FIRST TIME BUYERS Q & A
Property Brokerage
For Sale / For Rent
International Realty
For Sale / For Rent
International Realty
COMMON QUESTIONS FROM FIRST TIME HOMEBUYERS
Why should I buy, instead of rent?
Answer: A home is an investment. When you rent, you write your monthly check and that money is gone forever. But
when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes,
and usually from your state taxes. This will save you a lot each year, because the interest you pay will make up
most of your monthly payment for most of the years of your mortgage. You can also deduct the property taxes you
pay as a homeowner. In addition, the value of your home may go up over the years. Finally, you'll enjoy having
something that's all yours - a home where your own personal style will tell the world who you are.
Should I use a real estate broker? How do I find one?
Answer: Using a real estate broker is a very good idea. All the details involved in home buying, particularly the
financial ones, can be mind-boggling. A good real estate professional can guide you through the entire process
and make the experience much easier. A real estate broker will be well-acquainted with all the important things
you'll want to know about a neighborhood you may be considering...the quality of schools, the number of children in
the area, the safety of the neighborhood, traffic volume, and more. He or she will help you figure the price range you
can afford and search the classified ads and multiple listing services for homes you'll want to see. With immediate
access to homes as soon as they're put on the market, the broker can save you hours of wasted driving-around
time. When it's time to make an offer on a home, the broker can point out ways to structure your deal to save you
money. He or she will explain the advantages and disadvantages of different types of mortgages, guide you
through the paperwork, and be there to hold your hand and answer last-minute questions when you sign the final
papers at closing. And you don't have to pay the broker anything! The payment comes from the home seller - not
from the buyer.
How much money will I have to come up with to buy a home?
Answer: Well, that depends on a number of factors, including the cost of the house and the type of mortgage you
get. In general, you need to come up with enough money to cover three costs: earnest money - the deposit you
make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the
house; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and
closing costs, the costs associated with processing the paperwork to buy a house.
When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If
the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not
accepted, your money will be returned to you. The amount of your earnest money varies. If you buy a HUD home, for
example, your deposit generally will range from $500 - $2,000.
How do I know if I can get a loan?
Answer: Use our simple mortgage calculators to see how much mortgage you could pay - that's a good start. If the
amount you can afford is significantly less than the cost of homes that interest you, then you might want to wait
awhile longer. But before you give up, why don't you contact a real estate broker or a HUD-funded housing
counseling agency? They will help you evaluate your loan potential. A broker will know what kinds of mortgages the
lenders are offering and can help you choose a lender with a program that might be right for you. Another good
idea is to get pre-qualified for a loan. That means you go to a lender and apply for a mortgage before you actually
start looking for a home. Then you'll know exactly how much you can afford to spend, and it will speed the process
once you do find the home of your dreams.
How do I find a lender?
Answer: You can finance a home with a loan from a bank, a savings and loan, a credit union, a private mortgage
company, or various state government lenders. Shopping for a loan is like shopping for any other large purchase:
you can save money if you take some time to look around for the best prices. Different lenders can offer quite
different interest rates and loan fees; and as you know, a lower interest rate can make a big difference in how
much home you can afford. Talk with several lenders before you decide. Most lenders need 3-6 weeks for the
whole loan approval process. Your real estate broker will be familiar with lenders in the area and what they're
offering. Or you can look in your local newspaper's real estate section - most papers list interest rates being
offered by local lenders. You can find FHA-approved lenders in the Yellow Pages of your phone book. HUD does
not make loans directly - you must use a HUD-approved lender if you're interested in an FHA loan.
In addition to the mortgage payment, what other costs do I need to consider?
Answer: Well, of course you'll have your monthly utilities. If your utilities have been covered in your rent, this may be
new for you. Your real estate broker will be able to help you get information from the seller on how much utilities
normally cost. In addition, you might have homeowner association or condo association dues. You'll definitely have
property taxes, and you also may have city or county taxes. Taxes normally are rolled into your mortgage payment.
Again, your broker will be able to help you anticipate these costs.
So what will my mortgage cover?
Answer: Most loans have 4 parts: principal: the repayment of the amount you actually borrowed; interest: payment
to the lender for the money you've borrowed; homeowners insurance: a monthly amount to insure the property
against loss from fire, smoke, theft, and other hazards required by most lenders; and property taxes: the annual
city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year. Most
loans are for 30 years, although 15 year loans are available, too. During the life of the loan, you'll pay far more in
interest than you will in principal - sometimes two or three times more! Because of the way loans are structured, in
the first years you'll be paying mostly interest in your monthly payments. In the final years, you'll be paying mostly
principal.
What do I need to take with me when I apply for a mortgage?
Answer: Good question! If you have everything with you when you visit your lender, you'll save a good deal of time.
You should have: 1) social security numbers for both your and your spouse, if both of you are applying for the loan;
2) copies of your checking and savings account statements for the past 6 months; 3) evidence of any other assets
like bonds or stocks; 4) a recent paycheck stub detailing your earnings; 5) a list of all credit card accounts and the
approximate monthly amounts owed on each; 6) a list of account numbers and balances due on outstanding
loans, such as car loans; 7) copies of your last 2 years' income tax statements; and 8) the name and address of
someone who can verify your employment. Depending on your lender, you may be asked for other information.
I know there are lots of types of mortgages - how do I know which one is best for me?
Answer: You're right - there are many types of mortgages, and the more you know about them before you start, the
better. Most people use a fixed-rate mortgage. In a fixed rate mortgage, your interest rate stays the same for the
term of the mortgage, which normally is 30 years. The advantage of a fixed-rate mortgage is that you always know
exactly how much your mortgage payment will be, and you can plan for it. Another kind of mortgage is an Adjustable
Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than
a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year.
The adjustment is tied to a financial index, such as the U.S. Treasury Securities index. The advantage of an ARM is
that you may be able to afford a more expensive home because your initial interest rate will be lower. There are
several government mortgage programs,including the Veteran's Administration's programs and the Department of
Agriculture's programs. Most people have heard of FHA mortgages. FHA doesn't actually make loans. Instead, it
insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders
to give mortgages to people who might not otherwise qualify for a loan. Talk to your real estate broker about the
various kinds of loans, before you begin shopping for a mortgage.
When I find the home I want, how much should I offer?
Answer: Again, your real estate broker can help you here. But there are several things you should consider: 1) is
the asking price in line with prices of similar homes in the area? 2) Is the home in good condition or will you have
to spend a substantial amount of money making it the way you want it? You probably want to get a professional
home inspection before you make your offer. Your real estate broker can help you arrange one. 3) How long has
the home been on the market? If it's been for sale for awhile, the seller may be more eager to accept a lower offer.
4) How much mortgage will be required? Make sure you really can afford whatever offer you make. 5) How much do
you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In
some cases, you may even want to offer more than the asking price, if you know you are competing with others for
the house.
What if my offer is rejected?
Answer: They often are! But don't let that stop you. Now you begin negotiating. Your broker will help you. You may
have to offer more money, but you may ask the seller to cover some or all of your closing costs or to make repairs
that wouldn't normally be expected. Often, negotiations on a price go back and forth several times before a deal is
made. Just remember - don't get so caught up in negotiations that you lose sight of what you really want and can
afford!
So what will happen at closing?
Answer: Basically, you'll sit at a table with your broker, the broker for the seller, probably the seller, and a closing
agent. The closing agent will have a stack of papers for you and the seller to sign. While he or she will give you a
basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to
make sure you know exactly what you're signing. After all, this is a large amount of money you're committing to pay
for a lot of years! Before you go to closing, your lender is required to give you a booklet explaining the closing costs,
a "good faith estimate" of how much cash you'll have to supply at closing, and a list of documents you'll need at
closing. If you don't get those items, be sure to call your lender BEFORE you go to closing. Be sure to read our
booklet on settlement costs. It will help you understand your rights in the process. Don't hesitate to ask questions.
More information?
See 100 questions and answers about buying a home.
Questions and Answers provided by: HUD.GOV / U.S. Department of Housing and urban Development
Why should I buy, instead of rent?
Answer: A home is an investment. When you rent, you write your monthly check and that money is gone forever. But
when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes,
and usually from your state taxes. This will save you a lot each year, because the interest you pay will make up
most of your monthly payment for most of the years of your mortgage. You can also deduct the property taxes you
pay as a homeowner. In addition, the value of your home may go up over the years. Finally, you'll enjoy having
something that's all yours - a home where your own personal style will tell the world who you are.
Should I use a real estate broker? How do I find one?
Answer: Using a real estate broker is a very good idea. All the details involved in home buying, particularly the
financial ones, can be mind-boggling. A good real estate professional can guide you through the entire process
and make the experience much easier. A real estate broker will be well-acquainted with all the important things
you'll want to know about a neighborhood you may be considering...the quality of schools, the number of children in
the area, the safety of the neighborhood, traffic volume, and more. He or she will help you figure the price range you
can afford and search the classified ads and multiple listing services for homes you'll want to see. With immediate
access to homes as soon as they're put on the market, the broker can save you hours of wasted driving-around
time. When it's time to make an offer on a home, the broker can point out ways to structure your deal to save you
money. He or she will explain the advantages and disadvantages of different types of mortgages, guide you
through the paperwork, and be there to hold your hand and answer last-minute questions when you sign the final
papers at closing. And you don't have to pay the broker anything! The payment comes from the home seller - not
from the buyer.
How much money will I have to come up with to buy a home?
Answer: Well, that depends on a number of factors, including the cost of the house and the type of mortgage you
get. In general, you need to come up with enough money to cover three costs: earnest money - the deposit you
make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the
house; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and
closing costs, the costs associated with processing the paperwork to buy a house.
When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If
the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not
accepted, your money will be returned to you. The amount of your earnest money varies. If you buy a HUD home, for
example, your deposit generally will range from $500 - $2,000.
How do I know if I can get a loan?
Answer: Use our simple mortgage calculators to see how much mortgage you could pay - that's a good start. If the
amount you can afford is significantly less than the cost of homes that interest you, then you might want to wait
awhile longer. But before you give up, why don't you contact a real estate broker or a HUD-funded housing
counseling agency? They will help you evaluate your loan potential. A broker will know what kinds of mortgages the
lenders are offering and can help you choose a lender with a program that might be right for you. Another good
idea is to get pre-qualified for a loan. That means you go to a lender and apply for a mortgage before you actually
start looking for a home. Then you'll know exactly how much you can afford to spend, and it will speed the process
once you do find the home of your dreams.
How do I find a lender?
Answer: You can finance a home with a loan from a bank, a savings and loan, a credit union, a private mortgage
company, or various state government lenders. Shopping for a loan is like shopping for any other large purchase:
you can save money if you take some time to look around for the best prices. Different lenders can offer quite
different interest rates and loan fees; and as you know, a lower interest rate can make a big difference in how
much home you can afford. Talk with several lenders before you decide. Most lenders need 3-6 weeks for the
whole loan approval process. Your real estate broker will be familiar with lenders in the area and what they're
offering. Or you can look in your local newspaper's real estate section - most papers list interest rates being
offered by local lenders. You can find FHA-approved lenders in the Yellow Pages of your phone book. HUD does
not make loans directly - you must use a HUD-approved lender if you're interested in an FHA loan.
In addition to the mortgage payment, what other costs do I need to consider?
Answer: Well, of course you'll have your monthly utilities. If your utilities have been covered in your rent, this may be
new for you. Your real estate broker will be able to help you get information from the seller on how much utilities
normally cost. In addition, you might have homeowner association or condo association dues. You'll definitely have
property taxes, and you also may have city or county taxes. Taxes normally are rolled into your mortgage payment.
Again, your broker will be able to help you anticipate these costs.
So what will my mortgage cover?
Answer: Most loans have 4 parts: principal: the repayment of the amount you actually borrowed; interest: payment
to the lender for the money you've borrowed; homeowners insurance: a monthly amount to insure the property
against loss from fire, smoke, theft, and other hazards required by most lenders; and property taxes: the annual
city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year. Most
loans are for 30 years, although 15 year loans are available, too. During the life of the loan, you'll pay far more in
interest than you will in principal - sometimes two or three times more! Because of the way loans are structured, in
the first years you'll be paying mostly interest in your monthly payments. In the final years, you'll be paying mostly
principal.
What do I need to take with me when I apply for a mortgage?
Answer: Good question! If you have everything with you when you visit your lender, you'll save a good deal of time.
You should have: 1) social security numbers for both your and your spouse, if both of you are applying for the loan;
2) copies of your checking and savings account statements for the past 6 months; 3) evidence of any other assets
like bonds or stocks; 4) a recent paycheck stub detailing your earnings; 5) a list of all credit card accounts and the
approximate monthly amounts owed on each; 6) a list of account numbers and balances due on outstanding
loans, such as car loans; 7) copies of your last 2 years' income tax statements; and 8) the name and address of
someone who can verify your employment. Depending on your lender, you may be asked for other information.
I know there are lots of types of mortgages - how do I know which one is best for me?
Answer: You're right - there are many types of mortgages, and the more you know about them before you start, the
better. Most people use a fixed-rate mortgage. In a fixed rate mortgage, your interest rate stays the same for the
term of the mortgage, which normally is 30 years. The advantage of a fixed-rate mortgage is that you always know
exactly how much your mortgage payment will be, and you can plan for it. Another kind of mortgage is an Adjustable
Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than
a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year.
The adjustment is tied to a financial index, such as the U.S. Treasury Securities index. The advantage of an ARM is
that you may be able to afford a more expensive home because your initial interest rate will be lower. There are
several government mortgage programs,including the Veteran's Administration's programs and the Department of
Agriculture's programs. Most people have heard of FHA mortgages. FHA doesn't actually make loans. Instead, it
insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders
to give mortgages to people who might not otherwise qualify for a loan. Talk to your real estate broker about the
various kinds of loans, before you begin shopping for a mortgage.
When I find the home I want, how much should I offer?
Answer: Again, your real estate broker can help you here. But there are several things you should consider: 1) is
the asking price in line with prices of similar homes in the area? 2) Is the home in good condition or will you have
to spend a substantial amount of money making it the way you want it? You probably want to get a professional
home inspection before you make your offer. Your real estate broker can help you arrange one. 3) How long has
the home been on the market? If it's been for sale for awhile, the seller may be more eager to accept a lower offer.
4) How much mortgage will be required? Make sure you really can afford whatever offer you make. 5) How much do
you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In
some cases, you may even want to offer more than the asking price, if you know you are competing with others for
the house.
What if my offer is rejected?
Answer: They often are! But don't let that stop you. Now you begin negotiating. Your broker will help you. You may
have to offer more money, but you may ask the seller to cover some or all of your closing costs or to make repairs
that wouldn't normally be expected. Often, negotiations on a price go back and forth several times before a deal is
made. Just remember - don't get so caught up in negotiations that you lose sight of what you really want and can
afford!
So what will happen at closing?
Answer: Basically, you'll sit at a table with your broker, the broker for the seller, probably the seller, and a closing
agent. The closing agent will have a stack of papers for you and the seller to sign. While he or she will give you a
basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to
make sure you know exactly what you're signing. After all, this is a large amount of money you're committing to pay
for a lot of years! Before you go to closing, your lender is required to give you a booklet explaining the closing costs,
a "good faith estimate" of how much cash you'll have to supply at closing, and a list of documents you'll need at
closing. If you don't get those items, be sure to call your lender BEFORE you go to closing. Be sure to read our
booklet on settlement costs. It will help you understand your rights in the process. Don't hesitate to ask questions.
More information?
See 100 questions and answers about buying a home.
Questions and Answers provided by: HUD.GOV / U.S. Department of Housing and urban Development
| Contact us Today 954.251.0324 |
Copyright © 2005-2010 SOBTEC REALTY, INC.
Kevin Berman
Licensed Florida Real Estate Broker
P: (954) 251.0324
F: (954).251.0321
info@sobtec.net
8550 W. State Road 84, Davie, Florida, 33324
Kevin Berman
Licensed Florida Real Estate Broker
P: (954) 251.0324
F: (954).251.0321
info@sobtec.net
8550 W. State Road 84, Davie, Florida, 33324
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