When you need financing to purchase a home or sell a home, you will have a lot of questions. To help you start on the right foot, here are 10 (and a half) tips from Reazo's finance guide that might surprise you. Let's get started!
- I could be spending the same amount each month paying a mortgage as I do rent
- I could be earning equity as a homeowner
- My real estate agent is an asset in helping me sell or buy a home
- My credit score is essential in qualifying for a mortgage
- Talking to more than one mortgage broker is favorable
- Down payment assistance is available, including grants (no repayment)
- I can ask the home seller to pay for closing costs
- I can use HomeFundIt to raise money for a down payment
- Home loans are available to help make repairs and renovations
- There's a difference between pre-qualified and pre-approved for a loan
Paying Rent vs. Mortgage
Most first-time homebuyers are shocked to learn that the amount they're paying for rent each month is equivalent to the amount they could be paying for a monthly mortgage payment on a home they OWN. Your real estate agent can show you homes that fit your budget with payments that closely match what you're paying in rent.
Your mortgage payment could match the amount you're paying in rent each month and you would own the house. Bye landlord!
When you buy a house, you build equity as you pay your mortgage each month, something you'll never get from renting. A sizable down payment is your first step towards building equity. As you build equity in your home, you can use it to renovate or for other financial objectives.
Real Estate Agent
Having an experienced real estate agent in your corner takes a lot of burden off of your shoulders, whether you're buying or selling a house. You can rely on your RealtorⓇ to have professional connections (lenders, appraisers, inspectors, etc.), thoroughly know neighborhoods you're interested in, know how to negotiate contracts, and more.
When selling your house, a real estate agent may be able to get you an asking price well above what you could if you were trying to sell your house on your own (including RealtorⓇ fees). An agent will ensure you're choosing qualified buyers when selling your home. An experienced agent can help you negotiate multiple offers and their terms, getting you the most ideal offer for your needs. An experienced real estate agent can help you understand the importance of backup offers, especially if the original deal falls through.
When buying a house, a real estate agent can help make your offer on a home stand out above the others. If there's a bidding war, your agent can help you make a plan to get your offer accepted -- including price and terms. If your offer isn't accepted, your agent can help you create a backup offer if the other buyer's offer falls through.
If you've read Reazo's blog before, you've seen multiple articles about the importance of a good credit score when preparing to buy a house. Knowing what you can qualify for with your current credit score and what you can do to improve your credit score can save you thousands of dollars when buying a home.
More Than One Mortgage Broker
Talking to more than one mortgage broker is important when you're looking for a mortgage. You want the best terms to secure a home loan that will save you money over the long term. Check out this article about shopping around for the best mortgage.
Down Payment Assistance
Most states offer some form of down payment assistance. When preparing to buy a home, go online and search for down payment options, including grants (don't have to repay). Check out this article for more information on down payment options.
Nearly every state offers down payment options.
When you buy or sell a home, you will be faced with closing costs. Closing costs cover a multitude of fees. You can expect to pay for commissions, title insurance, attorney fees, and more in closing costs when selling a home. When buying a home, closing costs consist of private mortgage insurance, origination fees, and initial interest on the mortgage, among other fees. Your agent will help you negotiate with the home seller to determine if they will pay for a portion of the closing costs.
When buying a home, you can negotiate with the home seller to have them pay up to 50% of the closing costs.
Coming up with enough money to cover the down payment on a home purchase can be difficult. Programs like HomeFundIt can help you increase the amount of your down payment through down payment gifts and grants.
Loans For Repairs/Renovations
There are various options for financing the purchase of a home, and there's even a loan to help you pay to rehabilitate a residence. FHA 203k rehab loans are an excellent example of a home loan designed for borrowers with enough for a small down payment but not enough money to rehab the home.
Pre-Qualified vs. Pre-Approved
Did you know that there is a difference between being pre-qualified for a mortgage vs. pre-approved? The lender does a general, overall review of your financial situation to get pre-qualified for a mortgage. This pre-qualification states that you are likely qualified for a loan amount, and the bank might be willing to lend you the money; there's no guarantee.
Knowing the difference between getting pre-approved and pre-qualified for a mortgage can help you buy a house faster.
When you get pre-approved for a mortgage, your lender will thoroughly review every aspect of your financial situation in detail. Then, the lender will determine a price range you can afford when buying a home. Being pre-approved, your lender is confident that you can make the down payment and have the income to support your monthly mortgage payments.
Reason #10 1/2
Reazo’s Insider's Guide to Home Finance is an extensive and comprehensive reference that addresses everything mentioned in this article and more; you'll want to bookmark it for future reference. Every time you have a home finance question, you can open the Reazo home finance guide to find the answer. Talk to your mortgage lender and your real estate agent to learn more about your home financing options.
More questions? Check out Reazo's extensive home finance guide: