Top 100 Questions & Answers About Buying A Home
Dear Future Homeowner:
Homeownership is becoming a reality for more and more Americans. During 2000,
the US homeownership rate reached 67.7%, the highest rate ever.
Yet many Americans don’t realize that homeownership is within their
grasp.
A home is a financial asset and more: it’s a place to live and raise
children; it’s a plan for the future; it’s an investment in your
community. That’s why we at the U.S. Department of Housing and Urban
Development want all Americans to have an opportunity to enjoy the
benefits of owning a home. And we are especially proud of our work
to help first-time homebuyers: thanks to our special programs, more
than 81% of FHA-insured loans went to first-time homebuyers during
2000.
Knowledge is said to open doors. This is literally true when it comes to buying
a home. To become a first-time homebuyer, you need to know where
and how to begin the homebuying process. The following questions
and answers have been carefully selected to give you a foundation
of basic knowledge. In addition to helping you begin, this brochure
will give you the tools necessary to navigate the entire process
- from deciding whether you’re ready to buy, all the way to that
final proud step, getting the keys to your new home.
Calling
for this brochure was your first step. Now you can use this information
to determine if you’re ready to buy a home. if you are ready, contact
a real estate agent, lender, or a housing counseling agency. They
can help you decide your next step.
HUD’s
FHA has helped more than 30 million people become homeowners since
1934. We want to help you open the door to your own home. After
all, HUD and FHA, Fannie Mae and Freddie Mac are on your side.
Good Luck!
Getting Started
1.
How Do I Know If I’m Ready To Buy A Home?
You
can find out by asking yourself some questions:
- Do I have a steady source of income (usually a job)? Have I been
employed on a regular basis for the last 2-3 years? Is my current
income reliable?
- Do
I have a good record of paying my bills?
- Do
I have few outstanding long-term debts, like car payments?
- Do
I have money saved for a down payment?
- 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.
2.
How Do I Begin The Process Of Buying A Home?
Start
by thinking about your situation. Are you ready to buy a home? How
much can you afford in a monthly mortgage payment (see Question
4 for help)? How much space do you need? What areas of town do you
like? After you answer these questions, make a "To Do"
list and start doing casual research. Talk to friends and family,
drive through neighborhoods, and look in the "Homes" section
of the newspaper.
3.
How Does Purchasing A Home Compare With Renting?
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.
Owning
a home has many benefits. When you make a mortgage payment, you
are building equity. And that’s an investment. Owning a home also
qualifies you for tax breaks that assist you in dealing with your
new financial responsibilities- like insurance, real estate taxes,
and upkeep- which can be substantial. But given the freedom, stability,
and security of owning your own home, they are worth it.
4.
How Does The Lender Decide The Maximum Loan Amount I Can Afford?
The
lender considers your debt-to-income ratio, which is a comparison
of your gross (pre-tax) income to housing and non-housing expenses.
Non-housing expenses include such long-term debts as car or student
loan payments, alimony, or child support. According to the FHA,monthly
mortgage payments should be no more than 29% of gross income, while
the mortgage payment, combined with non-housing expenses, 4 should
total no more than 41% of income. The lender also considers cash
available for down payment and closing costs, credit history, etc.
when determining your maximum loan amount.
5.
How Do I Select The Right Real Estate Agent?
Start
by asking family and friends if they can recommend an agent. Compile
a list of several agents and talk to each before choosing one. Look
for an agent who listens well and understands your needs, and whose
judgment you trust. The ideal agent knows the local area well and
has resources and contacts to help you in your search. Overall,
you want to choose an agent that makes you feel comfortable and
can provide all the knowledge and services you need.
6.
How Can I Determine My Housing Needs Before Beginning My House Search?
Your
home should fit way you live, with spaces and features that appeal
to the whole family. Before you begin looking at homes, make a list
of your priorities - things like location and size. Should the house
be close to certain schools? your job? to public transportation?
How large should the house be? What type of lot do you prefer? What
kinds of amenities are you looking for? Establish a set of minimum
requirements and a ’wish list." Minimum requirements are things
that a house must have for you to consider it, while a "wish
list" covers things that you’d like to have but aren’t essential.
For more helpful mortgage tips on mortgage refinancing, home mortgages, reverse mortgages or a home equity line of credit, contact FreeLoanComparison.com today!
Last update: November 14, 2008
