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Costs
and Finances
-What
Can You Afford?
Finding the Right Home
-Choosing Your Home
-Inside Your Home
-Outside Your Home
-Neighborhood Choices
Negotiating the Purchase
-Writing an Offer
-Making an Attractive Offer
-Withdrawing Your Offer
Getting the Financing You Need
-Things Most Lenders
Need
Home Inspections
-Details
Closing the Deal
-What to Expect on Your Closing
Day
-What Can You Afford?
The amount a lender will loan for your house purchase depends
mostly on how much you can afford for the monthly payment
and how much you can invest in the downpayment.
Monthly payments consist of the principal and interest on
the mortgage loan, in addition to property taxes and homeowner's
insurance. These four costs are often abbreviated as PITI
[Principle, Interest, Taxes & Insurance].
Lenders figure that the buyer shouldn't pay more than 28%
of gross income for PITI, or 36%
for both PITI and monthly long-term debts such as credit card
payments, car payments, child support, school loan payments,
and alimony payments.
When it comes to financing your home, you can go to mortgage
bankers, savings and loans, or commercial banks. There are
conventional mortgage, adjustable rate mortgages, balloon
mortgages and assumable mortgages.
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-Choosing Your Home
When choosing a home, many people decide with emotion and
justify with facts. Your new home has to feel right, but it
has to work right, too. You can evaluate many of the physical
features yourself by systematically looking for certain details,
outside, inside and throughout the house. A professional inspection
is also recommended in order to ensure piece of mind when
it comes to buying. Some loans require an inspection, others
don't, so be sure to find out what your new home has in store!
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-Outside
Your Home, Questions to Answer
- Are
there any noticeable sags or dips in the roof?
- Will
water drain off of the sidewalks and driveway?
- Are
the sidewalks and driveway in good condition?
- Are
large trees at least 30' from the house?
- Are
the shingles and gutters in good condition?
- Do
the foundation walls have any cracks larger than 14"
wide?
- Is
the house's exterior in good condition?
- Are
there cracks where materials meet at walls or at windows
and walls?
- Is
the lot sloped for proper drainage?
- Are
electrical outlets grounded to prevent shock?
- Are
there low spots near the house?
- Does
the landscaping appear healthy?
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-Inside Your Home, Questions to Answer
- How
many finished rooms, unfinished rooms and bathrooms are
on each floor?
- Will
the main entry direct your guests where you want them?
- How
accessable are the bathrooms?
- Are
eating areas easily accessible from the kitchen?
- Are
the large, major appliances included in the sale of the
house?
- Is
there adequate cupboard and counter space?
- Is
there plenty of closet and storage space throughout the
house?
- Are
the windows in good shape?
- Do
bedrooms have two uninterrupted wall surfaces for easy furniture
arrangement?
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-Neighborhood Choices
There is the old real estate saying, "There are three
criteria that determine a property's market value: "location,
location, location." Most often, the hard part of making
a decision on the home to buy, is the neighborhood to live
in! The neighborhood will determine the value of your home.
Are other homes near the house you're considering well-maintained?
What do you prefer in a location? Consider distance from work,
shopping, & schools.
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-Writing An Offer
When you've selected the house you want to buy, your next
step is to submit a signed offer. When deciding how much to
offer, you should consider factors like: fairness of the price,
length of time the house has been on the market, & availability
of financing.
You need to decide how much earnest money
to offer. Keep in mind, if you fail to buy the house
after the seller has accepted your offer, the seller has the
right to keep this earnest money.
Select your closing and possession date.
(Allow yourself enough time to obtain financing.) You may
want to include a contingency plan for closing and occupancy
in case you can't secure possession on the agreed date.
Require the seller to conduct a title
search to prove the title is clear. It should show
no claims or liens against the property.
Joe or Colonel will present the offer to the seller or the
seller's agent. The seller will either reject, accept, or
counter your offer with changes. You may either sign it as
it is showing your agreement, or make a counteroffer against
it.
When both the buyer & seller agree on the terms and sign
the offer agreement, it becomes a valid contract.
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-Making an attractive offer
It is a good idea to get preapproved on your loan. When you
submit your offer with a copy of the preapproval letter, it
looks more appealing to a seller. It is also beneficial for
the seller to know if your purchasing the house is contingent
upon selling yours. If you have no house, you should let them
know. These are a few things that may up your negotiation
power.
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-Withdrawing Your Offer
You may find yourself wondering if you can withdraw an offer
once you have made it. Most often, you can up until the moment
it is accepted. You should always contact your lawyer before
withdrawing an offer, so you don't lose your earnest money
(deposit), or face a lawsuit filed by the sellers.
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-Things Most Lenders Need
- Your
current address and previous addresses if you have been
at your current address for less than two years.
- Your
Social Security number.
- The
amount of money you wish to borrow.
- Your
present employer's address and past addresses if you have
been there less than 2 years.
- Copies
of your paystubs and your gross monthly income.
- Copies
of monthly bank statements
- A
list of your assets
- A
complete list of debts with their account numbers.
- Last
year's W2 Forms
- Child
Support/Child Care
- Divorce
Decree if applicable
- Social
Security Card
- Driver's
License
- Application
Deposit
- A
copy of the sales contracts for the property you wish to
finance.
- A
written statement clarifying any problems with the loan
application.
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-Details of Home Inspections
The following is a list of the common areas that home inspectors
look at:
- Structural
- Plumbing
- Electrical
- Built
in Appliances
- Safety
Hazards
Miscellaneous;
Other items that may or may not be included in a standard
home inspection are: septic systems, drainage problems, roofs,
wood decks, patios or other outdoor structures.
Things normally not included: geological surveys, pollution,
and termite inspections. These are things that you, as the
buyer, should get done if applicable to protect your investment.
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-What to Expect on Your Closing Day
You can expect paperwork and even more paperwork!
You will sign the note to repay the mortgage, with the house
as security.
You willl sign papers regarding governmental regulations and
transaction information.
Finally, review the numbers on the closing statement carefully,
this is the last document you will need to sign today!
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