How to Buy a House, Part Three

You have done a lot of groundwork in preparation for meeting with a lender. Your folder of information necessary to speak authoritatively with any financial representative is as complete as you can make it. Your credit score and report are golden. You know how much you feel comfortable spending each month on a mortgage payment. You are working your plan.

Fixed rate and adjustable mortgages are the two mortgage types available. A fixed mortgage offers a payment of principal and interest that does not change for the term of the loan, normally 15 or 30 years. Taxes and insurance cost amounts may change and are not guaranteed. An adjustable rate mortgage or ARM, has an interest rate that can go up or down as rates are established by the federal government. The principal and interest payment fluctuate with these changes as well.

The amount of your down payment (the cash you are going to hand over upfront) will also affect your mortgage. Typically, a down payment can be anywhere from 3 to 30 percent of the total home price. There are a number of different loan types available and you may qualify for one with an even lower or no down payment. First time home buyer loans, Veterans Administration loans, HUD loans and FHA loans are just a few of the loan choices available.

Finding the right mortgage lender may be as close as your bank or credit union. Check the internet sites and compare as many lenders as you can. Know what the mortgage rates are for your area.

You may be pre-approved for an amount much higher than you feel comfortable spending. Flattering, isn't it? Just to think that the bank would put so much trust in you. They aren't. It's the highest amount that your income will afford. The lending institution will make more money and you'll be left with less. You'll need your extra income for your own costs associated with your new home like repairs, moving costs, additional furniture, remodeling, etc. There may be increases in your monthly expenses for utilities. Whatever you do, stay within your comfort zone not the bank's.

I know, you've done a lot of work and it has been mostly drudgery. Buying a house is supposed to be fun. Well, now that you have chosen your lender, been pre-qualified and pre-approved for your home loan, it is time to see what is out there that meets your criteria and is in your price range. This is a wonderful time to buy a home. Interest rates are low and there are lots of homes from which to choose.

Tomorrow, you'll start looking for your home. Here's where your real estate professional can help.

How to Buy a House - Part Two

You've determined that your financial house is in good order. No surprises in store for you! You have a plan.

Mortgage loan. Unless you won the lottery and can pay for your home upfront, in cash, you'll be applying for one. You'll be paying a little back every month until the loan is repaid. That monthly repayment amount consists of the principal (the original amount you borrowed from the lender), interest (or the cost that you will be charged for borrowing the principal amount), real estate taxes and homeowners insurance.

The total of your housing expenses alone should not exceed more than 28  percent of your gross monthly income. Whatever you owe (and because you have already done the credit report homework, you'll know this) for your car(s), credit cards, other loans, etc., should not exceed 36 to 40 percent of your gross monthly income. No need to include expenses for groceries or utilities. Sit down with a calculator and determine these amounts.

Use the following worksheet to calculate your debt-to-income ratio:

Minimum monthly credit card payments*:	_____________
+ Monthly car loan payments:	_____________
+ Other monthly debt payments:	_____________
+ Expected mortgage payments:	_____________
= Total:	_____________
Your debt-to-income ratio:
Total divided by monthly gross income =	_____________

*Your minimum credit card payment is not your total balance every month. It is your required minimum payment -- usually between two and three percent of the outstanding balance.

Now, it's time to talk with a lender. Before you even step foot into one of those homes you've been viewing on the internet, you'll want to know exactly how much you can spend. Here's what you'll need for that meeting and for that ever expanding folder of information: proof of your current income, the amount of debt you're carrying each month, copies of your W-2's and income tax returns from the last three years, copies of pay stubs and bank statements and a copy of your credit report.

But, what kind of a mortgage? A fixed or adjustable? What type of a loan? Down payment? How do you find a mortgage lender?

Tomorrow's post will answer those questions.

How to Buy a House

Buying a house. The single largest financial commitment most of us will ever make in our adult lives. How do you go about buying a house? What should you do first?

 Find out if you can afford it. Get your FICO score (just an acronym that stands for Fair Isaac Company, developer of the system). This score is one of the tools a potential lender will use to determine the interest rate that will be offered to you. All of your credit information is consolidated into this one three-digit number. Stellar credit will get you the best possible rate. A poor credit score will either get your mortgage application denied or you will be paying a higher interest rate.

 Get your financial house in order. Pay off any outstanding debts and DON'T incur any new ones. There are a number of mortgage calculators online. You can get a pretty good idea of how much your mortgage will cost you. Remember the insurance, taxes and maintenance will be your responsibility, so you'll need to allow for those costs as well.

Put yourself on a budget. Know where every penny of your income is going. Your new home won't come with a landlord ready to step in and fix that leaky faucet or replace the hot water heater.  You'll want to be ready for that "rainy day".

So, financially you are on solid ground? Great! Read tomorrow's post for what to do next.

Mid February here on Topsail Island. The weather is absolutely awesome. Sunshine, almost 70 degrees. High clouds but no rain threatening. The beach is uncrowded, just the occasional jogger, walker or shell seeker, often accompanied by a dog or two. It is a great time to be on the beach, either in Surf City, Topsail Beach or North Topsail Beach. The island is 26 miles long, so there's plenty of elbow room!

There is a lot of attention being given to our island listings. 103 Jennifer, for instance has an expansive view of the intracoastal. What a way to end the day, looking out at the sunset from the dock on the property. Kayak or jet ski, tie up a jon boat or just kick back in your favorite chair and watch the boats go by. Here's the link: 103 Jennifer, Surf City, NC

Over in Chadwick Shores at 173 Alligator Bay, we have a home on deep water with a boat lift. Beautifully maintained, it is ready for spring and summer fishing trips or vacations with loved ones. Take a look:  173 Alligator Bay, Sneads Ferry, NC

Those are only two of the listings that we have available. Visit the website at http://www.RandBurchfield.com to view all the properties ready to purchase at Latitude 34. Is it time for an attitude adjustment? Change your latitude!

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