Homeownership is a big responsibility, and it's a big leap from renting.
So, how do you know if you're ready?
Here are FAQ's every person should ask when considering making a real estate investment.
1. "Am I ready to be a homeowner?"
If you think you are ready, then it's time to take a serious financial inventory of assets, debt, and your general lifestyle habits.
Gainful employment--This is a must. In order to own a home, you have to be to make mortgage payments.
Lenders look for proof that you can pay your loans on time, and having a consistent income is a must to qualify for a mortgage loan.
Down payment--There are several different mortgage programs available. Most require some form of down payment. The minimum is 5%-10% of the purchase price of the home.
Your credit score should be in pretty good shape with a history of paying your bills on time. If you have a few outstanding debts, make sure those can be resolved easily.
If you've had a bankruptcy, you'll need to wait the typical two-year period before entering the real estate market. You'll have to show proof that you've cleaned up your credit and maintained a consistent history of making on-time payments.
It's a myth that you can't buy a home after declaring bankruptcy!
2. "Which is Better, Renting or Buying A Home?"
This question I really all about personal preference. For some, paying rent is the better choice because they have no interest in the responsibility of maintaining a home.
Others do, wanting to build equity in their home and to qualify for tax incentives. The question really comes down to this, "Which personality type are you?" Which lifestyle is more appealing to you?
3. "Pre-Qualification vs Pre-Approval: What's the Difference?"
This estimate is based on limited financial information. A pre-qual is an easy way to determine your real estate housing budget.
On the other hand, pre-approval means a lending institution has taken a deeper look at your finances, and has agreed to work with you.
With pre-approval, you get more solid answers on how much you can afford to buy.
4. "What Kind of Offer Do I Make the Seller?"
- What are the values of the other homes in the area?
- How long has the property been listed for sale?
- What's the physical condition of the home?
- Are there any special circumstances with the property?
These are all factors that should be considered when making an offer.
5. "What Should I Expect at Closing?"
- Title insurance
- Recording fees
- Property taxes
- Origination fees
It's important to note here that title insurance, in this case, is purchased strictly to protect the lender.
You must purchase your own title insurance, which is generally recommended, to protect your real estate investment.
So, are you ready to join the ranks of millions of others in homeownership? If you live in Staunton or Waynesboro, VA, give us a call. We'd be happy to help you!
If you want to learn more about the importance of title insurance, please go to our website: www.lillytitle.com.