How To Buy A Home On The Monterey Peninsula
Buying a home is one of the biggest purchases you will ever make. By owning your own home you can build equity and your personal wealth, save on income taxes, and become your own landlord. You gain personal pride in your home and the community you share with your neighbors.
Costs of owning your own home include your monthly mortgage payment, as well as property taxes, homeowner’s insurance, home maintenance and emergency repairs. Perhaps, if you have been a renter, you haven’t had to pay your own sewer, garbage or water bills before. As your own landlord, you are responsible for everything associated with your home. Insurance and an emergency savings account are vital to home ownership. Homeowner’s insurance covers damage to your home, your possessions and your liability to other people who are injured on your property.
First Things First
Buying your home is a big step. Start by organizing your finances.
Save for your down payment. You can make a down payment of as little as three percent or as much as twenty percent. If your down payment is less than twenty percent, lenders require that your pay an extra monthly charge for private mortgage insurance. (PMI)
Housing Counseling
Enroll in a certified counseling program that helps buyers get ready for home ownership. To find a local program go to www.hud.gov/buying and click on “Housing Counselor.” Your local Realtor ® can help you through this process as well.
Credit history
You will get a lower interest rate on your mortgage if you have good credit. The best way to have a good credit report is to pay your bills on time and pay off your remaining credit card balances. Get free copies of your credit report at www.annualcreditreport.com. If you find a mistake, follow the directions in the report for disputing errors.
Budget
Track your spending for a month. Can you find a way to trim expenses? Can you say more money for your down payment, or find a way to pay off more of your debt? Add up all of your income and assets. Add up all of your monthly bills, rent insurance, payments due on car loans and credit cards. Are you overspending? Are your expenses less than your income? Are you able to save more for a home? Your mortgage payment and home expenses should total no more than 36 percent of your income.
Next: How much loan can you get?
Qualifying for a Loan
Very few buyers can pay cash for a home. Instead, most buyers apply for a home mortgage. We recommend that you meet with a home mortgage broker such as Bob Walker from Blue Adobe Mortgage to help you through this process.
Many things can influence the type and amount of mortgage that you can get, including your credit history, debts and income of all applicants, the down payment, your savings, the loan percentage and points paid, and length of loan you choose.
The kind of property that you chose to buy, whether a single family residence, a duplex, condominium, or rural property helps decide what kind of loan you will get.
It is good to pay off any debts you can before you apply for a mortgage. The higher your down payment, the less you need to borrow. The down payment is usually expressed as a percentage of the sales price or appraised value. Don’t pledge all of your cash. Remember that you will need money for closing costs, and moving expenses.
When you apply for a mortgage lenders compare your income to your housing costs and other debts to see home much you can afford to spend each month on mortgage payments and closing costs. This percentage also helps then determine how much money you can borrow to buy a house. All debts, including housing costs, should total nor more than 36% of your total income.
Get your ducks in a row, find a great agent to help you..and you can buy a home on the Monterey Peninsula.
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