|
Buying A Home 101
Whether it's your first time buying a home or not, you
should familiarize yourself with the whole mortgage process. Numerous
mortgage lenders will assist you in the process of acquiring a
pre-qualified and pre-approved home buying application. Of course, your
mortgage qualifications will be required by your agent to strengthen your
deal in finding and buying a home.
Here are some things to consider when buying a home.
- Money
Before buying a home, consider your financial status. Check your credit
situation by getting hold of your most recent credit report at the credit
center. You should know exactly how much money you have and how much you
can afford to spend on a home.
- Time
Don’t expect to find a great home tomorrow if you’ve only begun your
search today. Buying a home is like working on a school project. It needs
ample time. If you think you’ve gathered enough information and resources
within your time table, so be it.
- The Right Agent
If you believe in the comfort and rewards of buying a home, you will need
to trust the agent who will do the work for you. In finding a reliable
agent you will need to look at many sources of information to determine
“who represents what”. It is always best to compare experiences,
backgrounds and referrals of reputable people.
- Needs vs. Wants
Why confuse yourself between needs and wants when you can have both? Upon
gathering information in buying a home, take into consideration the
different types of houses available and decide what you want from what is
offered.
- Word Confusion
Needless to say, when you buy a home you should familiarize yourself with
the terms and words used during the dealing and negotiating with your
agent and contractor. Also, try to keep a list of the questions you have
that need further clarification.
- Cue Cards
You don’t want to forget even a single detail about the home you’ve
selected, right? Why not keep little cue cards where the ‘plus & minus’ on
each home or property you’ve seen is listed and recorded.
- Points and Plus
Learn how to bargain and get the best possible deal.
- Safety and Security
Be sure to get homeowner’s insurance. It may seem like a lifetime expense,
but it will get you continued savings in the long run.
- Final Check
Do a final inspection or walk-through of the house before settlement and
before the contract is processed.
Consider the above points as helpful factors when you to decide to buy a
home. Plan ahead and avoid the common mistakes that most home buyers make.
Mortgages: Theory - vs - Reality:
Theory:
In the good ole days, a person would go to the bank borrow money, buy a
home, make payments for 30 years, then own it. However, that is not the
reality of today. In fact, can you think of anyone who has done that
(besides grandparents)?
The 'Illusion' of paying off your home might be costing you more then you
think!
Reality:
The Average Person will move or refinance their home every 5 to 7 years.
You pay a huge premium to have a 30 year fixed rate when you could lower
your payment by $100's per month with a 7 year fixed rate. That's $100's
per month you could use to pay down debt, invest or spend on 'your family'
instead of the 'banker's family'.
However, if a person is going to buy a home and make payments on the note
for the next 10 or 20 years, a 30 year fixed mortgage is the right
product. But be realistic! Can you name 5 friends who have done this? Have
you? The key is be honest about the likelihood of needing to borrow out
equity for braces, schooling, weddings or other family needs.
If you are still not sure, we'll give you another six... to lose the 30
year fix!
Putting money into your home is like putting money into a savings
account that earns no interest.
Your home will go up in value (or not) whether you buy down the balance
(or not). Rather than buy down the balance and earn no interest on the
equity, put your money in a place where you will earn interest.
Get Cash-Out while you still can!
If you were to lose your job the bank doesn't care how well you have paid
your loan or how much equity you have in your home -- your formerly
friendly banker will not loan you money and you could lose your home and
everything you've worked hard to achieve.
However, if you had your money in an interest bearing account or
investment, you could easily tap into the years worth of payments you will
be accumulating.
Invest Your Money somewhere else
Putting money into your home earns you no return on your money. By putting
money into a an interest bearing account or investment you will put your
money to work for you.
Pay the house off - Who is kidding who anyway?
Facts:
-
Most people think they want to pay off their house.
-
Most people refinance their home or move every 5 to 7
years.
-
In the first 5 years of your mortgage 92% of your money
is interest.
-
In the first 10 years you will only gain 85% of your
money is interest.
-
After 20 years you don't even own 1/2 of your home
-
How many people do you know (besides Grandma & Grandpa)
that have been making payments for 20 years without moving or
refinancing?
-
How many do you know (besides Grandma & Grandpa) that
own their home free and clear?
Cheapest money you will ever borrow
The average American has credit card debt, car loans, and a host of other
consumer debt with interest rates as high as 19% and they don't even get a
tax deduction. Your home on the other hand has a low interest rate and the
interest paid is tax deductible lowering the cost of the interest by about
1/3. Use your home to eliminate high interest debt.
Tax Deductible
Best source for a tax deduction is the interest on your home. Money that
goes toward 'equity' is NOT deductible nor are interest payments on credit
cards or car loans.
|
