|
|
Steps Towards Home Ownership
|
|
Purchasing a home involves a roller coaster of emotions, a pile of paperwork and nerves of steel. For many, it is one of the most significant investments of their lives. Research and an understanding of your financial situation, rather than emotion, should drive your decisions. Following are steps to follow to the final destination of home ownership. |
Step 1: Determine Affordability
|
|
The best way to determine what you can afford is to sit down with a financial consultant or mortgage broker who will weigh your current debt against your income and savings. It is important to consider the down payment, closing costs and your ability to meet monthly mortgage payments and other expenses, such as maintenance. Jenny can supply the names of reputable lenders who will be glad to help you.
Lenders are generally looking for a down payment of five to 20 percent of the purchase price and proof of your ability to repay the mortgage.
v The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. According to the FHA, monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41% of income. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.
v Keep in mind that you don’t have to wait until you find a house to apply for a loan. In fact, it’s a good idea to get pre-approved before you start looking. Pre-approval means you have met with a lender, your credit history has been reviewed, and the loan officer believes you can qualify for a given amount. Although a pre-approval is not a final loan commitment, it demonstrates your borrowing power.
|
Step 2: Jenny Markham Will Help Find Your Home
|
|
Finding your prospective home can be time-consuming. Enlist the help of Jenny Markham, a full time Realtor with current listings and up-to-date market information. Jenny’s services add no cost to your home purchase, and she is patient, kind, and knowledgeable in real estate. She can provide excellent references from past clients.
v Many people choose communities based on schools.
v Do you need access to shopping and public transportation or libraries and museums? Or the peace and quiet of a rural community or the YMCA or lake? Are parks and recreation important?
v When you find places that you like, talk to people that live there. More than anything, you want a neighborhood where you feel comfortable.
v Before you begin looking at homes, make a list of your priorities, like location and size. Establish minimum requirements that a house must have for you to consider it, and a "wish list" of things you like but aren't essential.
v Use the links on Jenny's Community Links page for helpful information.
Contact the U.S. Department of Housing and Urban Development (HUD) if you ever feel excluded from a neighborhood or house. Also, contact HUD if you believe you are being discriminated against on the basis of race, color, religion, sex, nationality, familial status, or disability. HUD's Office of Fair Housing has a hotline for reporting incidents of discrimination: 1-800-669-9777 (and 1-800-927-9275 for the hearing impaired).
|
|
In Tennessee, an offer requires a written contract. Jenny will advise, write and submit a contract with your offer price, down payment, proposed closing date and any contingencies, such as requiring a satisfactory home inspection or a home sale contingency.
The seller may accept your offer, reject it or make a counter-offer. Jenny will represent and advise you in all negotiations, which may go back and forth several times until the binding contract is finalized. |
Step 4: Secure a Mortgage
|
|
|
Choose your lender carefully. Look for financial stability, a reputation for customer satisfaction, and a company that gives helpful advice and makes you feel comfortable.
A local lender with the authority to approve and process your loan locally is preferable. It will be easier for you to monitor the status of your application and ask questions. Jenny can provide recommendations of local lenders.
With a fixed-rate mortgage, the interest rate stays the same for the term of the mortgage, which is typically 30 years.
Adjustable Rate Mortgages (ARMS): come with a lower initial rate. The downside is that the rate and payment may move up based on a financial index, often once or twice yearly. The advantage of an ARM is that you can afford a more expensive home since the initial interest rate is lower.
|
At the closing, the final paperwork is signed and the property title is transferred from the seller to the buyer. The Settlement Statement, or HUD-1 Form, itemizes the services provided and fees charged. It is completed by the closing agent and is given to you at or before closing.
On average, you can expect to pay two to five percent of the home’s selling price for closing costs. Keep in mind that lenders also often require you to obtain homeowners insurance.
Closing Costs Include:
v Attorney or escrow fees (Yours and your lender's if applicable)
v Property taxes (to cover tax period to date)
v Interest (paid from date of closing to 30 days before first monthly payment)
v Loan Origination fee (covers lenders administrative cost)
v Recording fees
v Survey fee
v First premium of Mortgage Insurance (if applicable)
v Title Insurance (yours and lender's)
v Loan discount points
v First payment to escrow account for future real estate taxes and insurance
v Paid receipt for homeowner's insurance policy (and fire and flood insurance if applicable)
v Any documentation preparation fees
Once the closing is complete, you are free to move into your home as specified by the contract. You will soon realize the economic benefits including the opportunity to build equity and take advantage of valuable tax benefits.
Link to more valuable information:
v Buying Your Home: Settlement Costs and Information
v HUD Mortgage Glossary
Thank you for visiting www.HendersonvilleTennesseeRealEstate.com.
Stop by www.HendersonvilleTNRealEstate.com and www.GallatinTennesseeRealEstate.com.
And remember . . . Don’t spend a PENNY ‘til you call JENNY!
|
|
There is no comparison. The only advantage of renting is being free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. You cannot decorate without permission and may also be at the mercy of the landlord for housing.
Owning a home has many benefits. When you make a mortgage payment, you build equity, which is investment! You also qualify for tax breaks to assist you with the payment of insurance, real estate taxes, and upkeep. Given the freedom, stability, and security of owning your own home, these costs are well worth the expense.
|
The lender collects your property taxes and your insurance premium in an Escrow Account. The money in the account will be used to pay your taxes and insurance premiums when they become due. The amount in this account is based on the estimated amount necessary to pay these obligations each year. |
A comprehensive study of closing costs nationwide, sponsored by Bankrate.com, shows Tennessee's average costs are BELOW average. Tennessee currently ranks 42nd in the nation ...and, in this study, the lower our ranking the better!
Average closing costs for a home involving a $180,000 loan for Tennessee totaled $2,459. The national average is $2,748.
The biggest differences between state and national average costs were in the following categories:
Mortgage broker, origination or lender fees
Tennessee: $688
U.S.: $853
Attorney, closing or settlement fee
Tennessee: $363
U.S.: $426
Title insurance
Tennessee: $690
U.S.: $756
Title work - Title search, plat drawing, name search,
endorsements
Tennessee: $141
U.S.: $167
[SOURCE: Bankrate.com]
Email Jenny for help with all your real estate needs.
And remember . . Don't spend a PENNY 'til you call JENNY! |
|
|