Buying a Home

Many homebuyers find that new construction allows them the flexibility to plan their home to exactly meet their needs.

Many homebuyers find that new construction allows them the flexibility to plan their home to exactly meet their needs.

First thing to do is to look into the future. It turns out most people move on average every seven years. Where will you be in seven years? Answering that question will help you determine what kind of home to buy and how to pay for it.

If you expect to move in a short period of time -- perhaps a job transfer -- you'll want to look for low closing costs and a short term mortgage that allows you to build up equity, quickly. If one child is on the way and one is about to graduate from day care, you may want to stretch your budget for a larger house in a good school district. If you plan to be in the same house for about 20 to 30 years you may want a 30 year fixed rate mortgage. Whatever your plans, it's important to have some time frame in mind.

The next step is to talk to a lender. This is very important because most sellers will ask for a pre-qualification letter with most offers. The lender will be able to determine the price of the home and what your payments will be. Whatever lender you use make sure to tell them amount of time you think you will stay in your new home. For a short term stay of 3-5 years, consider a adjusted rate mortgage. On the other hand, a family intending to live in the home for a longer period of time would do better to consider a 30 year fixed rate mortgage.

The following is an example for total funds needed to buy a house:

Sales Price:	$120,000.00
Down payment:	$3600.00 (3% of sales price)
Loan Amount:	$116,400.00 (sales price minus down payment)
Principal & Interest:	$874.47 (interest of 8.25%)
Taxes:	$114.30 (based on $1.27 tax rate)
Insurance:	$40.00
Mortgage Insurance:	$75.00
Total Payment:	$1103.77
+ Down payment + estimated closing costs + pre-paids = Total Cash needed to close

$3600.00 + $3747.00 = $7347.00

I have figured the above example very conservatively. The estimated closing costs & pre-paids vary from lender to lender. Also lenders have many different types of loans that may for example not have mortgage insurance on a 3% down program. Shop around to find the best one that you feel comfortable with. If you need help locating a lender, please contact me and I will be happy to provide you with a list of qualified lenders.

I am looking forward to helping you search for your new home.

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