BUYING INFORMATION
The decision to buy -- is it the right one for you?
Today, home buyers have more choices than ever before. You can choose financing options that are flexible and affordable, home styles that fit a variety of lifestyles and professional services that make the home buying process fast, effective and enjoyable.
When you begin the decision-making process of buying your first home, your L&S Realtor Team can guide you through the pros and cons of renting vs. buying. A simple evaluation can help you decide if you are financially and personally ready to make the investment of homeownership.
Here are some facts about homeownership that may surprise you:
- Homeownership can be a good investment opportunity. A house offers leverage and the possibility for appreciation in value. And, you can use this investment while it's working for you!
- You can't afford to overlook the tax breaks of homeownership. Since mortgage interest and property taxes are tax deductible, homeownership can save you money each year.
- Young people aren't priced out of the market. Figures from the National Association of Realtors put the average age of first-time buyers at 32 years old. Ask your L&S Team about the number and variety of financing options available.
- Renting doesn't protect you against rising prices. Rental units are just as susceptible as homes to increases in taxes, insurance, utilities and other costs. Landlords will pass along these increases to the tenants.
- The waiting game is a losing game. Don't put off buying a home waiting for prices to come down. For example, from 1984 to 1994, the median price of existing homes increased from $89,400 to $145,400 -- a total increase of 61 percent.
Click a Mouse, Buy a House
Record number of Americans, including San Antonio-area residents, are using Internet as key tool for finding and buying homes
San Antonio, Texas (Grassroots Newswire) June 2, 2009 -- More than ever, home buyers in the San Antonio area are using technology in their search for new homes. And they’re in very good company. A survey by the National Association of Realtors® found that more than nine out of 10 home buyers in
"When it comes to finding and buying homes, the overwhelming majority of people, including San Antonio residents, are using the growing array of online tools, tips and information to assist in their efforts," said Joe Acosta of Best Homes GMAC Real Estate based in San Antonio. "This is especially the case with home buyers who are 44 years old and younger. More than 90 percent of them report using the Internet as part of their search process. Overall, 87 percent of all home buyers say they use the Internet as one of several information sources at some time during the home-finding process."
Acosta said Web sites such as www.bhgmac.com have been created to provide consumers with a wide range of constantly updated information, including detailed listing information on homes for sale, photographs, virtual tours, mortgage calculations, neighborhood and community overviews, and more.
"We’re making more information available to home buyers than ever before - from virtual tours, to satellite photos to local school information - which is a huge benefit for consumers as they do their homework on where to buy their next home," said Acosta.
According to Acosta other key findings of the survey include:
-
While older buyers are somewhat less likely to use the Internet, the use of real estate agents in buying a home was broadly consistent across age groups, ranging from 81 percent for those 65 years and older to 88 percent among those 18 to 24 years old.
-
Eighty-seven percent of home buyers used the Internet to search for homes, up from 71 percent five years ago. Not only has the trend in overall usage risen, but the percent of buyers who reported using the Internet frequently increased from 42 percent in 2003 to 69 percent in 2008.
-
The length of the typical home search increased from eight weeks in 2007 to 10 weeks in 2008. During the search, buyers viewed a median of 10 homes before making a purchase.
-
While both first-time and repeat buyers most often start by looking for properties online, first-time buyers more often seek out information about the home buying process or talk with a friend or relative about the buying process. Repeat buyers more often begin by looking for properties online or by contacting a real estate agent, suggesting that these buyers not only are more comfortable with the process but also have a clearer understanding of what they are looking for when purchasing a home.
Remember that financing options are affected by local and regional real estate and banking practices as well as federal law.
Mortgage Approval
A pre-approved mortgage certificate is not a guarantee of being approved for the mortgage loan. Even if you have a pre-approved mortgage certificate, you must still meet your lender during the conditional offer period to get a final mortgage approval. To ensure that the process goes smoothly, make sure you bring:
- A copy of the property listing
- A copy of the signed Offer to Purchase
Your lender will update/verify your financial information, the property and other information required to complete the mortgage application. Your lender may require an appraisal and/or a survey. Title insurance may also be required. Your lender will also inform you on the various types of mortgages, terms, interest rates, amortization periods and payment schedules available.
Depending on your down payment, you may have a conventional or high-ratio mortgage.
A conventional mortgage is a mortgage loan that does not exceed 75% of the lending value of the property. The lending value is typically the lesser of the property's purchase price and market value. Your down payment is at least 25% of the purchase price or market value.
If you contribute less than 25% of the home price as a down payment - and as little as 5% you will need a high-ratio mortgage. This type of mortgage usually requires mortgage loan insurance, which is available from CMHC or a private company. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing.
Fixed, Variable or Adjustable Interest Rate
Mortgage interest rates are either fixed, variable or adjustable. A fixed rate is a locked-in rate that will not increase for the term of the mortgage. A variable rate fluctuates based on market conditions while the mortgage payment remains unchanged. With an adjustable rate, both the interest rate and the mortgage payment vary based on market conditions.
Closed Mortgage
A closed mortgage may be a good choice if you'd like to have a fixed payment that will allow you to adjust your budget to your new lifestyle. However, closed mortgages are not flexible and there are often penalties or restrictive conditions attached to prepayments or additional lump sum payments. It may not be the best choice if you decide to move before the end of the term or if you want to benefit from a potential decrease of interest rates.
Open Mortgage
This type of mortgage is flexible and can usually be pre-paid by any lump sum or paid off at any time without penalty. An open mortgage can be a good choice if you plan to sell your home in the near future or to pre-pay with large lump sums. Most lenders will allow you to convert to a closed mortgage at any time, although you may have to pay a small fee.
Term
Your lender will also inform you on the term options for the mortgage. This is the length of time that the agreed-upon mortgage contract conditions, including interest rate, will be fixed. It can vary from six months to ten years. Choosing a longer term (e.g.: five years) gives you the chance to plan ahead and protects you from interest rate increases while you adjust to homeownership. Weigh your options carefully and don't be afraid to ask your lender to work out the differences between a one, two, five-year term or longer term.
Amortization
This is the amount of time over which the entire debt will be repaid. Most mortgages are amortized over 15, 20 or 25-year periods. The longer the amortization, the lower your scheduled mortgage payments, but the more interest you pay in the long run
Payment Schedule
A mortgage loan is often repaid in regular payments, either monthly, biweekly or weekly. Payment schedules that are more frequent can save some interest costs by reducing the outstanding principal balance more quickly than with monthly payments. The more payments you make in a year, the lower the overall interest you have to pay on your mortgage.
Keep in mind that mortgages may have important payment features that can save you money and let you be mortgage-free sooner.
