Redding Real Estate ~ First Time Home Buyer have new opportunity. The time is right and the numbers work. It is a good time to think of investing in the real estate market and making that important decision to own your own home. With tax incentives that disappear in six months and local down payment assistance programs, and very attractive interest rates….now may be your perfect time to look into owning your own home.
It will provide you tax deductions that contribute to the cost of owning your own home by allowing you to bring home more money month to month due to tax deductions. Please consult your CPA or accountant for tax advice or your loan officer. If you do not have a loan officer, give me a call and I can suggest several professionals for you to consult with.
Redding Real Estate may be ready and waiting for First Time Home Buyers to own their own home. Now may be the perfect time for you to take important steps to owning your own home.
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Here are some tips and information to help you prepare to meet with a Mortgage professional and establish a relationship for determining what you can afford and what your goals will be. I have a number of references for mortgage consultation and I recommend that you speak with several professionals to determine who you feel comfortable with and want to work with.
1. What will a lender look at when I apply for a mortgage?
Lenders consider many factors in evaluating your loan application, but they usually focus on four areas:
Income and debt. How much money you make and what other bills you have to pay helps the lender determine whether you can afford to make mortgage payments.
Assets. The lender needs to make sure you have enough money to cover the costs of buying a home.
Credit. Whether you’ve met other financial obligations helps the lender predict whether you will repay your mortgage.
Property. The home you want to buy has to be worth enough to act as collateral for the mortgage.
2. What does it mean to get pre-approved?
Getting pre-approved means you receive a loan commitment from your mortgage company before you have found a home, based on a review of your credit and finances. Having your credit pre-approved shows sellers that you’re a qualified buyer and helps you establish a clear price range. The process is the same as a typical mortgage application, except that your application doesn’t include property information.
3. What if I’ve had credit problems?
Your credit history is only one factor in qualifying for a loan, and having made some late payments doesn’t have to keep you from buying a home. Someone who has consistently made payments on time in the past may have more financing options than someone who has not, but that doesn’t mean a mortgage is off-limits if you’ve had credit problems. In fact, we may be able to suggest a variety of mortgage options to help people with less-than-perfect credit become homeowners and leave credit challenges behind.
4. What is the minimum down payment I can make on a home?
There is no minimum down payment required for buying a home, in general. Many first-time buyers believe they must be able to put down as much as 20% of a home’s purchase price in cash. That may have been true in the past, but many of the mortgage options available to today’s home-buyers require little or no down payment. With housing prices as high as they are, homeownership would be impossible for many people if not for these low-down-payment options. We may be able to suggest a number of loan programs that can help you buy a home with little or no cash.
5. Will I have to pay for Private Mortgage Insurance?
Private Mortgage Insurance (PMI) provides your lender with a way to recoup its investment if you are unable to repay your loan. PMI is usually required when the mortgage amount is higher than 80% of the home’s value. That means that if you buy a home with a down payment of less than 20%, you will probably have to pay for PMI. One common way of bypassing PMI without making any down payment at all is to use an 80/20 program, which combines a first mortgage with home equity financing.
6. What closing costs will I have to pay?
Closing costs vary based on a number of factors – including the lender, mortgage type, purchase contract, and location – but they usually include the following:
Lender fees. Your mortgage company may charge for expenses related to making the loan, including an appraisal fee, a credit report fee, origination points, and discount points.
Third party fees. Charges for services not provided by your lender often include the settlement fee, title insurance, and attorney’s fees.
Prepaid items. Certain mortgage costs must be paid to your lender in advance. The most common of these are pre-paid interest, hazard insurance, and deposits to set up an escrow account.
7. Should I pay discount points?
Discount points are prepaid interest, which you can pay to your lender at closing in exchange for a lower interest rate on your mortgage. Paying discount points, each of which is equal to 1% of the loan amount, is often called “buying down” your rate.
So does paying points make sense for you? The answer depends primarily on how long you plan to stay in your home. First, find out how much lower your monthly payments will be if you pay points. Then, calculate how long it will take for those monthly savings to add up to the cost of the points. If it would take five years to break even and you’re planning to live in your home for 10, paying discount points may be a smart move.
8. Should I choose a fixed-rate or adjustable-rate loan?
Most mortgage loans have either a fixed interest rate or an adjustable interest rate. With a fixed-rate mortgage, the interest rate never changes and your payments remain stable throughout the life of your loan. With an adjustable-rate mortgage (ARM), the interest rate changes at regular intervals – usually once every year – based on market indicators. For most ARM options, rate adjustments begin after an initial period – usually between three months and ten years – during which the rate is fixed.
A fixed rate is usually best if you plan to stay in your home for the long term and are buying at a time when rates are relatively low. You may get the most value from an ARM if you plan to move before the end of the fixed-rate period, or if you’re buying at a time when rates are relatively high.
9. Should I lock my rate?
Locking your interest rate means your lender guarantees the rate on your loan even if market rates change before closing. Most lenders will allow you to lock your rate for 30 to 60 days, with the option to extend the rate-lock period for a fee.
So how do you know whether to lock your interest rate? It depends on whether you expect rates to rise or fall before you close on your home. No one knows for sure which direction rates will go at a given time, so it’s difficult to make a reliable prediction. It helps to keep track of announcements from the Federal Reserve Board, whose monetary policies have an effect on mortgage rates, and to talk to you financial advisor about what may happen in the near term.
10. What will my mortgage payments include?
For most borrowers, each monthly mortgage payment goes toward the following:
Principal, which is the total outstanding balance of the loan
Interest, which is the cost of borrowing money
Taxes, which are levied on the property by the local government
Insurance, which protects the owner and the lender from losses caused by fire and natural hazards
I am Jeanean Gendron, your Redding and Shasta County Specialist. I can be reached at 530 276-7417. I answer my phone.
If you like what you are reading here, subscribe to my blog and you will be notified by email of new postings. You will receive a confirmation email. Click on the link to confirm your subscription.
Author: Jeanean Gendron, Realtor, DRE#01299346 / Category: Redding Real Estate
The Home Buying Process
Have Your Credit Pre-Approved
Getting a credit pre-approval means you receive a loan commitment from your mortgage company before you have found a home, based on a review of your credit and finances. A credit pre-approval shows sellers that you’re a qualified buyer and helps you establish a clear price range.
The credit pre-approval process
The process of applying for a credit pre-approval is the same as a typical mortgage application, except that it doesn’t include information on the property you will purchase. Your loan officer collects information on your credit, income, assets, and debts, and sends this information through an underwriting system. If the underwriting process determines that you qualify for a loan, you receive a loan commitment for up to a certain amount, which is contingent on the property meeting certain criteria.
Benefits of having your credit pre-approved
There are many good reasons for getting a credit pre-approval before you buy a home:
It makes your home search more efficient by allowing you to focus only on homes you know you can afford.
It lets sellers know that you can back up your offer, so they don’t have to worry about whether you can get a loan.
It lets you know early in the process if you will have difficulty getting pre-approved, so you have a chance to address problems before finding a home.
It gets most of the mortgage process out of the way up front, so you can complete your transaction quickly after you find a home.
Go House Hunting
Now that you’ve had your credit pre-approved and know how much you can afford, it’s time to go househunting.
You may look at one house or two dozen before you find the one that’s right for you. Just keep an open mind, and focus on the things that are really important to you, and you’re sure to find a place where you’ll feel at home.
Choosing a neighborhood
House-hunters should keep in mind the familiar adage about the three most important features of a home: location, location, location. That’s because finding the right home for you and your family has as much to do with the neighborhood as with the home itself. In fact, you’ll probably notice during your search that a home in one area costs much more than a similar home in another. Factors like safety, school quality, and proximity to shopping and entertainment all contribute to demand for homes in a given neighborhood.
Beyond price, what you look for in a neighborhood probably has a lot to do with your personal situation. How far are you willing to commute to work? How close do you want to be to family and friends? Do you have young children who would enjoy a nearby playground? Picturing your day-to-day life in a certain neighborhood is a good way to predict whether you will feel comfortable there.
Considering different house styles
You may want to look beyond the traditional detached single-family home. Condominiums, town houses, and duplexes can be more affordable options, especially if you’re looking in a densely populated area. These types of housing may not offer as much yard space or privacy as single-family homes, but those may not be as important to you as the chance to own a home in the neighborhood of your choice.
Building a new home
If you’ve looked and looked for your dream home without success, or if you want to be the very first owner of a brand new home, consider building. You’ll have more opportunity to customize the home’s features and design, more up-to-date appliances and building materials, and usually a builder’s warranty to cover problems that come up in the first year.
Make an Offer
So, you’ve found a house you want to buy. Congratulations! Now you need to decide how much you’re willing to pay to make it yours. In today’s real estate market multiple offers on the same home are commonplace, so you may only get one chance to make an offer that the seller will consider. That’s why it’s important to think carefully about your strategy.
Your real estate agent should be able to give you a list of similar homes nearby that have sold recently, and for how much. Although you can’t directly compare the home you want with the homes on the list without ever having been in them, you can use the list of comparable sales to get a general idea of the neighborhood’s price range.
In addition to sale prices for other homes, there are several ways you can determine a good amount to offer:
The condition of the house. Is the home in move-in condition, in need of paint and other cosmetic improvements, or a fixer-upper that needs some real work?
The market. If you are in a buyer’s market-where there are more homes for sale than there are people to buy them-prices are probably stable or falling. If you are in a seller’s market-where there are more buyers looking for homes than there are homes for sale-prices are probably moving upward.
Your threshold. If you’ve gotten a credit pre-approval, you know how much you can borrow for your home purchase. Of course, you may not be comfortable paying as much as you’ve been approved to borrow, so think carefully about your financial situation before making an offer.
Get a Home Inspection
When you are making what is likely the largest investment of your life, you should know as much as possible about what you are buying. That’s why it’s a good idea to have a home inspected before you make your purchase. Most purchase contracts contain provisions for a home inspection to be performed within a certain timeframe, and sometimes they specify what action the buyer and seller may take if problems are uncovered.
Finding a home inspector
It’s very important that you choose a qualified inspector who has plenty of experience with residential homes. Contact a national or state association of home inspectors to find out what certifications it requires for membership and if there are any members in your area. You may also want to ask your real estate agent for a list of reputable companies.
What the inspection should cover
At a minimum, the inspector should examine the following:
Exterior structural components, including the foundation, roof, siding, and chimney.
Interior structural components, including the basement or crawlspace, attic, flooring, and ceilings.
Major systems, including heating, cooling, plumbing, and electrical.
You should make every effort to be present during the inspection so that you will have an opportunity to ask questions and see first-hand what the inspector looks at. You should receive an inspection report with descriptions, and possibly photographs, of any problems with the home.
Close the Deal
You’ve found your home, agreed on a price with the seller, had the home inspected, and now you’re ready for the closing, where you will officially take ownership of the property. Welcome to the end of the home buying process-and the beginning of your homeownership journey.
When to schedule your closing
The closing date will depend on when the seller is ready to move out, when you are ready to move in, and when all of the mortgage details have been finalized. You may want to request a closing date near the end of the month in order to minimize the amount of interest you have to prepay on your mortgage.
Who should be there
Closing practices vary based on location, but attendees may include the following:
Buyer and seller
Real estate agents for the buyer and seller
Closing agent
Title company representative
Mortgage company representative
Attorney
What happens at closing
Despite all the new technologies that are streamlining the mortgage process, the closing phase remains very paper-intensive. You will have to review and sign a hefty stack of documents, some of them in duplicate and triplicate. You will also have to pay for any closing costs, including:
Lender fees, such as an appraisal fee, credit report fee, origination points, and discount points
Third-party fees for services not provided by your lender, which may include a settlement fee, title insurance, and attorney’s fees
Prepaid items that must be paid to your lender in advance, such as prepaid interest, hazard insurance, and deposits to set up an escrow account
Move into Your New Home
So you’re ready to start life in your new home – congratulations! Now all you have to do is get yourself, your family, and your belongings there intact. You can save time and energy by hiring a moving company, or save money by doing it yourself – it all depends on how much stuff you have, how far you’re moving, and how much you can afford to spend.
Hiring a moving company
The key to choosing the right mover is trust. To find a company you can have confidence in, look for one that:
Has been in the business for a number of years
Has a clean record with the Better Business Bureau®
Can provide several references to satisfied customers
Meets the standards of your state’s professional association for moving companies, if there is one
Moving yourself
Your move may not require professional help, but pulling it off successfully does require a professional approach. You wouldn’t want your moving company taking shortcuts, so why should you?
Preparations should start well before moving day. Keep these tips in mind:
Get the right moving supplies, and plenty of them. High-quality boxes, padding, and other packing materials are a good investment.
Take a room-by-room inventory of everything you will take with you, and get rid of the rest either in a garage sale or by donating it to charity.
Label each box you pack, and keep a list of its contents to make unpacking easier.
Set aside a box of items you’ll need immediately after you arrive, such as cleaning supplies, kitchen utensils, dinnerware, bath items, tools, and a telephone.
Have kids pack a box of their favorite things to unload right away at the new house.
Settling in
Making yourself at home in your new surroundings is about more than unpacking. Try to explore the neighborhood and get acquainted with neighbors right away. Ask about stores, playgrounds, and places of worship, so you don’t have to put your life on hold while you familiarize yourself with the area.
I’ll be stopping by to check on you and making sure your new home is just dandy!
I am Jeanean Gendron, your Redding and Shasta County Specialist. Your can reach me at 530 276-7417. I answer my phone.
If you like what you are reading here, subscribe to my blog and you will be notified by email of new postings. You will receive a confirmation email. Click on the link to confirm your subscription.
First Time Buyers have a new incentive to help towards owning a home. We currently have very attractive conditions that should help new buyers enter the market and achieve their goal of owning their first home. There are local Down Payment Assistance Programs and new Loan Programs designed to help you own your first home.
The market current provides and supports opportunity for you:
Historically Low Interest Rates
Real Estate is a Reliable Investment ($10,000 dollar investment in Stock Market in a normal market typically nets 12% ROI over 10 years, $10,000 dollar investment in the Stock Market in a bull market nets a 25% ROI over 10 years, and a $10,000 investment in a home in a normal market nets a 100% ROI over a 10 year period. Real estate is a more reliable investment than stocks. Source: NAR
It’s a Buyer’s Market–Plenty of Supply and Little Demand
The Buy Smart Time–typically a good time to buy a home is when the market is recovering.
Rates are back where they were at historically lows to make mortgage payments affordable.
There is a wide selection of houses which is good news for buyers when they have good home to choose from.
Homeowners in it for the long term nearly always come out ahead when building wealth.
It is a good time to take advantage of the strong local economy.
Home sales have slowed giving buyers the advantage.
Additionally, the Government is offering a $7,500 tax credit for First Time Home Buyers!
Who is eligible? The $7,500 tax credit is available for first time home buyers only. The law defines a first time home buyer as a buyer who has not owned a home during the past three years. All U.S. citizens who file taxes are eligible to participate in the program.
What Type of Homes Qualify? All homes within the U.S., whether single-family, town homes or condos will qualify. There are conditions. The home must be used as a primary residence, and the buyer has not owned a home in the prior three years. The tax credit includes newly constructed home.
If you are thinking of buying your first home, now may be a very good time to learn about your options. Visit our website for dates for First Time Home Buying Seminars or call me to register for the seminars or for details on how you can begin getting started in this process. The time is good and there is a deadline (July 1, 2009 for this tax incentive)….so call today and let’s get started.
If you like what you are reading here, subscribe to my blog and you will be notified by email of new postings. You will receive a confirmation email. Click on the link to confirm your subscription.
