Buying
Buying a home is a great investment.
Here are a few answers to some of the most common questions about purchasing a house!
After you have had a chance to read through this information, please visit our listing pages to view available, residential homes, waterfront properties, or vacant land in Waupaca and it's surrounding communities.
Why should I buy, instead of rent?
Answer: You'll love the feeling of having something that's all yours - a home where your own personal style will tell the world who you are. A thriving vegetable garden in the backyard, a tiled entryway, a yellow kitchen...when you own, you can do it all your way! But there's more to owning a home than personal satisfaction. You can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes, too. And interest will compose nearly all of your monthly payment , for over half the number of years you'll be paying your mortgage. This adds up to hefty savings at the end of each year. And you're also allowed to deduct the property taxes you pay as a homeowner. If you rent, you write your monthly check and it's gone forever. Another financial plus in owning a home is the possibility its value will go up through the years.
Why should I use a real estate agent?
Answer: Using a real estate agent/broker is a very good idea. All the details involved in home buying, particularly the financial ones, can be mind-boggling. That's where I come into the picture. I can guide you through the entire process and make the experience much easier. Having grown up in the area and having experience in the business, I am well-acquainted with all the important things you'll want to know about a neighborhood you may be considering...the quality of schools, the number of children in the area, the safety of the neighborhood, traffic volume, and more. I will help you figure the price range you can afford will keep you informed with new listings and other properties you'll want to see. With immediate access to homes as soon as they're put on the market (and sometimes before they hit the market), I can save you hours of wasted driving-around time. I will explain the advantages and disadvantages of different types of mortgages, guide you through the paperwork, and be there to hold your hand and answer last-minute questions when you sign the final papers at closing. And you don't have to pay the broker anything! The payment comes from the home seller - not from the buyer.
How much money will I have to come up with to buy a home?
Answer: Well, that depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: earnest money - the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and closing costs, the costs associated with processing the paperwork to buy a house. It is safe to figure on having at least 5% down, and the more you have to put down the better! NOTE: I do work with lenders who have programs for people with good credit without a downpayment.
How do I find a lender?
Answer: You can finance a home with a loan from a bank, a credit union, a private mortgage company, or various state government lenders. Shopping for a loan is like shopping for any other large purchase: you can save money if you take some time to look around for the best prices. Different lenders can offer quite different interest rates and loan fees; and as you know, a lower interest rate can make a big difference in how much home you can afford. You can use whomever you are most comfortable with, and if you're unsure or would like a suggestion or two, just ask! There are lots of great lenders in the area.
In addition to the mortgage payment, what other costs do I need to consider?
Answer: Well, of course you'll have your monthly utilities. If your utilities have been covered in your rent, this may be new for you. I will be able to help you get information from the seller on how much utilities normally cost. In addition, you might have homeowner association or condo association dues. You'll definitely have property taxes. Taxes normally are rolled into your mortgage payment. Again, I will be able to help you anticipate these costs.
So what will my mortgage cover?
Answer: Most loans have 4 parts: principal: the repayment of the amount you actually borrowed; interest: payment to the lender for the money you've borrowed; homeowners insurance: a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders; and property taxes: the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year. Most loans are for 30 years, although 15 year loans are available, too. During the life of the loan, you'll pay far more in interest than you will in principal - sometimes two or three times more! Because of the way loans are structured, in the first years you'll be paying mostly interest in your monthly payments. In the final years, you'll be paying mostly principal.
What do I need to take with me when I apply for a mortgage?
Answer: Good question! If you have everything with you when you visit your lender, you'll save a good deal of time. You should have: 1) social security number(s) ; 2) copies of your checking and savings account statements for the past 6 months; 3) evidence of any other assets like bonds or stocks; 4) a recent paycheck stub detailing your earnings; 5) a list of all credit card accounts and the approximate monthly amounts owed on each; 6) a list of account numbers and balances due on outstanding loans, such as car loans; 7) copies of your last 2 years' income tax statements; and 8) the name and address of someone who can verify your employment. Depending on your lender, you may be asked for other information.
I know there are lots of types of mortgages - how do I know which one is best for me?
Answer: You're right - there are many types of mortgages, and the more you know about them before you start, the better. Most people use a fixed-rate mortgage. In a fixed rate mortgage, your interest rate stays the same for the term of the mortgage, which normally is 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it. Another kind of mortgage is an Adjustable Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index, such as the U.S. Treasury Securities index. The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower. There are several government mortgage programs that might interest you, too.
When I find the home I want, how much should I offer?
Answer: Again, I can help you here. But there are several things you should consider: 1) is the asking price in line with prices of similar homes in the area? 2) Is the home in good condition or will you have to spend a substantial amount of money making it the way you want it? I can help you arrange one. 3) How much mortgage will be required? Make sure you really can afford whatever offer you make. 4) How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In some cases, you may even want to offer more than the asking price, if you know you are competing with others for the house. I will always encourage you to make your highest and best offer!
What if my offer gets rejected?
Answer: They often are! But don't let that stop you. Now you begin negotiating. Often, negotiations on a price go back and forth several times before a deal is made. Just remember - don't get so caught up in negotiations that you lose sight of what you really want and can afford!
So what will happen at closing?
Answer: Basically, you'll sit at a table with the broker for the seller (which could be me), probably the seller, the closing agent, and myself. The closing agent will have a stack of papers for you and the seller to sign. While he or she will give you a basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to make sure you know exactly what you're signing. After all, this is a large amount of money you're committing to pay for a lot of years! Before you go to closing, your lender is required to give you a booklet explaining the closing costs, a "good faith estimate" of how much cash you'll have to supply at closing, and a list of documents you'll need at closing. If you don't get those items, be sure to call your lender BEFORE you go to closing. Don't hesitate to ask questions.
If you have more questions, feel free to contact us at any time. We are here to help!