Buying a home is the largest purchase most people will make in their entire life. Because buying a home requires so much money, the process for getting that money is a long and complicated one, and can seem overwhelming to a prospective home buyer. Here are some common questions that home buyers in the Ann Arbor area might have:
1. How Do I Get Started?
There are a lot of steps that come with buying a home, and often times, people want to jump straight to the fun stuff at the end. But buying a home is a very major purchase, and takes lots of preparation and research. The first step in beginning the home-buying process is getting an honest assessment of your personal finances. How much money do you have saved in the bank for a down payment? Many people save for years for their home down payment. Also, what does your credit score look like? It’s possible to find your credit online for a small fee. This will give you a good idea of what type of mortgage rate you will get.
Most lenders have a free “pre-qualification” process that allows the home buyer to enter in their financial information, and the lender will say if the buyer qualifies for a loan. Pre-qualification is in no way official, and the loan is pending a more thorough examination of finances later in the process, but it provides a good point of reference for home-buyers.
2. What Can I Afford?
Once you’ve got a grip on your finances, you should have an idea of how much of a monthly mortgage payment you can afford to make. There are other factors to consider, however. In addition to paying the principle and interest on a home loan, home buyers must also consider the costs of local property taxes and homeowners insurance in their monthly payments. Buyers that can’t afford a large down payment may also have to pay insurance on their mortgage. It’s also important to factor in the utilities’ costs of owning a home. These costs can add up quickly, and turn what looks like a reasonable monthly payment into an unmanageable one.
Talk to an Agent about How Much You Can Afford
3. Why Shouldn’t I Just Rent?
Renting is a much more simple process than buying a home. But owning a home isn’t just a place to live. It’s also an investment. The money you pay on a home loan doesn’t just disappear like a rent check. You’re paying for a home that will some day be yours, and will hopefully appreciate in value.
4. How Do I Find the Best Mortgage Loan?
The internet has revolutionized the mortgage finding process. A quick online search can show you a variety of mortgage options and rates from multiple different vendors. From there, it’s just a matter of choosing the one that best fits your financial needs. Typically, mortgage loan have either 15 or 30 year life spans. Fixed rate mortgages means your interest is locked-in and won’t change over the duration of the loan. Adjustable rate mortgages are the opposite and can change at set intervals. Those rates may go up or down, depending on the market.
5. What Should I Look For in a Community?
The needs of your community will depend on what you’re looking for. For many people, proximity to where they work is a key component. Families with young children will want to be a strong school district. Some people appreciate being able to walk to places and not having to rely on a car. Ultimately, it’s up to a home buyer to decide what aspects of a community they most value, and which don’t matter as much.
6. How Do I Make the Right Offer on a Home?
The list price for a home is rarely the final price buyers pay. Most home offers start at 5% below the asking price, though it is possible to go even lower if the seller is desperate to sell quickly. It is best to compare the home with the prices for other comparable homes sold in the area, and consult with your agent on current market conditions.
Buying a Home in Ann Arbor, MI
With the right information, you can go into the home buying process with confidence. You know what aspects to cover before searching for a home and now you can start looking at which properties might be for you:
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