Know Your Rights as a Home Buyer
Before you start, there are many laws that protect you from scams, unnecessary expenses, and discrimination in the process of homebuying. Know your rights!
How Much Mortgage You Can Afford?
You can save yourself a lot of wheel-spinning if you take a minute to figure out how much mortgage you can afford. Generally, a lender will want your monthly mortgage payment to total no more than 29% of your monthly gross income (that’s your monthly income before taxes and other paycheck deductions are taken out.) You also need to consider current loan interest rates. The lower the interest rate, the more expensive the home you’ll be able to afford. Follow our tips and use these simple calculators to see how much you can afford in a mortgage payment.
Creating Your Wishlist
Make your Wish Lst. Focus on the features you want in a home: 2 bedrooms or 3 1 bath or 2 Garage or no garage Knowing what you’re looking for will help you focus your search. And it will help your real estate broker, too.
Find a Real Estate Broker
You’ll want to start searching for a broker as soon as you decide to buy a home. Talk to several and find someone you think you’ll be comfortable working closely with. Many of your friends and relatives have probably bought and sold their homes through brokers. Ask them who they used and what their experiences were. You can find out which brokers specialize in the kind of home or the area you want by looking in the Yellow Pages or your local newspaper’s classified real estate ads. Or drive through neighborhoods and note the names of brokers on “for sale” signs. When you talk to prospective brokers, ask questions about the areas and types of homes in which you’re interested. Do they seem knowledgeable? Most important, is their personal style a good fit with your own?
Mortgages and Homebuying Programs
Many different kinds of mortgages are available to you. Read about them, and make sure you understand the pros and cons of each. Your real estate broker can help you. HUD offers some special homebuying programs. Also, many local governments offer special homebuying programs to help low-income homebuyers. Shop around – you may be surprised at all your options!
Buying a house is perhaps the biggest purchase that the average person will make in a lifetime, and while the process usually goes smoothly, there are times that difficulties arise. Over the years a variety of laws have been put into place to handle these difficulties; to combat possible problems, home buyers should be aware of these laws and their rights under them.
Fair Housing Act
Title VIII of the Civil Rights Act of 1968, more commonly referred to as the Fair Housing Act, is considered by many to be one of the most important pieces of legislation of the last century. This law prohibits “any kind of discrimination due to a person’s race or color, national origin, religion, sex, family status, or disability.” This means that you as a home buyer can expect housing in your price range to be available without discrimination of any type. No one can refuse to rent or sell, make housing unavailable or provide different housing services or facilities to you for any discriminatory reasons. Later amendments also address discrimination due to age.
The law allows a few exceptions to the Fair Housing Act for buildings with fewer than four units with one occupied by the owner, housing operated by organizations or private clubs that limit dwellings to members only, and housing not offered through a broker.
Passed in 1960, the Consumer Credit Protection Act guarantees confidentiality of credit reports and provides a way for individuals to correct information on them. The Federal Consumer Credit Protection Act, usually referred to as the Truth in Lending Act, passed in 1969 and requires that a borrower receive the actual terms and conditions of a loan before accepting it. A later act, the Equal Credit Opportunity Act of 1976, further makes it illegal for an institution to refuse an application for a mortgage or any type of credit because of discrimination.
While not as well known, the Real Estate Settlement Procedures Act of 1974 also requires financial institutions to provide prospective buyers with an estimate of all costs of obtaining a loan, including closing costs and monthly payments. A lending institution must also provide information about possible transfers of the loan. Other laws require lenders to inform borrowers of any actions taken against their applications. The Veterans Housing Benefits Act of 1978 also allows increased loan amounts to former military service members.