Month: January 2020

There is a lot involved in buying a home.  First you must browse listings and find places that you are interested in.  Then you narrow the list down to those that best meet your needs and price range.  Once you have settled on something, you go through negotiations until you find a price that is agreeable with you and the seller.  Then you have to get a mortgage.

The thoughts of getting a mortgage make a lot of people cower in fear.  That’s because if you’ve never been through the process before, there is much that you probably do not know or understand.  One of the most common questions is whether one should get a fixed or adjustable rate mortgage.

A fixed rate mortgage is one that has an interest rate that remains constant for the life of the loan.  That means that your payment is the same each and every month.  This type of mortgage is easy to understand and makes budgeting more predictable. The downside to fixed rate mortgages is that if interest rates are high when you get your mortgage, your interest will remain high as long as you keep the original loan.  If you wish to take advantage of lower interest rates in the future, you will have to refinance.  That means more paperwork and additional costs.

Adjustable rate mortgages, or ARMs, feature rates that start out low, then are adjusted according to current interest rates after a specified amount of time.  The initial rate can be good for anywhere from a month to 10 years, after which it may be adjusted monthly, yearly, or at any other frequency specified in the mortgage agreement. The biggest advantage of adjustable rate mortgages is the low initial interest rate.  This generally means that one can get a larger loan due to the lower payments.  ARMs also allow you to take advantage of falling interest rates without having to refinance. The bad thing about ARMs is their unpredictability.  Depending on the mortgage’s terms, the interest rate (and your payment) could nearly double in just a few years.  This would leave you with a much higher payment than you started out with, and possibly a higher payment than you would have had with a fixed rate mortgage.

Which type of mortgage you should get depends largely on your situation.  How long you plan to keep the home and whether your income is likely to stay the same or increase over the coming years are two important things to consider.  If you only plan to keep the home for a few years, an adjustable rate might work to your advantage.  And if you need low initial payments, an ARM may be the way to go.

If you’re looking for a payment that stays constant from month to month, a fixed rate mortgage would be your best bet.  If you can get one when interest rates are low, it could save you money compared to an adjustable rate in the long run.

You may be so enamored with the house that you fail to observe what’s going on in the surrounding area. It’s important that you take notice of the neighborhood you’re considering and determine if it’s the right fit for you and your family.

Purchasing a home is an investment – usually for the long term, so take time to notice the pulse of the community. Talk to neighbors if possible and note if the area is perhaps in transition from being a bad neighborhood to an up-and-coming one – or has it already made the transition.

One way to determine if the price of the home you’re considering is fair for the neighborhood is to research home values and foreclosures in the locality. Homes in transitional neighborhoods may be a good investment, but it could take time for that to happen.

Considering the school system in the area is a major decision factor if you have children. You can get grades and ranks of schools in the area at some online sites. Your home will maintain or increase its value if it’s in the area of high-ranking schools.

Buying a home in the thick of restaurants, stores and “action” may seem exciting, but are you sure you’re ready to put up with the noise and traffic associated with it? Even neighborhoods that aren’t in downtown may be noisy, so it’s a good idea to visit the area at various times of the day. Pay attention to traffic patterns at rush hour, weekends, the buzz of planes from an airport, a church that takes all the parking spaces on Sunday morning and does the neighborhood appear more dangerous at night?

Notice the condition of the roads around the neighborhood. Are they clean and smooth or are there potholes and trash on the curbs? Also note if there are sidewalks, public transportation and nearby fire and police stations.

If you’re not comfortable with the appearance of the neighborhood, the future value and appreciation of your home may be affected and the enjoyment of your time there may be compromised.

Finally, consider the proximity of a new home to work and the things you love. Stores and schools are also important in the scheme of things and your commute may be longer than you want it to be.

Proximity to work can become critical when you have to spend an hour or more in the car, morning and evening, and don’t get to enjoy the house as much as you could if you lived closer. Mass transportation might be the answer and can also have a good effect on your home’s value.

A neighborhood with walkways, neighborhood watch and no vandalism indicates you’ve chosen a safe neighborhood. Your realtor can help you in this quest and you can also search crimes in this neighborhood.