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Buying Advice

Buying a home will be one of your biggest investments in life. Not only are you choosing your living place for the next few years, and perhaps the place in which you’ll raise your family, you’re most likely investing a large portion of your assets into this venture. The more prepared you are at the outset, the less overwhelming and chaotic the process will be. The goal of this page is to provide you with detailed information to assist you in making an intelligent and informed decision. Remember, if you have any questions about the process, I am only a phone call away!

Benefits of Owning Your Own Home

The best investment. As a general rule, homes appreciate about five percent a year. Some years will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region. With interest rates currently at a low, the benefits of owning your own home were never more apparent. Purchasing the right home, for the right price is like putting money in the bank. With regular upkeep, and general maintenance, your homes value should continue to increase with the years.

Stable Monthly Housing Costs

When you rent a place to live, you may face yearly rent increases. If you get a fixed rate mortgage when you buy a home, you have the same monthly payment amount for thirty years. Even if you get an adjustable rate mortgage, your payment will stay within a certain range for the entire life of the mortgage– and interest rates arent as volatile as they were back in the 70’s and 80’s. Imagine how much rent might be in ten, fifteen or twenty years from now? Which makes more sense?

Forced Savings

Some people are just not good at saving money, and a house is an automatic savings account. You accumulate savings in two ways. Every month a portion of your payment goes toward the principal. Admittedly, in the early years of the mortgage, this is not much. Over time however, it accelerates. Second, your home appreciates. Average appreciation on a home is approximately 5 percent, though it will vary from year to year, and in some years may even depreciate. Over time, history has shown that owning a home is one of the very best financial investments.

More Space

Both indoors and outdoors you will probably have more space if you own your own home. Even moving to a condominium from an apartment, you are likely to have much more room available- your own laundry and storage area, and bigger rooms. Apartment complexes are more interested in creating the maximum number of income- producing units then they are in creating space for each of their tenants. If you are moving to a home for the first time, you are going to be pleased with all the new space you have available. You may even have to go shopping to buy more “stuff!”

Things to Avoid Before Buying a Home

Don’t move money around. When a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, stock statements, mutual funds, 401K and retirement accounts. If you have been moving money between those accounts during that time, there may be large deposits and withdrawals in some of them. The mortgage underwriter will probably need a complete paper trail of all the withdrawals and deposits. You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data which could get tedious. To ensure quality control and eliminate potential fraud, it is a requirement on most loans to completely document the source of all funds. Moving your money around, even if you are consolidating your funds to make it “easier,” could make it more difficult for the lender to properly document. So leave your money where it is until you talk to a loan officer.  And try to avoid changing banks until after you’ve made your purchase.

Avoid Major Purchases

When a person’s income begins to grow and they manage to save a bit of money, they commonly experience what may be considered an innate instinct of living in a modern civilized world. The need to shop! North Americans have a love affair with the automobile and becomes a high priority on the shopping list. Later, other things will be added to the list, one of which will likely be a house. As part of the interview process with a loan officer, one of the things that will be determined is our price target. They will ask about your income, your savings and your debts, then offer their opinion. “If only you didn’t have this car payment,” he might begin, certainly you would qualify for a home loan to buy that house.” So, refrain from any major purchases prior to meeting with the loan officer. This includes electronic equipment, furniture, appliances, jewelry, and vacations. Oh, and of course the car!

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