1. Why should I buy, instead of rent?
- Personal satisfaction
- Deduct the cost of your mortgage loan interest
- Deduct the property taxes
- Earn Equity. Your home is an investment, the value of your home could go up through the years
Note: When you rent, you write your monthly check and it's gone forever. You are just paying your landlordâs mortgage.
2. I can't afford my dream home, should I wait until I have more of a down payment, or until the house prices come down?
While only you know your financial situation and readiness to buy a home, it is crucial that you recognize the real estate market has been extremely strong and profitable for home owners over the past several years. Home values have increased an average of 10 to 20% per year. For example, a home that cost $200,000 this year may be worth $220,000 next year. Of course, no one can predict or guarantee the real estate market's performance, but trends indicate a continuation of a strong real estate market.
My recommendation is to buy a home within your budget that you can comfortably afford and enjoy, and keep in mind that upgrading is often the way to obtain your dream home, as opposed to trying to buy it the first time around.
3. How much money do I need to buy a home?
This depends on a number of factors, including the cost of the house and the type of mortgage you get. There are many different types of mortgage programs. There are programs for first time homebuyers that have zero or minimal closing costs. There are programs that require little money down for your new home. A realtor can assist you with helping you understand more about financing.
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. Earnest money can vary, your deposit generally will range from $500 - $2000
- Down payment: A percentage of the cost of the home that you must pay at closing. The more money you can put into your down payment, the lower your monthly mortagage payments will be. Some types of loans require anywhere from 3% - 20% of the purchase price.
- Closing costs: Costs associated with processing the paperwork to buy a house. This cost can sometimes be rolled into your mortgage.
4. Should I use a real estate broker? How do I find one?
Using a real estate broker is a very good idea. All of the details involved in home buying, particularly the financial ones, can be overwhelming. A good real estate professional can guide you through the entire process and make the experience much easier. A real estate broker will be well-acquainted with all the important things you'll want in a home. A realtor will help you find the best home for the price range that you can afford. With immediate access to homes as soon as they're put on the market, the broker can save you hours of wasted driving-around time. When it's time to make an offer on a home, the broker can point out ways to structure your deal to save you money. He or she will explain the advantages and disadvantages of different types of mortgages, guide you through the paperwork, and accompany you and answer last-minute questions when you sign the final papers at closing. You don't have to pay the broker anything! The payment comes from the home seller - not from the buyer.
5. Who pays the realtorâs commission?
Most commonly, the realtor's commission is paid by the seller from the proceeds of the transaction.
6. In addition to the mortgage payment, what other costs do I need to consider?
You will 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 town taxes. Taxes normally are rolled into your mortgage payment.