Like the guy in the video says, the two don’t really compare at all.
The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity take advantage of tax benefits and protect yourself against rent increases.Also, you may be at the mercy of the landlord for housing.
Owning a home has many benefits. When you make a mortgage payment, you are building equity increasing YOUR net worth.
Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities like insurance, real estate taxes, and upkeep which can be substantial. But given the freedom, stability, and security of owning your own home they are worth it.
As you’ll see in the video, the lenders consider your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses.
Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support.
According to the FHA, monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41% of income.
Lenders also consider cash available for down payment and closing costs credit history and the rest of your financial picture when determining your maximum loan amount.
Remember these pointers from the video: start by thinking about your situation.
- Are you ready to buy a home?
- How much can you afford in a monthly mortgage payment?
- How much space do you need?
- What areas of town do you like?
After you answer these questions, make a “To Do” list and start doing casual research. Talk to friends and family, drive through neighborhoods, and look in the “Homes” section of the newspaper, or online.
Watch this video and take a few notes!
First, devise a checklist for the information from each lending institution. You should include:
- the company’s name and basic information
- the type of mortgage
- minimum down payment required
- interest rate and points
- closing costs
- loan processing time
- whether prepayment is allowed
Speak with companies by phone or in person. Be sure to call every lender on the list the same day as interest rates can fluctuate daily.
In addition to doing your own research your real estate agent may have access to a database of lender and mortgage options or suggest a variety of different lender options.
This video tells you about it all. PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers.
These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility.
PMI’s usually have stricter qualifying ratios and larger down payment requirements than the FHA but their premiums are often lower and they insure loans that exceed the FHA limit.
As you’ll see in the video, every home and market is a unique situation. Good marketing plans are specific to both. But every plan will include: Preparation Pricing and Marketing Activities.
Preparation takes time – typically, months. Homes must be in “show” condition all repairs and upgrades complete and all photos and video completed before the home goes on the market.
Pricing, likewise, should be planned in advance. Your broker will advise on both the best price and the best TERMS things like closing costs and seller credits to balance sales speed with sales price. Once the home is on the market it will quickly be entered in the MLS and will show up in Internet searches by agents and buyers.
Your broker will advise other marketing activities including advertising, signage, showing and open house events so make the best of your situation. Their aim is to get negotiable offers, and then take the offer you accept through the closing process.
While this video simplifies things to help you remember: your aim is to get the best price AND terms in your market during the period you’re selling.
Market conditions interest rates and competition all matter.
The price you want, and the price a buyer will pay are framed by those complex conditions So pricing isn’t completely predictable.
Other factors include:
- How your home compares to other homes for the same buyers
- The inventory of homes and the level of buyer demand
Your needs also affect negotiations – for example, if you must sell quickly – but the final price will be determined by the market not by your needs.
Buyers look at the same comparables and market conditions and they want to pay as little as possible while meeting their needs.
Remember that the price isn’t the entire deal – repairs, closing, points, appliances and other factors can all change the value you finally receive. Listen to your broker, stay informed, be patient if you can and make your best reasonable, unemotional decisions.
As we show you in this video, start several months before the property is made available. Look through the eyes of a buyer
- What needs to be cleaned?
- Or tossed?
Ask yourself – or a friend If you were buying this house what would you want to see?
The goal is to show a home that looks good makes the most of its assets like space and location and attracts as many buyers and as much demand as possible.
Allow yourself enough lead time – not just a day or two – to make the most of the sale. And get help from a real estate agent – early.
The video puts this in more visual terms, but 203(b) is the most commonly used FHA program. It offers a low down payment, flexible qualifying guidelines limited lender’s fees, and a maximum loan amount.
203(k) loans enable homebuyers to finance both the purchase and rehabilitation of a home through a single mortgage. A portion of the loan is used to pay off the seller’s existing mortgage and the remainder is placed in an escrow account and released as rehabilitation is completed.
Basic guidelines for 203(k) loans are as follows:
- The home must be at least one year old.
- The cost of rehabilitation must be at least $5,000, but the total property value – including the cost of repairs must fall within the FHA maximum mortgage limit.
The 203(k) loan must follow many of the 203(b) eligibility requirements. Lenders will know specifics about improvement, energy efficiency, and structural guidelines.
As we show you in this video:
- The Settlement Statement, HUD-1 Form, which itemizes services provided and the fees charged; it is filled out by the closing agent and must be given to you at or before closing.
- A Truth-in-Lending Statement
- A copy of your Mortgage Note
- Your Mortgage or Deed of Trust
- The Binding Sales Contract prepared by the seller; your lawyer should review it
And the keys to your new home!