Now Might Be the Right Time to Buy Your Own Home

The great American dream is to own your own home. Today that dream is easier to achieve than you may think. Buyers with good credit and steady income can get a mortgage with as little as 3 percent down. Traditionally, the biggest challenge faced by home buyers was coming up with a big enough down payment to qualify for a mortgage. Today, bankers and brokers say, the mortgage market is so competitive, with so much money available and so many lenders willing to lend, that the balance of power has shifted dramatically. Even first time buyers often have the luxury of choosing the lender and loan most suitable to them. And that, the bankers and brokers say, combined with interest rates near historic lows, makes right now one of the best times in recent memory for first time buyers who may be short on cash but long on dreams of owning a home.

The bottom line question for most buyers is whether they will qualify for the mortgage they need. Most banks make mortgage decisions based on four factors: income, assets, creditworthiness and the value of the mortgaged property. The borrower obviously has to have enough income to afford the mortgage payments, taxes, insurance, and whatever other debt the borrower is carrying.

The second factor - the borrower's assets - is considered because the lender wants to know that the borrower can pay for closing costs and still have some reserves left over. The third factor, credit history, should show prompt and responsible payment of obligations. That means that while minor blemishes on credit may be overlooked if an acceptable explanation is provided, more serious problems should be addressed - if at all possible - before applying for a mortgage. Anyone considering applying for a mortgage in the near future should obtain a copy of his or her credit report from one or all of the national credit reporting agencies to insure that the reports are accurate. Incorrect entries can and should be removed from the reports by immediately contacting the credit bureaus in writing.

The fourth factor - the value of the property to be mortgaged - is an assessment of whether the market value exceeds the amount of the mortgage. The bank will look at the relationship between the market value of the property and the equity the borrower has invested in the property. By factoring in the borrower's equity, the bank is betting that the borrower has enough of his own money invested to keep him making payments on time. And by factoring in the market value of the property, the bank is making sure that the property is salable enough that the bank can afford to lose that bet.

After you find the house that you want to buy, you will be asked to sign a binder. Be sure that any binder that you sign contains the word, "subject to attorneys approval." Without this phrase, the binder can be a legal contract and make you responsible to purchase the home when you are not truly prepared to do so.

An attorney from Sanders, Sanders, Block, Woycik, Viener & Grossman, P.C. will help you to prepare a complete contract which will include all necessary clauses to protect you. Privately prepared contracts of sale will provide you with the right to have a thorough inspection of the home by a licensed engineer so that you can find out whether the heating, plumbing, electrical and mechanical systems, roof and structural elements are in good working order, and provide you an opportunity to have a termite inspection as well as a title search of the County Registers Office to make sure that the seller has the full and unquestioned right to sell you the house. Most importantly, the contract will be conditioned upon you obtaining a mortgage loan in the amount that you need to go through with the purchase.

It is your own responsibility, as the buyer, to seek the professional advice of an attorney to protect yourself and to be sure that you get precisely what you are legally entitled to receive. Buying your home is a major investment. In the long run it is likely to be more economical to have legal advice in making the purchase since you risk the trouble and expense that could result from not having that advice in the first place. If you are planning on buying a house, we will make sure that you are protected and that you get precisely what you are legally entitled to receive.

Back