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Know
Your Rights as a Homebuyer. There are laws
that can prevent you from falling into scams
and engaging in unnecessary expenses. Research
your rights to ensure that you are being
served rightfully.
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Find
out how much mortgage you can afford to avoid
wasting time, by considering current interest
rates. Use one of our simple calculators to
see how much you can afford in a mortgage
payment.
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Create
a list of the features you would like to have
in your home. This will save you as well as
your broker/agent a lot of time.
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Find
a real estate broker or agent who seems knowledgeable
and credible. You will be working closely
with him/her so you should make sure that
he/she has a personal style that will suit
well with your own.
Demand Experience: Buying
a home is probably one of the largest investments
you may make so you need to be sure that your
broker/agent is experienced in what he/she
does.
Look for Commitment: Try
finding a broker/agent who works full-time
in the Real Estate profession.
Conduct Interviews: Get recommendations
from friends, relatives, or neighbors regarding
brokers/agents they have worked with. You
can also search the Web, read through home
magazines and newspapers to learn about brokers,
agents, and their companies. The interview
does not have to be a formal one—it
is just your opportunity to meet or speak
with a broker or an agent so that you can
explain your needs, ask questions, and determine
whether or not you feel comfortable dealing
with him/her.
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Look
for a mortgage: Shop, Compare, Negotiate!!!
Collect Information from Several Lenders:
you can contact commercial banks, mortgage
companies, credit unions, or mortgage brokers.
A mortgage broker will be the middleman between
you and your lender. If you choose to work
with a broker, you should as how he or she
will be compensated so you can compare the
fees for different brokers. Keep in mind that
this process will entail negotiation if you
want the best rates.
Collect Important Cost Information:
Know how much of a down payment you can afford
and find out other costs that may be involved
in the loan. Simply knowing the monthly payment
or interest rate is not sufficient information—you
need to ask about the same loan amount, loan
term, and the type of loan.
Rates: collect the following information
from your broker or lender:
Whether
the rates being quoted are the lowest for
that day or week.
Whether the rate is fixed or adjustable.
If
adjustable, ask how your rate and loan
payment will vary.
What
the loan’s annual percentage rate
(APR) is.
Points:
these are fees paid to the broker or
lender for the loan—one point
equals one percent. The rate is usually
lower if you pay more points, but ask
for points to be quoted in dollar amount
so you know just how much you pay.
Fees:
Expect to be charged loan origination
or underwriting fees, broker fees,
and transaction, settlement, and closing
costs (many of these fees are negotiable.)
If you are unclear about the multiply
kinds of fees, make sure to ask your
broker or lender to explain them to
you.
Down
Payments and Private Mortgage Insurance:
Most lenders offer loans that require
a down payment of less than 20 percent
of the purchase price. Otherwise,
lenders will require the homebuyer
to purchase private mortgage insurance
(PMI) to protect the lender in the
event that the homebuyer is unable
to pay.
Inquire
about your lender’s requirements
for a down payment and about special
program offers your loan may include.
If
PMI is required for your loan,
inquire about the insurance’s
total cost, monthly payments,
and duration.
Get
the Best Deal that You Can:
Now that you know what each
lender has to offer you,
you can negotiate with them
for the best deal. When
you are satisfied with the
negotiation, you should
ask your lender for a written
lock-in that includes the
rate, period, and number
of points to be paid.
Note:
Lock-ins can protect you
from rate increases during
the processing of your loan,
however if rates drop, you
could be at a disadvantage.
This can be negotiated with
your broker or lender.
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Time to Shop for a Home: You are now ready
to go house hunting. Your broker or agent
will be prepared with listings for you based
on the features you desire in a home. You
can also search for properties on your own
and ask your broker or agent to show them
to you. Having a checklist for your own reference
may be helpful.
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Get
a Home Inspection: It is a good idea to have
an authorized inspector conduct a home inspection
before you make an offer on it. Based on the
results of the home inspection, you can further
negotiate with the homeowner to further reduce
the cost of the home or pay for repairs, if
needed. Otherwise, now would be the time to
make your offer.
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Get
an Appraisal: You will need to get an appraisal
for your lender so they can be sure that it
is worth the money that you are borrowing.
Whether you choose to go through your real
estate broker or agent or find your own appraiser
is up to you.
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Purchase
your Homeowner’s Insurance: Your lender
will require you to have homeowner’s
insurance for the sake of protection. Your
lender and broker/agent will have ample information
regarding homeowner’s insurance. You
can ask them or do the research on your own—in
any case, it is important to shop around until
you find one that suits your requirements.
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Signing
the Settlement Papers: Be sure to read every
document carefully before signing.
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