• Things You Need to Consider for Your Home Purchase
• Summary of a Home Purchase

1. Up-front payment. You need to determine how much you can pay up front for a down payment, and for closing costs.
   Most homebuyers put down at least ten percent of the purchase price, although some programs require less. However, depending on the size of the down payment, you may have to pay private mortgage insurance (PMI).
2. Qualifying ratio. Typical qualifying ratios are 28%/36%. First, most lenders will assess whether the total amount you’ll pay for your mortgage, property taxes and insurance is no more than 28% of your total income.
   Second, they’ll ensure that your mortgage costs and other debt payments such as credit cards and auto loans are no more than 36% of your total income.
   Programs are available with more relaxed qualifying guidelines.

1. Try to evaluate whether you and the real estate agent will be compatible. Ask questions like:

• Are you familiar with this type of property and this area of town?
• What can you tell me about this area of town? (Find out specifics on items important to you, such as schools, traffic, recreational areas, crime, etc.)
• Do you have time to work with me? (Be specific about your expectations of the amount of time you expect the agent to spend with you.)
• What procedure will you follow when working with me?

1. Stay involved in the process and ask questions wherever appropriate.  Remember that you are the only one truly looking out for your best interests–even though your real estate agent may listen sympathetically to your wish list and drive you around all hours of the day and night to help you find the right house.
2. Work with the real estate agent to negotiate the best price.  In many cases, a real estate agent legally works for the seller.  The seller pays the agent's commission.  When the sales price is higher, the agent may make a larger commission and the seller may be happier.

1. Get pre-approved to avoid disappointment, and for an advantage over other buyers.
   
   In today’s competitive home-buying market, it’s smart to take the time to get pre-approved for a loan before you start shopping. Sellers and real estate agents will be much more open to working with you if they know that you have already taken care of financing arrangements.
   
   To get pre-approved for a loan, you’ll complete a loan application and usually pay a small fee. You may also be asked to provide recent tax returns, which you’ll usually have to turn over anyway, to obtain a final loan.
   
   Keep in mind that "pre-qualifying" isn’t the same as being "pre-approved". Pre-qualifying with a lender is based on a limited amount of information and can only give you a general range of what you may be able to qualify for. The details you’ll provide for a pre-approval give the lender the confidence to make a firm commitment about the size loan for which you’ll be approved.
   
   Our pre-approval program, will provide you with a commitment, so that you can focus your home search on properties for which you qualify.
   
   
2. Focus your search on the right home.

Now that you know the home price for which you’re pre-approved, start listing the home features that you would like in a home–what’s absolutely essential you must have and what is desirable, but not absolutely necessary. Consider the following:

• What’s the maximum distance I want to drive to work each day?
• Do I want a newer house with better insulation, newer plumbing, high-efficiency central air, sophisticated, electrical systems and fewer repairs? Or would I prefer an older, established neighborhood, with established landscaping, a larger lot and architectural details not available with some newer homes?
• What special features are most important to me (i.e., breakfast nooks, indoor laundry, large backyard, front porch, home office, brick exterior, fireplace, pool, etc.)
• How close do I need shopping?
• Do I prefer a single-story, two-story, split-level or ranch?
• Are there certain house colors that are unacceptable? Am I willing to repaint, if necessary?
• Do I prefer a large or small lot? Do I object to a corner lot or being located on a busy street?

Once you’ve narrowed down the qualities of the home you’re looking for, start looking for homes that meet your criteria by doing one or more of the following:

• Check local newspaper listings or the Internet
• Talk to and work with real estate agents
• Drive around neighborhoods you’re interested in to find "For Sale" signs
• Check bulletin boards at work, church, businesses or online
• Talk to friends, acquaintances and co-workers

When you’ve focused on a few neighborhoods or homes:

• Drive through the neighborhood to see how well people maintain their properties.
• Find out how long it really takes to commute. If you’re able, wait until rush hour and time how long a drive it is. Your estimate could be way off!
• Find out if libraries, fire stations, police departments, hospitals, grocery stores and shopping malls are convenient and well-located.
• Walk the area and talk to anyone you meet. This is a good way to get your questions about the neighborhood answered.

1. Don’t give away your secrets too easily.
   
   It's not a good idea to let a seller or real estate agent know that you’ve fallen in love with a property. Try to play it cool and put on your best poker face. Making them think you can walk away from this property at any time and find something else just as good for a great price may give you greater bargaining power.
   Other secrets to keep to yourself: how much money you have, the top dollar you’re willing to spend, and when you’ll need to move out of your existing home.
   
2. Choose the best home financing for your situation.

With the wide variety of loans available, you should be able to find one that best suits your financial situation. More than likely, you’ll be choosing between a fixed-rate, an adjustable-rate or a balloon mortgage.

Fixed-rate mortgages offer a fixed interest rate and monthly payments that remain the same for the life of the loan. You may want to choose a fixed rate if you:

• Want payments to remain the same.
• Expect to stay in the home for some time.
• Think your income won’t increase while you’re in the home.
• Feel uncomfortable with the risk of rising payments.
• Live on a modest income and are approaching retirement.

Adjustable-rate mortgages (ARMs) feature a variable interest rate, with monthly payments that change at fixed intervals (usually six months or a year, depending on whether the interest rate index goes up or down).
The interest rate and payment on an ARM often increase after the initial period even if market interest rates do not change. An adjustable-rate mortgage may be a good choice if you:

• Need a lower monthly payment in the first year to buy the home you want.
• Expect your income to increase, so that you can handle an increase in monthly payments if rates rise.
• You anticipate living in the home for only a short period of time.

Balloon mortgages offer low, fixed payments for a short period–usually one, three, five or seven years before the entire loan is due.
Most homeowners choose to refinance the loan, rather than pay it off. If you’ve had late payments or there are liens on the property, you may face some difficulties. Balloon mortgages can be a good home-financing solution if you:

• Expect to sell the home before the balloon falls due.
• Are a first-time homebuyer expecting to trade UP in a few years.
• Are absolutely positive you’ll be able to refinance the house when the note comes due.