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Home Buying FAQ
How do I know if Iím ready to buy my first home?

What should I consider when choosing where to live?

What will make finding my new home easier? And where do I begin?

How does using a real estate agent benefit me?

What loan term should I choose?

How is the value of a home calculated?

What is a final walk-through?

What is Escrow?

How do I know if Iím ready to buy my first home?

Before beginning the process of looking for your first home, it is important to determine that you are ready to buy. There are other costs involved besides the monthly mortgage payments. You should be prepared to put down a down payment that is between 3 and 20% of the price, or property value. It must be emphasized that having 20% is the goal. If you have less to put down you will have to purchase mortgage insurance, costing you additional money. In addition to your down payment there are closing costs. Closing costs are usually between 3 and 7% of your purchase price. However, there are some lenders that offer to pay closing costs. Other factors to budget for are homeownersí insurance, money for utilities and maintenance, and property taxes. Finally, before you begin the home buying process, check your credit report. Most people will have errors on their credit report in their life time, which end up costing a lot of money unless they have them fixed! It is good to always know your credit score.

Your real estate agent should be able to anticipate what you are looking for and help narrow down the listings according to your criteria. This prevents brain overload. Before deciding to view a home most likely you have already seen many properties online. Itís difficult to make a decision if youíve viewed and walked through 50 homes in a short amount of time. If youíve seen too many properties the likelihood of remembering specific details diminishes and increases your buying time length.

Once youíve narrowed down your selection this is when you review your top choices and do another walk through. It might help to write out the pros and cons and compare after your second walk through. This will help keep you organized and make a final decision.



What should I consider when choosing where to live?

At first, you should have several areas in mind in which to search for your new home. You want to give yourself a lot of options to avoid buyer's remorse. If you have children (or are planning to start a family), investigate the school districts in the areas you are looking at. Also consider often forgotten things like traffic. You wonít be too happy with your new home if after moving you discover it takes hours sitting in traffic to get to work every day. It is worth your while to do a ďtest runĒ of your commute from a home you are considering. Another thing to think about is noise. Visit a potential new home during rush hour to test the waters. Remember that buying a home is a long-term commitment; you should think about the future of your neighborhood. Find out what's in store. Are there new building projects in the works that could effect whether or not you will enjoy this home in the future?



What will make finding my new home easier? And where do I begin?

Firstly, find a good real estate agent! They will have listings to show you and add knowledge and experience to the mix. When house hunting, take pictures! Take pictures of the inside and outside to look at and consider later. Bring your spouse, friend, or family member. Having another person's opinion is always helpful because they might think of something you donít. Consider all of the costs involved to make sure you can afford not just the house, but also utilities and any renovations or maintenance that you might need to do. Donít make a quick decision. Buying a home is a huge commitment; take your time!



How does using a real estate agent benefit me?

Real estate agents can of course find homes for you, but they also provide a lot of other services. Your agent will help you in the negotiations of buying the home when you are ready to make an offer and present your bid to the seller. Real estate agents can find a mortgage lender for you as well.



What loan term should I choose?

If you can afford higher payments, a shorter loan term will build equity more quickly and may be the right choice for you. If you wish to qualify for a larger loan, it may be better to choose a longer term. Longer term loans are a good choice if you donít plan on moving for a long period of time and the interest rates are good when you sign your loan. Long term loans are easier to qualify for as well. And you can always pay more than required if you have it and ask your lender to re-amortize (re-organize) your loan payments.



How is the value of a home calculated?

As a home buyer you will have your future new home appraised, and additionally, the real estate agent you work with will provide you with market analysis to help determine a home's value. A home's value is based on several things. The size, square-footage, construction quality, and location of the home are the basics. Also taken into consideration are relevant historical facts about the property and prices of recently sold comparable properties in the area.



What is a final walk-through?

The final walk-through happens on the day of closing or a few days before. It is an inspection to make sure your home is in the condition you agreed upon when you agreed to purchase it. It is not an appraisal. This is not the time to start new negotiations unless a new problem has arisen since all of your appraisals and home inspections. This is just to make sure any issues have been resolved and that the home is ready for you to move in. Things you should do on during your final walk through include: make sure all lights & water work, check for leaks under sinks, flush toilets, make sure all doors open and close, test garage door openers, run garbage disposal, open and close windows, test heat and A/C, and inspect ceilings, walls, and floors. It is also a good idea to test appliances that are included such as the stove/oven. It would be a good idea to do your walk-through with the seller present, so that you may ask questions.



What is Escrow?

In the most basic of terms, an escrow holder is a neutral third party that holds the buyer and seller's signed documents as well as the buyer's deposit money and makes sure all of the terms in the purchase contract have been satisfied for both parties. Once that is determined, the escrow officer performs a variety of tasks to help both the buyer and the seller in their transaction. All of the funds are distributed to the appropriate parties. The escrow holder obtains the seller's signature (notarized) on the grant deed, and determines prorates on property tax, etc. The escrow holder also facilitates recording the grant deed under the new owner's name. The escrow holder also acts as a coordinator for the buyer's lender. They handle the signing of the loan documents by the buyer as well as the funding. Your real estate agent will be of assistance in overseeing all of the steps involved with the escrow process.



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