Frequently Asked Questions
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How do I know if I'm ready to buy
a home?
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How does purchasing a home compare
with renting?
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How can I find information on the property
tax liability?
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Is an older home a better value than
a new one?
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What should I look for when walking
through a home?
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Do I need a lawyer to buy a home?
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How do I make an offer?
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How do I determine the initial
offer?
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What is a mortgage?
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Are there special mortgages for first-time
home buyers?
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What steps need to be taken
to secure a loan?
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How do I know if I'm
ready to buy a home?
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You can find out by asking yourself some questions:
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Do I have a steady source of income (usually a job)?
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Have I been employed on a regular basis for the last
2-3 years?
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Is my current income reliable?
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Do I have a good record of paying my bills?
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Do I have few outstanding long-term debts, like car
payments?
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Do I have money saved for a down payment?
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Do I have the ability to pay a mortgage every month,
plus additional costs?
If you can answer “yes” to these questions, you
are probably ready to buy your own home.
If you answer “no” to any of these questions,
you need to contact us for counseling assistance.
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How does purchasing
a home compare with renting?
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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.
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How can
I find information on the property tax liability?
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The total amount of the previous year's property taxes
is usually included in the listing information. If it's
not, ask the seller for a tax receipt or contact the local
assessor's office. Tax rates can change from year to year,
so these figures may be approximate.
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Is an older home a better value
than a new one? |
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There isn't a definite answer to this question. You should
look at each home for its individual characteristics.
Generally, older homes may be in more established neighborhoods,
offer more ambiance, and have lower property tax rates.
People who buy older homes, however, shouldn't mind maintaining
their home and making some repairs.
Newer homes tend to use more modern architecture and systems,
are usually easier to maintain, and may be more energy-efficient.
People who buy new homes often don't want to worry initially
about upkeep and repairs.
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What should I look for when walking through
a home?
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In addition to comparing the home to your minimum requirement
and wish lists, use the HUD Home Scorecard and consider
the following:
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Is there enough room for both the present and the future?
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Are there enough bedrooms and bathrooms?
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Is the house structurally sound?
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Do the mechanical systems and appliances work?
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Is the yard big enough?
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Do you like the floor plan?
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Will your furniture fit in the space?
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Is there enough storage space? (Bring a tape measure
to better answer these questions.)
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Do I need a lawyer to buy a home?
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Laws vary by state. Some states require a lawyer to assist
in several aspects of the home buying process while other
states do not, as long as a qualified real estate professional
is involved.
Even if your state doesn't require one, you may want to
hire a lawyer to help with the complex paperwork and legal
contracts. A lawyer can review contracts, make you aware
of special considerations, and assist you with the closing
process.
Your real estate agent may be able to recommend a lawyer.
If not, shop around. Find out what services are provided
for what fee, and whether the attorney is experienced at
representing homebuyers.
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How do I make an offer?
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Your real estate agent will assist you in making an offer,
which will include the following information:
- Complete legal description of the property
- Amount of earnest money
- Down payment and financing details
- Proposed move-in date
- Price you are offering
- Proposed closing date
- Length of time the offer is valid
- Details of the deal
Remember that a sale commitment depends on negotiating
a satisfactory contract with the seller, not just making
an offer.
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How do I determine the initial offer?
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Unless you have a buyer's agent, remember that the agent
works for the seller.
Make a point of asking him or her to keep your discussions
and information confidential.
Listen to your real estate agent's advice, but follow your
own instincts on deciding a fair price.
Calculating your offer should involve several factors:
what homes sell for in the area, the home's condition, how
long it's been on the market, financing terms, and the seller's
situation.
By the time you're ready to make an offer, you should have
a good idea of what the home is worth and what you can afford.
And, be prepared for give-and-take negotiation, which is
very common when buying a home. The buyer and seller may
often go back and forth until they can agree on a price.
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What is a mortgage?
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Generally speaking, a mortgage is a loan obtained to purchase
real estate. The "mortgage" itself is a lien (a
legal claim) on the home or property that secures the promise
to pay the debt. All mortgages have two features in common:
principal and interest.
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Are there special mortgages for first-time
home buyers?
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Yes. Lenders now offer several affordable mortgage options
which can help first-time homebuyers overcome obstacles
that made purchasing a home difficult in the past. Lenders
may now be able to help borrowers who don't have a lot of
money saved for the down payment and closing costs, have
no or a poor credit history, have quite a bit of long-term
debt, or have experienced income irregularities.
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What steps need to be taken to secure a loan?
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The first step in securing a loan is to complete a loan
application. To do so, you'll need the following information:
- Pay stubs for the past 2-3 months
- W-2 forms for the past 2 years
- Information on long-term debts
- Recent bank statements
- Tax returns for the past 2 years
- Proof of any other income
- Address and description of the property you wish to
buy
- Sales contract
Source: U.S. Department of Housing and Urban Development
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