1. how much can we afford to pay for a home?
how much you can afford depends on your debt to income ratio. To calculate your debt to income ratio, follow these steps:
Divide your annual gross income by 12. (12 months)
Second, add up your long term debt including your current home mortgage (principal and interest), taxes and insurance, student loan, car loan, credit card debt, etc. and calculate your monthly payments.
Third, divide your monthly debt by your monthly income. In most cases, your debt to income ratio should not exceed 35%.
Fourth, if your debt to income ratio is 35% or less and your credit rating is good, there is a good chance you will be able to get approved for a mortgage loan.
2. Should I contact a lender before looking at homes?
YES! There many reasons why you should contact your lender and get pre-qualified before looking at homes. First, a lender can help you determine exactly how much you can afford to pay for a home. It is a waste of time to look at homes that are listed for $300,000 if you can only afford up to $200,000.
Also, for first time homebuyers, there are many programs available. These programs can vary from state to state and county to county. A lender can help you determine exactly what’s available to you. It can be confusing to know the difference between all the costs associated with buying a home. A lender can explain to you the difference between a down payment, pre-paid items, and escrows.
As a Howard Hanna realtor group, the GU Crew recommends Howard Hanna Mortgage Services. Howard Hanna has provided quality mortgage products since 1983 and earned its place as one of the area's largest independent mortgage bankers through customer accommodation. Visit Howard Hanna Mortgage Services for a mortgage quote and prequalification.
3. What are my housing needs?
Your home should fit the way you live and the needs of your family. Make a list of your priorities:
Location - close to work, schools, or do you prefer a rural setting?
House size - how many bedrooms and baths?
Lot site - Do you enjoy yard work, do you intend to hobby farm, or would you prefer something that requires little maintenance?
Amenities - consider whether you need large closets, pantry space, a home office, mud room, workshop, attic or basement spaces, outdoor living areas, etc.
4. Should I buy or continue to rent?
Buying a home can be solid investment, but renting can be a better option for some depending on the circumstances. The current interest rates are incredible. When interest rates are low, it can often be cheaper to pay a mortgage than it would be to rent.
When considering a purchase, ask yourself how long you plan on staying in a home. If you are only planning on a few years, then it is likely better to continue to rent. If you’re going to be in the area for a longer period, and you're ready for the responsibilities of owning a home, then buying is likely the best option.
5. Should I find a rent-to-own?
Trying to find a rent-to-own property is often like trying to find a needle in a haystack. And, even if you can find a home you want to purchase and an owner that is willing to agree to that option, rent-to-own agreements are often unfavorable to buyers. In a rent-to-own arrangement, you will probably have a higher interest rate than you would from a conventional lender. Also, if at the end of the lease agreement you choose or are not able to purchase the home, you will lose all of the money you paid into the property. Renting and waiting until you can secure financing through a conventional lender is likely a better option than renting-to-own.
6. Should I buy a home before selling my current home?
The biggest benefit to buying a home before selling your current home is knowing that you have a place to go when you sell your home. However, if your current home does not sell in a timely manner you could be stuck paying double mortgage payments. Or, if the purchase of your new home is contingent on the sale of your current home and your home does not sell, you could lose the home you had planned on purchasing. Also, you may be more likely to accept low-ball offers on your current home if you have your heart set on the new home. It is often better for most homeowners to sell their current home first, then put an offer in on a new home.
7. What if I choose to sell my current home before buying a new home?
Selling your current home before buying a new home will put you in a good position to negotiate the purchase of a new home. Your offer will not be contingent on the sale of a current home. However, if you sell your current home without buying a new home first, you risk the chance of not having a place to live.
However, if your current home sells before you purchase a new home, you may be able to “rent-back” your home from the buyer. A “rent-back” allows you additional time to find a new home and you pay the buyer an agreed upon amount (usually their mortgage payment) for a certain number of days after closing until you find a home. Other options include staying with a friend or family member or finding a short-term lease, until you can move into a new home.
8. Do I really need a Realtor when buying a home?
When buying a home, it’s strongly recommended work with a Realtor. A Realtor represents your best interests when buying a home. When choosing a buyer’s agent, make sure to interview several prospective Realtors when buying a home and check their track record.
Let the GU CREW work for you! Our special brand of care, service, negotiation, and a proven five-point marketing plan is not only appealing to new sellers and buyers, but also to new agents. With the Howard Hanna Advantage we are a one-stop-shop for real estate, mortgage, title, and insurance services. We help you manage the entire home buying and selling process with ease.
9. Who pays the Realtor fees when buying a home?
In most cases the seller pays the Realtor fees, however no guarantees. It may depend on the home you are interested in purchasing and your buyer’s agent agreement. At the Uihlein Group, we are traditional Real Estate Professionals. We have experienced many different creative deals in the past, all unique. Please call us for a consultation on how we can save you time and money and guide you through your personal Real Estate transaction and journey.
10. What is a Buyer’s Agent Agreement?
A buyer’s agent agreement means that the realtor will represent you and your best interests. The agreement lists the responsibilities of the agent to you and you agree that,when purchasing a home, you will write the purchase offer with that realtor instead of going to another agent. Without a buyer’s agent agreement, the realtors are representing the seller.
The GU CREW will explain the terms of the buyer agency agreement. There are many advantages in working with a Howard Hanna Realtor. Howard Hanna offers an extensive range of tools, programs and resources to help you kick-start the home buying process. Learn more on our Buyer Resources page. Whether you are just getting started and looking to find an agent, curious about market conditions, seeking open houses, or are a first-time homebuyer, the GU CREW is here to help! Call (734) 475-3737 or email us today!