Thursday, August 11, 2011

Frequently Asked Questions

So I decided to spend sometime gathering some of the questions I am commonly asked by first time home buyers and post them on this blog.  I will add to them as new questions come up so feel free to leave me a question ! These questions will be posted permanently on the Common Questions section of my blog as well.

Why Should I Buy a Home Instead of Rent?  It is a fact that in most markets in the country, buying a home is significantly cheaper than renting. This isn’t just my advice as a realtor, this has been reported on trusted national services like Renting is basically money you will never get back, but buying a home is an investment in your future.  Remember, if you can afford to rent, you can afford to buy.

Do I Really Need an Agent to Buy a House

No, you don’t. Should you get an agent to buy a house? Yes, for two reasons. First of all, in virtually every real estate situation, the buyer does not pay any commission to the agent, the agent’s services are paid for by the seller.  As a first time home buyer, if it won’t cost you a dime to work with a buyer’s agent, doesn’t it make sense to do so? Second reason- You could potentially be missing out on valuable advice that you can’t find elsewhere. If this is your first time buying a home, you’ll want someone in your corner who understands the process.

How do I know I’m ready to buy a home?
The best way to know if you’re ready to purchase a home is to look at your current situation.  You need to make sure you have a steady source of income, and that you have been regularly employed for the past 2-3 years.  If your income isn’t reliable, then you need to make sure you have a dependable job.  If you default on your monthly mortgage payments, then you can have your home taken away by your lender.  Unlike renting, this simply isn’t an eviction notice.  If your home goes into foreclosure, you can dramatically hurt your credit score (stays on for 7 years) which can keep you from getting a good loan in the future.

Checking your credit score is something that will be done whether it’s by you or by the bank.  Other information like good record of paying bills and any outstanding long-term debts can affect you credit score. Many banks will be happy to meet with you about your score and suggest ways to improve it, so you will be able to be approved for a loan.
You also need to make sure you have money saved for a down payment on a home in addition to the ability to pay the monthly mortgage note on top of additional expenses.  If everything in this section checks out with you, then you’re ready to start the home buying process.

What exactly are foreclosures, and short sales?

When a homeowner can’t make their monthly mortgage payments to their lender, the property can be foreclosed by that lender due to the borrower’s failure to make payments.  These can also be good deals for first-time homebuyers or first-time property investors.  You can luck out by purchasing the home for what is owed on the mortgage.

A short sale is the sale of a property in which all the proceeds fall short of the balance owed on the property’s loan.  This often happens when the borrower cannot pay their mortgage.  But instead of foreclosing, the lender decides that selling the home for a slight loss is better than stressing the borrower.  In this type of process, both the lender and the borrower agree to it, because it enables them to avoid foreclosure which can involve hefty bank fees and a more damaged credit score to the borrower.  These are also great deals on the market, because of buyer being able to buy a good house at a cheaper price.

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