Before shopping for a home, there are specific things that you should know. We’ve put together a list of questions and answers to help you prepare for buying a home. Once you’ve learned how to start the home buying process you’ll be better able to get the right home at the right price. Consulting a qualified lender to find out how much house you can afford and getting preapproved for a loan is always a good place to start.
How much house can I afford?
Your savings, income and the current interest rates will determine the maximum price you can spend on a home. Most lenders recommend that you spend no more than 28% of your monthly income on mortgage payments.
What are the current interest rates?
Interest rates fluctuate daily based on the market and your individual rate will additionally be based on your credit history. So you will need to talk to a qualified mortgage loan officer to help you determine your rate. Contact The Boehmer Team if you would like the names of some reputable mortgage loan officers in St. Louis City, County, St. Charles County and surrounding areas in Missouri.
What is an appraisal and how much does it cost?
An appraisal is a valuation of a property that determines property value for tax and home loan purposes. Currently an appraisal costs between $250-$350 in the St. Louis, Missouri area. This is paid at closing and considered part of your closing costs.
What inspections will be required & how much do they cost?
A building inspection will be required for almost all home loans. This tells the bank the condition of the home they are financing. Currently in the St. Louis, Missouri area a building inspection runs approximately $225-$300 and is based on the sale price of the home.
Additionally you can get termite inspections ($60-$100) and radon inspections ($100-$150). There are a number of additional items that you can inspect for such as sewer laterals, septic systems, swimming pools, wells and environmental testing if desired.
What is a home closing?
The home closing is the final transfer of the ownership of a house from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded. This term can also be used to explain the timing of when the deed/ownership of the house will be transferred to the new owners. The closing usually takes place at the office of someone like a title officer, escrow officer, or real estate lawyer (someone who is licensed in initiating the transaction and purchase agreement).
How much will the closing costs be?
The amount of closing costs will depend on the amount of points a buyer will be paying with their mortgage loan. (Each point is 1% of the mortgage loan amount). Closing costs vary depending on the type of loan you are using. They can include title fees, origination fees, pre-paids including insurance, setting up your escrow account and survey to name a few. Depending on the loan amount and loan type, closing costs usually run approximately 2-3% of the loan amount. Your loan officer will be able to give you more accurate information on what your total closing costs will be.
I’m also thinking of buying a car, a boat or other big-ticket item. Should I wait?
Do not make any other large purchases while in the home buying process as it could affect your ability to get a mortgage loan. Consult your loan officer before opening any charge cards and obtaining any other type of loan.
Now that you have the information you need to start the home buying process visit TheBoehmerTeam.com to see homes currently for sale in the St. Louis and St. Charles County area of Missouri. You can narrow the results by the area and price range of your choice in addition to many other advanced features. Contact us if you have any questions about the home buying process.