Real Estate Financing - Your First Home

Most people today approach home-buying with many fears. This year alone, Americans are expected to borrow $1.33 trillion in acquiring 7.4 million houses, condominiums and co-ops. Besides being the average person's largest financial transaction, buying (or selling) a home is one of those areas where mistrust and misconceptions are sure to be present. And as the real estate market continues to grow and new technology gains ground, widely accepted beliefs  that were true a few years ago may not be true today.

Real Estate Financing In a Nutshell:

If you're a first-time home-buyer it 's possible that you may qualify for a lower down payment or lower interest rate.  Check with mortgage brokers, online mortgage companies, your county housing department or your employer to see if they know of any programs available.

First of all you'll need to determine what you can afford. The situation of each buyer is unique. It'll depend on what you can afford. Your income and your debts will typically play the biggest roles in determining your price range.

A range of mortgage options are available,  - some loans require little money down. You'll also need to consider closing costs and the escrow account for taxes and insurance. But don't get overwhelmed. If you have a less-than-perfect credit report don't worry too much. There are plenty of options that are ideal for those who have a few bad marks on their credit report. Work with your lender to develop an individual mortgage program based on your credit worthiness.

Loan programs - finding the best loan program for your needs depends on a number of factors, including: how long you'll stay in the home, how much money you'll put down, how you'll finance the closing costs.

Tax benefits -you may be able to deduct the interest you pay on the mortgage loan and some of the financing costs of the home, such as points on your income tax return. Also your property taxes may be deductible. You should consult your CPA or other tax advisor, for more information.

Private Mortgage Insurance (PMI)

Loan programs for down payments of 20% or less require you to purchase Private Mortgage Insurance (PMI).

Buying a Second Home

You'll need to identify the sources for your down payment, since you will not be selling your current house and using the proceeds, and you'll need to expect a larger monthly obligation for housing expenses too. Work with your lender to create a customized loan program with the best combination of rate, points, and closing costs to meet your needs.

New Home Construction

If you're working with a builder within a sub-division or development and just making carpeting, lighting and appliance selections for a brand new home, you'll probably be able to get a standard mortgage loan. But if you're hiring contractors, electricians, plumbers, and painters, you probably need a construction loan, which provides funds to pay subcontractors as work progresses. For more information on construction loans, contact your real estate agent, real estate broker or real estate professional or your mortgage company.