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Keeping Your Buyers Informed

March 7, 2012

It’s important to understand your buyers and where they are coming from.  Below you will find some common perceptions that home buyers may have and how you can inform them so they make the right decisions.

1. I should wait until the housing market drops further before I buy a house.  False. The truth is, no one can predict what will happen in housing, and with rates and home prices as low as they’ve ever been, it’s an incredible time for buyers to get into a home. That being said, buyers should first have their financial situations in order and find out how much home they can reasonably afford by becoming preapproved.

2. It’s better to build. It’s better to buy. So which is it? Depends. Both building and buying a home have advantages. When you build, you can custom order your home to be exactly as you want it, with the finishes, square footage, and layout you like. You don’t have that luxury when you buy an existing home. But then again, when you buy, you don’t have the responsibility of finding a lot, managing construction details, making hundreds of decisions on everything from faucets to grout color, and paying for extras that come from changes or upgrades you add.  There’s no one “best” answer.

3. My monthly payment will never go up because I have a fixed rate loan.  False. A fixed rate mortgage does lock in your principal and interest payment so that it will never increase, but your property taxes and homeowner’s insurance premium can increase, and often do. Because they are included in the monthly mortgage payment for most homeowners, it can increase the monthly payment.

4. I don’t need to read the mortgage closing documents. It’s standard stuff.  False. A mortgage loan is one of the biggest obligations you will take on in your life. You agree to certain terms and conditions to pay the money back, so you should take the extra step of ensuring that the paperwork correctly details that agreement. Here are key documents that contain the main provisions of your loan and purchase:

  • HUD-1 Settlement Form: Outlines all of the closing costs and charges to the buyer and seller. You can request this a day ahead of time so you can review and ask questions before closing. Compare the figures on this document to your Good Faith Estimate and ask questions if something is unclear.
  • Truth in Lending Form: Check the interest rate, annual percentage rate, amount financed, monthly payment, and the total lifetime cost of the loan.
  • Note: This is where you promise to pay back the mortgage loan according to the agreed-upon terms.
  • Mortgage: This is the document that pledges the property as collateral for the mortgage loan and it is filed with the courthouse.

5. Location, location, location. True.  But not just in the way you think. Choosing a home in a safe and desirable location is obviously important. But finding an area that also matches your lifestyle is just as important. Do you have kids and want them to have playmates in the neighborhood? Do you prefer more privacy and a quieter neighborhood? Do you enjoy walking to nearby stores and restaurants?  If your lifestyle doesn’t “fit” your neighborhood, you might be surprised how quickly your dream home loses its luster.


Mortgage Banker Gregg FitzGerald

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