Wish You Could Own Your Own Home?
Maybe you can. It’s possible that
you can actually afford a home of your own and you just don’t realize it
yet. Think about this: Maybe the rent money you shell out to your cranky
landlord would be better spent making a mortgage payment on your own home. Of
course there are many reasons why you might like to own instead of rent –
the kids could paint their own walls or you could get that puppy you always
wanted. There are also several important financial benefits to owning. When you
buy a home your money is spent on an asset which has the potential to increase
in value. Also, the mortgage interest and property taxes you pay are tax
deductible. Castle or Great
Home?
Figure out what you can afford. Take a
look at your budget, debts, and credit record. Generally speaking, if your
finances are in decent shape, you could look for a home priced at about three
times your gross yearly salary. For a more finely-tuned estimate, try using the
online calculator offered by LendingTree.com, under the heading
"What home can you afford?" .
Have you heard that you have to make a
down payment of 20 percent of the sale price? Not so! If the mortgage is
insured, lenders will grant loans to qualified buyers with as little as 3 to 5
percent down. Read the publication,
How to Buy a Home With a Low Down Payment for further details. The Federal Housing
Administration (FHA) is an insuring agent, and exploring an FHA insured
loan is one good way to proceed for many first-time homebuyers. For information
on FHA insured loans, visit the
U.S. Department of Housing and Urban Development (HUD). For general
information on home buying, check out the other offerings on HUD's website -
especially the Homebuyer's
page and
Homebuyer's Kit. |
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Other Resources
This is just a brief overview. For
more information on buying your first home check out these resources
on the World Wide Web:
Publications
Available:
Web Sites*:
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you click on these links, you are leaving our web site. Please bookmark us
before you leave so you can return easily. We are not responsible for the
content of these web sites. |
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For more information on
other popular consumer issues check out our Consumer Focus
Archive. |
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Get the Best Mortgage
Deal
Comparison shop among different lenders
– banks, mortgage companies, credit unions, etc. You need to compare
costs, consider the terms, and negotiate for the best deal. Read the
publication Looking
for the Best Mortgage - Shop, Compare, Negotiate, which includes a
handy worksheet for asking the right questions and comparing lenders. One
convenient way to compare lenders and their offerings is to mortgage shop
online. The loan sites have mortgage calculators to help you determine how much
money you can borrow. In addition, they offer some useful tips and hints on
finding the right mortgage as well as home buying in general. Several online
mortgage services you might want to look at are: LendingTree.com and Loanz.com. |
Find an
Agent
You will probably save time and money by
working with a good real estate agent. They have insider knowledge of
the real estate market and access to the Multiple Listing Service (MLS) as well
as listings not yet on the market. As with any professional service, it is best
to ask friends and family who have recently purchased homes for referrals.
Another way to find an agent is to visit open houses and speak with the agents
or drive through the neighborhoods you like and look at the sale signs showing
which firms or agents have homes for sale.
Or, you might want to consider working
with a buyer agent. In the past, most real estate agents represented
only the interests of the seller. However, it is fairly common now to find
agents who will represent the buyer. They can assist you by negotiating for a
smaller deposit and for having closing costs paid by the seller, in addition to
providing other helpful services. To officially establish that they will
represent you, the buyer, you should enter into a buyer agent contract. Be sure
to read the buyer agency agreement carefully before signing the contract.
Choosing to use a buyer agent usually does not effect who pays that
agent’s real estate commission. Unless the your buyer agent states
otherwise, they will still be paid by the seller, even though they are under
contract to work only for you, the buyer.
When you interview an agent you will want
to know how long they have been at their firm and in the real estate business,
whether they are full or part-time, and if they are a Realtor (Realtors are
members of the National Association of
Realtors). Try to find someone who is accessible, knowledgeable,
honest, sensitive to your needs and easy to get along with. Remember that this
is likely the largest purchase of your life (so far) and you will need the best
service and advice available to help you make a good decision. |
The Fun Part - House
Hunting
Determine the geographic area(s) where
you think you want to live, then visit open houses to get an idea of what you
like and don’t like. You should look over each property with an eye to
what best suits your family and lifestyle. Some of the factors to consider are:
your commute to work; the schools; crime rates; proximity to noise and
pollution sources; and the life stage of the neighborhood (e.g. newer homes
with children vs. homes with mainly retirees). To help you decide what features
you want in a new home, see the HUD Homebuyer's Kit." You can use this
list as the basis for comparing each home you visit. Be sure to take notes as
you visit each property. For a very thorough online guide to inspecting homes
for sale, read "A Consumer
Home Inspection Kit" published by Freddie Mac. This publication
includes a detailed "Consumer Home Inspection Form" which you can use to record
your findings. In addition, HUD's publication
100 Questions & Answers About Buying A New Home has a handy "HUD Home
Scorecard" which could be used to record the information you gather.
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