If you’re a first time home buyer there are some steps you can take to succeed in getting a mortgage and buying a home. You will want to be well-prepared to be in a strong negotiating position. Price is only one issue to negotiate and it’s not necessarily the most important one. Sellers and lenders look for strength of the buyer and other terms in the agreement. Here are some for first time home buyers:
Don’t Get “Pre-qualified!” First let’s make it clear that there is a BIG difference between getting “pre-qualified” and getting “pre-approved” for a loan. Pre-approval is what you want; getting pre-qualified is a waste of time.
When you get pre-qualified it simply means that you spent a few minutes on the phone with a lender. Based on your answers to their questions the lender pronounced you “pre-qualified” and issued a certificate that you can show to the seller. Sellers are aware that these certificates are worthless; none of the information was verified. How are they to know if there are any recorded judgments, unpaid child support or alimony payments or any other issues that could delay or prevent a successful closing.
Get “Pre-approved!” Getting pre-approved shows that you are a serious buyer; it puts you in a strong position to make an offer. The process takes anywhere from a few days to a few weeks, depending on your situation. All information is verified and you are actually APPROVED for the loan. Now your only loose end is the appraisal on the property.
Sell First; Then Buy
If you are looking to sell your home and buy another home the best strategy is to sell your home first! It’s Ok to look at homes to buy to see what is out there and compare asking prices, but do not actually make an offer until you have sold your home.
If you find a home that meets your desired criteria, and you choose to make an offer, you will likely ask the seller to reduce their price and wait until you have sold your home. The seller sees this as a risky deal so he approves the contingency only if you offer full asking price. So, you agree; now you are paying more for the property because of the contingency. Now you need to sell your home quickly; you will likely accept a lower offer than you had hoped for because you have placed yourself in a time-sensitive position.
The above scenario was a lose-lose for the home owner who sold their home for much less than he wanted AND paid more than he wanted to for the new home. This could easily cost you tens of thousands of dollars!
Sell First; then Buy! Start by looking around to see if there are plenty of possibilities worth looking into. If you are confident you will find something suitable soon, list your home while you continue watching the listings. Once you find a buyer you can add a clause to the purchase agreement that makes the sale subject to the seller finding another home. Adding this phrase gives you time to locate a new home, complete the acquisition process and move into your new home before the buyer of your home gets possession.
Play the Game of Nines
Before you begin looking at homes to buy, make a list of nine things you want your home to include. Also make a list of nine things you don’t want. This list will be your score card to rate each property you inspect. Keep score by marking the wants and don’t wants in each house you see.
This helps you keep things in perspective when you are comparing dozens of homes that you have walked through. You won’t remember all details so the list of good and bad points is helpful.
Keep in mind the “skin and bones” of the houses you see. The bones are things that cannot be changed such as location, view, lot size, school district or noise in the area. The skin represents things that are easily changed such as paint, carpet, wall paper and window coverings.
Look for a home with good bones and a high scoring card form the game of nines. Finally imagine each house as being vacant to avoid forming an opinion based on the seller’s decorating skills.
No Pressure – Don’t be Pushed into Buying
Your real estate agent’s job is to show you everything that is available that meets your desired criteria. Do not feel obligated to make a decision until you feel that you have seen enough to make a wise decision. A good agent will keep watching for new listings as homes are being listed every day.
Back in the 1980’s, when homes were selling quickly, an agent would advise you to make an offer quickly if you liked a home. These days you don’t have that same sense of urgency; you can think it over while we continue to shop around.
Take the time to look at the area, drive around the neighborhood, check out the schools if you have children, get demographic information and any other details that might be of benefit to you. Are you close to work, shopping, restaurants or parks? Do you want to be?
This is likely one of the most expensive transactions you will be involved in; take your time to be sure you are getting what you want in a new home before signing an agreement.
Stop Calling Ads!
Seller’s Agents place ads to make their phones ring. The ad likely says good things to get your attention; rarely will mention any draw-backs such as traffic noise, power lines, or legal issues.
When you reply to ads you are calling the Seller’s Agent; why? He represents the seller; he is going to work in the seller’s interest to get a high offer, to find a strong buyer, etc…
You are the Buyer! You want a Buyer’s agent to work with you. A buyer’s agent will work in your interest and point out any draw-backs in a property that you should know about. Your agent will negotiate for a good price on a property that meets your desired criteria.
A good agent will keep their eye out for the right home for you. Hire a good agent and stick with him/her. Be sure to find one who specializes in the area where you are considering buying a home.
Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with real estate professionals, agents, developers, investors, REO brokers and first-time home buyers. As a long standing business in Michigan, the company has been through many changes as they utilize technology to stay on the leading edge of real estate.
Mark Goedert serves clients in the Down River area, Calhoun, Battle Creek, Marshall, Albion, Hillsdale, Ingham, Lansing, Okemos, Mason, Jackson, Lenawee, Adrian, Tecumseh, Hudson, Livingston, Howell, Brighton, Pinckney, Macomb, Sterling Heights, Warren, St. Clair Shores, Monroe, Temperance, Bedford, Oakland, Farmington Hills, Royal Oak, Southfield, Washtenaw, Ann Arbor, Ypsilanti, Saline, Wayne, Detroit, Dearborn, Livonia, Canton, Trenton and more in South East Michigan.
Tuesday, August 4, 2009
First Time Home buyers Discover the many Benefits of Home Ownership in Adrian, Michigan
You have seen and heard plenty about financial benefits of home ownership, including budget control because you don’t have to be concerned with rent increases, tax credits and savings and equity build-up. Here are some other bonuses you may not have thought of:
Home ownership gives you the freedom to pursue other goals in life:
Many first time home buyers claim that other things fall into place once they can focus their energy on them. It’s as if the process took so much of their mental energy that other goals were placed on the back burner.
Home ownership creates the sense of belonging to a community:
Home ownership is an anchor; you have control over when you’re going to sell and when you have to move. Being settled in an area means kids don’t have to change schools and you have the freedom to plan for the future. Many first-time buyers have expressed how much they really feel “at home.”
Home Owners are in Charge
It’s your home; add to it, remodel it, re-do the landscaping; customize your home the way you pictured it when you were in the process of buying.
Where are the Kids?
When you live in an apartment complex, there are more possibilities of where the kids might be after school. Many tenants are in and out of apartment units and there are a variety of moral ideals in the neighborhood. In your own home, you are likely surrounded by people with stability in their lives; responsible families. There are fewer places your kids will go after school and getting to know their friends is much easier.
School Performance and Behavior
Studies have shown that kids do better in school when they live in their own home. The responsibility of homeownership seems to set a good example for the kids; they feel secure and they tend to have more respect for their property.
Your own Appliances are Much Nicer
This may seem small, but how frustrating is it to wait on the community washer and dryer at the apartment complex or to be using appliances that don’t have the convenient features like those you would purchase? What about all the time and money saved by not having to go to the laundromat?
Your stove and refrigerator can be a nice matching set with all the extras that don’t typically come with those in an apartment.
There are so many conveniences we take for granted once we’ve been in our own home. If you are a renter I’m sure you can think of many more things to add to this list. In many cases, if you can afford to rent, then you can afford to buy; what will your life look like when you become a home owner?
Mark Goedert of Goedert Real Estate specializes in working with first-time homebuyers to make home ownership a reality, even for those who have low-income or less than perfect credit.
Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with real estate professionals, agents, developers, investors, REO brokers and first-time home buyers in the Down River area, Calhoun, Hillsdale, Ingham, Jackson, Lenawee, Livingston, Macomb, Monroe, Oakland, Washtenaw, Wayne and South Eastern Michigan Cities and Counties.
Home ownership gives you the freedom to pursue other goals in life:
Many first time home buyers claim that other things fall into place once they can focus their energy on them. It’s as if the process took so much of their mental energy that other goals were placed on the back burner.
Home ownership creates the sense of belonging to a community:
Home ownership is an anchor; you have control over when you’re going to sell and when you have to move. Being settled in an area means kids don’t have to change schools and you have the freedom to plan for the future. Many first-time buyers have expressed how much they really feel “at home.”
Home Owners are in Charge
It’s your home; add to it, remodel it, re-do the landscaping; customize your home the way you pictured it when you were in the process of buying.
Where are the Kids?
When you live in an apartment complex, there are more possibilities of where the kids might be after school. Many tenants are in and out of apartment units and there are a variety of moral ideals in the neighborhood. In your own home, you are likely surrounded by people with stability in their lives; responsible families. There are fewer places your kids will go after school and getting to know their friends is much easier.
School Performance and Behavior
Studies have shown that kids do better in school when they live in their own home. The responsibility of homeownership seems to set a good example for the kids; they feel secure and they tend to have more respect for their property.
Your own Appliances are Much Nicer
This may seem small, but how frustrating is it to wait on the community washer and dryer at the apartment complex or to be using appliances that don’t have the convenient features like those you would purchase? What about all the time and money saved by not having to go to the laundromat?
Your stove and refrigerator can be a nice matching set with all the extras that don’t typically come with those in an apartment.
There are so many conveniences we take for granted once we’ve been in our own home. If you are a renter I’m sure you can think of many more things to add to this list. In many cases, if you can afford to rent, then you can afford to buy; what will your life look like when you become a home owner?
Mark Goedert of Goedert Real Estate specializes in working with first-time homebuyers to make home ownership a reality, even for those who have low-income or less than perfect credit.
Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with real estate professionals, agents, developers, investors, REO brokers and first-time home buyers in the Down River area, Calhoun, Hillsdale, Ingham, Jackson, Lenawee, Livingston, Macomb, Monroe, Oakland, Washtenaw, Wayne and South Eastern Michigan Cities and Counties.
First Time Home Buyer Advice from Lenawee County Real Estate Experts
First Time Home Buyer Information: The Dreaded Down Payment
The biggest challenge first-time home buyers are faced with is coming up with the down payment and closing costs required to get the mortgage. Saving for the down payment should be a goal that you are working toward long before you begin to shop for home.
How much do you need to save?
The down payment is typically a percentage of the overall purchase price of the home and this varies depending on the lender, the type of financing and the amount of the loan.
In the past a down payment on a conventional mortgage was usually 20% but in recent years lenders have been willing to accept as little as 3%. There are also government programs designed to help low-income families get mortgages with minimum to zero down.
Don’t forget about the additional closing costs associated with purchasing a new home. Loan origination fees, property tax pro-rations, hazard insurance and an appraisal are some examples of closings costs. When you submit a loan application, your lender will supply you with a good faith estimate of your closing costs.
The Gift Letter
If you otherwise qualify for a mortgage but you are short on cash for closing, many lenders will allow you to use gift funds. The gift can come from family, friends or other sources; the giver must sign a “gift letter” that states that the money is a gift and not a loan that has to be repaid. Most lenders only allow a certain percentage of the closing money to be a gift; the borrower must be able to show that they are using their own funds for most of the down payment.
Earnest Money Deposit
The buyer is generally required to deposit earnest money with the seller when they make an offer to purchase their home. If the offer is accepted, the earnest money is then credited toward the down payment. The amount of the deposit varies; sometimes the seller requires a set amount; sometimes a percentage of the purchase price. Be prepared to have funds available for this purpose.
Private Mortgage Insurance
In many cases where lenders accept less than 20% down they require the borrower to carry PMI or private mortgage insurance. The premium is often added to the monthly mortgage payment; the insurance protects the lender in case the borrower defaults on the loan.
Borrowers should watch their loan balance and request that the PMI policy is cancelled once they have paid off 20% of the loan. Some lenders do this automatically but many require that you request this in writing.
First time home buyers are often surprised at the amount of closing costs; a good real estate professional will give their client all the information they can to avoid unpleasant surprises.
Mark Goedert of Goedert Real Estate has been working with first-time home buyers and seasoned real estate investors for over 50 years. He provides information and resources for new home buyers to educate themselves so they can make a wise home buying decision.
Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with real estate professionals, agents, developers, investors, REO brokers and first-time home buyers in Battle Creek, Hillsdale, Lansing, Jackson, Grand Rapids, Adrian, Howell, Sterling Heights, Monroe, Farmington Hills, Ann Arbor, Detroit and neighboring cities and communities.
The biggest challenge first-time home buyers are faced with is coming up with the down payment and closing costs required to get the mortgage. Saving for the down payment should be a goal that you are working toward long before you begin to shop for home.
How much do you need to save?
The down payment is typically a percentage of the overall purchase price of the home and this varies depending on the lender, the type of financing and the amount of the loan.
In the past a down payment on a conventional mortgage was usually 20% but in recent years lenders have been willing to accept as little as 3%. There are also government programs designed to help low-income families get mortgages with minimum to zero down.
Don’t forget about the additional closing costs associated with purchasing a new home. Loan origination fees, property tax pro-rations, hazard insurance and an appraisal are some examples of closings costs. When you submit a loan application, your lender will supply you with a good faith estimate of your closing costs.
The Gift Letter
If you otherwise qualify for a mortgage but you are short on cash for closing, many lenders will allow you to use gift funds. The gift can come from family, friends or other sources; the giver must sign a “gift letter” that states that the money is a gift and not a loan that has to be repaid. Most lenders only allow a certain percentage of the closing money to be a gift; the borrower must be able to show that they are using their own funds for most of the down payment.
Earnest Money Deposit
The buyer is generally required to deposit earnest money with the seller when they make an offer to purchase their home. If the offer is accepted, the earnest money is then credited toward the down payment. The amount of the deposit varies; sometimes the seller requires a set amount; sometimes a percentage of the purchase price. Be prepared to have funds available for this purpose.
Private Mortgage Insurance
In many cases where lenders accept less than 20% down they require the borrower to carry PMI or private mortgage insurance. The premium is often added to the monthly mortgage payment; the insurance protects the lender in case the borrower defaults on the loan.
Borrowers should watch their loan balance and request that the PMI policy is cancelled once they have paid off 20% of the loan. Some lenders do this automatically but many require that you request this in writing.
First time home buyers are often surprised at the amount of closing costs; a good real estate professional will give their client all the information they can to avoid unpleasant surprises.
Mark Goedert of Goedert Real Estate has been working with first-time home buyers and seasoned real estate investors for over 50 years. He provides information and resources for new home buyers to educate themselves so they can make a wise home buying decision.
Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with real estate professionals, agents, developers, investors, REO brokers and first-time home buyers in Battle Creek, Hillsdale, Lansing, Jackson, Grand Rapids, Adrian, Howell, Sterling Heights, Monroe, Farmington Hills, Ann Arbor, Detroit and neighboring cities and communities.
Tips for First-time Home Buyers in South East Michigan - Lenawee County
Advice to First-Time Home Buyers: Tips to Eliminate Home Buyer Stress
Death, Divorce and Moving are three very common stressful experiences in life; to make matters worse, death or divorce often create the necessity for one to move.
Applying for a mortgage, finding a home, getting a reasonable deal, negotiating the price, filling out paperwork, and arranging the move are all part of the process of moving. A competent real estate professional will be able to provide assistance in all these areas.
But what about your emotional needs? Even with a good agent you will still experience stress as you go through the complicated process. If divorce is the reason you’re moving; getting through that will create additional stress.
Buying a home will be one of the largest transactions you will be involved in; it is also one of the most complicated and stressful processes. Here are some tips to help new home-buyers cope:
Begin with the end in mind. Picture the scenario; how will things be better when you’re settled in your new home? Write out your goal and use it as an anchor; something good to focus on when the process is complete.
Be flexible. Over-estimate how much you need to save up for closing costs in case there are last minute surprises. Money is often one of the biggest stress-producers; people become angry if it looks like the price keeps going up. Maybe the inspection will reveal more than the seller is willing to fix or the interest rate changes. A competent real estate agent should be able to anticipate things and take care of tying up loose ends quickly. You as a buyer can also anticipate snags and be prepared to work through them so you don’t get angry and emotional.
Trust in the Process. There’s so much to do it’s easy to panic. A good agent should be able to go through the process with you and explain what is coming up so you don’t feel you’re entering a dark tunnel with no light at the other end.
Know you have Options. When things don’t go smoothly don’t get overwhelmed; ask yourself or your agent what your options are. If the lender is taking longer than promised or asking for more documentation until you feel like you’ll never be approved. If you get fed up and give up, then you will have to start the process over again adding weeks to the time it takes to be a homeowner. Realize that the lender needs to be sure his is protecting his investment in you and your new home; therefore, you will be jumping hoops to prove yourself and gain his approval.
Seek Entertainment or Distraction. When set backs happen and there is nothing you can do about it, for example, you expected to close Friday but now it’s looking more like it will be early next week,; step back from things and make plans for the weekend. Create a diversion; do something entertaining for your self and your family to take your mind off your disappointment. Reducing the stress by spending a weekend enjoying family will help you to be more level-headed on closing day.
A real estate professional should be able to help get first-time home buyers through this difficult and complicated process. They are very familiar with all the possible things that can go wrong or cause the deal to go side-ways. They should be able to work with clients and help them be prepared for the worst while hoping for the best.
Mark Goedert has been in business for over 50 years, developing cutting-edge strategies for providing top-rate services to home buyers and sellers. His understanding of individual needs with different types of transactions helps him to put his clients at ease while working through acquisition and closing process.
Mark Goedert serves clients in the Down River area, Calhoun, Battle Creek, Marshall, Albion, Hillsdale, Ingham, Lansing, Okemos, Mason, Jackson, Lenawee, Adrian, Tecumseh, Hudson, Livingston, Howell, Brighton, Pinckney, Macomb, Sterling Heights, Warren, St. Clair Shores, Monroe, Temperance, Bedford, Oakland, Farmington Hills, Royal Oak, Southfield, Washtenaw, Ann Arbor, Ypsilanti, Saline, Wayne, Detroit, Dearborn, Livonia, Canton, Trenton and more in South East Michigan.
Death, Divorce and Moving are three very common stressful experiences in life; to make matters worse, death or divorce often create the necessity for one to move.
Applying for a mortgage, finding a home, getting a reasonable deal, negotiating the price, filling out paperwork, and arranging the move are all part of the process of moving. A competent real estate professional will be able to provide assistance in all these areas.
But what about your emotional needs? Even with a good agent you will still experience stress as you go through the complicated process. If divorce is the reason you’re moving; getting through that will create additional stress.
Buying a home will be one of the largest transactions you will be involved in; it is also one of the most complicated and stressful processes. Here are some tips to help new home-buyers cope:
Begin with the end in mind. Picture the scenario; how will things be better when you’re settled in your new home? Write out your goal and use it as an anchor; something good to focus on when the process is complete.
Be flexible. Over-estimate how much you need to save up for closing costs in case there are last minute surprises. Money is often one of the biggest stress-producers; people become angry if it looks like the price keeps going up. Maybe the inspection will reveal more than the seller is willing to fix or the interest rate changes. A competent real estate agent should be able to anticipate things and take care of tying up loose ends quickly. You as a buyer can also anticipate snags and be prepared to work through them so you don’t get angry and emotional.
Trust in the Process. There’s so much to do it’s easy to panic. A good agent should be able to go through the process with you and explain what is coming up so you don’t feel you’re entering a dark tunnel with no light at the other end.
Know you have Options. When things don’t go smoothly don’t get overwhelmed; ask yourself or your agent what your options are. If the lender is taking longer than promised or asking for more documentation until you feel like you’ll never be approved. If you get fed up and give up, then you will have to start the process over again adding weeks to the time it takes to be a homeowner. Realize that the lender needs to be sure his is protecting his investment in you and your new home; therefore, you will be jumping hoops to prove yourself and gain his approval.
Seek Entertainment or Distraction. When set backs happen and there is nothing you can do about it, for example, you expected to close Friday but now it’s looking more like it will be early next week,; step back from things and make plans for the weekend. Create a diversion; do something entertaining for your self and your family to take your mind off your disappointment. Reducing the stress by spending a weekend enjoying family will help you to be more level-headed on closing day.
A real estate professional should be able to help get first-time home buyers through this difficult and complicated process. They are very familiar with all the possible things that can go wrong or cause the deal to go side-ways. They should be able to work with clients and help them be prepared for the worst while hoping for the best.
Mark Goedert has been in business for over 50 years, developing cutting-edge strategies for providing top-rate services to home buyers and sellers. His understanding of individual needs with different types of transactions helps him to put his clients at ease while working through acquisition and closing process.
Mark Goedert serves clients in the Down River area, Calhoun, Battle Creek, Marshall, Albion, Hillsdale, Ingham, Lansing, Okemos, Mason, Jackson, Lenawee, Adrian, Tecumseh, Hudson, Livingston, Howell, Brighton, Pinckney, Macomb, Sterling Heights, Warren, St. Clair Shores, Monroe, Temperance, Bedford, Oakland, Farmington Hills, Royal Oak, Southfield, Washtenaw, Ann Arbor, Ypsilanti, Saline, Wayne, Detroit, Dearborn, Livonia, Canton, Trenton and more in South East Michigan.
Information First Time Home Buyers in Lenawee County: Understanding Closing Costs
First-time Home Buyer Information: Understanding Closing Costs
The fees associated with buying or selling a home are called closing costs. The amount of closing cost is an important factor in the transaction; some are customary, others are negotiable. You should be able to obtain an estimate of what your closing costs will be early in the process.
Buyer Closing Costs
When a buyer applies for a loan the lender is required to provide a “Good-faith Estimate” of their closing costs. The form should break down the various fees associated with the loan and state how much the buyer needs to pay in advance. The fees vary according to the type of loan one applies for and the terms of the purchase agreement. Some common buyer closing costs include:
• Down Payment
• Loan fees, points, application fee, credit report
• Prepaid interest
• Inspection fees
• Appraisal
• Mortgage insurance (PMI, MIP, and others)
• Hazard insurance
• Title insurance
• Recording fees and stamps
Seller Closing Costs:
A seller has to take into consideration the balance due on their mortgage as well as other costs associated with the transaction. The original loan, associated fees and closing costs must all be paid before the seller can receive proceeds. Seller associated costs include:
• Broker’s commission
• Transfer taxes
• Documentary Stamps on the Deed
• Title insurance
• Property tax pro-rations
In addition to the sales price and terms, buyers and sellers often negotiate closing costs. This can even cover things like a buyer is nervous about the condition of the plumbing so the seller agrees to pay for an inspection.
In many cases the buyer agrees to pay full asking price if the seller agrees to pay all allowable closing costs; this is often referred to as seller concessions. Negotiate all you can; there are no rules to negotiating. It never hurts to ask; just make sure everything is covered in writing on the purchase agreement.
The real estate professional you work with should be good at negotiating the best deal possible for you, including negotiating closing costs and other terms of the purchase agreement.
Mark Goedert of Goedert Real Estate has worked with buyers and sellers in South East Michigan for over 50 years. He provides tips and resources to first time home buyers, seasoned real estate investors and anyone who is buying or selling homes.
Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with real estate professionals, agents, developers, investors, REO brokers and first-time home buyers in the Down River area, Calhoun, Hillsdale, Ingham, Jackson, Lenawee, Livingston, Macomb, Monroe, Oakland, Washtenaw, Wayne and South Eastern Michigan Cities and Counties.
The fees associated with buying or selling a home are called closing costs. The amount of closing cost is an important factor in the transaction; some are customary, others are negotiable. You should be able to obtain an estimate of what your closing costs will be early in the process.
Buyer Closing Costs
When a buyer applies for a loan the lender is required to provide a “Good-faith Estimate” of their closing costs. The form should break down the various fees associated with the loan and state how much the buyer needs to pay in advance. The fees vary according to the type of loan one applies for and the terms of the purchase agreement. Some common buyer closing costs include:
• Down Payment
• Loan fees, points, application fee, credit report
• Prepaid interest
• Inspection fees
• Appraisal
• Mortgage insurance (PMI, MIP, and others)
• Hazard insurance
• Title insurance
• Recording fees and stamps
Seller Closing Costs:
A seller has to take into consideration the balance due on their mortgage as well as other costs associated with the transaction. The original loan, associated fees and closing costs must all be paid before the seller can receive proceeds. Seller associated costs include:
• Broker’s commission
• Transfer taxes
• Documentary Stamps on the Deed
• Title insurance
• Property tax pro-rations
In addition to the sales price and terms, buyers and sellers often negotiate closing costs. This can even cover things like a buyer is nervous about the condition of the plumbing so the seller agrees to pay for an inspection.
In many cases the buyer agrees to pay full asking price if the seller agrees to pay all allowable closing costs; this is often referred to as seller concessions. Negotiate all you can; there are no rules to negotiating. It never hurts to ask; just make sure everything is covered in writing on the purchase agreement.
The real estate professional you work with should be good at negotiating the best deal possible for you, including negotiating closing costs and other terms of the purchase agreement.
Mark Goedert of Goedert Real Estate has worked with buyers and sellers in South East Michigan for over 50 years. He provides tips and resources to first time home buyers, seasoned real estate investors and anyone who is buying or selling homes.
Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with real estate professionals, agents, developers, investors, REO brokers and first-time home buyers in the Down River area, Calhoun, Hillsdale, Ingham, Jackson, Lenawee, Livingston, Macomb, Monroe, Oakland, Washtenaw, Wayne and South Eastern Michigan Cities and Counties.
First Time Home Buyer Information: Mortgage Terms and Lingo - from and expert in Hudson, MI
We have seen many different financing options for home owners over the years, from traditional mortgages to adjustable-rate (ARMs) and hybrid loans. There are financing packages designed to meet the needs of many different people in various situations.
When deciding on what type of loan to apply for, consider your current needs, future needs and financial situation. If you are currently working with a real estate professional, they can refer you to a mortgage specialist who you can work with. Be sure you’re comfortable with your loan specialist and that you understand your options.
There are different variations of loan programs with most of them falling under three major categories: fixed-rate, adjustable-rate and hybrid loans.
Fixed-rate mortgages carry the same interest rate for the life of the loan or until you refinance. These are typically the most popular choice of loan for home-owners because of the fixed monthly payments. Budget planning is easier and the constant payment amount helps protect against inflation.
Adjustable-rate mortgages (ARMs) are those with interest rates that can change periodically over the life of the loan. The rate amount is tied to an index such as Treasury Securities that may rise or fall over time. ARMS usually have caps that limit the amount of increase, as well as a ceiling to limit how high it can go during the life of the loan. Low introductory rates make this a favorable loan for one that will be short term; buyers usually refinance to get a fixed rate before the ARM adjusts.
Hybrid loans combine the features of both the fixed-rate and the adjustable-rate mortgages. Typically, a hybrid loan starts with a fixed-rate for a certain length of time and then later converts to an adjustable-rate. Be sure to know when the change will occur and how much the increase will be. Be aware that some hybrid loans do not have interest rate caps for the first adjustment period.
Some hybrid loans start with a fixed rate for several years, and then change to another (usually higher) fixed rate for the remainder of the term. Lenders often charge a lower introductory interest rate for hybrid loans than they would on a fixed-rate mortgage. This makes it more attractive to homeowners who anticipate relocating in a few years.
Balloon payment loans are those that have a large, final payment due at the end of the term. For example, one’s payments might be amortized based on a 30-year loan, but the entire balance may be due after 7 years. As with some hybrid loans, this type of mortgage might also be attractive to a homeowner who plans to sell within a few years.
Time Factors in Financing
As discussed above, the type of financing you apply for can be influenced by how long you plan to own the home. If you only plan to be in your home for 5 years or less then one with a low introductory, adjustable interest rate would make sense. When considering an adjustable-rate or hybrid loan, compare the interest rate, the length of time before the 1st adjustment, the amount of increase, and other terms and conditions. If you will be staying 10 years or more then the fixed rate mortgage is the wisest choice.
FHA and VA Loans
US Government loan programs like FHA and VA are designed to help people who might otherwise be unable to qualify for a conventional mortgage. FHA and VA loans have lower qualifying ratios and often require smaller or no down payments. Anyone can apply for FHA loans but VA loans are only available to veterans for their spouses and certain government employees.
Conventional Loans
Conventional loans are simply those offered by a traditional private lender. They can be fixed-rate, adjustable, hybrid or other types. While harder to qualify for, they often require less paper work than the government loan programs. Conventional loans are not usually limited to maximum loan amounts or other restrictions.
Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with first time home buyers, real estate investors and developers. As a long standing business in Michigan, the company has been through many changes as they utilize technology to stay on the leading edge of real estate. Mark Goedert works with first time home buyers in Marshall, Albion, Okemos, Mason, Rockford, Tecumseh, Brighton, Warren, Temperance, Royal Oak, Ypsilanti, Livonia and other cities and communities in South East Michigan
When deciding on what type of loan to apply for, consider your current needs, future needs and financial situation. If you are currently working with a real estate professional, they can refer you to a mortgage specialist who you can work with. Be sure you’re comfortable with your loan specialist and that you understand your options.
There are different variations of loan programs with most of them falling under three major categories: fixed-rate, adjustable-rate and hybrid loans.
Fixed-rate mortgages carry the same interest rate for the life of the loan or until you refinance. These are typically the most popular choice of loan for home-owners because of the fixed monthly payments. Budget planning is easier and the constant payment amount helps protect against inflation.
Adjustable-rate mortgages (ARMs) are those with interest rates that can change periodically over the life of the loan. The rate amount is tied to an index such as Treasury Securities that may rise or fall over time. ARMS usually have caps that limit the amount of increase, as well as a ceiling to limit how high it can go during the life of the loan. Low introductory rates make this a favorable loan for one that will be short term; buyers usually refinance to get a fixed rate before the ARM adjusts.
Hybrid loans combine the features of both the fixed-rate and the adjustable-rate mortgages. Typically, a hybrid loan starts with a fixed-rate for a certain length of time and then later converts to an adjustable-rate. Be sure to know when the change will occur and how much the increase will be. Be aware that some hybrid loans do not have interest rate caps for the first adjustment period.
Some hybrid loans start with a fixed rate for several years, and then change to another (usually higher) fixed rate for the remainder of the term. Lenders often charge a lower introductory interest rate for hybrid loans than they would on a fixed-rate mortgage. This makes it more attractive to homeowners who anticipate relocating in a few years.
Balloon payment loans are those that have a large, final payment due at the end of the term. For example, one’s payments might be amortized based on a 30-year loan, but the entire balance may be due after 7 years. As with some hybrid loans, this type of mortgage might also be attractive to a homeowner who plans to sell within a few years.
Time Factors in Financing
As discussed above, the type of financing you apply for can be influenced by how long you plan to own the home. If you only plan to be in your home for 5 years or less then one with a low introductory, adjustable interest rate would make sense. When considering an adjustable-rate or hybrid loan, compare the interest rate, the length of time before the 1st adjustment, the amount of increase, and other terms and conditions. If you will be staying 10 years or more then the fixed rate mortgage is the wisest choice.
FHA and VA Loans
US Government loan programs like FHA and VA are designed to help people who might otherwise be unable to qualify for a conventional mortgage. FHA and VA loans have lower qualifying ratios and often require smaller or no down payments. Anyone can apply for FHA loans but VA loans are only available to veterans for their spouses and certain government employees.
Conventional Loans
Conventional loans are simply those offered by a traditional private lender. They can be fixed-rate, adjustable, hybrid or other types. While harder to qualify for, they often require less paper work than the government loan programs. Conventional loans are not usually limited to maximum loan amounts or other restrictions.
Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with first time home buyers, real estate investors and developers. As a long standing business in Michigan, the company has been through many changes as they utilize technology to stay on the leading edge of real estate. Mark Goedert works with first time home buyers in Marshall, Albion, Okemos, Mason, Rockford, Tecumseh, Brighton, Warren, Temperance, Royal Oak, Ypsilanti, Livonia and other cities and communities in South East Michigan
First Time Homebuyer Information: Home Equity explained by an Expert in Tecumseh, MI
One of the greatest benefits of home ownership is that you can leverage a small amount of money to purchase an asset and then watch the equity grow as the value of the asset appreciates. For example, if you purchase a $125,000 home with a 10% down payment then you have leveraged $12,500 to buy a home worth 10 times that amount.
Appreciation: Here is what really sweetens the deal; the rise in value of the property is appreciation. Consider the above scenario; the $125,000 home you purchased. If you live in the home for 5 years and the values increased by the average of 2.5% per year then your home would be worth over $140,000.
Equity: In addition to the 10% down payment you will also be making mortgage payments. Each payment reduces the principal balance owed on the home. Reducing the debt is how you build equity. Now if you sell the home you have a chance to recoup your $12,500 investment plus pay yourself back for the money you’ve put in over the years.
Appreciation and equity are two great benefits of homeownership that you do not enjoy when you pay rent. The rent payment is only good for one month or one rental period. 5 years of paying rent gets you occupancy only; 5 years of mortgage payments can mean so much more.
Mark Goedert of Goedert Real Estate has been serving customers in South East Michigan for over 50 years. Their offices are open 7 days a week, providing the most innovative technological services available to first-time homebuyers, real estate investors and people selling their homes. Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with real estate professionals, agents, developers, investors, REO brokers and first-time home buyers in Battle Creek, Hillsdale, Lansing, Jackson, Grand Rapids, Adrian, Howell, Sterling Heights, Monroe, Farmington Hills, Ann Arbor, Detroit and neighboring cities and communities.
Appreciation: Here is what really sweetens the deal; the rise in value of the property is appreciation. Consider the above scenario; the $125,000 home you purchased. If you live in the home for 5 years and the values increased by the average of 2.5% per year then your home would be worth over $140,000.
Equity: In addition to the 10% down payment you will also be making mortgage payments. Each payment reduces the principal balance owed on the home. Reducing the debt is how you build equity. Now if you sell the home you have a chance to recoup your $12,500 investment plus pay yourself back for the money you’ve put in over the years.
Appreciation and equity are two great benefits of homeownership that you do not enjoy when you pay rent. The rent payment is only good for one month or one rental period. 5 years of paying rent gets you occupancy only; 5 years of mortgage payments can mean so much more.
Mark Goedert of Goedert Real Estate has been serving customers in South East Michigan for over 50 years. Their offices are open 7 days a week, providing the most innovative technological services available to first-time homebuyers, real estate investors and people selling their homes. Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with real estate professionals, agents, developers, investors, REO brokers and first-time home buyers in Battle Creek, Hillsdale, Lansing, Jackson, Grand Rapids, Adrian, Howell, Sterling Heights, Monroe, Farmington Hills, Ann Arbor, Detroit and neighboring cities and communities.
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