Buying Your Home
Where & What to Buy
What You Can Afford
- How much will I spend on maintenance
expenses?
- What is the standard debt-to-income ratio?
- What is Fannie Mae's low-down program?
- How much does my real estate agent need to
know?
- How much will I spend on
maintenance expenses?
Experts generally agree that
you can plan on annually spend 1 percent of the purchase price of your house on repairing
gutters, caulking windows, sealing your driveway and the myriad other maintenance chores
that come with the privilege of homeownership. Newer homes will cost less to maintain than
older homes. It also depends on how well the house has been maintained over the years.
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- What is the standard
debt-to-income ratio?
A standard ratio used by
lenders limits the mortgage payment to 28 percent of the borrower's gross income and the
mortgage payment, combined with all other debts, to 36 percent of the total.
The fact that some loan applicants are accustomed to spending
40 percent of their monthly income on rent -- and still promptly make the payment each
time -- has prompted some lenders to broaden their acceptable mortgage payment amount when
considered as a percentage of the applicant's income.
Other real estate experts tell borrowers facing rejection to
compensate for negative factors by saving up a larger down payment. Mortgage loans
requiring little or no outside documentation often can be obtained with down payments of
25 percent or more of the purchase price.
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- What is Fannie Mae's
low-down program?
Fannie Mae is expanding the
availability of low-down-payment loans in an effort to help more people nationwide qualify
for a mortgage.
Two new programs will help potential buyers overcome two of
the most common obstacles to home ownership, low savings and a modest income.
To address many first-time buyers' struggles to save the down
payment, Fannie Mae developed Fannie 97. The program provides 97 percent financing on a
fixed-rate mortgage with either a 25- or 30-year loan term through Fannie Mae's Community
Home Buyers Program.
Fannie Mae's new Start-Up Mortgage will assist buyers with a
5 percent down payment who are at any income level. Yet applicants do not need as much
income to qualify and less cash for closing than with traditional mortgages. Borrowers
will receive a 30-year, fixed-rate mortgage with a first-year monthly payment that is
lower than the standard fixed-rate loan.
Freddie Mac, Fannie Mae's counterpart, also offers
low-down-payment loan programs.
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- How much does my real
estate agent need to know?
Real estate agents
would say that the more you tell them, the better they can negotiate on your behalf.
However, the degree of trust you have with an agent may depend upon their legal
obligation.
Agents working for buyers have three possible choices: They
can represent the buyer exclusively, called single agency, or represent the seller
exclusively, called sub-agency, or represent both the buyer and seller in a dual-agency
situation.
Some states require agents to disclose all possible agency
relationships before they enter into a residential real estate transaction. Here is a
summary of the three basic types:
- In a traditional relationship, real estate agents and brokers
have a fiduciary relationship to the seller. Be aware that the seller pays the commission
of both brokers, not just the one who lists and shows the property, but also to the
sub-broker, who brings the ready, willing and able buyer to the table.
- Dual agency exists if two agents working for the same broker
represent the buyer and seller in a transaction. A potential conflict of interest is
created if the listing agent has advance knowledge of another buyer's offer. Therefore,
the law states that a dual agent shall not disclose to the buyer that the seller will
accept less than the list price, or disclose to the seller that the buyer will pay more
than the offer price, without express written permission.
- A buyer also can hire his or her own agent who will represent
the buyer's interests exclusively. A buyer's agent usually must be paid out of the buyer's
own pocket but the buyer can trust them with financial information, knowing it will not be
transmitted to the other broker and ultimately to the seller.
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© 2008 Century 21 Real Estate LLC. CENTURY 21 © is a registered trademark licensed to Century 21 Real Estate LLC. Equal Housing Opportunity. Each Office is Independently Owned and Operated.
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Century 21 Teramana-Westling, Inc.
4120 Sunset Blvd.
Steubenville, OH
740-264-0300 |
All materials © CENTURY 21 Teramana-Westling, Inc.
Last modified Sunday, June 15, 2008 |
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