Buyer’s Home Guide

Whether you are a first time home buyer or seasoned buyer, the process can sometimes become confusing. This guide is designed to help you focus on the most important aspects you want in your new home.

Financing guidelines make it easy for you to understand what lenders currently look for when evaluating a buyers purchasing power. As many buyers are confused about the different costs involved beyond the down payment, there is a section outlining all the costs associated with buying a home. Some of the costs are a one-time fixed payment, while others represent an ongoing monthly or yearly commitment.

Buying a home is exciting and knowing the basic process up front will help to make this process a smooth transition for you and your family.


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Should I Buy a Home or Rent-Calculate the Difference And Decide

What is the financial Long term Effect of Renting vs Buying  A Home

Renting is always a viable option and there are many people ready to buy, but because of the ranting and raving of media are uncertain. Use the calculator to determine cost savings of renting vs owning.Let’s review the pros and cons of renting vs. buying:


  • No real estate taxes
  • No HOA fees
  • Minimal maintenance if any
  • Never have to replace the roof or paint the exterior
  • No remodeling
  • No loss of appreciation
  • Lower housing payments


  • No interest deduction
  • No real estate tax deductions
  • No asset
  • No appreciation
  • Rents increase over time
  • Subject to relocating often

While money is not the only factor in purchasing a home it is generally the number one reason. Use the Rent vs Buy Calculator to determine if buying is right for you. You will be surprised at the savings owning has over buying. One calculation I performed for a $450,000 home price (10% down, 5% Interest) vs $2500 rent payment returned a savings of $88,000 over a 10 year period.

Plug in your numbers and you will probably be surprised that buying a home versus renting will put more money back in your bank account.

Rent vs Buy Calculator

Free Mortgage Calculator

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Home Buying Criteria – How Do I Know When I Found the Right House

Find the right home is not as difficult as it seems if you have a “game plan”. By that I mean – you have a good idea of the area you want to live and if you have been qualified by a lender the amount you can afford to spend. It is very easy to get caught up on the “looking at homes” and getting side tracked. I have worked with buyers who get so overwhelmed with some of the decorations in houses, that they lose sight of what is really important to them.

Depending on the amount of current inventory of homes, the process may take anywhere from 30 to 90 days (let’s hope not longer than than). The best advice I can give is for you to take a piece of paper and write down everything you think the perfect home should have. Then go through the list and rate them – A – must have – important no compromise on these items – pick 7-10 items. Generally bedrooms, baths, kitchen area, layout, garage, size of yard will fall into this category. Rate the B’s – these items would be nice – not critical to the decision. If the house has everything on the A list but it is a 1 story rather than a 2 story you may be willing to compromise.

When you are looking at homes, take your worksheet with you and start to analyze the properties. When you find a home that meets 90% of the items you must have, you have a winner. This process will help to keep you focused on what is really important to you in a home and makes the whole process a lot more enjoyable.

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7 Reasons Why Now Is A Good Time to Buy A House

Recent history has reframed some of what had long been taken for granted about buying a home. Namely, we’ve learned that even though buying a home remains one of the best and safest investments available, a home should not function as an ATM or a short-term speculation strategy. So, where does that leave us? A lot smarter, able to recognize an opportunity when we see one, and aware of the facts that point to now as the prime time to buy a home.

1. Home affordability is at an all-time high. The median mortgage payment on the median-priced home, as a percentage of the median household income, is lower than it’s been in a generation.
2. Mortgage rates are at rock bottom. It’s hard to imagine interest rates going much lower, and when they start to inch back upward, monthly payments and total loan costs will spike upward.
3. Home prices are back on the rise. After declining for 30 months, home prices are trending back upward. The time to get in the market is now.
4. Sellers are motivated. This means that buyers have the upper hand. Sellers are fiercely competing among an excess of housing inventory, which often means buyers have untold choices and negotiating power.
5. Financing is readily available. Banks are back in the game and ready to lend to well-qualified buyers.
6. Owning vs. renting is increasingly favorable. Since 2009, the average principal and interest payment has fallen below the average rental rates, and the gap is now wider than it’s been in the past 22 years.
7. Homeownership is still at the core of the American Dream. Owning a home is critical to financial stability and wealth building. It’s a forced savings account, a place to live, and a fabulous tax deduction.

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Buyer’s Closing Costs

Regardless of the type of financing you choose to purchase your home, there will be closing costs. These are fees to process the loan and escrow. Both buyers and sellers have closing costs.

These are the typical buyer closing costs:

* Title insurance premiums
* Escrow fees
* Notary fees
* Document preparation fees
* Document recording fees
* Prorated share of the property taxes
* Buyer ordered inspections (roof inspection, property inspection, etc.)
* Special deliver/courier fees
* All new loan charges (except those required by lender for seller to pay)
* Interest on new loan from date of funding to 30 days prior to first payment date
* Fire insurance premium for the first year
* Preliminary change of ownership fee
* Assumption/change of record fees for takeover of an existing loan

A buyer can request that the seller pay all closing costs. There has to be a compelling incentive for the seller to pay your closing costs which will depend on their situation and your purchase offer. Even if the seller agrees to paying closings costs, if you are setting up an impound account (taxes & insurance), the lender will require anywhere from 3 to 6 months of taxes and 1 year prepaid insurance (or more).

Also the criteria for seller paying all buyer’s closing costs on your mortgage type and down payment. On FHA mortgages the seller can pay up to 6.0% of the sales price in closing costs and prepaid expenses (escrow account) although some lenders are restricting it to 3.0% . Conventional mortgages, owner occupied, vary based on the down payment.Less than 10% down the maximum in seller contributions is 3%, if you put 10% down the maximum is 6%. With a VA mortgages the seller can pay all the closing costs and prepaids with no restriction unless it is new construction whereas it may or may not be limited to 4.50% of sales price.

Be sure to check with your lender and real estate agent prior to writing a contract so that you can make a knowledgeable offer.

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Qualifying for a Home Loan – How Much Can I Afford

What Can I Qualify For to Buy A House

While the regulations for financing a home today have gotten more stringent, this is not a bad thing. The fear that some people cannot get a loan is in my opinion ludicrous. I say that because the criteria for getting a home loan is back to where it was prior to the “free money for everyone”.

  • FHA has extended the loan limits for buyers to help those who are qualified to purchase a home, which is a big plus for first time buyers
  • Interest rates are still unbelievably low. (I have worked in markets when the rates dropped to 10% we were elated…and people were still buying homes)
  • Non conforming and conforming loans are plentiful

The criteria for any loan today (2010) is as a buyer you have to qualify – enough income, limited debt and good credit. Just because your credit history is not perfect, does not mean you cannot get a loan.

I insist that all buyers who want to work with me get “pre-approved” by a lender. Not pre-qualified – but approved. The pre-approval will help you the buyer and me the real estate agent focus on properties you can afford and will be able to buy. Listing agents and sellers want assurance before accepting your offer that you are qualified to close the deal. Most listing agents will not even present an offer to their Seller without the “pre approval letter”.

How Do Lenders Determine How Much I Will Qualify For

Income to Debt Ratio

The percentage of one’s debt to income is one of the most important factors when underwriting a loan and the two criteria to determine what you will qualify for are:.

  • House payment: Not to exceed 30% of monthly gross income (income before taxes).  If you are setting up an escrow account and putting less than 20% down, your payment will include taxes, homeowners insurance and mortgage insurance. The total number is taken into account, not just the principal and interest.
  • House Payment plus minimum monthly revolving and installment debt – not to exceed 35-41% of gross monthly income (the variance will depend on the source of financing with FHA loans allowing for a higher back end ratio).

As an Example

$10,000 gross monthly income. The maximum mortgage payment is: $10,000 x .30 = $3,000 maximum monthly mortgage payment

Total credit cards & car payments $1,500/month– – $10,000 x .40 = $4,000 maximum amount for house payment and debt. Based on these numbers the maximum mortgage a person would qualify for is $2,500.

Affordability Calculator

Monthly Gross Income $
Monthly Debt Expenses [?] $
Down Payment: $
Interest Rate: %

What is my mortgage payment?

Mortgage Calculator


What Are The Estimated Closing Costs

Closing costs vary from county to county and state to state. This is just an estimate to let you know some of the costs involved in purchasing a home that is beyond the down payment. Many buyers are unaware there are closing costs.

Closing Cost Estimator

Loan Information
Loan Amount $
View/Edit Closing Cost Details
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