First-Time Homebuyer Q&A: Part 2
By Heather Faucher | Posted on June 30, 2009 | Filed Under Real Estate
Check out Part 1 of this semi-regular series.
4. WHAT DOES THE LENDER DO TO CALCULATE THE AMOUNT OF MORTGAGE I CAN AFFORD?
The biggest factor lenders consider is the debt-to-income ratio, which is a comparison of a potential homebuyer’s gross (pre-tax) income to housing and non-housing expenses. Examples of non-housing expenses include long-term debts like car or student loan payments, alimony, and child support. The Federal Housing Administration (FHA) recommends that monthly mortgage payments should not exceed 29% of gross income. Additionally, the mortgage payments combined with non-housing expenses should not exceed 41% of income. One other factor lenders look at is any available cash for down payment and closing costs, along with credit history, when factoring in what a potential homebuyer’s maximum mortgage amount should be.
5. HOW SHOULD I GO ABOUT FINDING THE RIGHT REAL ESTATE AGENT?
One surefire way to kick off this process is by consulting with family and friends to see if any can recommend a reputable agent. Make a list of qualities you want in an agent, and then make appointments with several to meet with them face to face. You never know who you’re going to “click” with the most so keep an open mind. Don’t just settle for the first one you meet! You’re going to want an agent who actually listens to what you want and need, rather than trying to force their opinions on you. Make sure they’re with a reputable real estate agency, or that they have viable credentials themselves if they don’t work with an agency. Remember, an ideal agent knows your target area like the back of their hands and has the right contacts and resources to ease your home search. Agents work mostly on commission, so above all, find one who works well for you and earns that commission by finding you what you need.
6. WHAT THINGS SHOULD I CONSIDER WHEN CHOOSING A NEIGHBORHOOD?
One thing many people look at first is what sort of school system their target neighborhood is in. Even those who don’t currently have children may have them someday, and those who plan to never have children or have already raised theirs might consider school systems for future resale value. Just because they’re not worried about it now doesn’t mean a future homebuyer won’t be years down the line. Homebuyers should consider what amenities are most important to them. Do they need to be close to public transportation and shopping? Do they want easy access to local facilities like libraries and museums? Would they prefer the peace and quiet of country living? One good step to take is talking to people who already live in the neighborhood you’re considering. They’re obviously going to know a lot about community and could be your future neighbors. The most important thing is to find a neighborhood that feels like home sweet home.
7. WHAT SHOULD I DO IF I FEEL DISCRIMINATED AGAINST IN CERTAIN NEIGHBORHOODS?
Don’t just accept this–there are anti-discrimination laws when it comes to housing. You should immediately contact the U.S. Department of Housing and Urban Development (HUD) if you ever feel excluded from a neighborhood or particular house. Also, contact HUD if you believe you are being discriminated against on the basis of race, color, religion, sex, nationality, familial status, or disability. HUD’s Office of Fair Housing has a hotline for reporting incidents of discrimination: 1-800-669-9777 (and 1-800-927-9275 for the hearing impaired).
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