Sun Nations Mortgage, Inc. Call Today 602 993-0000Home Buying 101
As you traverse through this home buying section, you will have the opportunity to ask yourself the question, "Is it a right time for me to buy a home?" We will explore the advantages and the disadvantages of home ownership. We will learn about the traditional steps involved in purchasing a home and how to put together an advisory team that will assist you throughout the process. You will be able to answer the question, "What can I afford to buy" when we explore the qualification process and identify your purchasing potential and any hidden weaknesses that may impede the process. Though buying real estate is really the art of negotiating, the key is not knowing how to negotiate as much as it is having a great negotiator working for you. We will discuss this topic when we explore how to find an agent and identifying your needs and wants when finding a home.
As a home buyer, the most important piece of advice any real estate agent will tell you is to learn as much as you can about the home process. The more informed and knowledgeable you are about the home buying process, the more informed and educated your decisions will be when you do decide upon a home to purchase.
If you have considered purchasing a home, you have probably asked yourself the question, "Is this a good time for me to buy a home?" As a home buyer, you must consider a variety of economic, social and financial issues in order to answer that question. Though there really isn't a right or wrong answer to that question, you must weigh each option carefully and examine the impact of your decision.
Common Reasons to Purchase a Home:
A place of your own: "Your home is your castle," as the old saying goes. A home is a place you can call your own. You have the liberty to design and decorate your place to your tastes.
Financial incentives: For many people, the motivation for home ownership is primarily financial. Owning your own home is a first-rate investment for a number of reasons.
Scheduled savings: When you buy a house, your monthly mortgage payments serves as a type of scheduled savings plan. Over time you gradually accumulate what we call "equity," an ownership interest in the property that you can often borrow against or convert into cash by selling the house. In contrast, renters must continue paying rent to a landlord for as long as they rent, without the opportunity to build up equity.
Stable housing costs: Another advantage of home ownership is that while rents typically increase year after year, the principal and interest portion of most mortgage payments remains unchanged throughout the entire repayment period (typically 30 years). In fact, because of the effect of inflation, this means that over the years you pay the same amount but with ever "cheaper" dollars.
Increased value: Houses typically increase in value, or "appreciate," over time. It is not unusual to find a house that sold for $50,000 fifteen years ago to be valued at much more than that amount today. This increased value is as good as money in the bank to the homeowner.
Tax benefits: Homeowners also get significant tax breaks that are not available to renters. Most important, interest paid on a home mortgage is usually deductible. This alone can save you a substantial amount each year in federal income taxes.
More Room: Often times the motivation to upgrade from an apartment to a house lies in a lack of space. You may have a child on the way and need an extra bedroom or want a larger backyard for Fido (or in my case, my wife didn't have enough closet space). If you currently live in a home and your only motivation is for more space, you should consider the costs of adding on before considering a purchase.
Better Schools, Neighborhood: If you have a family or plan to have one within the next few years, this may be a top priority. Schools, shopping, etc. become an integral facet of everyday life. Choosing the right neighborhood or school is generally the first criteria to finding the right home.
New Home: The thought of living in a home that no one else has ever lived in is very tempting for many home buyers. In addition, new homes generally have a higher appreciation rate than older homes in more stable neighborhoods and the time frame to recoup and costs is considerably shorter.
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Even though the decision has been made to proceed with a home purchase, the thought of buying a home may terrify some. Legal documents, loan qualification, house hunting, and the stress of making one of the largest financial decisions in your life can be a little overwhelming. Taken in stride and understanding the steps involved in buying a home, you will learn the worse part about buying a home is having to move the boxes and unpack everything.
There are six basic steps to buying a home in Arizona. Each step is outlined as follows:
1. Pre-qualification. This first step is the single most important step involved in home buying. Pre-qualification is the step that determines
· what options you have available
· how much home you can afford
· how much the mortgage payments will cost each month
· identifies the loan programs that are available to you
· maps out alternative strategies to help you buy a home
· points out any hurdles that may prevent you from buying a home
Though many real estate agents profess to have a degree of expertise in helping you pre-qualify for a home, this step is best left to a loan officer who has first hand experience with mortgage programs, new loan programs available on the market, and experience overcoming potential problems so that they do not become problems.
2. Find a real estate agent. How successful you are in buying a home lies not in the home itself, but in the agent you choose to represent you and negotiate on your behalf...whether it is yourself, a licensed and experienced agent or your "Uncle Morty" who has dabbled in real estate for the past 20 years.
3. Find a home. As simple as it sounds, finding a home that has the right mix of "needs" and "wants" coupled with your qualifying criteria can often be a daunting task. Though once a home has been identified, you (or your agent) will negotiate a purchase contract that outlines the terms and conditions of your offer (including items such as a sales price, any seller paid closing costs, the inclusion of any personal property like a washer and dryer, etc.).
4. Find a mortgage. With an accepted contract, the final step (and normally the easiest) is to select a mortgage to finance the purchase of your home. Normally your loan officer has already assisted you in exploring your options (see step one), and all that remains is to finalize the mortgage (including a firm lender commitment, searching the title records to make sure there isn't any liens that would affect clean title, and determining the property's value through an appraisal).
5. Close the deal! Closing is the final step before you receive the keys to the home. Though this is generally the shortest step, the closing is the step where you sign all final paperwork to include the new note that outlines the amount you are borrowing and your monthly payment, the deed of trust which shows that you own the property, and a stack of other related paperwork that are needed to finalize the transaction. Once signed, you are now the proud owner of a new home.
6. Move.
Pre-Qualifying to Buy a Home in Arizona
Before you begin looking for a home to purchase, it is important to know the options and limitations you have. Almost every home buyer today will need a mortgage in one form or another (unless you plan on paying cash...and if you are, be sure to talk with your financial advisor before jumping in both feet first). The first, and logical, step is pre-qualifying for a mortgage.
Pre-qualifying for a home loan is a relatively painless process. There are several areas you should explore with your loan officer in order to help lay the groundwork to buy a home. They include:
What type of mortgage options are available? When looking at available loan programs, it is important to look at the short term and the long term effects of a mortgage. If you plan on living in the home for only a few years, does it make sense to apply for a 30 year fixed rate loan when you may qualify for a lower interest rate on an adjustable rate mortgage?
How much will you need to put down on the home? The down payment requirements will vary with each mortgage. If you have little to no money to put down, you may not be able to qualify for certain loans. On the other hand, if you have additional money to put down, you may be able to eliminate mortgage insurance (if there is any) for a particular loan and lower your monthly payment to an even more reasonable payment.
Do you qualify for down payment assistance? In recent years, home buyers been able to buy homes with grants or gifts from non-profit agencies. Though this option may limit the types of mortgages available to you, having the option to save three percent (3%) may make the difference between a nice living room set and a folding chair.
Are there any hurdles or issues that may prevent you from buying a home? How you have lived your life and the events that have occurred may have a significant impact on your life. Are there any credit issues that may present a problem (and unless you have looked at your credit within the last 24 hours, there could be...no matter how excellent you believe your credit to be)? Are you in the middle of a divorce? The questions go on and on. However, it is important to remember that a bankruptcy, a late payment, or a collection account, for example, are not reasons to disqualify someone for a loan. How you view an event and how the loan officer sees it are normally two different perspectives. Many issues can be worked around or may require a little time to fix; knowing what they are and how to correct them is very important. Your loan officer will assist you in this step.
As you go through the pre-qualifying process, be honest and thorough with your answers. Be sure to point out any problems or hurdles that you feel will present a problem. Remember, your loan officer is there to assist you in buying a home.
If you are ready to begin the pre-qualification process, call us at (602) 993-0000 and we will have one of our loan experts assist you in exploring your financing options
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Before beginning the home buying process, you must remember that as a potential home buyer you are the one in charge--not the real estate agent, not the lender, or the lawyer. More often than not, too many home buyers feel trapped due to a lack of knowledge of the process and rely on the judgment of others without knowing all of the facts and processes involved in home buying. This is especially true when selecting a real estate agent that will walk you through one of the most important transaction of your life.
As a buyer, it is important to first seek out the services of a buyers agent. This type of agent varies from other agents in the sense that they represent you in the real estate process, not the seller. Often times, a buyer will call the agent listed on a for sale sign outside a property only to find out that when it comes time to negotiating your interests, that agent represents the seller. Find out whom the agent represents. Even though most states require the agent to disclose this fact to the buyer. Be on the look out for agents that practice a form of buyer's representation called "dual agency". Dual agency is when the real estate agent represents both the buyer and the seller and forces the agent to be neutral throughout the negotiating process. Having someone looking out for your interests and offering their expert opinion about price and the condition of a home are invaluable when you consider the amount of money you are spending.
A buyer's agent is contracted by you to represent your interest in the real estate process and has a fiduciary responsibility to do so from the beginning of the home shopping process until the close of escrow. Most buyer's agents do not charge the buyer fees for their services. This is because their commission comes from the seller who has already agreed to pay the buyers agent anywhere from a flat fee up to 4% of the sales price. It is one of those strange but true paradoxes of real estate.
Finally, remember that the decision is yours to make. Only you will have to live with that decision because once you have closed upon the home, you will have to live in it and only you will have to make the payments.
Before driving through neighborhoods and visiting open houses on Sundays, take a piece of paper and divide it into two columns. If you have a spouse, have him/her do the same on a separate sheet of paper.
Above the first column, write "NEEDS" and above the second, write "WANTS". Needs are defined as items that are necessities and are must have features for a new home. Wants, on the other hand, are generally categorized as those items that make life a little more comfortable (such as a garden tub and double sink vanity in the master bathroom).
As you begin to fill out each column, be sure to ask yourself the following questions:
1. What is the minimum number of bedrooms?
2. What is the minimum number of bathrooms? (Try to pick homes with at least 1.5 to 2 bathrooms. Homes with only one bathroom are very difficult to resell).
3. New home or resale home? As you explore this option, remember that newer homes may offer newer appliances and amenities where as older homes have landscaping, established neighborhoods, etc. (One bit of advice here...never go into a new home subdivision without an buyer's agent to represent you. The sales agent at the subdivision works for the builder and will not negotiate on your behalf. The result could be a costly contract that you cannot back out of).
4. Are there any features that I must have? Are you a hobby enthusiast and need extra space for your arts and crafts? Do your children attend a specific school and you want to keep them in the area? Do you want a pool?
Having an idea of the type of home is critical to successfully finding a home. As you and your real estate agent begin exploring homes, be sure to take a notepad along so that you can write down any special features about the property.
How to Find the Right Mortgage
Finding the right mortgage for your next home purchase should be a decision based upon your needs and wants for the near term and far term. There are so many choices to make and knowing what your options are is an integral part of the process.
Education is an integral part of finding the right mortgage for you. Explore our web site to learn more about the variety of available loan programs such as:
· Conventional Home Loans
· FHA Home Loan Financing
· VA Home Loan Financing Learn about the home loan qualifying process by clicking here or go over the steps for applying for a home loan here.
When you are ready to go compare your home loan options, search hundreds of loan programs offered by dozens of competing mortgage lenders by clicking here or begin the application process by filling out our secure online loan application here.
If you would like to talk to an expert to go over your available options, call Sun Nations Mortgage at (602) 993-000 or at (888) 993-3330 outside of Phoenix to have one of our mortgage specialist personalize a home buying road map that outlines the steps you will need to take to buy your next home. You can also fill out our online for to have someone contact you at your earliest convenience by clicking here
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