Q:
Why should I buy instead of rent?
A: A property is an
investment. When you rent, you're essentially paying for another
person's investment. Owning a property gives you many financial
advantages. You can deduct the cost of your mortgage loan interest
from your federal income taxes and in most states from your state
taxes, and that also includes your property tax. This will save
you money each year, because the interest paid will make up most
of your monthly payment for most of the years of your mortgage.
In addition, the value of your home or equity may go up over the
years, allowing you to collect a nice sum when you sell. Finally,
you'll enjoy having the ability to be as creative as you wish with
your own personal style that you could truly call yours.
Q: How do I choose a
real estate agent?
A: There are many real estate agents and plenty of reasons
why you want to hire an agent to help you. The best agent for
you is an experienced professional who will have your desires
in mind, conduct themselves in an ethical manner and knows your
market well. Sometimes what you've heard about agents from friends
and family might not be true, so it's smart to interview a few
agents before selecting your representation. Once you settle on
an agent, expect to sign an exclusive right to sell or exclusive
right to buy agency agreement, which gives the consent to the
agent to represent you. Most real estate agents work only on commissions,
and at the end of a buying transaction the seller will usually
pay 6 percent of the selling price, 3 to the listing and 3 to
the buying agent. Remember, real estate agents know how to deal
with most problems involved in transactions, therefore to have
their expertise in a tight situation could be extremely valuable,
financially and otherwise.
Q: How much money will
I have to come up with to buy a property?
A: It depends on a number of factors, such as the cost of
the property and the type of mortgage you assume. Essentially,
you need to come up with enough money to cover three costs of
the initial transaction: Earnest Money - this is a deposit kept
in escrow that you make on the property when you submit your offer,
to prove to the seller that you are serious about purchasing their
property. If accepted this will usually go towards the closing
costs and is refundable before a certain time period if you choose
not to go through the transaction; the Down Payment, is a percentage
of the cost of the home, usually 10-20 percent, that is paid when
you go to settlement, or based on the type of loan your mortgage
lender will supply the payment. The more money you put towards
your down payment, the lower your mortgage payments; and Closing
Costs, which are the costs at settlement associated with processing
the paperwork and various fees by a lender, usually 3-4 percent
of the price of the property. When you assume a loan your lender
should be giving you an estimate of the closing costs.
Q: How do I make sure
I pick the right lender?
A: Being as prepared as possible is a great way to make your
offer stand out for a seller. Having a pre-approval letter, though
not necessary right away, can help a seller feel good about your
offer over another. Do Not be confused with pre-qualification,
which is just based on a review of your finances, a pre-approval
letter from a lender is based on your actual income, debt and
credit history. Don't choose a lender just because they advertise
the lowest interest rate. There are multiple costs to a loan and
sometimes lenders use clever advertising to draw you in, not actually
offering you what they promise and not disclosing the actual whole
cost process. Your goal should be assuming a loan with minimum
cost or hassle and maximum financial benefits. After meeting with
a lender and giving them your financial record, you should receive
a statement of fees associated with your transaction called a
Good Faith Estimate (GFE). This is required of them by law and
gives you insight on how much your loan will cost you. Take your
Good Faith Estimate (GFE) with you when you sign loan documents,
so you can compare yours to their document. You are not expected
to pay fees which are different from those contained in your GFE.
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