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1. How much do you need to Qualify?
This is where front and back ratio’s come into play. A front ratio is simply a way to compare your total mortgage payment to your monthly income. A back ratio compares your total monthly expenses (including the mortgage) to your total monthly income.
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2. How much can you afford?
There are a couple factors to take into consideration. How much do you have for a down payment? How much gross and extra income do you have coming in? How much debt do you have (school loans, car loans, revolving accounts, credit card debt, etc). You will also need to know your loan information, like, the interest rate, the term it is for (years), the front ratio and back ratio. All of these pieces of information will determine the amount of house you can afford.
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3. What are the tax benefits of buying a home?
A:Did you know that mortgage interest, points and real estate taxes are tax deductible? That might not sound like a big deal, but hear us out. Think about it, if you have a $1,200 monthly mortgage payment, that first year will be mostly interest payments. Well, of that $1,200, you get to deduct about $1,080. Thus, reducing your taxable income by almost $13,000 that year! If you are in a 28% bracket, your deduction is almost $300 a month. Not too shabby! But just to be safe, we recommend checking with your accountant to make sure that you will be able to get these tax savings.
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4. Should you consider a First Time Buyer program?
If you are a first time buyer, there are TONS of different programs out there. The program you use will be based on your location and the mortgage resource you chose to use. Each program will have varying benefits and requirements so spend some time checking out all of your options. Check with an agent for further information.
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5. How do you know if you are getting a good deal on a mortgage?
The only way to know is by doing your homework. Mortgage rates change constantly, so be active in tracking them. In addition to watching the market, compare lenders. Another helpful resource is the newspaper. Many times they will list current rates in the Real Estate Sections. (Most likely they will appear in the Saturday or Sunday addition).
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6. What do you need for the closing?
• The Settlement Statement--Page 1 and Page 2
• The Contract
• The Loan Papers
• Title Insurance
• Homeowners' Insurance
• The Title or Deed
• The Down Payment and Closing Costs
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7. How much will my closing costs be?
This is variable depending on what is customary for buyers and sellers to pay for in your location. Check with an agent to get an idea of what you will be accountable for in the closing agreements. The cost to close will also depend on the amount of points you will be paying. A point is simply 1% of your mortgage loan amount and they are usually paid up front
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8. How long should I expect the home buying process to be?
There are so many factors that an exact time frame cannot be given. However, a general timeline would be three to four months.
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9. What should you be doing during this time frame?
We have broken down the timeline to help you assess if you are on schedule.
3 to 4 months until move in date:
-Start a personal checklist (finding an agent, styles of houses, location, what your house needs to have tweaked, etc)
-Start the Mortgage Pre-approval process. Being pre-approved will not only save you headache later on, but it will also make you a stronger candidate when you find your dream house.
-Begin searching for property
2 to 3 months until move in date:
-Compare and examine different homes
-Select a home
-Start the offer and purchase contract negotiations. It is important to do your homework in this stage. Know what the rules are when you want make an offer.
-Home inspection. The first inspection is done by the prospective home buyer. The second inspection is conducted by a professional. Home inspection is crucial. Spending $200-$500 at the beginning could save you thousands of dollars and numerous headaches down the road.
-Make the Closing arrangements.
5 to 6 weeks until move in date:
-Make moving arrangements
-Observe the mortgage process
-Arrange for any school relocations
-Get homeowners insurance in place
3 to 4 weeks until move in date:
-Time to start packing!
-Change addresses for bills, magazines, let others know
of address change, etc.
-Contact utility companies and get them set up for new
house
-Plan decorating ideas for new house (colors, drapes, etc).
1 to 2 weeks until move in date:
-Double check with mover, and make sure date is set correctly
-Verify closing details with settlement agent
-Verify final details of mortgage
-Packing! Packing! Packing!
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