in Real Estate
by John Dashwood
One problem plaguing excited first time home buyers is the deposit for the house of their dreams. If you are one of them, this problem can be resolved with a little help from family or friends or the First Time Homebuyer Credit. But all these are just the beginning of your new life as a homeowner and your responsibilities is just starting.
If you have never owned a home before, you may be eligible for first time buyer programs with government insured loans. These programs often have less stringent requirements for credit ratings and down payments than private lenders. If you are comfortable with your current rent payment, shop for a mortgage payment that will be about the same as your rent. A mortgage payment will help you build equity, a rent payment will not.
The first thing couples should do is to stick to their budget. I f that house so perfect for you but the price is beyond your means, don’t fantasize about job promotions and increased pay and think that you can swing it. Be realistic. Assess the price according to your present not future means. Should you get a pay increase, you can always make modest improvements on the house you bought. In the long term, you increase the value of your home and this will serve you well should you decide to sell your home at the right time.
Young newly-weds are always excited at the prospect of owning a house that they jump into a deal without examining what goes with the mortgage. They take the first offer that looks good on paper without knowing that there are fees and more fees attached to the deal.
Some young buyers may receive help with their down payment from family members. It may be better to try for a government program that waives that down payment. Some state governments also offer first time buyer incentives, so you may want to look into the programs available. A good credit rating will still qualify you for a lower interest rate. Remember that in addition to your down payment, you will need to pay closing costs at the time of sale. Closing costs can be several thousand dollars.
The closing costs include the origination fee from the lender, the cost of title search and any other necessary fees that must be paid by either the buyer, the seller or both before the sale is final. If the home requires repairs, the lender may require that either the buyer or seller set aside funds in an escrow account to insure the repairs will be completed. Be prepared for disappointment. Your lender may find a problem with the home and decline the loan for that reason. VA and HUD insured mortgages have strict regulations for the homes they will finance.
You can compare lenders online. Many will give a quote for their origination fee and current interest rates. It is always best for new homeowners to seek a fixed rate mortgage rather than an adjustable rate or balloon mortgage. Looked for the lowest fixed rate you can qualify for and consider the origination fee and other costs when deciding on a mortgage lender.
After you have done your own personal financial analysis and decided how much you can afford to spend on a house, it is time to start looking around. Don’t put in an offer on the first house you see, check several properties before you make a decision. Chances are you’ll be living there a long time.
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