House Hunting Tip
February 2, 2007
Before you even begin your search for the house of your dreams, or maybe just your residence for the present time, it is important to carefully evaluate your financing options.
One hundred percent financing and interest only mortgages became popular in the last several years. Not just with first time home buyers or buyers with no savings, but with many savvy buyers who wanted to purchase a home with the most leverage possible. On the surface, with both of these types of financing, you don't build equity in your home when prices are flat. Of course, making improvements in the home or making principal payments, can create equity.
However, just making the required monthly payment will keep the principal balance the same as the day you purchased your home.
This type of financing is not necessarily bad, but make sure that you have an understanding of the pros and cons. While you are educating yourself about financing, get yourself preapproved for the mortgage you will need to complete the purchase of your new home. You have much better negotiating power if sellers know that you are financially capable of closing the sale.
Another tip about financing; use a lender that has a solid reputation for making real estate loans. A by product of the booming real estate market of the past few years was the tremendous increase in the number of mortgage brokers. Listen to your real estate agent as they should have some insight into which lenders actually do the best job of processing loans.
Century 21 Lois Lauer Realty has a fully owned subsidiary called Financial 2000. We believe that we aid our clients by providing a mortgage service that we know and can count on to get the job done.
Before you even begin your search for the house of your dreams, or maybe just your residence for the present time, it is important to carefully evaluate your financing options.
One hundred percent financing and interest only mortgages became popular in the last several years. Not just with first time home buyers or buyers with no savings, but with many savvy buyers who wanted to purchase a home with the most leverage possible. On the surface, with both of these types of financing, you don't build equity in your home when prices are flat. Of course, making improvements in the home or making principal payments, can create equity.
However, just making the required monthly payment will keep the principal balance the same as the day you purchased your home.
This type of financing is not necessarily bad, but make sure that you have an understanding of the pros and cons. While you are educating yourself about financing, get yourself preapproved for the mortgage you will need to complete the purchase of your new home. You have much better negotiating power if sellers know that you are financially capable of closing the sale.
Another tip about financing; use a lender that has a solid reputation for making real estate loans. A by product of the booming real estate market of the past few years was the tremendous increase in the number of mortgage brokers. Listen to your real estate agent as they should have some insight into which lenders actually do the best job of processing loans.
Century 21 Lois Lauer Realty has a fully owned subsidiary called Financial 2000. We believe that we aid our clients by providing a mortgage service that we know and can count on to get the job done.
posted by shirley harry at 8:34 AM
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