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GETTING STARTED
The first step toward owning a home is to look at all the possible roads available to you. Look to your real estate agent to help
you cover the basics that concern all homebuyers - from developing a house-hunting strategy (by figuring how much you can
afford to spend, and how to line up your finances) to actually starting out on your search.
you cover the basics that concern all homebuyers - from developing a house-hunting strategy (by figuring how much you can
afford to spend, and how to line up your finances) to actually starting out on your search.
 | Where do I start? | |
First things first. After you’ve thought about things for awhile, ask yourself why you want to buy a home: to stop paying rent? to start building
equity? to have a place of your own? to move up to a bigger home?
Next, list what kind of home you’d like and where you would like it to be. Be specific. Separate the “must haves” from the want to haves.”
Rate both lists on a scale from 5 (high) to 1.
Think of yourself as zeroing in on a target, going from the general to the specific. Consider area (city, suburban, country); community
(north, south, east or west side); neighborhood (older and settled or sparkling new; a particular school; recreational facilities; and other
community services: transportation, day care, library, stores, entertainment). Ask yourself how many minutes you’re willing to commute to
work.
Think about home styles (1-story, 2-story, townhouse, condominium, etc.) How much space do you need, and how much will you need in
the foreseeable future (number of bedrooms, baths; kind of kitchen and total rooms); size and kind of property. Do you want a new home,
an older one to fix up? Is the community a good area for resale? Someday you or your heirs will want to sell. Con-sider how long you
expect to live in this particular home. Keep going with whatever you want to add.
Knowing exactly what you think you want makes house-hunting and later decisions easier when you get into the nitty-gritty aspects of
buying. Many people like to start a House Hunter’s” notebook to keep their requirements clearly in mind and to compare specific properties.
You’ll find as you return again and again to your original thinking that your preferences become clearer—and your search becomes more
efficient.
equity? to have a place of your own? to move up to a bigger home?
Next, list what kind of home you’d like and where you would like it to be. Be specific. Separate the “must haves” from the want to haves.”
Rate both lists on a scale from 5 (high) to 1.
Think of yourself as zeroing in on a target, going from the general to the specific. Consider area (city, suburban, country); community
(north, south, east or west side); neighborhood (older and settled or sparkling new; a particular school; recreational facilities; and other
community services: transportation, day care, library, stores, entertainment). Ask yourself how many minutes you’re willing to commute to
work.
Think about home styles (1-story, 2-story, townhouse, condominium, etc.) How much space do you need, and how much will you need in
the foreseeable future (number of bedrooms, baths; kind of kitchen and total rooms); size and kind of property. Do you want a new home,
an older one to fix up? Is the community a good area for resale? Someday you or your heirs will want to sell. Con-sider how long you
expect to live in this particular home. Keep going with whatever you want to add.
Knowing exactly what you think you want makes house-hunting and later decisions easier when you get into the nitty-gritty aspects of
buying. Many people like to start a House Hunter’s” notebook to keep their requirements clearly in mind and to compare specific properties.
You’ll find as you return again and again to your original thinking that your preferences become clearer—and your search becomes more
efficient.
| Exactly how will a real estate agent help me buy a home? | |
Brokers and agents make it their business to provide every service connected with your home search, from expert advice in the early stages
through careful monitoring of your settlement (also “closing” or escrow”). The more closely you work with one agent, the better your needs
are known and the more effectively you can be served—saving you time and possible grief.
All agents are bound by law to deal fairly and ethically with both buyer and seller. Because the seller typically hires the broker, a broker’s
and agent’s legal obligation is to represent the interests of the seller. This means you must decide yourself what offer to make and what
counter offers to accept.
You benefit from an agent’s services in many ways such as:
• helping you set up a plan of action through an analysis of your needs and your finances, the current housing market, homes available in
your price range, and lenders’ mortgage options.
• personally conducting your search to find neighborhoods and homes that fit your requirements.
• guiding you through the intricacies of making an offer on a home and presenting your offer to the seller.
• assisting you through both the pre-settlement and settlement processes
• showing you how to save home ownership tax dollars in the years to come.
through careful monitoring of your settlement (also “closing” or escrow”). The more closely you work with one agent, the better your needs
are known and the more effectively you can be served—saving you time and possible grief.
All agents are bound by law to deal fairly and ethically with both buyer and seller. Because the seller typically hires the broker, a broker’s
and agent’s legal obligation is to represent the interests of the seller. This means you must decide yourself what offer to make and what
counter offers to accept.
You benefit from an agent’s services in many ways such as:
• helping you set up a plan of action through an analysis of your needs and your finances, the current housing market, homes available in
your price range, and lenders’ mortgage options.
• personally conducting your search to find neighborhoods and homes that fit your requirements.
• guiding you through the intricacies of making an offer on a home and presenting your offer to the seller.
• assisting you through both the pre-settlement and settlement processes
• showing you how to save home ownership tax dollars in the years to come.
| What do people mean when they say home ownership is the key to financial security? | |
The benefits of home ownership are both financial and psychological:
• Home ownership is a durable (real) investment. Historically housing has appreciated in value for decades. Although no one can say a
specific borne in a specific location will increase in value, generally speaking the odds favor most homeowners. Also, monthly mortgage
payments (the part that reduces the principal loan balance) becomes a solid form of savings.
• Numerous unique tax advantages are available to homeowners. Unlike other investment tax shelters, home ownership works for you even
as you live in your investment. For example, the thousands of dollars you pay in mortgage interest (discussed below) is deductible. This
tax deduction alone can sometimes make owning your own home cheaper than renting with “after-tax’ take-home dollars.
• By accumulating equity in your home you can later move up” to another home, with a good down payment on band.
• Home ownership offers you the opportunity to take control of your housing costs. Mortgage payments (even on adjustable-rate mortgages)
are more predictable than rents.
• Owning your own borne allows great freedom of choice in choosing your community, architecture, interior decor, appliance selection,
plus whatever method of financing best suits your situation.
• Home ownership is a durable (real) investment. Historically housing has appreciated in value for decades. Although no one can say a
specific borne in a specific location will increase in value, generally speaking the odds favor most homeowners. Also, monthly mortgage
payments (the part that reduces the principal loan balance) becomes a solid form of savings.
• Numerous unique tax advantages are available to homeowners. Unlike other investment tax shelters, home ownership works for you even
as you live in your investment. For example, the thousands of dollars you pay in mortgage interest (discussed below) is deductible. This
tax deduction alone can sometimes make owning your own home cheaper than renting with “after-tax’ take-home dollars.
• By accumulating equity in your home you can later move up” to another home, with a good down payment on band.
• Home ownership offers you the opportunity to take control of your housing costs. Mortgage payments (even on adjustable-rate mortgages)
are more predictable than rents.
• Owning your own borne allows great freedom of choice in choosing your community, architecture, interior decor, appliance selection,
plus whatever method of financing best suits your situation.
| What are some of the tax advantages of owning a home? | |
Tax breaks enter the home ownership picture from all angles: buying, owning and selling. Remember, tax laws are constantly changing
and complex, and you should consult with your professional tax advisor before filing any claims on your tax returns. Here some of the
basics:
and complex, and you should consult with your professional tax advisor before filing any claims on your tax returns. Here some of the
basics:
| Homebuying | |
Tax-savings begin with deductions allowed for:
• Settlement charges for the use of money, such as “points:’ (A point is a sum equal to one percent of your loan amount. Points
are charged to increase a lender’s yield and attract money into the housing market. For example, one point on an $86,000 loan
is $860; two points total $1,120.)
• Prepaid interest on prorated loan payments made between settlement and your first mortgage payment.
• City, town and/or county real estate taxes on the purchased property.
• Settlement charges for the use of money, such as “points:’ (A point is a sum equal to one percent of your loan amount. Points
are charged to increase a lender’s yield and attract money into the housing market. For example, one point on an $86,000 loan
is $860; two points total $1,120.)
• Prepaid interest on prorated loan payments made between settlement and your first mortgage payment.
• City, town and/or county real estate taxes on the purchased property.
| Home Ownership | |
Your home provides shelter for both you and your taxes. For example:
• The interest paid on your loan is deductible, as are your property taxes. This is a major benefit that can effectively knock as
many as to 4 percentage points off your interest rate This interest deduction is also a major tax advantage in owning a second
home for yourself.
• You may deduct a portion of your home expenses if you have a home office.
• Any health-related additions to your home required by your doctor (such as air conditioning for an asthma sufferer) are
deductible, provided the addition does not add to the value of your borne.
• Casualty losses (such as flooding, hurricane damage etc.) that are not reimbursed by insurance are deductible, subject to
income limits.
• The interest paid on your loan is deductible, as are your property taxes. This is a major benefit that can effectively knock as
many as to 4 percentage points off your interest rate This interest deduction is also a major tax advantage in owning a second
home for yourself.
• You may deduct a portion of your home expenses if you have a home office.
• Any health-related additions to your home required by your doctor (such as air conditioning for an asthma sufferer) are
deductible, provided the addition does not add to the value of your borne.
• Casualty losses (such as flooding, hurricane damage etc.) that are not reimbursed by insurance are deductible, subject to
income limits.
| Home Selling | |
When you sell your home tax-savings help defray many of the expenses of selling, such as:
• Fix-up” expenses incurred in repairing your home for sale may be deducted, as long as the repairs have been made within 90
days of the sales contract date, are paid for within 30 days of closing, and are not capital improvements (such as a new roof).
• If, when you sell, you have to pay a penalty for prepaying your mortgage, that charge can be deducted. Fortunately, few
mortgages have prepayment penalties today.
• Under certain conditions, you may deduct moving expenses within limits.
• If, within two years of selling, you buy a new borne of equal or greater value, you can defer payment of any tax on the sale of
your old home.
• When that deferred tax comes due, you can subtract the cost of borne improvements from your net sale price (“net sale price” is
your sale price minus closing costs, broker’s and lawyer’s fees). You can also subtract title insurance fees, recording fees, transfer
taxes and other acquisition costs. This reduces your gain, and also your taxes.
• If you’re 55 or older and have lived in your home for 3 of the past 5 years, you do not have to pay taxes on gains up to $125,000.
• If you pass up the one-time $125,000 gain exclusion and if you do not reinvest in a new home when you sell, you can spread out
your profit by permitting the buyer to spread purchase payments over a period of years, thereby reducing your taxes in any one
year.
• Fix-up” expenses incurred in repairing your home for sale may be deducted, as long as the repairs have been made within 90
days of the sales contract date, are paid for within 30 days of closing, and are not capital improvements (such as a new roof).
• If, when you sell, you have to pay a penalty for prepaying your mortgage, that charge can be deducted. Fortunately, few
mortgages have prepayment penalties today.
• Under certain conditions, you may deduct moving expenses within limits.
• If, within two years of selling, you buy a new borne of equal or greater value, you can defer payment of any tax on the sale of
your old home.
• When that deferred tax comes due, you can subtract the cost of borne improvements from your net sale price (“net sale price” is
your sale price minus closing costs, broker’s and lawyer’s fees). You can also subtract title insurance fees, recording fees, transfer
taxes and other acquisition costs. This reduces your gain, and also your taxes.
• If you’re 55 or older and have lived in your home for 3 of the past 5 years, you do not have to pay taxes on gains up to $125,000.
• If you pass up the one-time $125,000 gain exclusion and if you do not reinvest in a new home when you sell, you can spread out
your profit by permitting the buyer to spread purchase payments over a period of years, thereby reducing your taxes in any one
year.
| Is it true my paycheck will get bigger when I buy a home? | |
Yes, if you’re renting now or if you take a larger mortgage loan than you now have. Buying a home adds to your “take home” paycheck
because you can increase your withholding allowances in anticipation of mortgage interest payment deductions on your next tax return.
By increasing your allowances, you reduce the amount with-held to pay future taxes which puts your tax refund in your paycheck today,
not at the end of the year.
Ask your tax preparer to estimate how many allowances you should claim to compensate for reduced taxes caused by the interest
deductions.
because you can increase your withholding allowances in anticipation of mortgage interest payment deductions on your next tax return.
By increasing your allowances, you reduce the amount with-held to pay future taxes which puts your tax refund in your paycheck today,
not at the end of the year.
Ask your tax preparer to estimate how many allowances you should claim to compensate for reduced taxes caused by the interest
deductions.
| What price home can I afford to buy? | |
The easy answer to this all-important question of price is simply adding how much you can afford to borrow to how much you have
available for your down payment investment. The total is your maximum affordable home price. (Remember to keep enough cash or credit
left over for move-in expenses and an emergency reserve.) The harder answer is how much you are qualified to borrow.
For starters, you can put the most frequently used lenders’ rule of thumb to work: the 28%/36% formula. This is the test many lenders use to
qualify applicants for conventional mortgage loans (though some lenders and mortgage plans apply stricter codes, such as 25% and 33%,
especially if your down payment is less than 20% of the sale price).
The 28% test permits you to spend no more than 28% of your gross monthly income on your total monthly housing costs: including
principal, interest, taxes and insurance (P.l.T.l.) and condominium fees, if any. For example: 28% of a $3,600 gross monthly income would
qualify a buyer for a $1,008 per month payment.
The 36% limit covers both your P.l.T.l. and long-term debts (more than 10 months) such as alimony, regular household expenses
(mortgage insurance and/or condominium or association fees), outstanding loans (car, appliances, school), support for children (resident or
living separately). For example: 36% of $3,600 would qualify for a $1,296 payment per month.
In our examples, the affordable loan payments for an income of $3,600 per month is a range between $1,008 a month home payment and
$1,296 a month combined home and debt payments. (Strict lenders may use only the 28% standard, even with no debts, or ask you to
meet both standards.)
In addition to your loan, the cash you have on hand (plus the cash you can acquire) is an important factor. You will need cash for a down
payment (ranging from 0-5-10-20% or more of the sale price), for closing costs, for moving expenses, possible immediate repair, remodel-
ling, new appliances or furnishings. Also be sure to budget for utilities and maintenance. This takes some figuring.
An agent can help translate your affordable monthly payment into a total loan amount. Add this loan amount to your desired down
payment amount and you get the approximate range of home prices you can afford.
Your next step is to shop carefully for the loan that will keep your mortgage payments in line with your budget. Different mortgage plans
can dramatically affect your monthly payment - and thus the price home you can afford. Also other plans, especially FHA and VA
mortgages, may offer you much more liberal qualifying standards—again allowing you more home for your income.
available for your down payment investment. The total is your maximum affordable home price. (Remember to keep enough cash or credit
left over for move-in expenses and an emergency reserve.) The harder answer is how much you are qualified to borrow.
For starters, you can put the most frequently used lenders’ rule of thumb to work: the 28%/36% formula. This is the test many lenders use to
qualify applicants for conventional mortgage loans (though some lenders and mortgage plans apply stricter codes, such as 25% and 33%,
especially if your down payment is less than 20% of the sale price).
The 28% test permits you to spend no more than 28% of your gross monthly income on your total monthly housing costs: including
principal, interest, taxes and insurance (P.l.T.l.) and condominium fees, if any. For example: 28% of a $3,600 gross monthly income would
qualify a buyer for a $1,008 per month payment.
The 36% limit covers both your P.l.T.l. and long-term debts (more than 10 months) such as alimony, regular household expenses
(mortgage insurance and/or condominium or association fees), outstanding loans (car, appliances, school), support for children (resident or
living separately). For example: 36% of $3,600 would qualify for a $1,296 payment per month.
In our examples, the affordable loan payments for an income of $3,600 per month is a range between $1,008 a month home payment and
$1,296 a month combined home and debt payments. (Strict lenders may use only the 28% standard, even with no debts, or ask you to
meet both standards.)
In addition to your loan, the cash you have on hand (plus the cash you can acquire) is an important factor. You will need cash for a down
payment (ranging from 0-5-10-20% or more of the sale price), for closing costs, for moving expenses, possible immediate repair, remodel-
ling, new appliances or furnishings. Also be sure to budget for utilities and maintenance. This takes some figuring.
An agent can help translate your affordable monthly payment into a total loan amount. Add this loan amount to your desired down
payment amount and you get the approximate range of home prices you can afford.
Your next step is to shop carefully for the loan that will keep your mortgage payments in line with your budget. Different mortgage plans
can dramatically affect your monthly payment - and thus the price home you can afford. Also other plans, especially FHA and VA
mortgages, may offer you much more liberal qualifying standards—again allowing you more home for your income.
| Today’s financing techniques can be confusing. What are the basic types of loans I should know about? | |
You’re right. Today’s homebuyers have quite a variety of mortgage plans to choose among: fixed-rate, adjustable-rate; short-term, long-
term; low-interest; graduated payment; government insured, and many more. Each has its own special features. Here is a brief run-down of
five major mortgage plans. You’ll want to explore these and others in detail with an agent to see which plan best suits your needs.
Fixed Rate Conventional Mortgage
A conventional loan is a loan made to a buyer without a third party participant, such as VA or FHA. Fixed rate conventional loans are
typically paid off in equal monthly payments spread over 15, 25, or 30 years. The interest rate stays the same for the life of the loan,
therefore the monthly principal and interest payment remains constant. Terms of a conventional loan vary among lenders, but most can be
obtained with as little as 5% down payment. When the down payment is less than 20% it is necessary to obtain private mortgage insurance
(PMI) to protect the lender from a buyer’s default. Advantage: Quick processing and stable payments.
15-Year Mortgage
This loan is a straight 15 year amortized mortgage at current or below-market rates, and the buyer owns the home free and clear in 15
years, instead of 30 years. Lower rates combine with a shorter term to produce payments somewhat higher than 30-year-loans. Advantage:
Rapid equity growth and mortgage pay-off; dramatic interest savings.
Adjustable Rate Mortgage (ARM; also “variable rate”)
The interest rate may go up or down over the years and is tied to a financial market index (such as one-year Treasury bills). Monthly
payments may also be adjusted on a periodic schedule. Many ARM's set a maximum adjustment (or 'cap') on possible increases to interest
rates, monthly payments, and/or a maximum cap on rates for the life of the loan. Advantage: The lower initial interest rate and monthly
payment allows the buyer to pay less in the early years for a larger loan. Caps offer peace-of-mind rate ceilings.
FHA Loan
Strictly speaking, FHA does not make loans; rather it insures loans, which increases lenders’ willingness to make low down payment loans.
With an FHA-insured loan, a homebuyer can make a small down payment, a feature particularly attractive to first-time buyers. The down
payment often averages in the range of 3-5% of the loan amount. Second mortgages are now permitted.
Points (prepaid interest) can be charged by the lender, but since the FHA rate is now tied to the points, the purchaser may negotiate the
interest rate and points with the seller.
FHA charges an advance mortgage insurance premium (MIP) fee. Ask an agent how much the fee would be in your situation, and if you
can borrow the fee and add it to the loan amount rather than measurably increase your closing costs.
FHA-insured mortgages offer a maximum loan amount that varies area to area. We can help you determine the prevailing maximum loan
amount in this area. Advantage: Low down payment; low interest rates; long terms; many are fully assumable loans; no prepayment
penalty; second mortgage permitted under certain circumstances.
VA Loan
Qualified veterans can take out loans up to a specific limit with no down payment, or up to a higher limit with some down payment. These
limits occasionally change; check with an agent for current rules. VA guaranteed loans can be combined with second mortgages and are
fully assumable by any qualified buyer. Payments are fixed for the full term. VA/FHA qualification guidelines are more flexible than those
for conventional loans. Actual income qualifications are dependent on the type of loan requested. Advantage: usually no down payment
and an interest rate typically below conventional loans; points can be paid only by the seller, although the buyer is charged a 1% loan
origination fee (not tax deductible); no prepayment penalty; assumption may make your home very attractive to buyers when you decide to
sell.
term; low-interest; graduated payment; government insured, and many more. Each has its own special features. Here is a brief run-down of
five major mortgage plans. You’ll want to explore these and others in detail with an agent to see which plan best suits your needs.
Fixed Rate Conventional Mortgage
A conventional loan is a loan made to a buyer without a third party participant, such as VA or FHA. Fixed rate conventional loans are
typically paid off in equal monthly payments spread over 15, 25, or 30 years. The interest rate stays the same for the life of the loan,
therefore the monthly principal and interest payment remains constant. Terms of a conventional loan vary among lenders, but most can be
obtained with as little as 5% down payment. When the down payment is less than 20% it is necessary to obtain private mortgage insurance
(PMI) to protect the lender from a buyer’s default. Advantage: Quick processing and stable payments.
15-Year Mortgage
This loan is a straight 15 year amortized mortgage at current or below-market rates, and the buyer owns the home free and clear in 15
years, instead of 30 years. Lower rates combine with a shorter term to produce payments somewhat higher than 30-year-loans. Advantage:
Rapid equity growth and mortgage pay-off; dramatic interest savings.
Adjustable Rate Mortgage (ARM; also “variable rate”)
The interest rate may go up or down over the years and is tied to a financial market index (such as one-year Treasury bills). Monthly
payments may also be adjusted on a periodic schedule. Many ARM's set a maximum adjustment (or 'cap') on possible increases to interest
rates, monthly payments, and/or a maximum cap on rates for the life of the loan. Advantage: The lower initial interest rate and monthly
payment allows the buyer to pay less in the early years for a larger loan. Caps offer peace-of-mind rate ceilings.
FHA Loan
Strictly speaking, FHA does not make loans; rather it insures loans, which increases lenders’ willingness to make low down payment loans.
With an FHA-insured loan, a homebuyer can make a small down payment, a feature particularly attractive to first-time buyers. The down
payment often averages in the range of 3-5% of the loan amount. Second mortgages are now permitted.
Points (prepaid interest) can be charged by the lender, but since the FHA rate is now tied to the points, the purchaser may negotiate the
interest rate and points with the seller.
FHA charges an advance mortgage insurance premium (MIP) fee. Ask an agent how much the fee would be in your situation, and if you
can borrow the fee and add it to the loan amount rather than measurably increase your closing costs.
FHA-insured mortgages offer a maximum loan amount that varies area to area. We can help you determine the prevailing maximum loan
amount in this area. Advantage: Low down payment; low interest rates; long terms; many are fully assumable loans; no prepayment
penalty; second mortgage permitted under certain circumstances.
VA Loan
Qualified veterans can take out loans up to a specific limit with no down payment, or up to a higher limit with some down payment. These
limits occasionally change; check with an agent for current rules. VA guaranteed loans can be combined with second mortgages and are
fully assumable by any qualified buyer. Payments are fixed for the full term. VA/FHA qualification guidelines are more flexible than those
for conventional loans. Actual income qualifications are dependent on the type of loan requested. Advantage: usually no down payment
and an interest rate typically below conventional loans; points can be paid only by the seller, although the buyer is charged a 1% loan
origination fee (not tax deductible); no prepayment penalty; assumption may make your home very attractive to buyers when you decide to
sell.
| How much down payment should I make? | |
There are advantages to both large and small down payments, and which you choose depends on both personal choice and your financial
circumstances.
Advantages of a large down payment: Less mortgage to pay off, smaller monthly mortgage payments and greater opportunity to find lower
interest rates.
Advantages of a small down payment: Less cash out of hand, therefore more money for other costs; a larger monthly mortgage payment
means a larger tax deduction for mortgage interest. With a down payment of less than 20%, you will be required by the lender to take out
mortgage insurance. The FHA (Federal Housing Administration) calls it MIP (Mortgage Insurance Premium), while private companies call
it PMI (Private Mortgage Insurance).
circumstances.
Advantages of a large down payment: Less mortgage to pay off, smaller monthly mortgage payments and greater opportunity to find lower
interest rates.
Advantages of a small down payment: Less cash out of hand, therefore more money for other costs; a larger monthly mortgage payment
means a larger tax deduction for mortgage interest. With a down payment of less than 20%, you will be required by the lender to take out
mortgage insurance. The FHA (Federal Housing Administration) calls it MIP (Mortgage Insurance Premium), while private companies call
it PMI (Private Mortgage Insurance).
| What are the best sources of cash for a down payment? | |
If your own bank account isn't large enough, you have several options. For example:
• Receive a tax-free gift from your parents (or others) documented by a “gift letter" stating no repayment is required (thus your debt burden
is not increased). Some lenders may require you to use some of your own money in addition to the gift.
• Borrow against a life insurance policy.
• Borrow against a company pension plan.
• Cash in a retirement savings plan (even though you may have to pay a penalty for early withdrawal).
• Ask for a cash payment from your employer instead of next year’s raise.
• Obtain an advance on a future inheritance.
• Use your own business as collateral.
• Team up with friends, relatives or investors as partners in return for equity in your home. (You can, if you like, buy them out later.)
• Receive a tax-free gift from your parents (or others) documented by a “gift letter" stating no repayment is required (thus your debt burden
is not increased). Some lenders may require you to use some of your own money in addition to the gift.
• Borrow against a life insurance policy.
• Borrow against a company pension plan.
• Cash in a retirement savings plan (even though you may have to pay a penalty for early withdrawal).
• Ask for a cash payment from your employer instead of next year’s raise.
• Obtain an advance on a future inheritance.
• Use your own business as collateral.
• Team up with friends, relatives or investors as partners in return for equity in your home. (You can, if you like, buy them out later.)
| Should I shop for a loan before or after I find a place to buy? | |
It’s a good idea to let an agent help you look for financing before you find a home. The agent is in constant contact with many lenders,
and can act as an invaluable “clearing house” of information. If you’re actively house hunting but have not found the right home yet, ask
the lender to do a “screening application.” This details your income, debts and assets.
Knowing where you stand concerning how much money a lender will lend you (based on your income and credit rating) puts you in a
good bargaining position. Sellers faced by deciding between two buyers - one who is “pre-qualified” by a lender - may favor the offer of the
buyer for whom getting a loan is almost a sure thing.
and can act as an invaluable “clearing house” of information. If you’re actively house hunting but have not found the right home yet, ask
the lender to do a “screening application.” This details your income, debts and assets.
Knowing where you stand concerning how much money a lender will lend you (based on your income and credit rating) puts you in a
good bargaining position. Sellers faced by deciding between two buyers - one who is “pre-qualified” by a lender - may favor the offer of the
buyer for whom getting a loan is almost a sure thing.
| On Your Mark. Get set. Go! | |
Now that you’ve mapped out your strategy, determined what you want to look for in general and lined up a real estate
agent, you’ll want to discover all you need to know about intelligent, time-saving and money-saving house hunting. That’
s what our next section is all about.
agent, you’ll want to discover all you need to know about intelligent, time-saving and money-saving house hunting. That’
s what our next section is all about.
| Richard A. Reich, REALTOR |
| 827 Willow Street, Lebanon, PA 17042 (717) 273-8861 ~ dick@reichrealty.com |