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What To Do Before You Start Shopping For an Atlanta Home

2006 11-23
What To Do Before You Start Shopping For an Atlanta Home

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What To Do Before You Start Shopping For an Atlanta Home

  1. 1. NOV What to Do Before You Start 23 Shopping for a Home I Looking for a home can be stressful and daunting. But there are things you can do to decrease your stress level and make the home buying process easier. Before you even think about what kind of home you want, you have to decide what kind of home you need. Doing this will narrow down the number of houses you look at and will save you valuable time. At the same time, you should make a list of things you don’t want in a home so that you don't waste time looking at houses that don't fit your needs or your budget. You can use Elegance Realty’s House Hunting Priorities worksheet, (available only in the downloadable version) to list your wants and needs. To set your priorities, ask yourself these questions: Where do you want to live? Location is one of the most important elements to choosing the right home. So, not only are you looking for the right home, you're looking for the right neighborhood. Among all your decisions, you should consider things like: how far or near do you want to live to your other family members? If you have your own family, what kind of schools you want your children to go to? How important is it to you to be close to the highway or public transportation, shopping, work, hospitals, entertainment, community amenities? How long do you expect to live in your new home? Most people end up moving within seven to nine years of living in a home and move for several reasons: job transfers, starting a family, needing a bigger home, don't like the area, etc. If you plan on living in your new home for only a few years, or if you don't have children, then proximity to schools may not be an issue, but resale value may be. On the other hand, if you have a family and plan on staying in the home for ten years or more, schools, as well as size of the home, will be priorities. How long you expect to stay in your home can have a large impact on which home you choose as well as what type of mortgage you choose. Consider your lifestyle As you make a list of your wants and needs (as well as what you don’t want), it may also be important to consider the type of lifestyle you have. If you like to entertain a lot, then you'll want a spacious home that lends itself to that. If you work from home, or have your own business that you run out of your home, you'll need space for a home office. If you're a gardener, then lot size may be your priority. Put these items on your list in order of importance. For instance, a large kitchen may be more important to you than a fireplace. Remember, your list should be somewhat flexible in case you can't find a home in your price range with all the amenities you need or want. How much home can you afford? Few things are more frustrating than falling in love with a home only to discover it's out of your price range. But, how do you figure out what you can afford? You should consider two major factors when determining how much home you can afford:
  2. 2. Your Credit Score Your credit report determines your credit score, which is needed for qualifying for a home loan. Your credit score can help you qualify for a bigger loan amount and/ or better interest rate. It's important to check your credit report carefully for discrepancies and errors. You can order your credit report from the three major credit bureaus, Experian, TransUnionand Equifax. There are many other ways you can improve your credit score to get the best loan possible including paying your bills on time, paying off debt and keeping credit card balances low. Mortgage Payment It's possible you may qualify for a loan amount that would require a higher monthly mortgage payment, but you may not want to stretch yourself too far financially. If that's the case, you should calculate how much you'd be comfortable paying for your mortgage payment. Use a Home Affordability Calculator to give you an idea of your potential monthly mortgage payment, and how much you'll be able to borrow. Mortgage Basics Once you've figured out what you want in a home, how long you plan on living there, and what you're comfortable paying each month, you need to shop for a mortgage. A mortgage is a legal document by which real property (your house) is pledged as security for the repayment of a mortgage loan. You can think of a mortgage loan like an auto loan, but instead of getting a loan to finance the purchase of a car, you're getting a loan to finance the purchase of a home. It's a legal contract stating that you promise to pay back the loan on a monthly basis over a certain amount of time. Your monthly payment typically goes toward the loan principal, interest, taxes, and insurance. Although there are hundreds of variations of mortgages, you only need to know a few basics to understand how they work: Fixed-rate mortgages have a fixed interest rate over the term of the loan. Most people opt for 30-year terms, but 15- and 20-year terms are available. The biggest advantage of a fixed-rate mortgage is that your interest rate and monthly payment do not change over the term of the loan. However, if interest rates happen to fall below your current fixed rate, you may be ‘‘locked in" to a higher rate and should consider refinancing. Adjustable-rate mortgages (ARMs) usually start with a lower interest rate than a fixed-rate mortgage for an introductory period—typically one, three, five or seven years. After that initial introductory period, the rate adjusts—usua| ly annua| |y—based on a pre—determined index. As a result, the interest rate on your loan and the monthly payment will rise and fall with increases and decreases in overall interest rates. An interest rate cap limits the amount by which the interest rate can change. An ARM is a good choice if you're expecting to live in your home for seven years or less and it may also allow you to borrow a larger loan amount. The down payment is the amount you plan to pay up front, in cash, when you buy a home. It is typically the difference between how much you borrow and the purchase price of your home. To avoid paying private mortgage insurance (PMI), a 20 percent down payment is usually required. However, many lenders offer many low and no—down—payment loans. Get a loan before you house shop It sounds counter—intuitive: why would you apply for a mortgage when you haven't even started looking for a house yet? The answer is simple. When you have a preapproval letter, you're in a better position to
  3. 3. negotiate. Here's why: The seller knows that your offer is serious and valid, giving you a stronger edge over other buyers. You know exactly how much home you can afford, saving you valuable time since you won't be looking at homes outside of your price range. You can close on the home you want in days—not weeks. Your approval is good for four months* while you shop for homes. If you'd like to know more about the home buying process, caII Elegance Realty, LLC at 866-687-5543. Posted 23rd November 2006 by Kemi Salako