common questions from first-time
homebuyers
- Why should I buy, instead of rent?
- Answer: You’ll love the feeling of having something that’s all yours - a home where your own personal style will tell the world who you are. A thriving vegetable garden in the backyard, a tiled entryway, a yellow kitchen...when you own, you can do it all your way! But there’s more to owning a home than personal satisfaction. You can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes, too. And interest will compose nearly all of your monthly payment , for over half the number of years you’ll be paying your mortgage. This adds up to hefty savings at the end of each year. And you’re also allowed to deduct the property taxes you pay as a homeowner. If you rent, you write your monthly check and it’s gone forever. Another financial plus in owning a home is the possibility its value will go up through the years.
- I’ve heard of HUD homes. What are HUD homes, and are they a good deal?
- Answer: HUD homes can be a very good deal. When someone with a HUD insured mortgage can't meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. Then we sell it at market value as quickly as possible. One might be right for you! And check the listings of Hud Homes - Or check out listings
- I’ve had bad credit, and I don’t have much for a down-payment. Can I become
a homebuyer?
- Answer: You may be a good candidate for one of the federal mortgage programs that are available. A good place for you to start is by contacting a lender, 1-800-989-2500 ext 201 (ask for Jill or Sharon and tell them Mona asked you to call for free prequalification. They can help you sort through your options, with no obligation. Then contact hudfinder@charter.net (me)
- I’m a single mother. How would I go about buying a home?
- Answer: Although you won’t have the benefit of two incomes on which to qualify for a loan, there’s no reason that you can’t become a homeowner. Become familiar with the process, pick a good real estate broker, and think about getting pre-qualified for a loan. You might want to contact one of the HUD-funded housing counseling agencies in your area to talk through your options. And you also might want to think about buying a hud home - they can be very good deals. Also, contact hudfinder@charter.net for local home buying programs, that could help you.
- Should I use a real estate broker? How do I find one?
- Answer: Using a real estate broker is a very good idea. All the details involved
in home buying, particularly the financial ones, can be mind-boggling. A good real estate
professional can guide you through the entire process and make the experience much easier.
A real estate broker, Mona Sulli (hudfinder)
will be well-acquainted with all the important things you’ll want to know about a
neighborhood you may be considering...the quality of schools, the number of children
in the area, the safety of the neighborhood, traffic volume, and more. She will help you
figure the price range you can afford and search the multiple listing services
for homes you’ll want to see. With immediate access to homes as soon as they’re
put on the market, the broker (Mona Sulli (Hudfinder@charter.net
)can save you hours of wasted driving-around time. When it’s time to make an offer on
a home, I can point out ways to structure your deal to save you money. I will
explain the advantages and disadvantages of different types of mortgages, guide you
through the paperwork, and be there to hold your hand and answer last-minute questions
when you sign the final papers at closing. And you don’t have to pay the me anything!
The payment comes from the home seller - not from the buyer.
By the way, if you want to buy a HUD home, you will be required to use a real estate broker to submit your bid.
- Answer: Using a real estate broker is a very good idea. All the details involved
in home buying, particularly the financial ones, can be mind-boggling. A good real estate
professional can guide you through the entire process and make the experience much easier.
A real estate broker, Mona Sulli (hudfinder)
will be well-acquainted with all the important things you’ll want to know about a
neighborhood you may be considering...the quality of schools, the number of children
in the area, the safety of the neighborhood, traffic volume, and more. She will help you
figure the price range you can afford and search the multiple listing services
for homes you’ll want to see. With immediate access to homes as soon as they’re
put on the market, the broker (Mona Sulli (Hudfinder@charter.net
)can save you hours of wasted driving-around time. When it’s time to make an offer on
a home, I can point out ways to structure your deal to save you money. I will
explain the advantages and disadvantages of different types of mortgages, guide you
through the paperwork, and be there to hold your hand and answer last-minute questions
when you sign the final papers at closing. And you don’t have to pay the me anything!
The payment comes from the home seller - not from the buyer.
- How much money will I have to come up with to buy a home?
- Answer: Well, that depends on a number of factors, including the cost of the
house and the type of mortgage you get. In general, you need to come up with enough money
to cover three costs: earnest money - the deposit you make on the home when
you submit your offer, to prove to the seller that you are serious about wanting to buy
the house; the down payment, a percentage of the cost of the home that you
must pay when you go to settlement; and closing costs, the costs associated
with processing the paperwork to buy a house.
When you make an offer on a home, you’re real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies. If you buy a HUD home, for example, your deposit generally will range from $500 - $2,000.
The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20% of the purchase price. That’s why many first-time homebuyers turn to HUD’s FHA for help. FHA loans require only 3% down - and sometimes less.
Closing costs - which you will pay at settlement - average 3-4% of the price of your home. These costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs, so you won’t be caught by surprise. If you buy a HUD home, HUD may pay many of your closing costs.
- Answer: Well, that depends on a number of factors, including the cost of the
house and the type of mortgage you get. In general, you need to come up with enough money
to cover three costs: earnest money - the deposit you make on the home when
you submit your offer, to prove to the seller that you are serious about wanting to buy
the house; the down payment, a percentage of the cost of the home that you
must pay when you go to settlement; and closing costs, the costs associated
with processing the paperwork to buy a house.
- How do I know if I can get a loan?
- Answer: Use our simple mortgage calculators to see how much mortgage you could pay - that’s a good start. If the amount you can afford is significantly less than the cost of homes that interest you, then you might want to wait awhile longer. But before you give up, why don’t you contact hudfinder@charter.net ? I will help you evaluate your loan potential. I will know what kinds of mortgages the lenders are offering and can help you choose a lender with a program that might be right for you. Another good idea is to get pre-qualified for a loan. That means you go to a lender and apply for a mortgage before you actually start looking for a home. Then you’ll know exactly how much you can afford to spend, and it will speed the process once you do find the home of your dreams.
- How do I find a lender?
- Answer: You can finance a home with a loan from a bank, a savings and loan, a credit union, a private mortgage company, or various state government lenders.Mortgage Concepts (800)989-2500 is one of these Specializing in self employed, stated income, first time buyers, refinancing .Like shopping for any other large purchase: you can save money if you take some time to look around for the best prices. Different lenders can offer quite different interest rates and loan fees; and as you know, a lower interest rate can make a big difference in how much home you can afford. Talk with several lenders before you decide. Most lenders need 3-6 weeks for the whole loan approval process. I am familiar with lenders in the area and what they’re offering. look in - most papers list interest rates being offered by local lenders. HUD does not make loans directly - you must use a HUD-approved lender if you’re interested in an FHA loan. Call Exclusive Financial, ask for Ray mortgage broker, who will shop the best loan and rates for you for no additional charge.
- In addition to the mortgage payment, what other costs do I need to consider?
- Answer: Well, of course you’ll have your monthly utilities. If your utilities have been covered in your rent, this may be new for you. Your real estate broker will be able to help you get information from the seller on how much utilities normally cost. In addition, you might have homeowner association or condo association dues. You’ll definitely have property taxes, and you also may have city or county taxes. Taxes normally are rolled into your mortgage payment. Again, I will be able to help you anticipate these costs.
- So what will my mortgage cover?
- Answer: Most loans have 4 parts: principal: the repayment of the amount you actually borrowed; interest: payment to the lender for the money you’ve borrowed; homeowners insurance: a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders; and property taxes: the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year. Most loans are for 30 years, although 15 year loans are available, too. During the life of the loan, you’ll pay far more in interest than you will in principal - sometimes two or three times more! Because of the way loans are structured, in the first years you’ll be paying mostly interest in your monthly payments. In the final years, you’ll be paying mostly principal.
- There are ways to lessen the amount of interest you actually pay out, by making as many payments of additional
- Answer: Good question! If you have everything with you when you visit your lender, you’ll save a good deal of time. You should have: 1) social security numbers for both your and your spouse, if both of you are applying for the loan; 2) copies of your checking and savings account statements for the past 6 months; 3) evidence of any other assets like bonds or stocks; 4) a recent paycheck stub detailing your earnings; 5) a list of all credit card accounts and the approximate monthly amounts owed on each; 6) a list of account numbers and balances due on outstanding loans, such as car loans; 7) copies of your last 2 years’ income tax statements; and 8) the name and address of someone who can verify your employment. Depending on your lender, you may be asked for other information. To begin, all you need is to call (800)989-2500, ask for Jill or her assistant and give them your name(s), address, social security number(s) and the "journey begins".
- Answer: You’re right - there are many types of mortgages, and the more you know about them before you start, the better. Most people use a fixed-rate mortgage. In a fixed rate mortgage, your interest rate stays the same for the term of the mortgage, which normally is 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it. Another kind of mortgage is an Adjustable Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index, such as the U.S. Treasury Securities index. The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower. There are several government mortgage programs that might interest you, too. Most people have heard of FHA mortgages. FHA doesn’t actually make loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders to give mortgages to people who might not otherwise qualify for a loan. Talk to me about the various kinds of loans, before you begin shopping for a mortgage.
- Answer: Again, your real estate broker can help you here. But there are several things you should consider: 1) is the asking price in line with prices of similar homes in the area? 2) Is the home in good condition or will you have to spend a substantial amount of money making it the way you want it? You probably want to get a professional home inspection before you make your offer. I can help you arrange one. 3) How long has the home been on the market? If it’s been for sale for awhile, the seller may be more eager to accept a lower offer. 4) How much mortgage will be required? Make sure you really can afford whatever offer you make. 5) How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In some cases, you may even want to offer more than the asking price, if you know you are competing with others for the house.
What if my offer is rejected?
- Answer: They often are! But don’t let that stop you. Now you begin negotiating. I will help you. You may have to offer more money, but you may ask the seller to cover some or all of your closing costs or to make repairs that wouldn’t normally be expected. Often, negotiations on a price go back and forth several times before a deal is made. Just remember - don’t get so caught up in negotiations that you lose sight of what you really want and can afford! I can help you decide and won't get you in over your head, you'll always know where you are payment wise. I can show you how to afford more and pay less!
- Answer: Basically, you’ll sit at a table, with me, broker for the seller, possibly the seller, and a closing agent. The closing agent will have a stack of papers for you and the seller to sign. While he or she will give you a basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to make sure you know exactly what you’re signing. After all, this is a large amount of money you’re committing to pay for a lot of years! Before you go to closing, your lender is required to give you a booklet explaining the closing costs, a "good faith estimate" of how much cash you’ll have to supply at closing, and a list of documents you’ll need at closing. If you don’t get those items, be sure to call your lender BEFORE you go to closing. Be sure to read our booklet on settlement costs . It will help you understand your rights in the process. Don’t hesitate to ask questions.
I've
had one close at $12,000 under the asking price from hud.