How To Buy A House With Pictures

Sellers love buyers who get pre-approved. Pre-approved buyers are almost always given the green light by lenders, meaning there’s less risk for the deal to get scuttled before a successful closing. Don’t accidentally get pre-qualified instead of pre-approved. There’s a difference. Pre-approval means that the lender is usually prepared to give you a loan after seeing your financial vitals. Pre-qualified only means that the lender is estimating what you could borrow. It doesn’t mean you’ll get a loan. [2] X Trustworthy Source US Consumer Financial Protection Bureau U. S. government agency for protecting consumers in the financial sector Go to source

You’ll know exactly how much you can borrow before you buy your home. Too many people fall in love with a home that they — well — can’t afford. They struggle finding a mortgage that covers the cost of the home. Finding a mortgage first and a home second may seem less appealing, but it’s smarter. You’ll immediately be able to tell whether a home is in your price range or out of it. Think about the sort of down-payment you’ll be able to afford. This should be part of your mortgage calculations, although you don’t need to know for sure when shopping for a mortgage. Have a general idea in mind. More on this later in the article. Find out what ratios lenders are using to determine if you qualify for a loan. “28 and 36” is a commonly used ratio. It means that 28% of your gross income (before you pay taxes) must cover your intended housing expenses (including principal and interest on the mortgage, as well as real estate taxes and insurance). Monthly payments on your outstanding debts, when combined with your housing expenses, must not exceed 36% of your gross income. Find each percentage for your monthly gross income (28% and 36% of $3750 = $1050 and $1350, respectively). Your monthly payments on outstanding debts cannot exceed the difference between the ($300) or else you will not be approved.

The cost of the lawyer is a drop in the bucket compared to the total you are likely to spend for the home. The home you are buying is either in foreclosure or in probate, which means that the home is being distributed as part of a deceased person’s estate. You suspect the seller might try to quickly back out of the deal or you don’t trust them. Your state requires a lawyer at closing. Six states currently require a lawyer present. [4] X Research source Talk to your state commission of real estate to find out if it’s common practice in your state. It is also a good idea to check with an attorney before entering into a contract.

A Realtor’s job is to connect people who want to buy and sell a particular home. For this reason, a Realtor has an interest in selling homes. A very good Realtor will use their experience to sell the right home to the right buyer — you. A Realtor can tell you about the schools, nearby shopping, zoning of the property, construction nearby, ages and values of nearby properties, growth rate, and any other statistics on the area you may be interested in.

If you sign up through a real estate agent, it is poor form to call the listing agent directly to see a house. Don’t ask an agent to do things for you unless you’re planning to have them represent you — they don’t get paid until a client buys a house and it’s not fair to ask them to work for free, knowing that you’re not going to use them to buy your home!

What will you and your family need in several years?[8] X Research source Maybe you’re just a couple right now, but are there plans for kids in the future? A home that snugly fit two people could be torturous for three or four. What tradeoffs are you willing to make? In other words, what are your priorities? Although we like to believe that buying a house can be straightforward, it’s often a complex ordeal in which we’re forced to compromise. Do you care more about a safe neighborhood and good schools over a big backyard? Do you need a big, workable kitchen more than a big luxurious bedroom? What are you willing to sacrifice when it’s crunch time? Do you expect your income to increase over the next couple years? If your income has increased by 3% for several years in a row and you hold a secure job in a safe industry, you can probably rest assured that buying an expensive but still reasonable mortgage is possible. Many homebuyers buy relatively expensive and then grow into their mortgage after a year or two.

The area in which your home is located is sometimes a bigger consideration than the home itself, since it has a major impact on your home’s resale value. Buying a fixer-upper in the right neighborhood can be a great investment, and being able to identify up-and-coming communities — where more people want to live — can lead you to a bargain property that will only appreciate in value.

What are the seller’s financial prospects? Are they in desperate need of money or are they sitting on a pile of cash? Cash-strapped sellers will be more likely to take an offer that undercuts their asking price. If the house is a flip, the seller is often less emotionally invested and wants to sell quickly. Have your agent call the seller’s agent and find out what they want for the property. People flipping houses usually already have a number in mind. You can find out if a house is a flip by looking at sale records, if it sold recently (around a year ago) and for much less than it’s listed for now, and looks upgraded, it’s probably a flip. You can also look it up on Google Maps street view to get some insight as to what it looked like before. If it looked run down with boarded up windows, and now it’s looking pretty nice, it’s probably a flip. It can also help to reassure the seller that you can close quickly (if you really can!). How long has the home been on the market? Homes that have been on the market for longer periods of time can usually be bid down. Have they already bought another house? If the sellers aren’t currently living in the house they’re trying to sell, it may be easier to bid less than you otherwise might.

Determine whether you need to sell your current home in order to afford a new one. If so, any offer to buy that you make will be contingent on that sale. Contingent offers are more risky and less desirable for the seller, since the sale can’t be completed until the buyer’s house is sold. You may want to put your current house on the market first.

Include earnest money with your offer. This is typically 1-5% of the offer. Once you sign an offer, you are officially in escrow, unless you cancel using an accepted contingency to the contract during the contingency period. During escrow (typically 30 to 90 days), your lender arranges for purchase financing and finalizes your mortgage. Consider putting an expiration time on your offer if you or your agent think it makes sense for that situation. For example, if you put a 24-hour expiration, you’re only bound to that offer for 24 hours. This can put a little pressure on the seller to act quickly.

You may be expected to put down 10-20% of the appraised value of a home depending on your loan package. However, there are loan packages that allow you to put down much less. Note that the appraised value may be higher or lower than the selling price of the house. If you have $30,000 saved for a down payment, for example, you can use it as a down payment for a home between $300k (10% down payment) or $150k (20% down payment). Putting less down often, but not always, requires you to pay private mortgage insurance (PMI), which increases your monthly housing cost but is tax deductible. However, 20% is the typical amount for not needing to pay PMI. If you can’t afford a 10%-20% down payment on your home, but have good credit and steady income, a mortgage broker may assist you with a conventional or FHA mortgage. FHA mortgages only require a 3. 5% down payment and there are other loan packages that require as little as 3% down. There are also USDA and VA loans that require no money down. Talk to your mortgage broker to find your best option.

A home inspection costs between $150 and $500, depending on the area and the size of the home, but it can prevent a $100,000 mistake. This is especially true with older homes, as you want to avoid financial landmines such as lead-paint, asbestos insulation and mold. If you use the inspection results to negotiate down the price of your purchase, then include the portion of the inspection report that notes the deficiency to prove that it exists.

Consider using your real-estate lawyer to review closing documents and represent you at closing. Again, Realtors are unable to give you legal advice. Lawyers may charge $200-$400 for the few minutes they’re actually there, but they’re paid to look out for you.