Home Buyer Tips

Here are some cool new ways to use the internet to finds homes. You still need a good realtor to represent your interests as well as find and consumate the deal!
http://money.cnn.com/galleries/2009/real_estate/0906/gallery.New_homebuying_tools/index.html

Can you afford to buy a home?

5 HOME PURCHASE QUALIFICATION QUESTIONS

1. How much of your target purchase price have you saved for a down payment?

a) Less than 5%

b) Between 10% and 20%

c) 20% or more

2. What percentage of your pre-tax income will you need to pay to cover mortgage, property taxes and homeowner’s insurance on a home in your target price range?

a) 35% or more

b) Between 28% and 35%

c) Less than 28%

In general, no more than 28 percent of your pre-tax income should go toward your mortgage, property taxes and homeowner’s insurance.

3. What is your employment status?

a) I recently started a new career

b) I am self-employed or work on commission

c) I’ve been on salary at the same company for several years

Lenders like to see at least two years of employment stability,

4. What other debts do you have?

a) I have a substantial amount of debt (such as a car loan, student loan and large credit card balance

b) I have a small amount of debt (such as a small car loan and a credit card balance that I usually pay off every month)

c) I am virtually debt-free

The rule of thumb is that no more than 36 percent of your pre-tax income should go to paying off debt, including the 28 percent maximum for mortgage, taxes and insurance.

5. What is your credit score?

a) Below 620

b) Between 620 and 720

c) Over 720

The interest rate you obtain on your mortgage will be closely tied to your credit score. And a low credit score may affect your ability to get a loan. A score over 720 should get you a favorable rate.

Adding up your score:

Give yourself zero points for every question that you answered with an A, one point for every B and two points if you chose C. 8 to 10: Congratulations! You’re well-positioned to become a homeowner. You’re in good financial shape and are well prepared to start shopping for a loan.
6 to 7: You may be able to purchase a modest house, however, you may find it a struggle to meet your mortgage payments. It may be wise to save more for a down payment and / or raise your credit score. Within a year or two you should be well on your way to your first home. 5 or less: Your financial situation needs to improve before you buy a house. Spending the next few years improving your credit, paying off debt, building your savings and establishing a stable employment record will bring you much closer to achieving your dream of owning a home.

CLOSING COSTS – WHO PAYS FOR WHAT?

The various fees associated with buying or selling a home are called closing costs. Buyers and sellers both pay closing costs but who pays what costs varies from area to area.

Buyers typically pay the following closing costs:

1. Fees charged for obtaining a mortgage
2. Inspection fees
3. Homeowner's insurance (must be prepaid for one year at closing)
4, Doc stamps on the mortgage
5, Title insurance and escrow fees (depending on the location)
6, Attorney's fees (where attorneys are involved in the transaction).

Sellers' closing costs typically include:

1. Loan payoff fees
2. Real estate brokerage fee for service
3, Title insurance
4. Transfer taxes (doc stamps on the deed)
5. Escrow fees,
6. Attorney's fees where applicable

3 things to know before you apply for a loan

1. Your credit rating or FICO® score. As a rating of your credit worthiness, your FICO® score is a basic building block in your quest for a loan. Before they give you money, lenders want to feel comfortable that you’re going to pay it back. Your credit rating tells them your record of doing just that. If your credit rating is bruised, you might consider holding off on the purchase until you can improve your rating. That’s because higher FICO® scores can translate into lower interest rates and lower overall borrowing costs.

2. The cost of borrowing. This includes knowing and understanding interest rates, fees and other charges that make the amount of money you’re paying back higher than the amount you borrowed. Knowing the prevailing interest rate can help you choose among lenders. So can comparing the annual percentage rate (APR), which expresses a loan’s interest costs and other fees as a yearly percentage. The APR gives you a look at the true cost of borrowing. Also make sure you also understand whether you are being offered a fixed-rate or an adjustable-rate loan and the long-term implications of both.

3. How much you can afford to borrow. You don’t want to be stuck paying more than you have to. Carefully look at your monthly expenses to see how much you can pay. Don’t forget to figure in things like rent increases or unexpected expenses that could hit down the line.