fill
fill
fill
Connie Wildasinn
Broker

562-824-4846
Connie@WGroupRealtors.com

CalBRE# 01221986
fill
fill
fill
fill
Connie Wildasinn
Broker

fill
562-824-4846
Connie@
WGroupRealtors.com

CalBRE# 01221986
fill
fill
fill
fill
fill
fill
fill
fill
fill
fill
fill
fill
fill
fill
fill
fill
Work With Me
fill
Buyer Info
fill
Seller Info
fill
Your Home's Value
fill
Neighborhood - School Information
fill
Community Information
fill
Real Estate Glossary
fill
fill
fill

Buying Property - Made Simple and Easy to Understand

 

Buying a home can be one of your most significant investments in life. 

Not only are you choosing your dwelling place, and the place in which you will bring up your family, you are most likely investing a large portion of your assets into this venture. The more prepared you are at the outset, the less overwhelming and chaotic the buying process will be. The goal of this page is to provide you with detailed information to assist you in making an intelligent and informed decision. Remember, if you have any questions about the process, I'm only a phone call or email away!

BUY OR RENT

Does It Pay to Buy a Home or Simply Rent?

If, like most first-time buyers, you are presently renting, it's easy to calculate your cost - simply, the monthly rent you pay. (Utilities, phone, cable, and other costs can be ignored in this comparison because they'll be approximately the same whether you rent or buy.)

But calculating the cost of home ownership is much more complicated, because income tax considerations affect you bottom line. And there is, in addition, the uncertainty about how much the value of your home will rise (or even fall) in coming years.

As a tenant, you may be taking a standard deduction on your income tax return. This is the time to judge how that standard deduction stacks up against the amount you'd be able to subtract from income if, like most homeowners, you itemized deductions instead.

Once you itemize, you can deduct:

**Home Mortgage Interest:

**All Real Estate Taxes on ANY property you own

**Your State Income Taxes

 **Charitable Contributions

**Medical and dental expenses that exceed 7.5% of income

**Personal property taxes if your state has them And most important

**Certain moving expenses

At the stat of a mortgage repayment schedule, when the debt hasn't been reduced yet, almost all of your monthly payment goes toward interest. A bit goes toward reducing principal (the amount borrowed), so that the next month you're borrowing a bit less, and owe a little less interest. That allows more of yr next payment to go toward reducing principal. However, this process is very slow in the beginning and the interest portion remains high for many years.

Between the mortgage interest and the property tax deductions, you can figure the Uncle Sam is shouldering part of your monthly mortgage payment - 28% of it, in fact, if that's your tax bracket. Your state income tax bracket can also be added to that, before you calculate how much you save on income tax as a homeowner. Always check with you tax account before you buy.

Buying Verses Renting

There are many advantages to buying a home versus renting one. View these advantages in the Buy vs. Rent Comparison Chart, or view a financial comparison of buying versus renting in the Buy vs. Rent Calculator.

Your income, savings, and monthly expenses play an important role in determining how large a mortgage you can afford. To figure out the amount you can afford, please click Affordability.

--------------------------------------------------------------------------------

Savings: Buying

In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.

Buy vs. Rent Comparison
The chart below shows a cost comparison for a renter and a homeowner over a seven year period.

The renter starts out paying $800 per month with annual increases of 5%
The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000
After 6 years, the homeowner's payment is lower than the renter's monthly payment
With the tax savings of home ownership, the homeowner's payment is less than the rental payment after 3 years

--------------------------------------------------------------------------------

Monthly Expenses: Buying

Your rental company takes part of your rent payment to cover certain housing expenses. When you decide to purchase a home, you accept responsibility for paying for these expenses (listed below). They are additional costs to your monthly mortgage payment and should be included in your budget estimates:

Property Taxes and Special Assessments
Home/Hazard Insurance
Utilities
Maintenance
Home Owner Association (HOA) Fee: Doesn't apply to all purchases. It pays for trash and snow removal and maintenance of common grounds if applicable.
Membership Fee: It may pay for recreational facilities and other services (cable TV).

How Much House Can I AFFORD?

The amount of loan for which you qualify is based on two different calculations. Using what are known as qualification ratios. Lenders evaluate your income and long-term debt to determine a "safe" amount for your mortgage payments. A fairly standard ratio is 28/33. Certain mortgage plans sometimes use more liberal ratios. For example the FHA currently use 29/41

Here's how it works: With a 28/33 ratio, you'd be allowed to spend up to 28% of your gross monthly income for mortgage payments. The lender will then run a different calculation. This one is you loan payment and debt payment combined, which may not exceed 33% of your gross monthly income. To calculate exactly how much you may borrow, you also need an estimate of current interest rates.

For Example: Suppose you had $1,000 a month for mortgage payment at 7% that would let you borrow about $160,000 on a 30-year loan. At 6% the loan amount would be nearly $175,000. If your rate were 8%, the loan amount would be a bit less than $150,000.

As part of this calculation, you also need to estimate and include the property taxes, homeowner's insurance, and Homeowners Association Dues (if applicable) you might need to pay, which are considered part of your monthly expenses.

Begin the home buying process by using my Mortgage Calculator on the left keys to determine how much you can afford, or visit a REALTOR or mortgage lender and they can analyze it for you. Don't know a lender? Call or email me today I have a team waiting to help you when you are ready. Know Your BUDGET

There's no point wasting time and energy house-hunting before you know what you can afford! So your next step is t assess you finances:

***Compare Buying with Renting
***Find out about Interest Rates
***Understand YOUR Closing Costs
***Figure out your income, debt and down payment
***Calculate how much home you can AFFORD

Interest RATES?!?

Interest Rates and How They Change

As you start shopping for a home loan, first question of each lender will probably be "What's your interest rate? How much are you charging?"

Interest rates are usually calculated as an annual percentage of the amount borrowed. If you borrowed $120,000 at 10% interest, you'd owe interest of $12,000 for the first year. With most mortgage plans you'd pay it at the rate of $1,000 a month. You would also send in something each month to reduce the principal debt you owe - and the next month you'd owe a bit less interest.

When your grandparents bought their home (putting at least half the purchase price down, by the way), their interest rate was probably around 4%-5%. Rates stayed the same for years at a time. Then in the years following World War II, things became more turbulent. As economic changes speed up, rates began to change several times a year. By the 1980's, lenders were setting new rates on mortgage loans as often as once a week - and they still do today. When inflation his a high in the '80's, some mortgage loans carried interest rates as high as 17-18 even 22% and those who absolutely needed to buy, paid that much.

Rates dropped gradually through the '90s and by 1998 had reached their lowest rates in decades. Heading toward the millennium, home buyers appear to have the most favorable conditions for mortgage borrowing since their grandparents' days - and without 50% down payments either.  

 Closing Costs

On the day you actually buy your new home, in addition to your down payment and the prepaid property tax and homeowners insurance premiums. you'll need cash for various fees associated with the purchase. These expences are known as Closing Costs and are paid by both buyers and sellers.

Some closing costs you pay up-front when you apply for a mortgage loan. That includes money for a credit check on all applicants and an appraisal on the property. Keep in mind that even if you don't eventually receive the loan, that money is not refundable.

Other closing costs are possible and should be considered when evaluating your financial situation. These may include but are not limited to:

* Title Insurance Fee;
* Survey Charge;
* Loan Origination Fee;
* Attorney Fees or Escrow Fees;
* Document Preparation Fee;
* Garbage or Trash collection Fees; and the big one
* Points - up - Front interest paid in return for a lower interest rate. Each point is one percent of the loan amount, Sometimes you can contractfor the seller to pay your points.

NOTE: Consider closing costs when choosing one mortgage plan over another. The good news is that if your cash is limited, some mortgage plans allow the seller to pay some or all of your closing costs, such as title insurance, escrow fees, and points. Certain closing costs can sometimes be added to the amount of mortgage loan you're receiving.

Figuring Our Your Monthly Income

When you apply for a home loan (and even long before that, when you first speak to a REALTOR) the first question may likely be How much is your income? In making this determination lenders consider the income of all parties who will be owners of the property. Be prepared to provide a monthly accounting of all sources of income.

Figuring Out Your Monthly Debt

Lenders are interested mainly in your present monthly payments because they want to be sure you can handle the mortgage payment you'll be applying for. Different mortgage plans consider payments on any debt that won't be paid off within, for example, six months, nine months or a year.

Amount of Your Down Payment

Your down payment is paid in cash and is not included as part of the loan amount. The bigger your initial down payment, the smaller your loan, which reduces the amount of you payments.

How much you'll put down depends on the cash you have available and the amounts you'll need for closing costs and prepaid property taxes and homeowners insurance.

Mortgage plans have various down payment requirements and they can range from 0% down on a VA(Veterans Administration Loan) to between 3-5% down FHA - Federal Housing Administration Loan - to 20% down, the traditional amount for a conventional loan (there are now -depending on your good credit - down payments as low as 3% on Conventional Loans!). In addition, special state programs for first-time buyers may set different sums, which are usually lower than conventional financing.

If you put less than 20% down on most loans, you'll be asked to protect the lender by carrying private mortgage insurance(PMI) Carrying PMI ensures that the debt is repaid if you default on the loan. This adds approximately an extra half a percent onto the loan.

FHA mortgage in return for their low-down-payment requirements, also charge for mortgage insurance premiums(MIP)

I also have available for you a special Teachers Program if you qualify this loan is only $500.00 down!!

Choosing Your NEIGHBORHOOD

Choosing a Neighborhood

With so many homes on the market you'll never get anywhere unless you narrow you choices. You can begin the process by first identifying one or a few neighborhoods that are right for you by;

* Consider Local Factors; and
* Using Neighborhood Strategies

Factors to Consider When Evaluating a Neighborhood

When evaluating a neighborhood, you should investigate local conditions. Depending on your own particular needs and tastes, some of the following factors may be more important considerations that others;

* Quality of Schools
* Property Taxes
* Traffic
* Crime Rates
* Future Construction
* Proximity to; Schools, Employment, Hospitals, Shops, Public Transportation, Cultural Activities(museums, concerts, theaters, etc) Freeways, Airports, Beaches and Parks

Whether you're moving across the country or across town, you can count on the "Wildasinn" Team to help you through every step of the process.

Neighborhood Search Strategies

If you're a first time-buyer with limited financial resources, it's a wise purchasing strategy to buy a home that meets your primary needs in the best neighborhood that fits within your price range.

You can maximize your home purchase location by incorporating some of the following strategies into your neighborhood search:

* Look for communities that are likely to become "hot neighborhoods" in the coming years. They can often be discovered on the periphery of the most continuously desirable areas.
* Look for a home in a good neighborhood that is a bit father out of the city. If commuting is a concern, purchase a home is close to public transportation
* Look at the neighborhood demand by asking us whether multiple offers are being made, whether the involvement. You can also drive around neighborhoods and see how many "sale pending" and "sold" signs there are in a particular area (beware that many agent DO NOT post pending or sold signs in hopes you will call!)
* Look into purchasing a condominium or co-op, rather than a house, in a desirable neighborhood. This way you still may be able to purchase in a prime area that you otherwise may not be able to afford!

Manage Your Credit!

It's important to note that raising your score is a bit like losing weight: It takes time and there is no quick fix. In fact, quick-fix efforts can backfire. The best advice is to manage credit responsibly over time. See how much money you can save by just following these tips and raising your score.

The Power of Credit Scores

Ever wonder why you can go online and be approved for credit within 60 seconds? Or get pre-qualified for a car without anyone even asking you how much money you make?

The answer is credit scoring.

Problem Credit?

Find out How You Can Help Yourself To A Better Credit Rating!    

Comparison shopping for loans online can hurt your credit rating!

Believe it or not, surfing around on the Internet for a good deal on a loan could actually hurt your chances of getting one.

Here's how. Click the link!

FICO Score Estimator

What's a FICO® Score?
Your FICO® score is a number that tells lenders what kind of borrower you will likely be, based on your credit history. Your score is between 300 and 850 and lenders prefer borrowers with higher scores.

Click the link for more!