Are you ready to be a homeowner? To many of us our homes represent our personalities, lifestyles, and havens. Even more, homes make up much, if not most of our investments. In other words, buying a home can be vital.
Rindy Merrifield, 2007 president of the Placer County Association of Realtors, said: “Not only does home ownership provide security, with pride and comfort to a family, it is one of the best investments you can make in your life.”
Knowing when to buy is important. At this time we are in an excellent buyer’s market, the last two years we have seen prices drop and interest rates are at an all time low. In my 25 years of real estate experience I’ve never seen so many homes to choose from.
If you’re interested in getting into the current market you should talk to a lender and get pre-qualified.
When you do this your lender will probably address these four areas:
1. Your work history: The bank looks for stability and growth. At least two years in the same type of work is good, but having the same employer for the last two years is not a must. In fact, career moves that show growth could actually be helpful.
2. How is your credit? Lenders will need to order a credit report to verify use of accounts and the time left to repay them. Credit bureaus keep track of repayment histories. This doesn’t take long and knowing your credit score is a good thing.
3. Do you have a down-payment? If you are like most home buyers, you will depend upon a mortgage to purchase your home. There are still some 100 percent financing programs for folks with excellent credit, but in many cases the bank or financial institution will like to see the buyer have something down.
They feel if you have a vested interest in the property their loan will be more secure. A down payment for some lenders can be as little as 3 percent for certain government loans.
For a $200,000 home, the typical down payment of five percent is about $10,000. You may have saved the down payment but remember the closing costs. They cover the legal costs associated with the transfer of title, as well as mortgage closing costs. This can range from 3 to 6 percent of the home’s sale price. It is possible to ask a seller to help with the closing costs as a form of discounting the price.
4. Be advised that current interest rates will affect the size of the payments. Today we are experiencing some of the best rates in 40 years. Careful shopping will be your best insurance for happy homeownership.
Gene Thorpe is a California Association of Realtors director, the current secretary/treasurer of the Placer County Association of Realtors, and broker/manager of Pavilion Realty, Inc. You can reach him at GeneCaj.movingtoplacercounty.com.