| Since launching the Home Buying Institute website | | | | conditions. |
| back in 2005, I've received quite a few | | | | Section of Home Buying Institute: "Process |
| home-buying questions by email. As you might | | | | Overview" and "What to Avoid" |
| imagine, many of these questions came from | | | | 4. Which type of mortgage loan should I choose? |
| first-time home buyers who are new to the | | | | This question always presents a catch-22 for me. |
| process of buying a home. | | | | On one hand, I enjoy helping people by answering |
| I thought it would be beneficial to home buyers | | | | their home buying questions. On the other hand, I |
| everywhere if I selected five of the most | | | | don't dare make a decision like this on behalf of a |
| common home-buying questions I receive, and | | | | stranger. It's too important a decision for me to |
| explored them in an article such as this. I've also | | | | make for somebody else. |
| listed the corresponding areas of that cover these | | | | With that disclaimer out of the way, here's how |
| topics in more detail. | | | | you can choose the best type of mortgage loan |
| So here we go with five common questions when | | | | for your situation. First, do some research on the |
| buying a home: | | | | basic types of home loans -- fixed rate, |
| 1. How do I find out my price range? | | | | adjustable rate (ARM), balloon loan, etc. When |
| Determining a price range should be one of your | | | | researching the different mortgage types, pay |
| first steps when buying a home. When you know | | | | attention to paragraphs that begin with: "This type |
| how much you can comfortably afford each | | | | of mortgage might be best for you if..." Generally, |
| month, you'll save time during the house hunting | | | | this type of statement is followed by a series of |
| process by only visiting properties within your | | | | pros and cons that will explain the type of home |
| price range. | | | | buyer who might choose that option. |
| To determine your price range, sit down and | | | | As a rule of thumb, if you're going to be in the |
| compare your monthly income to your monthly | | | | home for quite a while (five years or more), it's |
| expenses (savings, credit card payments, car | | | | probably a good idea to choose a fixed-rate |
| payment, quality of life, etc.). How much is left? | | | | mortgage. On the other hand, if you think you'll |
| Your monthly mortgage should be less than this | | | | only be in the home for two or three years, you |
| amount. Now you can use an online mortgage | | | | might want to choose an adjustable-rate |
| calculator to break each sale price down to a | | | | mortgage to save money during your short time |
| monthly amount, and determine if that amount is | | | | of ownership. |
| inside or outside your comfort zone. | | | | Section of Home Buying Institute: "Types of |
| Section of Home Buying Institute: "Self | | | | Mortgages" |
| Assessment" | | | | 5. What happens at the real estate closing? |
| 2. Do I need a real estate agent? | | | | Basically, the real estate closing (also known as a |
| Here's the short answer ... yes! If you are buying | | | | "settlement") is when property ownership |
| a first home, you should have a real estate agent. | | | | transfers from seller to buyer. All remaining fees |
| Buying a home is one of the biggest financial | | | | will be paid as well, and these are known as |
| transactions you will ever make, so it's always | | | | closing costs. The seller gets their portion of the |
| wise to have professional help. | | | | payment (minus what they still owe on the |
| Your agent will help you find homes that match | | | | mortgage), and the deed is transferred to reflect |
| your price range and desired features. He or she | | | | the new owner. |
| will also help you validate the asking process (next | | | | As a home buyer, the best you can do is save |
| item), write up the purchase offer, help you | | | | more money than you think you'll need at closing, |
| negotiate with the seller, and guide you through | | | | just to be safe. You should also make sure you |
| the rest of the home buying process. | | | | receive a HUD-1 statement (or "settlement |
| Section of Home Buying Institute: "Finding an | | | | statement") at least one day prior to the closing |
| Agent" | | | | date. This document gives you an itemized list of |
| 3. How do I research the asking price? | | | | the costs you'll be expected to pay at closing. |
| The first thing to realize here is that it's called an | | | | The Real Estate Settlement Procedures Act |
| "asking price" for a reason. The price set by the | | | | (RESPA) requires that the closing / escrow agent |
| seller is never set in stone. It's what they are | | | | provide this document at least one day before |
| asking for, and you are free to make a | | | | the real estate closing. |
| counter-offer is you see fit. Your real estate | | | | Section of Home Buying Institute: "Closing / |
| agent will help you validate the asking price by | | | | Settlement" |
| looking at comparable, recent sales in the area. | | | | * You may republish this article online if you retain |
| This will tell you if the asking price is reasonable or | | | | the author's byline and the active hyperlinks below. |
| over-priced, based on current marketing | | | | Copyright 2007, Brandon Cornett. |