When looking into anything new, it is normal to have questions. Here are some common questions and answers about real estate to help you gain that edge when deciding whether buying a home is right for you.
Which is better: renting or buying?Before buying, you need to determine what will save you money over the long run, and what might be of the most financial benefit in the future. It is indeed cheaper to rent, even in the long run (according to a Joint Center for Housing Studies of Harvard University study). Additionally, when you rent you do not have to pay maintenance costs, as those are the responsibility of the landlord.
However, there are tax benefits to owning, and the home will likely appreciate in value, allowing you to possibly make money. If you buy a home now for 150,000 dollars, in a few years is will likely be worth more than 200,000. Additionally, rent always goes up, but your monthly housing costs remain relatively stable when you buy. Until you reach the end of your mortgage when it drops to zero.
Ultimately, it is up to you to weigh the pros and cons. There are advantages to both renting and buying, and you need to determine what works for you.
How do I figure how much house I can afford?The big question that needs to be answered before buying how much can one afford? To figure that out, you need to take into account several factors. Most lenders accept a five percent down payment, so you will need that up front. What remains after the down payment is what you will borrow.
You will have to figure interest, mortgage insurance, an escrow account, and possibly taxes as well. All of that is added to the amount of monthly principal payments, and that is your payment. Most lenders want to see that your payment is only .28 of your income, although some are stretching it to .30 or .32. Take your monthly payment (everything included) and divide it by the percentage your lender finds acceptable. Then multiply by 12. That is the yearly income you need.
So, if your monthly payment expenses total 983 dollars, this is what you would need:
983/.28=3,510.71
3,510.71x12=42,128.57.
To be safe, you would need to make about 43,000 dollars a year. In order to see if you can manage, open a savings account and put the down payment in the account. For six months, add the amount you would pay above your rent to the account (if you pay 600 dollars in rent, put 383 in the account each month). If you can handle the extra, you can afford the house.
How can I know whom a real estate agent is working for?When looking for help finding a home, many people turn to real estate agents. However, many agents are just looking to sell a home. If you would like someone who wants to help you get the best price, look for what is called a buyer’s agent. He or she is required to work for your best interest. This means that you pay the agent, but it also means you have someone lawfully bound to work for you.
Are there special programs for first time buyers?Many states offer programs for first time buyers. If you get in touch with your local credit union advisor she or he can let you know how to take advantage of programs that can help you purchase your first home. Additionally, non-profit national lenders like Fannie Mae and Freddie Mac offer advice and programs to help you achieve the American Dream of homeownership.
Nicole Soltau is the President and Founder of CreditUnionRate.com.
The Leading Credit Union Directory.Search, Find, Join.http://CreditUnionRate.com