PRIOR TO BUYING A HOME

     Buying a home is normally the biggest purchasing decision a person or couple make in their entire lives. It is not the same as going down to to your local store and buying a shirt off the rack. A home is a significant long-term investment that often represents the foundation of our lives and can provide financial as well as emotional security. Therefore, proper planning is the key to making the home buying process as glitch free as possible. Whether it is - your first home - or a second, third or fourth home.  The following suggestions   in each link of the "Home Buyer Guide"  are provided to assist  you in making the most  informed decision  possible while making your home buying experience one that will be remembered as a very pleasant memory. 

CHECK YOUR CREDIT REPORT:  Prior to starting your home buying search  get a copy of your credit report. Federal law allows you to get a free credit report yearly from each of the three major credit reporting agencies. Check these reports thoroughly. Errors  or mistakes on your credit report can impact your ability to purchase a home.

 DECIDE HOW MUCH HOME YOU CAN AFFORD AND STAY WITHIN YOUR BUDGET: Don't overreach. Forget the mansion on the hill or the beach if it's beyond your means. Sit down and draw up a budget that includes all your fixed monthly expenses. When factoring in your mortgage payment be sure to include property taxes, mortgage and homeowners insurance. Don’t rely on estimates. Get quotes from the insurance company and  local tax office.  Remember the main focus is to find something you can afford the monthly payments on along with a debt load you can handle.  While you may not find exactly what you want at this time just remember you can always sell and move up to another home when the time is right.

 GET APPROVED FOR FINANCING:  Nothing enhances a buyer’s power more than approved financing.  Sellers  will give the buyer much more favorable terms when they know financing is already in place.  Additionally, pe-approval provides you peace of mind in knowing that when the time comes to make an offer you already have financing in place.

WHAT IS A MORTGAGE:  A mortgage is a loan that is secured by real estate. In return for the money to buy a home the lender gets your written promise to pay back the money over a specified period of time at a certain cost over and above he money borrowed. This additional cost is normally called interest on the borrowed money and is also backed by the value of the property purchased. During the repayment period if you stop paying (default) on your mortgage the lender reserves the right to take over ownership of the property. A mortgage is normally repaid over an extended period of time known as monthly payments.

WHAT IS INCLUDED IN MY MORTGAGE PAYMENT: A mortgage payment is normally broken down into four parts. The first part is principle which is the money that was borrowed to buy the property and is based upon the sale price of the home or property. The second part is the interest which is a fee charged on the money that was borrowed. One thing to remember is that during the early part of the mortgage the majority of the payment will be made up of this interest. The third part of your mortgage is made up of property taxes which are paid by the homeowner to the local government. These property taxes are normally assessed based on the value of the property. The fourth part of the mortgage is the homeowners hazard insurance. This insurance protects you against financial losses on your property as a result of fire, wind, natural disaters or other hazards. Almost all lenders will require you to carry insurance since it will protect their investment as well as yours.  Last but not least most of us at one time or another will have to have Mortgage Insurance. This insurance is normally required by lenders who loan money to homebuyers who have less than 20% down on their home purchase. However, there are other loan progams that have different requirements on mortgage insurance. So it pays to shop around to find which loan is best for you.

This additional money over and above the principle and interest is held in an account known as escrow that is established by the lender. So when the bills come due, the lender pays them on your behalf. However, this can be an option and not a requirement for the homeowner.