Are You a Prepared Home Buyer? 6 Considerations

Congratulations! You’ve made the decision, the time is right, for you to find the house for you, and make it your home! However, doesn’t it make sense, since, for most people, one’s house is their single, most valuable asset, to be as prepared, as possible? As a Licensed Real Estate Salesperson, in the State of New York, for over a decade, I have come to realize, many potential home buyers, enter into this all – important process, with their eyes, seemingly, shut, when they need to plan effectively, and be as prepared, as possible! Let’s briefly discuss 6 considerations, potential home buyers, should keep – in – mind.

1. Pre- approved: Before looking at any houses, discover what you can afford. Meet with a recommended, professional mortgage expert, and ask to be pre – approved! This is far different from receiving a pre – qualification. While pre- qualification’s merely mean, based on a simple analysis of basic data, you provide becoming pre – approved, requires a procedure similar, to what is actually done, to receive a mortgage approval, and submitting more forms, verification, etc. By doing this, a buyer knows, before he starts, how much mortgage, he is qualified for, and thus what price range, he should be looking at. Doesn’t that make more sense?

2. Check out the area: How will you know what area, and/ or neighborhood, you should search in? Walk around potential areas, and get a feel, for the place! Is it quiet enough for you, or too quiet? What about the neighbors? How convenient might your commute be, from this locale?

3. Know what you need, and want: Evaluate both present and future needs. Is this going to be a starter home, or one, where you hope to remain, for a significant period of time? How many bedrooms, and what size, do you need, and want? How about the bathrooms, kitchen, living room, dining room, house style, amount of land, etc?

4. Downpayment and closing costs: Now that you know how much you qualify for, in terms of your mortgage, consider whether you feel comfortable with the necessary amount of downpayment! Be careful to avoid becoming house – rich, but living over your head! Discover your closing costs, and be certain, you are prepared and comfortable, with those expenditures.

5. Monthly charges: Try to evaluate, as closely as possible, your estimated monthly charges! This includes far more than merely your mortgage interest and principle, taxes and insurance. Consider maintenance, creating a reserve for repairs, etc, utilities, and other potential expenditures. As a rule of thumb, be prepared, by maintaining at least 6 months reserves!

6. Be prepared for the unanticipated: What will happen if you undergo a career reversal, or some extended period, with less than your regular income? How long will you be able to continue making the necessary payments? Use the 6 months, rule, but attempt to maintaining a larger reserve!

Prepared home buyers are better able to enjoy owning a house. Will you prepare, as you should?

Richard has owned businesses, been a COO, CEO, Director of Development, consultant, professionally run events, consulted to thousand, conducted personal development seminars, for 4 decades, and a RE Licensed Salesperson for a decade+. Rich has written three books and thousands of articles. Website: and LIKE the Facebook page for real estate:

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Which Mortgage Program is Best for You?

There are many types of mortgages. It is to your advantage to know about each mortgage type before you start searching for your next home. Most people apply for a fixed-rate mortgage. In a fixed rate mortgage, your interest rate stays the same for the term of the loan, which can range from 10 to 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it, although your property taxes and home owner’s insurance may change during the repayment term of your mortgage. Another type of mortgage is an adjustable rate mortgage (ARM). With this type of mortgage, your interest rate and monthly payments usually start lower than a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index, such as the U.S. Treasury Securities index.

The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower. There are several government mortgage programs, including the Veteran’s Administration’s programs, the Department of Agriculture’s programs, Federal Housing Administration mortgages, and conventional loans. Thoroughly discuss your financial situation with your real estate broker about the various loan options, before you begin shopping for a mortgage.

Below is a brief description of the 4 main mortgage types. The Federal Housing Administration (FHA), Veterans Administration (VA), United States Department of Agriculture (USDA), and Fannie Mae/Freddie Mac (conventional financing) all have different guidelines and down payment requirements. Fannie Mae and Freddie Mac are the most recent sudo-government agencies to launch minimal down payment programs. There are also various down payment assistance programs available to first time home buyers, recent graduates, and low-income households. Most down payment assistance programs have income and sales price limitations and repayment requirements.

• Conventional Financing – Conventional mortgage loans require a minimum 3% down payment. Private mortgage insurance (PMI) is required unless there is a 20% down payment or lender paid PMI is offered by the mortgage company. Mortgages are offered for owner occupants and investors.

• FHA Financing – This financing type requires a minimum of 3.50% down. FHA allows approved nonprofit organizations and/or family members to assist homebuyers with the down payment requirement. Upfront and monthly mortgage insurance is required. Only owner occupied financing is offered.

• Veterans Administration – Honorably discharged veterans or active-duty personnel in the US military who meet specified qualifications are eligible for no down payment mortgage financing. VA Mortgages requires an upfront funding fee unless the veteran is disabled. VA mortgages require no monthly mortgage insurance, but are available to owner occupants only.

• USDA Financing – This mortgage program is available through the United States Department of Agriculture. This loan type allows zero down financing for owner-occupied properties in designated rural areas. Income and sales price limitations apply. An upfront and monthly fee is required. There are two distinct loan types, which include guaranteed and direct loans.

Each of these loan types offer different features and should be fully investigated to determine which loan type fits your credit and financial situation. It is always in your best interest to be pre-approved prior to looking for a new home.

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