Start Planning for Home Ownership

The Tuscaloosa housing market is on the rise, and while conditions for buying a home have improved, there are still numerous misconceptions. In this guide, I will highlight some of the most popular questions and answers related to purchasing your new home.

To help combat the misconceptions, I have listed the 5 most common home-buying questions with answers below:

• Is right now the best time to buy a home?
• What type of home is right for me? What’s the difference?

• Do I need a real estate agent?
• Should I seek the lowest mortgage interest rate?
• Should I buy a home?

1. Is right now the best time to buy a home?

Housing cost economics vary by market, so it’s important to remember the basic law of supply and demand. Low housing inventory and high demand cause prices to increase. High housing supply and low demand cause prices to decrease. Interest rates fluctuate daily. When the interest rates are low, economically, it’s a good time to buy a home, even if demand is high.

When asking yourself if now is the right time for you to buy, there are many things to consider. The most important factor to consider is the reality of your financial condition. Regardless of the house price and interest rates, if you’re not financially prepared to purchase and maintain a home, then it might not be the right time for you.

2. What type of home is right for me? What’s the difference?

Depending on your lifestyle wants and needs, you’ll have to decide which type of ownership is right for you. To help you decide, here are the three most common home types.

Detached House: A freestanding house that does not share a wall with another house

Attached House: A house that is attached on one or both sides to another house or houses. Attached homes include duplexes and townhouses. Generally, attached homes are less expensive than detached houses, however it’s important to consider the neighborhood the house is in, as well as the condition and features of the home.

Condo: A condominium is also a type of home ownership. The word condominium is frequently used to refer to purchased units in apartment buildings. You can get a condo in a high- rise or a low-rise building.

3. Do I need a real estate agent?

Of course you can locate, negotiate, and complete the home-buying process without an agent’s help. However, that approach is far more difficult and, frequently, more costly.

Finding a house is the easy part. The hard part, which takes more skill, is everything that happens from contract-to-close. Contract-to-close includes various negotiations and, as a skilled negotiator, I am equipped with information most home buyers and sellers don’t have about the myriad moving parts involved in choosing the right mortgage, negotiating repairs, etc. Contract-to-close is where, as your agent, I earn my commission. Having a wall between the buyer and the seller is for your protection. To ensure you receive the full benefits of that protection, I am a certified Accredited Buyer’s Representative (ABR), and a Real Estate Negotiation Expert (RENE).

When you choose the route of consulting a real estate agent, you get the benefits of their local real estate market and neighborhood knowledge, as well as their team of professionals and access to historical sales. They also have access to all available and up-to-date information on homes listed. This all helps to ensure your home buying experience is a positive one. Most of all there is no cost to you as a buyer to hire an agent!

4. What type of mortgage do I need?

Mortgage Options

There are several types of mortgages from which to choose. This is your lender’s area of expertise. You and your lender need to have a discussion about which loan is the best fit for you. To secure the right one for you, you must understand the difference between them. Below is a guide that will assist you in determining which one best suits your situation.

Fixed Rate Mortgage vs. Variable Rate Mortgage

• Fixed Rate Mortgage: In a fixed rate mortgage you agree on an interest rate with your lender and this rate gets locked in for the term of the mortgage.

Pros: You won’t pay more if interest rates go up

Cons: You won’t pay less if they go down

• Variable Rate Mortgage: In a variable rate mortgage your interest rate is the current rate indicated. At specified intervals, your interest rate may change to reflect the current rate at that time. In that case, your monthly payments do not change for that time period.

Pros: If the interest rate falls, more of your payment goes toward the principal and less goes toward the interest
Cons: If the interest rate rises, less of your payment goes toward the principal and more goes toward the interest

VA Loans

• This is a loan for veterans only, and the veteran must occupy the home. Although you can make a down payment, this is a zero-down loan.

USDA Loans

• These are special mortgages for low-to-moderate income home buyers. It is a zero-down payment mortgage eligible in rural locations, although it may include areas on the outskirts of town.

5. Should I Buy a Home?

This may be the biggest question of all. Buying a home is one of the most exciting moments of your life. Your home is one of the most important investments you’ll ever make. It’s not just the roof over your head, it’s where you live, eat, sleep, play, and raise a family.

Evaluate your financial situation very carefully. Owning a home is not the same as renting a home. While your mortgage may be less expensive than your rent payment, you must factor in maintenance and other unforeseen costs. If you are a first-time home buyer, my mission as a real estate agent is to educate you on the pros and cons of buying. Education is key. It’s my job to ensure that you can make a sound financial decision for you and your family. That means I am responsible to get you armed with knowledge about home ownership costs, so you can make the best financial decision for your future. Be very clear on your budget, and be honest with yourself about the expenses associated with buying a home. If, after looking, learning about home ownership and scrutinizing your financial position, this may be the right time for you to buy!

Summary

I hope these frequently asked questions have helped kick start your home buying journey. There are many aspects of home ownership to consider, but with the right help, your buying process can be smooth!

I’ll see you at home,

Laura Leigh Thompson

Associate Broker | ABR | GRI | RENE

Advantage Realty Group

205.790.7229 (tel)

lauraleigh@thecrimsonkey.com

TheCrimsonKey.com

*The information contained in this document is provided for educational and informational purposes only, and should not be construed as legal advice.

The Top Home Buying Questions and Answers - Laura Leigh Thompson - ...