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Buyer Services The following information was provided by the Massachusetts Association of Realtors (MAR). you can visit the MAR web site by clicking here. How a REALTOR® Can Assist You in the Home Search and Home Buying Process Selection Financing Negotiation Inspection Closing
A Guide for the First-Time Home Buyer and The
Advantages of Home Ownership Six-Year
Look at Massachusetts
Home Prices Year Avg.
Sell Price App.
Rate 1998 $200,870 +7.3% 1999 $223,593 +11.3% 2000 $261,293 +16.9% 2001 $286,277 +9.6% 2002 $321,343 +12.2% 2003 $347,882 +8.3%
Typically, the amount you will be able to afford for housing costs (principal,
interest, taxes, and insurance) per month is equal to about 28-33 percent of
your gross monthly income. These ratios are the guidelines used by many, but not
all, banks and mortgage companies. Your REALTOR® can help you find a bank that
may have higher qualifying ratios. In
addition, when estimating your actual purchasing power, most banks will require
that approximately 36% of your gross monthly income be greater than the total of
your monthly debt payment.
Monthly
Principal & Interest Payments (30-year
Fixed-rate mortgage) $150,000 $175,000 $200,000 6% $
899.33 $1049.21 $1199.10 7% $
997.96 $1164.29 $1330.62 8% $1100.65 $1284.10 $1467.54 9% $1206.94 $1408.10 $1609.26 10% $1316.36 $1535.76 $1755.15 A number of financing options,
including low-interest mortgage funds, also are readily available to you as a
first-time homebuyer. Such programs have only minor restrictions and will
increase the opportunities you have to purchase your first residence. When
calculating the maximum price of a home you can afford, don’t forget to
include the down payment you expect to make as well. The larger your down
payment, the lower your monthly mortgage cost. Follow These Steps To
Purchase Your First Home
Prepare a list of your needs and then a list of your wants. Be sure to
distinguish between them. You should be able to meet your needs, but may have to
compromise on your wants. Have a REALTOR® or a bank pre-qualify you to
determine how much you can afford to spend on a home. Allow your REALTOR® to
show you the properties that will most closely meet your needs and wants. As a
prospective home buyer you should consider retaining an attorney to represent
you in the transaction. Once the decision is made to purchase the property of
your choice, contact your REALTOR® to assist you in completing an offer which
will be accompanied by your deposit. Your
REALTOR® will assist you in reaching an agreement on the price and terms of
sale. Remember, your REALTOR® must disclose whether s/he represents you, the
seller, or both in the transaction. Disclosure should occur at the first
personal meeting to discuss a specific property. Once your offer has been
accepted by the seller, you are ready to satisfy the contingencies included in
your offer, such as financing and inspections. Your REALTOR® can provide the
names of local businesses from which you can select people to perform these
services, and arrange an appointment with one or more lending institutions. When
any requested inspections have been completed and any required mortgage
applications have been made, just relax and wait for your mortgage approval. Once
your mortgage loan has been approved, it is time to arrange for a closing date
for transfer of title, homeowners’ insurance, the movers, ordering of electric
and telephone services, and making any transfer of funds for a bank or certified
check for closing day. One
closing day, arrive promptly with your bank or certified check and insurance
policy or binder. Then relax and enjoy. In an hour or so you will have become a
new homeowner. Congratulations You have made the best
investment of your life - A home of your own! Methods of Financing To
Consider Fixed Rate Mortgage
- A loan that fixes the interest rate as a prescribed rate for the
duration of the loan. Generally is offered at a higher interest rate
than adjustable rate payments, but is favored during low interest rate
periods. Common Real Estate
Financing Terminology Comparative Market Analysis
- An estimate of real estate value, usually issued to the standards of FHA, VA,
FNMA. Recent comparable sales in the neighborhood are the most important factor
in determining value. Closing Costs -
Expenses incurred in the closing of a real estate or mortgage transactions.
Purchaser’s expenses normally include: cost of title examination, premiums for
title policies, survey, attorney fee, lender’s service fee, and recording
charges. Also, the purchaser may have to place in escrow a sum of money to cover
accrued real estate taxes and insurance. Equity - The
difference between the market value of property and the homeowner’s
indebtedness (mortgage). Mortgage - Pledge of
real property to secure a debt by a written instrument given by the
mortgage. Origination Fee - A
fee or charge for work involved in the evaluation, preparation, and submission
of a proposed mortgage loan. Point - One percent of
loan amount. Private Mortgage Insurance
(PMI) - Insurance written by a private company protecting the mortgage
lender against loss occasioned by a mortgage default. Title Insurance - An
insurance policy which protects the insured (purchaser or lender) against loss
arising from defects in title. How a REALTOR® Can
Help You Attain the American Dream A REALTOR® is familiar
with local home loan and seller-financing options and can suggest how to accrue
a down payment, determine how much you can afford, and explain financing
methods. A REALTOR® knows the
local real estate market and can accurately assess home values. REALTORS® also
are aware of local tax levels, utility costs, and municipal services. A REALTOR® has a
complete inventory of homes for you to select from at his/her fingertips through
the use of the local Multiple Listing Service. A REALTOR® has the
forms to prepare a purchase and sales agreement and knows how to facilitate
negotiations between both seller and buyer. With no emotional ties to the
property, a REALTOR® can be objective in pointing out the features and
drawbacks of each home. A REALTOR® must
disclose whether s/he represents the buyer, seller, or both prior to
meeting with you to discuss a specific property, and also is bound and obligated
by a strict Code
of Ethics to give fair treatment to all parties to the transaction. Copyright© 2004 Massachusetts Association of REALTORS®
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