BUYING A HOME
Homeownership remains one of the highest goals for many people because of its many benefits. Along with owning your own home comes a sense of security and belonging that cannot be found elsewhere. For many, homeownership represents personal and financial success.
There is much personal satisfaction in living in a home that you own. A home is still a valued investment which can have many financial advantages and tax benefits. The amount of interest you pay on a home loan and the real estate taxes you pay on your home are among the few major federal tax deductions. Owning a home is the primary way most people build wealth.
Homeownership is also good for our communities, because families who own their homes are more involved in their local communities and participate in local events.
Homeownership is becoming a reality for more and more Americans. During 2000, the US homeownership rate reached 67.7%, the highest rate ever. Yet many Americans don't realize that homeownership is within their grasp.
Know Your Rights as a Homebuyer
There are many laws that protect you from scams, unnecessary expenses, and discrimination in the process of homebuying. Know your rights!
How Much Mortgage Can You Afford?
You can save yourself a lot of wheel-spinning if you take a minute to figure out how much mortgage you can afford. Generally, a lender will want your monthly mortgage payment to total no more than 29% of your monthly gross income (that's your monthly income before taxes and other paycheck deductions are taken out.) You also need to consider current loan interest rates. The lower the interest rate, the more expensive the home you'll be able to afford. Follow our tips and use these simple calculators to see how much you can afford in a mortgage payment.
How Much Home Can You Afford?
How much home you can afford will be determined by the amount of mortgage you will be able to pay. To help you figure out an affordable mortgage use a mortgage calculator that fits your needs on the Mortgage Calculator page.
Your Real Estate Broker
You'll want to start searching for a broker as soon as you decide to buy a home. Talk to several brokers and find someone you think you'll be comfortable working closely with. Many of your friends and relatives have probably bought and sold their homes through brokers. Ask them who they used and what their experiences were. You can find out which brokers specialize in the kind of home or the area you want by looking in the Yellow Pages or your local newspaper's classified real estate ads. Or drive through neighborhoods and note the names of brokers on "for sale" signs. When you talk to prospective brokers, ask questions about the areas and types of homes in which you're interested. Do they seem knowledgeable? Most important, is their personal style a good fit with your own?
Mortgages and Homebuying Programs
Many different kinds of mortgages are available to you. Read about them, and make sure you understand the pros and cons of each. Your real estate broker can help you. The Department of Housing and Urban Developement (HUD) offers some special homebuying programs. Also, many local governments offer special homebuying programs to help low-income homebuyers. Shop around - you may be surprised at all your options!
Shopping for a Home
So now you really begin house-hunting. Your real estate broker will be able to find listings for you, based on your wishlist. But don't stop there! You can do your own looking, and then ask your broker to show you the house. Start with the Internet. Pick up real estate flyers at local grocery stores and convenience stores. Read the real estate sections of your local newspaper. Drive around neighborhoods that interest you and write down addresses where there are "for sale" signs. Go to open houses. Try everything! And use our convenient home-shopping check list to help you compare the houses you see.
Home Inspections
When you make an offer on a home, it's a good idea to make your offer contingent on a home inspection, conducted by an independent authorized inspector. You will have to pay for this inspection yourself, but it could keep you from buying a house that will cost you far more in repairs, down the road. If you are satisified with the results of the inspection, then your offer can proceed. If you aren't, you may want to negotiate, asking the seller to pay for certain repairs or asking for a lower price.
Appraisals
Your lender will require you to get an appraisal of the house you want to buy, to make sure it's worth the money that you're borrowing. You may select your own appraiser, or you may ask your real estate broker to help you take care of that.
Homeowner's Insurance
Lenders require that you have homeowners insurance, to protect both your interests and theirs. Like everything else, be sure to shop around for insurance that fits your needs.
Settlement or Closing
Finally, you've gone through the whole process, and you're ready to go to "settlement" or "closing." We know you'll be excited, but be sure to read everything you sign! And before you go, read this important information about your rights.
