Posts (RSS)Buying Homes for Sale: Advice from Attorney General
Buying homes for sale requires research, planning and financial management, so if you are planning to buy a home, this free downloadable PDF document from the Office of Idaho Attorney General Lawrence Wasden is a very helpful PDF that you need to read.
This free document was prepared by Attorney General Wasden for residents and prospective home buyers in Idaho, but a large portion of information in this document apply also to residents and home buyers in other states. So even if you do not live in Idaho, you can download this document, which has just been released this October, and benefit from it.
According to the PDF, before buying a home, you need to examine your credit scores, financial readiness and your loan pre-qualification.
Most lenders use the FICO credit score to evaluate your credit-worthiness. FICO refers to credit rating agency Fair Isaac Corporation. If your FICO credit score is higher than 700, you are considered financially healthy by lenders, but if your credit score is below 600, you are considered a high risk.
Attorney General Wasden advises buyers to delay their plan of buying homes for sale if their credit score is poor because lenders assign higher mortgage rates to high-risk debtors. Besides, banks no longer offer subprime or nontraditional loans.
To calculate if you can afford to buy a house, use mortgage calculators available at fhaoutreach.gov. You should not consider future salary increases because they may never come and you should have 20 percent of the home price ready for down payment. Additionally, you should not be allotting over 30 percent of your monthly income for your monthly home loan payment.
Remember also that closing on a home is very costly. Depending on your agreement with the seller, you may be required to pay various fees that include fees for loan application, appraisal, home inspection, credit report, document processing, prepaid interest, private mortgage insurance, insurance escrow, title closing, title insurance, recording, taxes, flood certification and home association. You can get more information about closing costs at federalreserve.gov.
Under the Real Estate Settlement Procedures Act, when you are buying a house, you are entitled to receive written disclosures from your lender or broker before and during closing and as you pay your mortgage loan through the years. These disclosures will inform you about closing costs, escrow accounts and other activities related to your loan account so you can guard yourself against people victimizing people buying homes for sale.