Everything You Need to Know About Buying Your First Home!

The Housing Market

  • All real estate is local.
  • Housing inventories are up.
  • Prices have come down.
  • Sellers are more willing to negotiate.
  • Interest rates are still low.
  • Your home can be a solid, long term investment.

Buying Verses Renting

  • Allows you to build equity.
  • Allows you to make home improvements as well as change landscaping and decor.
  • May give you the chance to deduct mortgage interest and taxes.
  • Gives you pride of ownership.
    Make sure to use a “buy versus rent calculator” to determine what’s right for you

Costs of Buying and Owning a Home
One time

  • Down payment (ask about Down Payment Assistance Programs)
  • Closing costs (may be able to be financed or contributed by the seller)
  • Lender, Reserves and Transfer fees

Ongoing

  • Mortgage payment – Principal, Interest, Taxes and Insurance (and possibly Mortgage Insurance)
  • Maintenance (ask about a Home Warranty)
  • Homeowner or Condo Association fees, if applicable

Mortgage Terms

  • Mortgage – A loan where the borrower offers property as collateral until the debt is repaid
  • Down Payment – The difference between the amount of the loan and the cost of the property
  • Loan to Value – The percentage of the loan amount compared to the cost of the property (will determine need for Mortgage Insurance)
  • Appraisal– a report that states an opinion regarding the value of the property
  • Good Faith Estimate – A document that tells the borrower the approximate costs they will pay at or before closing
  • Truth in Lending Statement – A statement that tells borrowers how much they will be repaying over the term of the loan

Types of Loans

  • Conventional and Government
  • Fixed and Adjustable Rate
  • Term of the loan
    1. Longer term
    2. – The lower each monthly payment will be.
      – More interest over the life of the loan.
      – May have a higher interest rate.

    3. Shorter term
    4. – Higher monthly payments
      – Mortgage will be paid off sooner with less interest

Before You Start Shopping

  • Educate yourself about the mortgage process (which you’re doing right now!)
  • Assemble your “home” team
  • Mortgage professionals, loan officers, real estate agents
  • Get referrals from your friends and family
  • Review your credit report
  • Complete your wish list
  • Get pre-approved