These days many potential home buyers ask how to best prepare for a home purchase in the next year or two. There are many other ways to prepare but I am just going to touch on a couple of general topics.
How much do you need for a down payment?
If possible, 20% of the purchase price is a good down payment. Anything less than will usually give way to Mortgage Insurance which can equal hundreds of dollars a month on your mortgage payment. Absolutely none of the mortgage insurance premium will go to the principle balance of your loan. If you can save a 20% down payment, you should be able to avoid mortgage insurance altogether. Your payment goes down because you don’t have to pay mortgage insurance, but also because you are financing less. Not having to get mortgage insurance will significantly lower your monthly payment. While it could allow you to qualify for more home, you have to take into account that, if you raise up the cost of the home, you will need also need to bump up your down payment.
To many people, 20% would be out of reach in the time to purchase a home. If one cannot save the 20% as a down payment, try to shoot for 5-10%. While the minimum amount required for common financing is 3.5%, anything less than 20%, you will likely have mortgage insurance up-front, monthly, or even both.
What to do before the house hunting starts?Before you take off running in search of your new home, one of the first things to do is save up for the down payment. Then save a little more. It is also very important to continue paying any bills on time. They can be car loans, student loans, personal loans, credit cards, cell phone bills even utility bills. Keeping your credit score as high as possible will allow you to qualify for the best interest rate available. High credit scores will make it easier for you to qualify for financing than someone with poorer credit. I have
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Talk with a Buyers Agent
Even though your neighbor’s cousin’s roommates hair dressers bought a house through the listing agent, you might want to avoid contacting the listing agents directly. Listing agents are not working for the Buyer or truly representing them in a transaction. A listing agents job is to sell the homes they have listed which is why the sellers have hired them. They are looking out for the sellers best interest. Their fiduciary responsibility is to the seller.
In the state of Oregon, real estate agents do a co-broker agreement where the listing agents split their commissions with buyer agents who help to bring buyers to their property’s.
Since sellers usually have professional representation (there are for sale by owners but you will severely limit the number of available homes by only searching out these), why shouldn’t buyers too? Using a West Linn buyers agent can level the playing field and possibly even to give them an advantage in negotiations. Would you want to represent yourself in a court of law without a lawyer? Especially when the other attorney is willing to pay for your lawyer?
A buyer’s agent can give you information on market trends, home values, help you with loan shopping, etc. The job of a buyers agent is not to “sell” you any particular home. Their fiduciary responsibility is to you the buyer (not the seller) by making sure the you are protected and aware of all your options as you try and buy the best home you can at a price and terms most favorable to you
When do we start getting serious?
The time to start getting serious is when you are about 90 days from wanting to be in your new home. Getting your pre-approval for your financing is the first priority. That will give you a solid idea of what how much West Linn real estate you can afford and will give us a target to search within. Once we get that info, we can set up showings of available properties. Take a look at the buyers guide I put together (click here) to get a better idea of the entire process.
Doing some preliminary research prior to the 3 month mark is great. You will want to have a professional to help you with your searching, financing and other preparations when you are ready to pull the trigger..
If you have any additional questions on West Linn real estate, please don’t hesitate to call, text or email me.
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Rich Peralta is a real estate professional in the Portland Metro Area, including Lake Oswego, Tualatin and West Linn Real Estate.
He can be reached at 503.961.2181 or by e-mail at rich.peralta@exprealty.com
Contact him for more information on Portland, Lake Oswego or West Linn Real Estate!
Also posted on Lake Oswego Real Estate.
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[...] to come up with the cash for the required down payment to obtain the loan, and the closing costs. With preparation and planning, setting aside funds earmarked specifically for a down payment on a regular basis will help you [...]
[...] represent you in a home purchase will help you avoid that conflict of interest. Making contact and “hiring” a buyers agent from the start of your home search can benefit you when you close your [...]
[...] represent you in a home purchase will help you avoid that conflict of interest. Making contact and “hiring” a buyers agent from the start of your home search can benefit you when you close your [...]
[...] represent you in a home purchase will help you avoid that conflict of interest. Making contact and “hiring” a buyers agent from the start of your home search can benefit you when you close your [...]