Buying

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Financial Advice for the First Time Buyer

Purchasing a new home is a big step, especially for first–time buyers. Most people’s concerns center on affordability, so take a look at your financial situation.Crunch the numbers to decide if this is the right time to buy.Mortgage rates are historically low, and homes are well off their highs of a several years ago. That’s great for buyers!

It takes more than the down payment to get you through the door of your first home. When buying, consider the closing costs and future expenses that come with any property.Many experts agree that homeowners should have 1–3% of your home’s purchase price in savings for improvements and surprise expenses. Likewise, mortgage experts say you hold at least 6 mortgage payments in the bank in case of job loss or other circumstances.Home inspections also are helpful for first–time and other buyer, as they list repairs that must be made now by the seller, and other repairs that should be made soon … by you. Put together a short–term plan based on the inspection. This will help you figure how much additional money you'll need in the months ahead for maintenance.Be sure to read What Can I Afford? for more information.Discuss homeownership costs with your Alex Mark Real Estate Agent. Working together you can pinpoint all related expenses and achieve your homeownership dreams. 

1. Mortgage Costs

Most buyers require a mortgage. Work with your lender to pinpoint your monthly house payment, and the costs of your mortgage. While the former will be generally consistent based market rates and loan types, your mortgage costs can vary significantly. Be sure to compare mortgage offers.

You also need to insure the value of the home against fire, theft, and perhaps flood damage. This insurance is purchased separately. Shop around for the best price and remember that this cost can go up each year, especially if you file a claim.

Property taxes can add hundreds of dollars to your monthly mortgage payment. They also can increase depending on your community’s school and town budgets. Typically, a home is taxed on its assessed value, which is an amount equal to a fraction of its appraised value.

If you put down less than 20% on a mortgage, you’ll need to pay PMI, which protects your lender against a potential default on the loan. PMI generally runs up to .75% of the loan amount, depending on your loan to value and credit score.

Utility expenses are a given … water, gas, electricity, and oil bills. Have your Prudential Real Estate Agent ask the home seller for their average monthly cost over the last year. Then you can estimate how much to put aside monthly.

You may purchase a home with a large yard and beautiful landscaping. Unless you have a green thumb and the desire and time for maintenance, you must hire a gardener to mow, weed, and care for those beautiful flowers and shrubs. Ask your Prudential Real Estate agent for referrals and compare costs.

You’ll probably want to upgrade your home once you’re in. Make a list of all the projects you are considering — such as adding new flooring, drapes, or appliances — and leave room in your budget for some of these costs each month.Once you tally these costs, you may need to adjust your price range. This will make for a smooth and financially comfortable transition.Your Alex Marl Real Estate Agent can help you each step of the way. 

 Understanding Mortgages

With interest rates near historic lows, now is the terrific time to apply for a home mortgage or refinance an existing one.Consumers must choose a loan that’s most appropriate for their financial circumstances. Here is an overview of today’s most common mortgages. 

• Conventional Loans — Also Called Fixed Rate Mortgages
  The most common mortgages are fixed rate mortgages, where rates are stable for the life of the loan. This takes out all the guesswork, as borrowers will know their monthly payment throughout the life of the loan and nothing will change it. The most popular fixed–rate mortgages are 30 and 15–year terms. If you can afford a fixed–rate and plan to live in your home for 10 or more years, this may be the best option.
• Adjustable Rate Mortgages (ARMs)
  ARMs start with low rates for a specified period, and then fluctuate based on market conditions. The initial rates are significantly lower than fixed rate mortgages. However, borrowers must be prepared for the possibility of increased mortgage payments later. Because of the risk involved, ARMs are better suited for borrowers who plan to stay in their houses for shorter periods of up to 8 years.
• FHA Mortgages
  Home loans insured by the Federal Housing Administration (FHA) are generally designed for first–time home-buyers and others who face modest hurdles in securing a mortgage. FHA mortgages generally feature lower down payments, flexible requirements, and consistent rates throughout the entire term.
• Jumbo Mortgages
  For those who need larger loans than the conforming loan limits set by Fannie Mae and Freddie Mac — $417,000 for most of the country, and up to $729,750 in high–priced markets — jumbo mortgages are the way to go. Jumbo loans are higher risk to lenders and usually have higher mortgage rates and stricter mortgage criteria, including higher down payments and higher credit requirements.

There also are mortgages tailored for veterans, soldiers, first–time buyers, and even doctors. Research loan types, lenders and compare offers.Your Alex Mark Real Estate Agent can help you each step of the way. 

 Give Your Prospective Home a Check–Up

Buying a home is an exciting process.

Yet, as with any purchase, the buyer must beware. Sometimes, what looks like an ideal home might be masking major defects that could cost far beyond the purchase price.Enter the home inspection.Before any sale is complete, it’s essential to have a professional home inspector assess the property from the ground up. An objective inspection gives both buyer and seller a better understanding of the value and needs of the property.Remember, no home is perfect and the presence of defects needn’t halt the transaction. An inspection allows the buyer to further negotiate the home’s purchase price or the cost of repairs in the purchase contract. 

 When You’re Moving . . .

Everything has a decision tied to it.With so many decisions to make, careful planning is essential for an easy move.Our goal is to help you stay organized, avoid frustration, and save time and money during your move. Take advantage of your Alex Mark Real Estate Agent's experience to make a smooth, positive transition into your new home. 

 What Buyers Need to Know about Short Sales

Homebuyers sometimes cringe at the term ‘short sale’ yet short sales can present attractive opportunities for those with patience, as homes usually sell at a market discount.A short sale occurs when a lender accepts less than what is owed on a property, and forgives all or a portion of the excess debt. For a short sale to close, everyone who is owed money must agree to take less — or possibly no money at all — which makes the transaction complex and time consuming.If you’re considering buying a short sale home, understand that it often takes longer than a traditional sale because of the documentation required and the sign–off needed by the lender. The entire short sale process hinges on the hope the bank approves the sale, takes the loss, and eliminates the costly process of foreclosing, clearing, and reselling the home.When homes list as short sales, they are more likely to be maintained as sellers still want to get as much money as they can. Still, a seller probably won’t make any big home improvements so be prepared to make some repairs and improvements on your prospective home.The best advice is to work with a Prudential Real Estate Agent who has experience in short sales. Our agents can help you expedite the transaction and will protect your interests. By checking recent home sales in the area to get a better idea of which properties are selling, our agents will work with you to establish an appropriate price that a bank would be more likely to approve.

Understand that with a short sale there is no leniency with the closing escrow date. As the buyer, you must close on time. Because of this, take care of all loan paperwork immediately after opening escrow. Alex Mark Real Estate Agent will help ensure that nothing falls through the cracks and all your paperwork is completed when needed.