Do you have a realtor ?

If your in the market to buy a home the first thing you need is an loan approval and a realtor. Its important to have a realtor for the following reasons:

  • Having a middle man that can explain and understand contracts saves times. You’ll be able to close the deal quicker and move in !
  • They have neighborhood knowledge you may not have.
  • They know the market , which will help you get the best interest rate.
  • Negations can be made effectively. 
  • Professional networking, realtors know many people whom offer housing services. You may be able to save a boat load of money on homeowners insurance, just from knowing someone.

Choose a realtor first it will save you time and money.

Advertisements

8 Myths About Home Buying

  1. You need a 20% down payment.

    Fact: While putting down 20% is ideal, not everyone can realistically afford that. You can get away with a smaller down payment in exchange for paying PMI (private mortgage insurance) until you have enough equity in the home to have it removed—usually 20%. FHA and VA programs require down payments as low as 3.5% and 0% respectively if you and the property qualify.  A few lenders have even started offering piggy-back loans again in which borrowers with strong credit and low debt-to-income ratios can get a second loan (albeit at a higher interest rate) to cover part of the down payment. (Forbes.com)

  2. You need to save for your full down payment.

    Fact: Again, while this would be ideal, it may not be feasible for everyone. There are a host of government and some private programs that offer assistance, primarily for first-time home buyers with low to moderate income. You can also see if you can borrow from family members. As long as you pay them a competitive interest rate, it wouldn’t be a taxable gift. If they do gift the money, each person can give up to $14k per year to you without having to file a gift tax return.

    You may be able to take a loan from your employer’s retirement plan, perhaps for a longer repayment period for a home purchase, but you’ll lose potential earnings on the money you borrow. You can also withdraw up to $10k during your lifetime from an IRA for a home purchase without penalty as long as you haven’t owned a home in the last 2 years. If you meet the 2 year requirement and it’s a Roth IRA that you’ve had for at least 5 years, up to $10k of the Roth earnings can be withdrawn tax and penalty-free (contributions can always be withdrawn tax and penalty free for any purpose). Just remember that the $10k is a lifetime total from all IRAs. Finally, you may be able to take a hardship withdrawal from your employer’s retirement plan but you it would be subject to taxes plus a 10% penalty if you’re under age 59 1/2, you can’t repay the withdrawal, and you may not be able to contribute to your retirement plan for a period of time.

  3.  You need perfect credit to purchase a home.
    Fact: It is true that an individual’s credit score has an impact on the mortgage loan approval process and ultimately the resulting interest rate. However, perfect credit is not needed to secure approval for a mortgage loan. While credit scores can range widely, the higher your credit score, the more options you will have to find a mortgage with favorable interest rates. (Zillow.com)

  4. Lenders have free rein in sharing your personal credit information.
    Fact: Not so. For a lender to share your information with an affiliate (any entity that is involved in making, holding or investing in bank loans or credit extensions), generally you must first give your permission. State and federal privacy laws are in place to help protect your personal information. (Zillow.com)

  5. Lenders only use one scoring model that determines creditworthiness.
    Fact: There are a number of credit-scoring models used to determine credit risk in today’s marketplace. For example, many lenders use the VantageScore® as one model for determining credit worthiness. While scoring models vary, many of the same factors influence your credit score, including your payment history and your level of debt.                 ( Zillow.com)

  6. Cut out the realtor, rep yourself and you will save a fast 3%.

    Fact: That is just about never true.

    The realtor’s commission – 5 or 6 % in most of the country – is paid by the seller. In most contracts that realtor agrees to “co-broke,” which means he or she will split his commission with a buyer’s agent.

    Explained Sam DeBord, a broker with Coldwell Banker Danforth in Washington State: “Most listing agents sign a contract with the seller for a certain commission percentage – for example, 6%. They offer to share a portion of that if a cooperating buyer’s agent enters the picture – for example, 3% – but if there is no buyer’s agent involved, the full 6% is still paid by the seller to the listing agent.”

    The buyer has absolutely no say in this, at least in theory.

    Could a tenacious and persuasive buyer negotiate, say, a 1% cut in the selling price by self representing? Probably. ( Yahoo.com)

  7. Fixed rate mortgages are the only way to go.

    Fact: Not true, said David Reiss, a professor at Brooklyn Law School who specializes in real estate. He elaborated: “The necessity of getting a 30-year fixed rate mortgage is one of the biggest myths about homebuying. The average American household stays in their home for about seven years. Typically, 30-year fixed rate mortgages have higher interest rates than adjustable rate mortgages (ARMs). Homebuyers should take a hard look at their plans for the new home.”

    Only 6.5% of applications for mortgages in a recent period were for ARMs, according to the Mortgage Bankers Association. A typical ARM went out at 3.21% interest, versus 4.69% for a typical 30 year fixed rate. That adds up to a difference worth tens of thousands of dollars over, say, a seven year probable life of the loan.

    Do the math. ( Yahoo.com)

  8. I will always receive an extra tax deduction for my mortgage interest.

    Fact: Yes, it is true that mortgage interest is tax deductible, but it may not make sense for you to take this deduction. (Before I continue, I want to be clear that I am not a tax expert, so please consult with your accountant or CPA before making any decisions.) For you to actually take the mortgage interest deduction, you must itemize your deductions rather than take the standard deduction. In many cases, the standard deduction is higher than your itemized deductions, which means that it would not make financial sense to go the “itemized” route. (Huffington Post) .