At Small Business Accounting Solutions, we help our Milwaukee and Waukesha Clients with Life Events as well as their Accounting issues. Buying or selling a home is something that can go a lot easier if you have somebody in your corner.
Once you are ready to buy a home, you will need to be as informed
as possible. This guide discusses how much money to save for a down
payment, how to work with a real estate agent, how to negotiate, and
what you need to know about closing on your new home--including fees
and other costs.
Because home ownership is a substantial investment and a long-term
commitment, it is important to become as knowledgeable as possible
about the process of buying a home including how much you need to
save for a down payment, the process of finding the right home for
you, negotiating the best possible deal, and the various aspects of
closing.
Deciding How Much to Spend
Before deciding on the price range of the home you plan to buy,
think about how much you want to pay out each month in mortgage
payments. Use a mortgage calculator (online) to figure out what your
payments would be and try to make as large a down payment as possible
to reduce your principal loan amount.
The Mortgage Payment
A mortgage payment consists of the mortgage loan payment
(principal and interest), property taxes (in most cases), and
homeowner's insurance. It might also include private mortgage
insurance if your down payment is less than 20%.
Caution: The lender will set a maximum on how much
you can borrow, but you use the maximum only as a starting point in
deciding how much you will borrow.
Tip: To get an estimate of the maximum mortgage
amount ask a real estate agent to help you get "pre-qualified"
by a lender.
When deciding how much to borrow, be sure to take into account
saving for your retirement, your financial goals, and your current
lifestyle. If your monthly payments do not allow you to meet these
needs, buying that particular home may not make financial sense.
Caution: To avoid having your dream home turn into
a nightmare, calculate how much you realistically can spend on the
monthly mortgage payment. Do not forget to add in the real estate
taxes and mortgage insurance.
Lenders will be happy to pre-qualify you by giving you a
preliminary limit on the amount they would be willing to lend you.
This pre-qualification is not a commitment on the lender's part;
lenders will not commit to a mortgage until they have the property
appraisal and all of your supporting documentation, but the maximum
loan amount they are willing to offer can be helpful for planning
purposes.
The maximum debt is based on your income and debt level. It
depends on current interest rates, the term of the mortgage, and the
property taxes. To get a rough idea, the maximum debt amount is
usually about three times your annual gross income.
The Purchase Price
Having decided how much of a monthly mortgage payment you can
realistically afford, you are now ready to set a price range for your
new home. Give this range to potential real estate agents during your
first visit or use it to rule out homes that are out of your price
range.
Planning Aid: See the Financial Calculator: How
much house can I qualify for?
Tip: Don't be afraid to look at homes that are 15%
to 20% over your price range. In many cases, you will be able to
negotiate the price down.
The Down Payment
Try to make as large a down payment as possible. There are two
reasons for this: (1) lenders will generally not require you to pay
for private mortgage insurance if you can come up with a 20% down
payment and (2) the sooner you pay off your mortgage, the better off
you will be financially.
To save the 20% down payment, you may need to go on an "austerity
plan" for a year or two. Many home buyers also use cash gifts or
loans from family members to meet the 20% figure. If you cannot save
20% of the purchase price, you will still be able to get financing
however.
Working With Your Real Estate
Agent
You can save yourself much time and trouble by knowing what to
look for in a real estate agent.
If you find that your real estate agent is not doing his or her
best to find you the home you want or is otherwise not meeting your
expectations, don't hesitate to make a change. Avoid the mistake of
staying in the relationship because you have invested time in it.
Rather, get out as soon as you can. The real estate agent will cost
you money, so make sure you are getting your money's worth.
You can shop for and buy a home without an agent, but you will
need to put in much extra time to do an agent's work: search for
properties, schedule appointments to see them, coordinate
inspections, and negotiate. Home buyers who already have a property
in mind that they want to buy are the best candidates to do the deal
without an agent.
Agents' Titles and What They Mean
When looking for a real estate agent, you may come across the
following commonly used titles. Here is a basic definition of each:
- Principal broker: This is a person who is licensed to
operate a real estate office. He or she may either work alone or
employ other agents. Several years of experience are required to
obtain this licensure. Anyone selling realty must work under the
supervision of a principal broker.
- Realtor: A realtor is a member of the National
Association of Realtors, along with a state realtors' association
and a local board of realtors. Realtors are bound by a code of
ethics. They are able to access a local computerized database of
homes for sale known as the multiple listing service.
- Agent: This is the general term for any licensed
professional in the real estate sales business.
- Listing agent: A type of agent who signs up the home
seller and lists the home with the multiple listing service.
- Selling agent: An agent who finds a home for sale
(through the multiple listing service) and finds a buyer for it.
Note: On a home sale, the listing agent and the
selling agent split the commission with each other and with their
principal brokers.
Click here for more
Once
you are ready to buy a home, you will need to be as informed as
possible. This guide discusses how much money to save for a down
payment, how to work with a real estate agent, how to negotiate, and
what you need to know about closing on your new home--including fees and
other costs.
Because home ownership is a substantial investment and a long-term
commitment, it is important to become as knowledgeable as possible about
the process of buying a home including how much you need to save for a
down payment, the process of finding the right home for you, negotiating
the best possible deal, and the various aspects of closing.
Deciding How Much to Spend
Before deciding on the price range of the home you plan to buy, think
about how much you want to pay out each month in mortgage payments. Use
a mortgage calculator (online) to figure out what your payments would
be and try to make as large a down payment as possible to reduce your
principal loan amount.
The Mortgage Payment
A mortgage payment consists of the mortgage loan payment (principal
and interest), property taxes (in most cases), and homeowner's
insurance. It might also include private mortgage insurance if your down
payment is less than 20%.
Caution: The lender will set a
maximum on how much you can borrow, but you use the maximum only as a
starting point in deciding how much you will borrow.
Tip: To get an estimate of the maximum mortgage amount ask a real estate agent to help you get "pre-qualified" by a lender.
When deciding how much to borrow, be sure to take into account saving
for your retirement, your financial goals, and your current lifestyle.
If your monthly payments do not allow you to meet these needs, buying
that particular home may not make financial sense.
Caution: To avoid having your
dream home turn into a nightmare, calculate how much you realistically
can spend on the monthly mortgage payment. Do not forget to add in the
real estate taxes and mortgage insurance.
Lenders will be happy to pre-qualify you by giving you a preliminary
limit on the amount they would be willing to lend you. This
pre-qualification is not a commitment on the lender's part; lenders will
not commit to a mortgage until they have the property appraisal and all
of your supporting documentation, but the maximum loan amount they are
willing to offer can be helpful for planning purposes.
The maximum debt is based on your income and debt level. It depends
on current interest rates, the term of the mortgage, and the property
taxes. To get a rough idea, the maximum debt amount is usually about
three times your annual gross income.
The Purchase Price
Having decided how much of a monthly mortgage payment you can
realistically afford, you are now ready to set a price range for your
new home. Give this range to potential real estate agents during your
first visit or use it to rule out homes that are out of your price
range.
Planning Aid: See the Financial Calculator: How much house can I qualify for?
Tip: Don't be afraid to look at homes
that are 15% to 20% over your price range. In many cases, you will be
able to negotiate the price down.
The Down Payment
Try to make as large a down payment as possible. There are two
reasons for this: (1) lenders will generally not require you to pay for
private mortgage insurance if you can come up with a 20% down payment
and (2) the sooner you pay off your mortgage, the better off you will be
financially.
To save the 20% down payment, you may need to go on an "austerity
plan" for a year or two. Many home buyers also use cash gifts or loans
from family members to meet the 20% figure. If you cannot save 20% of
the purchase price, you will still be able to get financing however.
Working With Your Real Estate Agent
You can save yourself much time and trouble by knowing what to look for in a real estate agent.
If you find that your real estate agent is not doing his or her best
to find you the home you want or is otherwise not meeting your
expectations, don't hesitate to make a change. Avoid the mistake of
staying in the relationship because you have invested time in it.
Rather, get out as soon as you can. The real estate agent will cost you
money, so make sure you are getting your money's worth.
You can shop for and buy a home without an agent, but you will need
to put in much extra time to do an agent's work: search for properties,
schedule appointments to see them, coordinate inspections, and
negotiate. Home buyers who already have a property in mind that they
want to buy are the best candidates to do the deal without an agent.
Agents' Titles and What They Mean
When looking for a real estate agent, you may come across the
following commonly used titles. Here is a basic definition of each:
- Principal broker: This is a person who is licensed to
operate a real estate office. He or she may either work alone or employ
other agents. Several years of experience are required to obtain this
licensure. Anyone selling realty must work under the supervision of a
principal broker.
- Realtor: A realtor is a member of the National Association
of Realtors, along with a state realtors' association and a local board
of realtors. Realtors are bound by a code of ethics. They are able to
access a local computerized database of homes for sale known as the
multiple listing service.
- Agent: This is the general term for any licensed professional in the real estate sales business.
- Listing agent: A type of agent who signs up the home seller and lists the home with the multiple listing service.
- Selling agent: An agent who finds a home for sale (through the multiple listing service) and finds a buyer for it.
Note: On a home sale, the listing agent and the selling agent split the commission with each other and with their principal brokers.
- See more at:
http://sbasgroup.com/life-events.php?item=63&catid=17&cat=Buying%20a%20Home:%20What%20To%20Do%20and%20How%20To%20Do%20It#sthash.BzU9L8Vk.dpuf
Once
you are ready to buy a home, you will need to be as informed as
possible. This guide discusses how much money to save for a down
payment, how to work with a real estate agent, how to negotiate, and
what you need to know about closing on your new home--including fees and
other costs. - See more at:
http://sbasgroup.com/life-events.php?item=63&catid=17&cat=Buying%20a%20Home:%20What%20To%20Do%20and%20How%20To%20Do%20It#sthash.BzU9L8Vk.dpuf
Once
you are ready to buy a home, you will need to be as informed as
possible. This guide discusses how much money to save for a down
payment, how to work with a real estate agent, how to negotiate, and
what you need to know about closing on your new home--including fees and
other costs. - See more at:
http://sbasgroup.com/life-events.php?item=63&catid=17&cat=Buying%20a%20Home:%20What%20To%20Do%20and%20How%20To%20Do%20It#sthash.BzU9L8Vk.dpuf
Once
you are ready to buy a home, you will need to be as informed as
possible. This guide discusses how much money to save for a down
payment, how to work with a real estate agent, how to negotiate, and
what you need to know about closing on your new home--including fees and
other costs. - See more at:
http://sbasgroup.com/life-events.php?item=63&catid=17&cat=Buying%20a%20Home:%20What%20To%20Do%20and%20How%20To%20Do%20It#sthash.BzU9L8Vk.dpuf
Once
you are ready to buy a home, you will need to be as informed as
possible. This guide discusses how much money to save for a down
payment, how to work with a real estate agent, how to negotiate, and
what you need to know about closing on your new home--including fees and
other costs.
Because home ownership is a substantial investment and a long-term
commitment, it is important to become as knowledgeable as possible about
the process of buying a home including how much you need to save for a
down payment, the process of finding the right home for you, negotiating
the best possible deal, and the various aspects of closing.
Deciding How Much to Spend
Before deciding on the price range of the home you plan to buy, think
about how much you want to pay out each month in mortgage payments. Use
a mortgage calculator (online) to figure out what your payments would
be and try to make as large a down payment as possible to reduce your
principal loan amount.
The Mortgage Payment
A mortgage payment consists of the mortgage loan payment (principal
and interest), property taxes (in most cases), and homeowner's
insurance. It might also include private mortgage insurance if your down
payment is less than 20%.
Caution: The lender will set a
maximum on how much you can borrow, but you use the maximum only as a
starting point in deciding how much you will borrow.
Tip: To get an estimate of the maximum mortgage amount ask a real estate agent to help you get "pre-qualified" by a lender.
When deciding how much to borrow, be sure to take into account saving
for your retirement, your financial goals, and your current lifestyle.
If your monthly payments do not allow you to meet these needs, buying
that particular home may not make financial sense.
Caution: To avoid having your
dream home turn into a nightmare, calculate how much you realistically
can spend on the monthly mortgage payment. Do not forget to add in the
real estate taxes and mortgage insurance.
Lenders will be happy to pre-qualify you by giving you a preliminary
limit on the amount they would be willing to lend you. This
pre-qualification is not a commitment on the lender's part; lenders will
not commit to a mortgage until they have the property appraisal and all
of your supporting documentation, but the maximum loan amount they are
willing to offer can be helpful for planning purposes.
The maximum debt is based on your income and debt level. It depends
on current interest rates, the term of the mortgage, and the property
taxes. To get a rough idea, the maximum debt amount is usually about
three times your annual gross income.
The Purchase Price
Having decided how much of a monthly mortgage payment you can
realistically afford, you are now ready to set a price range for your
new home. Give this range to potential real estate agents during your
first visit or use it to rule out homes that are out of your price
range.
Planning Aid: See the Financial Calculator: How much house can I qualify for?
Tip: Don't be afraid to look at homes
that are 15% to 20% over your price range. In many cases, you will be
able to negotiate the price down.
The Down Payment
Try to make as large a down payment as possible. There are two
reasons for this: (1) lenders will generally not require you to pay for
private mortgage insurance if you can come up with a 20% down payment
and (2) the sooner you pay off your mortgage, the better off you will be
financially.
To save the 20% down payment, you may need to go on an "austerity
plan" for a year or two. Many home buyers also use cash gifts or loans
from family members to meet the 20% figure. If you cannot save 20% of
the purchase price, you will still be able to get financing however.
- See more at:
http://sbasgroup.com/life-events.php?item=63&catid=17&cat=Buying%20a%20Home:%20What%20To%20Do%20and%20How%20To%20Do%20It#sthash.BzU9L8Vk.dpuf
Once
you are ready to buy a home, you will need to be as informed as
possible. This guide discusses how much money to save for a down
payment, how to work with a real estate agent, how to negotiate, and
what you need to know about closing on your new home--including fees and
other costs.
Because home ownership is a substantial investment and a long-term
commitment, it is important to become as knowledgeable as possible about
the process of buying a home including how much you need to save for a
down payment, the process of finding the right home for you, negotiating
the best possible deal, and the various aspects of closing.
Deciding How Much to Spend
Before deciding on the price range of the home you plan to buy, think
about how much you want to pay out each month in mortgage payments. Use
a mortgage calculator (online) to figure out what your payments would
be and try to make as large a down payment as possible to reduce your
principal loan amount.
The Mortgage Payment
A mortgage payment consists of the mortgage loan payment (principal
and interest), property taxes (in most cases), and homeowner's
insurance. It might also include private mortgage insurance if your down
payment is less than 20%.
Caution: The lender will set a
maximum on how much you can borrow, but you use the maximum only as a
starting point in deciding how much you will borrow.
Tip: To get an estimate of the maximum mortgage amount ask a real estate agent to help you get "pre-qualified" by a lender.
When deciding how much to borrow, be sure to take into account saving
for your retirement, your financial goals, and your current lifestyle.
If your monthly payments do not allow you to meet these needs, buying
that particular home may not make financial sense.
Caution: To avoid having your
dream home turn into a nightmare, calculate how much you realistically
can spend on the monthly mortgage payment. Do not forget to add in the
real estate taxes and mortgage insurance.
Lenders will be happy to pre-qualify you by giving you a preliminary
limit on the amount they would be willing to lend you. This
pre-qualification is not a commitment on the lender's part; lenders will
not commit to a mortgage until they have the property appraisal and all
of your supporting documentation, but the maximum loan amount they are
willing to offer can be helpful for planning purposes.
The maximum debt is based on your income and debt level. It depends
on current interest rates, the term of the mortgage, and the property
taxes. To get a rough idea, the maximum debt amount is usually about
three times your annual gross income.
The Purchase Price
Having decided how much of a monthly mortgage payment you can
realistically afford, you are now ready to set a price range for your
new home. Give this range to potential real estate agents during your
first visit or use it to rule out homes that are out of your price
range.
Planning Aid: See the Financial Calculator: How much house can I qualify for?
Tip: Don't be afraid to look at homes
that are 15% to 20% over your price range. In many cases, you will be
able to negotiate the price down.
The Down Payment
Try to make as large a down payment as possible. There are two
reasons for this: (1) lenders will generally not require you to pay for
private mortgage insurance if you can come up with a 20% down payment
and (2) the sooner you pay off your mortgage, the better off you will be
financially.
To save the 20% down payment, you may need to go on an "austerity
plan" for a year or two. Many home buyers also use cash gifts or loans
from family members to meet the 20% figure. If you cannot save 20% of
the purchase price, you will still be able to get financing however.
- See more at:
http://sbasgroup.com/life-events.php?item=63&catid=17&cat=Buying%20a%20Home:%20What%20To%20Do%20and%20How%20To%20Do%20It#sthash.BzU9L8Vk.dpuf
Once
you are ready to buy a home, you will need to be as informed as
possible. This guide discusses how much money to save for a down
payment, how to work with a real estate agent, how to negotiate, and
what you need to know about closing on your new home--including fees and
other costs.
Because home ownership is a substantial investment and a long-term
commitment, it is important to become as knowledgeable as possible about
the process of buying a home including how much you need to save for a
down payment, the process of finding the right home for you, negotiating
the best possible deal, and the various aspects of closing.
Deciding How Much to Spend
Before deciding on the price range of the home you plan to buy, think
about how much you want to pay out each month in mortgage payments. Use
a mortgage calculator (online) to figure out what your payments would
be and try to make as large a down payment as possible to reduce your
principal loan amount.
The Mortgage Payment
A mortgage payment consists of the mortgage loan payment (principal
and interest), property taxes (in most cases), and homeowner's
insurance. It might also include private mortgage insurance if your down
payment is less than 20%.
Caution: The lender will set a
maximum on how much you can borrow, but you use the maximum only as a
starting point in deciding how much you will borrow.
Tip: To get an estimate of the maximum mortgage amount ask a real estate agent to help you get "pre-qualified" by a lender.
When deciding how much to borrow, be sure to take into account saving
for your retirement, your financial goals, and your current lifestyle.
If your monthly payments do not allow you to meet these needs, buying
that particular home may not make financial sense.
Caution: To avoid having your
dream home turn into a nightmare, calculate how much you realistically
can spend on the monthly mortgage payment. Do not forget to add in the
real estate taxes and mortgage insurance.
Lenders will be happy to pre-qualify you by giving you a preliminary
limit on the amount they would be willing to lend you. This
pre-qualification is not a commitment on the lender's part; lenders will
not commit to a mortgage until they have the property appraisal and all
of your supporting documentation, but the maximum loan amount they are
willing to offer can be helpful for planning purposes.
The maximum debt is based on your income and debt level. It depends
on current interest rates, the term of the mortgage, and the property
taxes. To get a rough idea, the maximum debt amount is usually about
three times your annual gross income.
The Purchase Price
Having decided how much of a monthly mortgage payment you can
realistically afford, you are now ready to set a price range for your
new home. Give this range to potential real estate agents during your
first visit or use it to rule out homes that are out of your price
range.
Planning Aid: See the Financial Calculator: How much house can I qualify for?
Tip: Don't be afraid to look at homes
that are 15% to 20% over your price range. In many cases, you will be
able to negotiate the price down.
The Down Payment
Try to make as large a down payment as possible. There are two
reasons for this: (1) lenders will generally not require you to pay for
private mortgage insurance if you can come up with a 20% down payment
and (2) the sooner you pay off your mortgage, the better off you will be
financially.
To save the 20% down payment, you may need to go on an "austerity
plan" for a year or two. Many home buyers also use cash gifts or loans
from family members to meet the 20% figure. If you cannot save 20% of
the purchase price, you will still be able to get financing however.
Working With Your Real Estate Agent
You can save yourself much time and trouble by knowing what to look for in a real estate agent.
If you find that your real estate agent is not doing his or her best
to find you the home you want or is otherwise not meeting your
expectations, don't hesitate to make a change. Avoid the mistake of
staying in the relationship because you have invested time in it.
Rather, get out as soon as you can. The real estate agent will cost you
money, so make sure you are getting your money's worth.
You can shop for and buy a home without an agent, but you will need
to put in much extra time to do an agent's work: search for properties,
schedule appointments to see them, coordinate inspections, and
negotiate. Home buyers who already have a property in mind that they
want to buy are the best candidates to do the deal without an agent.
Agents' Titles and What They Mean
When looking for a real estate agent, you may come across the
following commonly used titles. Here is a basic definition of each:
- Principal broker: This is a person who is licensed to
operate a real estate office. He or she may either work alone or employ
other agents. Several years of experience are required to obtain this
licensure. Anyone selling realty must work under the supervision of a
principal broker.
- Realtor: A realtor is a member of the National Association
of Realtors, along with a state realtors' association and a local board
of realtors. Realtors are bound by a code of ethics. They are able to
access a local computerized database of homes for sale known as the
multiple listing service.
- Agent: This is the general term for any licensed professional in the real estate sales business.
- Listing agent: A type of agent who signs up the home seller and lists the home with the multiple listing service.
- Selling agent: An agent who finds a home for sale (through the multiple listing service) and finds a buyer for it.
Note: On a home sale, the listing agent and the selling agent split the commission with each other and with their principal brokers.
- See more at:
http://sbasgroup.com/life-events.php?item=63&catid=17&cat=Buying%20a%20Home:%20What%20To%20Do%20and%20How%20To%20Do%20It#sthash.BzU9L8Vk.dpuf
Once
you are ready to buy a home, you will need to be as informed as
possible. This guide discusses how much money to save for a down
payment, how to work with a real estate agent, how to negotiate, and
what you need to know about closing on your new home--including fees and
other costs.
Because home ownership is a substantial investment and a long-term
commitment, it is important to become as knowledgeable as possible about
the process of buying a home including how much you need to save for a
down payment, the process of finding the right home for you, negotiating
the best possible deal, and the various aspects of closing.
Deciding How Much to Spend
Before deciding on the price range of the home you plan to buy, think
about how much you want to pay out each month in mortgage payments. Use
a mortgage calculator (online) to figure out what your payments would
be and try to make as large a down payment as possible to reduce your
principal loan amount.
The Mortgage Payment
A mortgage payment consists of the mortgage loan payment (principal
and interest), property taxes (in most cases), and homeowner's
insurance. It might also include private mortgage insurance if your down
payment is less than 20%.
Caution: The lender will set a
maximum on how much you can borrow, but you use the maximum only as a
starting point in deciding how much you will borrow.
Tip: To get an estimate of the maximum mortgage amount ask a real estate agent to help you get "pre-qualified" by a lender.
When deciding how much to borrow, be sure to take into account saving
for your retirement, your financial goals, and your current lifestyle.
If your monthly payments do not allow you to meet these needs, buying
that particular home may not make financial sense.
Caution: To avoid having your
dream home turn into a nightmare, calculate how much you realistically
can spend on the monthly mortgage payment. Do not forget to add in the
real estate taxes and mortgage insurance.
Lenders will be happy to pre-qualify you by giving you a preliminary
limit on the amount they would be willing to lend you. This
pre-qualification is not a commitment on the lender's part; lenders will
not commit to a mortgage until they have the property appraisal and all
of your supporting documentation, but the maximum loan amount they are
willing to offer can be helpful for planning purposes.
The maximum debt is based on your income and debt level. It depends
on current interest rates, the term of the mortgage, and the property
taxes. To get a rough idea, the maximum debt amount is usually about
three times your annual gross income.
The Purchase Price
Having decided how much of a monthly mortgage payment you can
realistically afford, you are now ready to set a price range for your
new home. Give this range to potential real estate agents during your
first visit or use it to rule out homes that are out of your price
range.
Planning Aid: See the Financial Calculator: How much house can I qualify for?
Tip: Don't be afraid to look at homes
that are 15% to 20% over your price range. In many cases, you will be
able to negotiate the price down.
The Down Payment
Try to make as large a down payment as possible. There are two
reasons for this: (1) lenders will generally not require you to pay for
private mortgage insurance if you can come up with a 20% down payment
and (2) the sooner you pay off your mortgage, the better off you will be
financially.
To save the 20% down payment, you may need to go on an "austerity
plan" for a year or two. Many home buyers also use cash gifts or loans
from family members to meet the 20% figure. If you cannot save 20% of
the purchase price, you will still be able to get financing however.
Working With Your Real Estate Agent
You can save yourself much time and trouble by knowing what to look for in a real estate agent.
If you find that your real estate agent is not doing his or her best
to find you the home you want or is otherwise not meeting your
expectations, don't hesitate to make a change. Avoid the mistake of
staying in the relationship because you have invested time in it.
Rather, get out as soon as you can. The real estate agent will cost you
money, so make sure you are getting your money's worth.
You can shop for and buy a home without an agent, but you will need
to put in much extra time to do an agent's work: search for properties,
schedule appointments to see them, coordinate inspections, and
negotiate. Home buyers who already have a property in mind that they
want to buy are the best candidates to do the deal without an agent.
Agents' Titles and What They Mean
When looking for a real estate agent, you may come across the
following commonly used titles. Here is a basic definition of each:
- Principal broker: This is a person who is licensed to
operate a real estate office. He or she may either work alone or employ
other agents. Several years of experience are required to obtain this
licensure. Anyone selling realty must work under the supervision of a
principal broker.
- Realtor: A realtor is a member of the National Association
of Realtors, along with a state realtors' association and a local board
of realtors. Realtors are bound by a code of ethics. They are able to
access a local computerized database of homes for sale known as the
multiple listing service.
- Agent: This is the general term for any licensed professional in the real estate sales business.
- Listing agent: A type of agent who signs up the home seller and lists the home with the multiple listing service.
- Selling agent: An agent who finds a home for sale (through the multiple listing service) and finds a buyer for it.
Note: On a home sale, the listing agent and the selling agent split the commission with each other and with their principal brokers.
- See more at:
http://sbasgroup.com/life-events.php?item=63&catid=17&cat=Buying%20a%20Home:%20What%20To%20Do%20and%20How%20To%20Do%20It#sthash.BzU9L8Vk.dpuf
Once
you are ready to buy a home, you will need to be as informed as
possible. This guide discusses how much money to save for a down
payment, how to work with a real estate agent, how to negotiate, and
what you need to know about closing on your new home--including fees and
other costs.
Because home ownership is a substantial investment and a long-term
commitment, it is important to become as knowledgeable as possible about
the process of buying a home including how much you need to save for a
down payment, the process of finding the right home for you, negotiating
the best possible deal, and the various aspects of closing.
Deciding How Much to Spend
Before deciding on the price range of the home you plan to buy, think
about how much you want to pay out each month in mortgage payments. Use
a mortgage calculator (online) to figure out what your payments would
be and try to make as large a down payment as possible to reduce your
principal loan amount.
The Mortgage Payment
A mortgage payment consists of the mortgage loan payment (principal
and interest), property taxes (in most cases), and homeowner's
insurance. It might also include private mortgage insurance if your down
payment is less than 20%.
Caution: The lender will set a
maximum on how much you can borrow, but you use the maximum only as a
starting point in deciding how much you will borrow.
Tip: To get an estimate of the maximum mortgage amount ask a real estate agent to help you get "pre-qualified" by a lender.
When deciding how much to borrow, be sure to take into account saving
for your retirement, your financial goals, and your current lifestyle.
If your monthly payments do not allow you to meet these needs, buying
that particular home may not make financial sense.
Caution: To avoid having your
dream home turn into a nightmare, calculate how much you realistically
can spend on the monthly mortgage payment. Do not forget to add in the
real estate taxes and mortgage insurance.
Lenders will be happy to pre-qualify you by giving you a preliminary
limit on the amount they would be willing to lend you. This
pre-qualification is not a commitment on the lender's part; lenders will
not commit to a mortgage until they have the property appraisal and all
of your supporting documentation, but the maximum loan amount they are
willing to offer can be helpful for planning purposes.
The maximum debt is based on your income and debt level. It depends
on current interest rates, the term of the mortgage, and the property
taxes. To get a rough idea, the maximum debt amount is usually about
three times your annual gross income.
The Purchase Price
Having decided how much of a monthly mortgage payment you can
realistically afford, you are now ready to set a price range for your
new home. Give this range to potential real estate agents during your
first visit or use it to rule out homes that are out of your price
range.
Planning Aid: See the Financial Calculator: How much house can I qualify for?
Tip: Don't be afraid to look at homes
that are 15% to 20% over your price range. In many cases, you will be
able to negotiate the price down.
The Down Payment
Try to make as large a down payment as possible. There are two
reasons for this: (1) lenders will generally not require you to pay for
private mortgage insurance if you can come up with a 20% down payment
and (2) the sooner you pay off your mortgage, the better off you will be
financially.
To save the 20% down payment, you may need to go on an "austerity
plan" for a year or two. Many home buyers also use cash gifts or loans
from family members to meet the 20% figure. If you cannot save 20% of
the purchase price, you will still be able to get financing however.
Working With Your Real Estate Agent
You can save yourself much time and trouble by knowing what to look for in a real estate agent.
If you find that your real estate agent is not doing his or her best
to find you the home you want or is otherwise not meeting your
expectations, don't hesitate to make a change. Avoid the mistake of
staying in the relationship because you have invested time in it.
Rather, get out as soon as you can. The real estate agent will cost you
money, so make sure you are getting your money's worth.
You can shop for and buy a home without an agent, but you will need
to put in much extra time to do an agent's work: search for properties,
schedule appointments to see them, coordinate inspections, and
negotiate. Home buyers who already have a property in mind that they
want to buy are the best candidates to do the deal without an agent.
Agents' Titles and What They Mean
When looking for a real estate agent, you may come across the
following commonly used titles. Here is a basic definition of each:
- Principal broker: This is a person who is licensed to
operate a real estate office. He or she may either work alone or employ
other agents. Several years of experience are required to obtain this
licensure. Anyone selling realty must work under the supervision of a
principal broker.
- Realtor: A realtor is a member of the National Association
of Realtors, along with a state realtors' association and a local board
of realtors. Realtors are bound by a code of ethics. They are able to
access a local computerized database of homes for sale known as the
multiple listing service.
- Agent: This is the general term for any licensed professional in the real estate sales business.
- Listing agent: A type of agent who signs up the home seller and lists the home with the multiple listing service.
- Selling agent: An agent who finds a home for sale (through the multiple listing service) and finds a buyer for it.
Note: On a home sale, the listing agent and the selling agent split the commission with each other and with their principal brokers.
- See more at:
http://sbasgroup.com/life-events.php?item=63&catid=17&cat=Buying%20a%20Home:%20What%20To%20Do%20and%20How%20To%20Do%20It#sthash.BzU9L8Vk.dpuf
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