BuyersHelpful Information When Buying a Home
"My job is to protect and educate you, negotiate on your behalf, and to insure all of the details of your transaction are handled properly. I will uphold to the finest standards of the Code of Ethics for REALTORS®, which means you can always count on me to be honest, fair, keep your confidential information confidential and insure that we disclose all appropriate information. I will always work in the best interest of you, my client!"
DPR Real Estate Professional
Why consider buying a home?
Benefits of owning your own home
Owning your home has many advantages – both personal and financial. But buying a home is a big decision. Weigh the benefits and the differences between owning and renting to better understand if owning a home is right for you.
First consider the benefits of owning your own home:
- Tax savings
You may earn significant tax savings because you can deduct mortgage interest and property taxes from your federal income tax and many states’ income tax if you itemize your deductions
- A more stable monthly housing expense
Your monthly housing loan or mortgage expense can remain the same for the life of your mortgage, depending on the type of loan you choose
You may build equity in your home over the life of your loan, which allows you to plan for your future goals and/or retirement
Owning a home is not right for everyone. It may not be the right time for you. Consider the some differences between renting and owning:
- Renters are typically free from maintenance and repair to the home
- Renters can move more quickly and easier than a homeowner
- Homeowners often have more freedom in decorating, landscaping, remodeling, being a pet owner, etc.
- There are higher costs associated with buying and selling a home
- Homeowners have a financial investment and may build equity in their home
How much can I afford?
For a rough idea/estimate of the loan amount you may qualify for, multiply your annual gross income (before taxes) by 2.5.
Example, if your annual household income is $100,000, you may be able to qualify for a $250,000 home. This is just a very rough estimate. The actual amount you qualify for will vary based on your income, debt and credit history.
Mortgage lenders typically use the housing expense and debt-to-income ratios to more accurately determine the loan amount you will qualify.
- Debt-to-Income Ratio: You need to factor your other debts into determining an affordable monthly mortgage payment. Mortgage lenders look at whether your total debt is larger than 30-40% of your monthly gross income. Remember, debt is not just credit cards and student loans. It can also include alimony, child support, car loans, and housing expenses.
- Housing Expense Ratio: Mortgage lenders recommend that your monthly mortgage payment be less than or equal to a quarter of your monthly gross income (before taxes). This percentage can change based on the type of your loan and/or the area in which you’re looking to buy
Be sure to speak to a mortgage lender to help you better understand these guidelines. Remember there are other related expenses to purchasing a home and maintaining it. Set money aside for a down payment, closing costs, inspections costs, moving, as well as a plan to set money aside for in the future for any maintenance and repairs that may come up later on.
Why should I get Pre-Approved?
Getting pre-approved is different from getting pre-qualified. While getting pre-qualified is good, it is only an assessment of your borrowing potential based solely on the information you give the lender.
Getting pre-approved is best as it is obtained through documented and verified information. Credit and employment histories are verified, as well as your income and cash-on-hand. This gives your lender a realistic view of your borrowing potential and gets you locked in at a certain rate.
A pre-approved buyer will be more desirable to a seller as it shows them you are already prepared and ready to buy. In some cases it may allow you to have a quicker close of escrow which can be important to sellers. Above all, a pre-approved buyer gives your agent better leverage to negotiate on your behalf.
Common Myths About Buying a Home
MYTH: You must have a great credit score to purchase a home
TRUTH: While great credit can help you get a better rate and a cheaper purchase, it is not necessary to buy a home. By having your finances in order and minimal debt, some one with less than perfect credit may still qualify. If its not the right time, it gives you a chance to repair your credit where needed, so you will be ready later on.
MYTH: You must save for a substantial down payment to purchase a home
TRUTH: A down payment is great and can help reduce the monthly payment. But there are plenty of programs lenders offer that require little to no money down. These programs are not just limited to a first-time home buyer.
MYTH: Renting a home is cheaper
TRUTH: Sometimes this may be the case, but depending on the market, often times buying can be about the same as renting or cheaper depending on the area. Buying a home is a long term investment that builds value and equity. This can make the maintenance, repairs and taxes all worth it. Renting once pays toward the owners equity with no advantage or value to the renter.
MYTH: You do not need a Realtor with you when purchasing a new build from a builder
TRUTH: A realtor must be present with you the first time you visit a development to register with you. Without a realtor, the registration is you signing your right away to having that representation.
MYTH: You can not get a loan if you just changed jobs
TRUTH: While lender do look at your job history, they understand that people change jobs. The most important thing they look at is a stead and stable income.
MYTH: The lender will share or sell my personal information to others
TRUTH: It can be scary to share your personal information with someone. But there are federal and state laws in place that protect you and your information.
Why should I use a REALTOR®?
Your REALTOR® is not just an agent, but a professional member of the National Association of REALTORS® and uphold to its strict code of ethics. Here are the top 5 reasons why you should use a REALTOR®:
- KNOWLEDGE: There is a lot of paperwork involved whether you are buying or selling a home. Having a professional by your side that speaks the language can not only get you the best deal, but help to avoid delays or costly mistakes.
- MARKET INFORMATION: REALTORS® can obtain objective information about each individual property. They can also provide local information zoning, utilities, schools and more that helps you make the best decision for your family.
- MARKETING POWER: A property doesn’t sell with advertising alone. A large share of real estate comes from a REALTORS® contacts with previous clients, friends and family. They know how, when and where to best market your property to get the most interest.
- NEGOTIATION: A REALTOR® will look at every angle of a transaction from your perspective. This allows you the flexibility you need to take the next step and feel good about it.
- UP TO DATE EXPERIENCE: Laws and regulations change over time. Having a REALTOR® that handles transactions on a regular basis ensures everything is being done in line with those current laws and regulations. REALTORS® are required to get a certain amount of continuing education hours every two years, which only increases their knowledge and experience that they can pass on to you.
BONUS – YOUR ROCK: Buying a home is the biggest investment for most people. Having an objective third party that has no emotional attachments looking out for your best interests, can help you stay focused in making the right decision and protect you against costly mistakes.
What is Agency and how does it affect me?
As a REALTOR® representing you, I have a fiduciary responsibility to you. This means I am required to put your interests before mine. For example, if, when looking for a new home, I found one that matched what you wanted perfectly but noticed that the commission being offered was lower than all of the other properties that I had to show you, I could not keep from showing you that property. I am required to put your needs first.