Owning a home has many financial benefits. There are tax deductions, like property taxes and mortgage interest that one can take advantage of. Owning a home also allows one to put value back into your home and build home equity. With a stable financial history and proper planning, owning a home can be a smart and affordable investment.
Whether you should rent or own greatly depends on your local housing market, financial standing, and length of residency. Whereas rent is an out-of-pocket expense, your monthly mortgage payments gradually reduce your remaining loan balance. That means with each payment, you will own more of your home, eventually having no payments at all.
As a homeowner, you can make all the decisions and know where your money goes. As you decide whether to rent or own, keep in mind that rent prices can increase without your consent, reflecting rising demand and renovation costs. Additionally, mortgage payments can be less expensive than rent payments over time, even with a fluctuation in interest rates.
First, determine the price range you can afford. You can do this by pre-qualifying or getting a pre-approval. Pre-qualifying for a loan is a good way to get started if you are just thinking about buying a home. If you want to get an estimate of the loan amount you can afford, you should prequalify. It takes very little effort on your part and will give you a “ballpark” figure. If you are serious about buying a home soon, pre-approval is the way to go. The pre-approval process is more comprehensive and gives you a rocksolid commitment of the loan amount you can afford. A Hayward Capital, Inc. representative will be happy to give you a confidential evaluation of your purchasing power. You will know how much house you can afford and the amount of your monthly payment beforehand.
What happens in the 30 to 60 days it takes to get approval and close your loan? First of all, your application sets into motion a course of action including these professionals and processes:
- Loan Officer
Your Loan Officer is the person who assists you in the selection of your loan program and interest rate. He or she will answer your questions about the loan process, and assist you in completing the loan application. Your loan officer is also your point person and will communicate with all parties on your behalf throughout the loan approval process.
Processing is next in the chain. The information in your file and completed application is verified using the requests of verification. During processing of the loan, you will be sent the federal and state disclosures. Throughout this time your Hayward Capital, Inc. representative will keep you informed of the status of the loan.
During this period the request is made for an independent appraisal of the property you want to buy. The appraisal will determine whether the property would be sufficient security for your loan. To place an opinion of value on the house, the appraiser inspects the property and compares it to similar properties nearby that were recently sold. Based on the sales price of comparable homes, the appraiser issues a Uniform Residential Appraisal Report which renders the property’s fair market value.
Closing is the final step in the home buying process. At closing you will settle all the details of the purchase and receive title to your new home. You will sign your final loan documents with Escrow. Your loan officer will instruct you on what to bring to the closing. In general, arrangements for hazard insurance are required before the loan can close, and the first year’s premium must be paid in advance. You will also need a cashier’s check or arrange for a wire transfer of funds for your down payment and closing costs. The documents you sign will include the mortgage Note, which is your promise to repay the loan. It indicates the terms and conditions of your loan and how it will be repaid. You will also sign a Deed of Trust rather than a Mortgage; however, both documents serve the same function. You will also sign a Settlement Statement. Created by the federal department of Housing and Urban Development, this statement itemizes all the closing costs.