Buying a home is an exciting but often overwhelming experience, particularly if you are buying your first home. As your REALTOR, the Reechia Powell Realty Group can help you through the home buying process and assure that you find the right home for you, at the right price for you.
Every homebuyer has a number of concerns, all of which we can help you with:
Setting a Time Frame
There are a lot of variables in the home-buying process, which means the time it takes to find and buy your new home varies too. A typical home search process may take three to four months, including the mortgage approval process, comparing and evaluating properties, making an offer and the closing process. The loan process typically takes 30-45 days.
The Lending Process
Perhaps one of the most intimidating aspects of buying a home is the mortgage approval process. We'll be here to help guide you through this process. Your first step should be to contact a mortgage broker. We can provide you with a few choices; lenders we have done business with and have the upmost respect for and confidence in their skills. Next make sure your budget is under control, make a list of all your monthly expenses, compare it with your income, and see if adjustments need to be made. You should also try to pay off small credit card balances.
before we begin looking at homes.
What Are Points and When Should You Pay Them?
Points are up-front fees paid to obtain a better interest rate on a loan. One point equals one percent of the loan amount. A lower interest rate may result in a lower monthly payment, but it is important to consider how long you intend to be in the loan, and to compare current rates to historical market trends.
If you take out a $300,000 mortgage and decide to pay one point, this translates into an up-front closing cost of $3,000. Paying a point up front saves $100 a month but it will take 30 months to recuperate the cost of that point. If you decide to refinance or sell the home before the 30-month mark, your money is lost. In this case, you would benefit financially by remaining in the home longer than the 30 months.
Rates run in cycles. When rates are at historical lows, it is sensible to pay points if you plan to live in the home for an extended period of time. It is unlikely that rates will go down; hence, there will be no need to refinance.
When rates are up, there is a strong likelihood that they will come down. This is no time to pay points. The chances of refinancing in the future are extremely high, and you will likely not be in the loan long enough to recuperate the cost of the points.
Determining How Much You Can Afford
A general guideline to consider is that most buyers purchase a home that costs about one and a half to two and half times their current annual income. For example, someone earning $50,000 a year might purchase a home for $75,000 to $125,000. Mortgage payments should be about 26-28 percent of your gross monthly income. Existing debt is also considered in the mortgage process, and total debt payments (car payments, credit cards, student loans, etc.) should not exceed 40 percent of your gross monthly income.
Finding a Home That Meets Your Needs and Wants
Before you start looking at properties, make a list of "must-have" features along with optional features you'd like to have. "Must-have" features may include the number of bedrooms and bathrooms you'll need to accommodate your family, location (consider commute to work, which schools your children will attend, etc.), lot size and special needs (handicapped access, etc.). Optional features may include the architectural styling, bay windows, landscaping, etc. Having a clear idea of what you want in a home will help your REALTOR? find the perfect property for you.
Educating yourself about the home-buying process is key to getting a home you love and can afford. As your REALTOR?, we are here to answer any questions you might have and guide you through this process.