Buying a new home is the all American dream. Owning a home is an investment that can provide future equity. If all goes well and our home is paid off when we retire, we will not be strapped for a house payment during our retirement years. There are many things to consider when buying a home:
How does purchasing a home compare with renting?
Should I build a new home or buy an existing home?
How much can I afford?
How long does the loan process take?
What options are available for first-time homebuyers?
What makes up my credit score?
How can I be sure I have the right loan program?
What is the difference between a fixed and an adjustable rate?
What does it mean to be "Pre-Qualified"?
How does purchasing a home compare with renting?
The two don't really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.
Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that's an investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities- like insurance, real estate taxes, and upkeep- which can be substantial. But given the freedom, stability, and security of owning your own home, they are worth it.
Should I build a new home or buy an existing home?
It depends on you and your family's situation. Although the choice is ultimately yours, ask yourself these questions to help you decide to buy an existing home or to build a new one.
Do you want to have your home customized to you? If so, then building might be the best route.
How much work do you wish to do on the house? It will be less work for you in the beginning to buy an established home. Building a new home comes with the expense of putting in a new yard, as well as other expenses.
How important is the price of the home to you? Building a home could be a more expensive ordeal in most cases. Building costs and home appreciation are rising.
How important is the location? It will be harder to find a more established neighborhood nearer to the downtown area of a city with empty lots with which to build. Most new developments are located on the fringes of cities and metro areas, since that is where the land is available.
How much can I afford?
As a general rule, the FHA has found that most people can afford to budget 31% of their gross monthly income to housing expenses, depending on total debt. Total debt, which would include the housing expense, should not exceed 43% of gross monthly income.
Before you determine what the price range of home you can buy, start with the basics and determine a budget. I can help you determine what you could really afford based upon your annual income and/or your desired monthly payment.
How long does the loan process take?
You can pre-qualify online at no cost to you in about five minutes. You'll receive a response from me within one business day. Once you are pre-qualified, meet with your real estate agent and let them assist you in finding the perfect home. Once you have found a home and supplied the loan officer with all the necessary documentation, the entire process is quick and easy. I don't have to send my loans out-of-state because I have my own in-house underwriting and closing staff. This makes the whole loan process much faster and easier for everyone involved.
What options are available for first-time homebuyers?
There are special government programs available to help you get into a home with little or no money down and in many cases with a special, below-market interest rate. MyFirst-Time Buyer programs include FHA and Utah Housing Loans, which can offer you a lower rate and also cover your closing costs.
What if I have no money for a down payment?
Under normal circumstances, when you close on a home, you will be required to pay a down payment. This varies, but is usually around 3% of the cost of the home. If you don't have that money available, down payment assistance is available for those who qualify. I have special loan programs available to help cover the costs of a down payment. Call me at 801-409-5191 for more information.
What makes up my credit score?
There are five factors that impact consumer credit scores. They are listed here in order of importance:
- Payment History has a 35% impact. Paying debt on time and in full has a positive impact. Late payments, judgments and charge-offs have a negative impact.
- Outstanding Credit Balances have a 30% impact. Debt ratio of outstanding balance to available credit is important. Keeping that below 50% is wise and below 30% even wiser. It is never a good idea to close an account; the debt ratio will go up and the number of seasoned lines will decrease. Pay outstanding debt down as close to zero as possible and evenly redistribute the remaining balance among the open lines. Hitting the maximums of available credit can be very negative. It may be worth calling and asking the credit company to increase your available credit to lower the debt ratio, provided they can do so without a hard credit inquiry.
- Credit History has a 15% impact. The length of time a particular credit line has been opened is important. A seasoned borrower is stronger.
- Type of Credit has a 10% impact. A mix of auto loans, credit cards and mortgages is positive, rather than a concentration in credit cards only.
- Inquiries have a 10% impact. Hard inquiries for credit will negatively impact the score. Auto and mortgage inquiries receive special treatment and 20 inquiries can be made in a 14-day period for auto or mortgage and will be treated as only 1 inquiry. The maximum number of inquiries that will reduce the score is 10. Any inquiries beyond that [11+] in a six -month period will have no further impact on the borrower. Each hard inquiry can cost 2-50 points on a credit score.
How can I be sure I have the right loan program?
I am not limited to only a handful of loans. Rather, I have all the loan products offered by large banks and brokers. Many lenders process their loans entirely online and you never actually speak to a real live person. I will take the time to sit down with you and find out more about your individual situation. I will then be able to customize a loan program that fits your family's needs. Please take a look at the Loan Options I have available and then give me a call to schedule an appointment.
What is the difference between a fixed and an adjustable rate?
- Fixed Rate: The interest is set for the life of the loan.
- Adjustable Rate: The interest rate adjusts according to loan terms.
People looking for a steady, secure loan will most often opt for the fixed rate. If you plan on staying in your home for only a short time, an adjustable rate might be more attractive. Our mortgage experts will be able to help you determine which loan is best for you and your family's needs.
What does it mean to be "Pre-Qualified"?
A pre-qualification is an estimate given by a lender stating that you "should" be able to buy a home up to a certain amount. This is an estimate only and may help you in deciding to make an offer on a home. Getting pre-qualified is an important step to being prepared to buy a home; it's FREE and takes only a few minutes.
