy based on monthly payment. This may include taxes, insurance and possibly the monthly mortgage insurance. Ideally you want to stay around 25% of your income as a payment. You can still qualify between 26-50% or more, however be careful to respect your overall household budget. Credit scores of 700 or higher will allow for the best rates. Assets will be verified to at least cover necessary down and closing costs. Two or more months of payments may be required in assets as reserves. A detail of the cost of doing the home loan is the good faith estimate. The GFE outlines the loan amount, interest rate, monthly payment, loan product, lender fees, title/escrow fees, and prepaid tax and insurance amounts. When you sit down with a lender, ask for the GFE before you leave. This disclosure is crucial to monitor your home loan costs and overall scenario until your loan closes. Your home loan professional and real estate agent will navigate you through the steps to buying a home. After pre-qualification, you now know how much house you can afford to include principal, interest, taxes and insurance (PITI). Negotiating the sales price with possibly having the seller pay 3-6% in closing costs is where a good Realtor will bring tremendous value to the table. Once your offer is accepted, and the sales contract is executed, the clock start ticking for several contingincies. A home inspection is recommended. Your appraisal, preliminary title report, formal loan approval and underwriter conditions are all in the process. You can count on bumps along the way. Additional supporting documents, verification may be asked for. Be patient. The more responsive you are to requests, the smoother the process will be. The Closing is what is considered drawing loan documents for signing the deed of trust, the note, and all disclosures in title. In some cases a mobile notary may be used. Finally your loan should be ready to fund and record. Now the house is yours! Good communication and experienced professionals go a long way to making the home buying experience a great one. Be selective in who you choose to handle one of the biggest financial transactions in your life. Cathy Acosta of Mission Hills Mortgage Bankers says, I love working with First Time Home Buyers. As a teacher, I like to take the extra time to explain and answer all their questions. I can empathize with their fears and concerns about the many options available. Take time to choose your realtor and mortgage professional. Also be willing to learn about the process and take control of what you can control. About the Author: Before you commit to any lender, you owe it to yourself to check with a seasoned loan professional to be sure you are treated fairly. Prequalification is the first step. Visit Home Loans Redding for todays loan programs and resources to make your transaction a success. Easily apply online for a home loan or call for todays rates. Its FREE with No Obligation to analyze your loan scenario. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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