First Time Homebuyers

The Fifteen Most Commonly Asked Questions by First Time Homebuyers – Part 1

First Time HomebuyersWhen mortgage rates increased last month, millions of Americans questioned if they had missed their window of opportunity for home ownership. Now is still an affordable time to buy a home. If you’re still contemplating home ownership, here are fifteen of the most commonly asked questions by first time home buyers. The answers may surprise you.

Many folks contemplating home ownership wonder why they should buy a house instead of rent one. When it comes to owning your own home it’s important to think of your home as an investment. When homeowners pay their monthly mortgage payment they are building equity in their home. Homeowners can deduct the cost of their mortgage loan interest from their federal income taxes. And the same holds true for most state taxes. Deducting interest saves you lots of money over the long term with the interest you pay making up most of your monthly payment for the majority of the years of your mortgage. Property taxes can also be deducted. Over the years your home’s value will have appreciated which benefits you when it comes time to sell. When you rent the check you write each month is gone forever and you haven’t built any equity nor can you deduct mortgage loan interest on your federal or state taxes.

Many first-time homebuyers ask about HUD homes and if they are a good investment. When a homeowner can’t no longer make their mortgage payments on a HUD insured mortgage, the lender forecloses and HUD (Housing and Urban Development), an agency of the U.S. federal government, pays the lender what is owed on the loan. HUD owns the home and then sells it at market value as quickly as possible. In many cases, a HUD home can be a good deal.

First-time homebuyers with bad credit and not a lot of money for a down-payment are often afraid to ask if homeownership is even a possibility. First-time homebuyers in this situation should contact Homestead loan officers who can work with you to help you sort through your options.

Single parents also have concerns about first-time home ownership and inquire about grants or programs available for single parents. It helps to become familiar with the home buying process and to work with a well-respected real estate broker. Getting pre-qualified for a mortgage will allow you to know your price range which is extremely important since single parents don’t have the benefit of two incomes when it comes to qualifying for a loan. A Homestead loan officer can direct you to local homebuying programs. In some cases single parents have worked with their mayor’s office or the county executive’s office for supplemental financing to help qualify them for their home mortgage.

First-time homebuyers also ask if they should use a real estate broker and how they can find one. There are so many financial particulars involved with home buying and a good real estate


professional can make things much easier by guiding you through the process. An experienced real estate broker who is well-acquainted with an area you are interested in can provide information about the school district, safety of the neighborhood, the number of children in the area, traffic volume, etc. They can narrow down your home search by keying in your preferences to the multiple listing service, with immediate access to homes that match your criteria as soon as they are put on the market. This saves you time driving around. When you’re ready to make an offer on a home a real estate broker will lead you through the contract paperwork step by step and answer your questions.

In “The Fifteen Most Commonly Asked Questions by First-Time Homebuyers Part II,” we’ll discuss down payments, loan qualification, working with Homestead mortgage and mortgage costs.

Why We Should Stop Panicking over Rising Mortgage Rates

We all knew the day would come when mortgage rates would rise. Last month when Federal Reserve Chairman, Ben Bernanke hinted the Fed might begin backing off its monthly quantitative easing, mortgage rates climbed up well over 4%. This has many potential and existing homeowners who had been considering purchasing a home or refinancing one in a panic and under the misconception that it’s too late to do so. Last month refinancing applications dropped 3.4% and home purchases fell 3%. But the truth is there’s no reason to panic since home financing is still extremely affordable at today’s interest rates.Continue reading

Family in new home

Getting a Fair Home Appraisal

Getting a home appraisal

The home appraisal. It’s why so many homebuyer’s sweat bullets during the buying or selling process. The last thing a person wants is to lose a mortgage because of a low appraisal when buying or selling a home. Here are some steps to take for getting a fair appraisal.

Professionals are Best for Serious Home-buying Needs

While automated valuation websites like Zillow, HomeGain and Trulia are a convenient and quick way of getting a ballpark figure of the worth of homes in certain areas, they shouldn’t be used when you’re buying or selling a home. Websites like these can only give an estimate because the figures are based on a limited amount of information. It’s okay to use websites like these when you’re at the beginning of your home search but turn to professionals when things turn more serious.

If you’re serious about buying a home, it’s best to work with a real estate agent who can prepare a competitive market analysis (CMA) or provide a broker’s price opinion before you make an offer on a property. Proactive home owners who are looking to sell their homes often have their own appraisal done before pricing their homes. This is especially helpful in a market where prices are fluctuating or where there are a lot of foreclosures. An appraisal usually costs $1,000 or less. Homeowners use appraisals to guide their pricing decisions and as a reference to compare to the appraisal done by the buyer’s lender.

Homestead uses Qualified Appraisers

At Homestead we work with qualified licensed appraisers and homebuyers with the goal of getting a fair appraisal of the home. Our appraisers have residential appraiser certifications as well as professional designations. Home buyers and sellers will work with appraisers who have the Appraisal Institute’s senior residential appraiser (SRA) and member of the Appraisal Institute (MAI) designations.

TFamily in new homehe appraiser should be familiar with the local market in order to arrive at a fair appraisal. To insure a fair appraisal, Homestead works with appraisers who come from the same county or neighboring county.
For home owner’s selling their homes, it’s important to meet the appraisal when your home is inspected. Be sure to share the appraisal you had done or the CMA from your real estate agent. You’ll want to share all the upgrades and improvements you’ve made to the home with the appraiser. If you are aware of any important pending neighborhood improvements like commuter rail lines, shopping centers, parks, roads or schools, you’ll want to provide that information to the appraiser as well. New companies moving to the area or major employers that are expanding are also important items for appraisers to know about and consider as they are assessing the value of your home.

When you’re selling your home you’ll want to do as much as you can to get the highest appraisal so the buyer can get necessary financing to meet your asking price. When a low appraisal occurs, both the buyer and seller should question it. Double check the paperwork to make sure short sales and foreclosures weren’t used as comps and make sure all improvements made to the home were taken into account. Unintentional human error and oversights happen. If a second appraisal is necessary, be sure to ask for a current comp that reflects the current real estate market conditions.

How to Calculate Your Mortgage Payoff

It’s a glorious day when the home mortgage is paid off. No longer does the bank have a claim on your home. You are the sole owner. Getting to that point takes time and payment after payment. Many people don’t live long enough to see that day, and others see it quite often as they pay off the mortgage every time they refinance the home.Continue reading

How to Prequalify for a Mortgage

Buying a home is the all-American dream. It starts with an idea, then saving for the down payment, and finally shopping for the perfect place to call home.

When you prequalify for a mortgage, your house shopping will run smoother, giving you—the future homeowner—some guidelines in regard to how much you can spend. There’s no point in falling in love with a house that you can’t afford. Prequalifying will keep your shopping in the reality zone and eliminate getting in over your head. Continue reading