Why Buy a Home?

Homeownership has proven itself to be a wise long-term investment. Several reasons for being a wise investment include:

• Paying rent pays your landlord's mortgage. Every dollar you spend toward principle on your mortgage, that builds your equity and your wealth.
• Income taxes favor those who own a home. Additional deductions such as mortgage interest, property taxes, and some closing costs reduce the amount of money you pay in income taxes.
• When you finally do go to sell, your equity (original mortgage amount, minus principal paid) belongs to you, and is often not subject to income taxes.
• Having an advocate on your side working for you, ie, your Coldwell Banker Agent, costs you nothing out of your pocket. Despite the fact that your Coldwell Banker Agent works for you and represents your best interest, your Coldwell Banker Agent is customarily paid by the seller.
• Homes typically appreciate. This presents two benefits
  • First, let's cite an example: You purchase your home for $100,000. If you sell it 7 years later, your mortgage balance is at approximately $87,945. However, your home is now worth, $120,000, as an example. Instead of having more than $12,000 in equity, you now have $32,000 in equity!
  • Second, the longer you live in a home, the less expensive it is to you. That's because your payment doesn't go up on a fixed mortgage, as your rent payment would. You continue to pay your mortgage payment based on what you paid for the home when you purchased it. While rents are certain to go up over time, your principal and interest payments on your mortgage stay the same!
• Owning your home and paying your mortgage on-time every month helps to further establish your credit history. In addition, there may be other financial incentives to look into, such as a "homeowner discount" on your auto insurance.

In addition to the financial benefits of home ownership, there are also many psychological and "warm and fuzzy" benefits, too!

• There is a sense of stability and security in owning your own home. Your home is yours to enjoy as you see fit.
• For example, in your own home, you can decorate it and paint the walls to your taste. Changing light fixtures or renovating the kitchen is your choice to do, and if done right, will be a reward you reap in terms of additional home value when you later sell the home.

Ready to learn more? Call us at (937) 912-1200, or contact us for more information on how to begin!

The Home Buying Process in Detail

First-time Homebuyers often describe the process of buying their first home as scary and stressful, but it doesn't have to be. With some upfront knowledge of what to expect and being prepared, it really is nothing to be stressed over or scared about.

• Your first step is to line up a personal "advocate" for you in purchasing your home. Your Coldwell Banker Agent is experienced with watching out for a first-time homebuyer's best interest.
  • While your Coldwell Banker Agent is your personal advocate - watching out for your best interest - he or she is customarily paid for by the seller. But despite being paid for by the seller with no out-of-pocket cost to you, your Coldwell Banker Agent is your trusted adviser in the entire process.
  • Learn more about the wealth of knowledge your Coldwell Banker Agent brings to the table by contacting us.
• You also need to begin the qualification and mortgage pre-approval process with a trusted and reputable lender. With many of the bank failures of 2008 and 2009, this is now more difficult than it used to be. But a company such as Legacy Mortgage, a joint venture with Wells Fargo Home Mortgage (one of the strongest banks in the world) can provide stability, great rates and very competitive closing costs.
  • Paperwork you will want to have handy during your preapproval meeting with your lender includes:
    • Your most recent W-2s from the past two years
    • Your 2 most recent pay stubs
    • Your Social Security card and driver's license, or state-issued ID
    • Your two most recent bank statements that have your name on them
  • Down payments can vary. Plan on a minimum of 3.5% of the sale price as a downpayment. Certain exceptions can apply, such as if you are eligible for a no-money-down VA (military) loan, or perhaps if a family member will "gift" you the money for your downpayment. Be certain to discuss this at length with your lender.
• Once you are pre-approved up to a certain and comfortable price point, it is now time to begin your home search. With higher-than-normal inventory levels at this moment, there is a wide selection of homes for you to choose from. Ask your Coldwell Banker Agent to begin setting up "showings" for homes that match your needs and wants.
• Once you have identified your desired home, it is now time to write an offer for that home. Your Coldwell Banker Agent is very knowledgable on the needs of first-time buyers, and can work the contract to minimize your out-of-pocket closing costs (money you have to spend to "close" on the house).
• Often-times, negotiations may go back and forth between you and the seller, called "counter-offers", until you both agree on sales price and terms of the contract.
• At this time, you will also need to submit an earnest money check. This can sort of be considered to be a "down payment on your down payment", and shows the seller that you are truly serious about purchasing their home. Often-times, this can be between $500 and $2,000, depending on the sale price of the home, but is refunded back to you at the time of closing.
• Once the offer is accepted, your Coldwell Banker Agent will work with your mortgage lender to ensure additional required paperwork is submitted, such as a copy of the deposited earnest money check, and all paperwork from the signed contract.
• Inspections are typically done now during the "Inspection Period", where you can have licensed and certified inspectors take a look at the home to ensure that no habitability issues exist in the home. Any costs to repair these habitability issues can often-times be negotiated between the buyer and seller as to who will pay for them.
• An appraisal is ordered on the home. An appraisal is a formal valuation of the home where a state-certified individual helps the bank to ensure they do not loan you more than the home is worth. While this is in the lender's best interest, it is also in your best interest, to ensure you are purchasing for fair market value or below.
• Once the appraisal has been completed and accepted by the lender, your loan will go through "underwriting", which is where the lender performs various actions from a checklist. This includes making sure all required documentation has been received, the appraisal is inline with the loan amount. In addition, final paperwork for you to sign is prepared at this time.
• A "Closing Date" will be determined from the contract. Customs for this closing process vary by market, but at a high-level involve:
  • Receiving a "Settlement Statement", one to two days prior to your closing date, so you can review the charges and credits made in association with the closing of your new home.,
  • Signing the rest of your mortgage paperwork. This includes the actual mortgage itself where you promise you will make payments until the loan is paid off in the original terms, or through a refinance or sale of the home. It is very important that you read these in detail as you sign them. Ask your closing officer or attorney ANY questions that you may have - that is why they are there!
• Depending on the language of the contract you and your Coldwell Banker Agent wrote, you may receive the keys to your new home at closing and take occupancy immediately, or there may be a later date that you and the seller have already agreed to.

Are you ready to begin the process? Let us help you make it easy. Either call us at (937) 912-1200, or click here to contact us online!

Down Payment Options

• TRADITIONAL SAVINGS: Use traditional savings. A typical scenario would be to use up to 3.5% of the sales price as a down-payment on an FHA loan, or 5% of the sales price on Convention loan. However, depending on the terms that your Coldwell Banker Agent helps to negotiate with the seller, you may be able to have the seller pay for you closing costs.
• GIFT: Ask a family member for a gift. FHA loans allow an immediate family member to "gift" you a down payment - tax-free to both you and them. Same closing cost option as #1 may apply.
• Updated July 2009 - Home Buyer Tax Credit Advantage program provided  by the Ohio Housing Finance Agency (OHFA) and offered through our own Legacy Mortgage giving eligible buyers the ability to access the Tax Credit money and actually use it for the downpayment  for their  home.
• Sponsored by the Ohio Housing Finance Agency, accessible through Legacy Mortgage - (937) 434-8444
• OHFA will issue a loan, as a second mortgage, up to 3% of the purchase price of the home.
• You can use the loan to pay for the down payment, closing costs, or other prepaid expenses incurred prior to closing. Keep in mind that while the loan will greatly reduce your expenses, you may still be required to pay for some costs if they are not covered by the loan.
• If you take advantage of the loan, your second mortgage interest rate will be fixed at 1% higher than OHFA's current mortgage rates and you will begin paying August 1, 2010.
• Other restrictions may apply for qualification, including income, sale price, home buyer education programs and more. Contact us at (937) 912-1200, or visit OHFA's site.
• VA MORTGAGED BACK LOAN: If you are/were a member of the Armed Forces, you may be eligible for a VA-backed mortgage loan that requires 0% down. In addition, the same closing cost option in #1 may apply.
• LIFESTYLE CHANGES: Many prospective homeowners have reported success in saving for a down payment by making small but reasonable lifestyle changes. For example, an average of $20 per weekday in eating-out equals $5,200 per year alone. Cutting that back, along with other small lifestyle changes can pay for your upfront down payment, and maybe more!

Ready to learn more? Call us at (937) 912-1200, or contact us for more information on how to begin!