Questions on Buying a Home     

What's My Price Range?

Determining how much house you can reasonably afford, and the sizes of your mortgage, requires carefully evaluating:
 
1. Savings - how much have you set aside to cover a down payment on your home, as well as your closing costs? Many loans require 20 percent down payment.
2. Affordability - how much can you safely borrow, and still meet all your financial obligations?

When evaluating how much you can afford for your home and mortgage, lenders usually use two rules of thumb:

1. Your maximum monthly mortgage payment should not exceed 28 percent of your gross (pre-tax) income.
2. Your maximum debt load, including your mortgage payment, should not exceed 30 percent of your gross income.

What does my credit profile look like?
 
Request your free credit report at annualcreditreport.com to check for errors and negative information on your report. For a small fee you can get your credit score.
Lenders typically require a minimum credit score of 620 or 640 and higher for government-insured loan programs, but for the lowest mortgage rates you need a credit score of 740 or above.

What's the difference between being pre-qualified and pre-approved for a mortgage?
 
Pre-qualification: An informal determination by a lender or mortgage broker stating how much mortgage you can afford.
Pre-approval: A guarantee in writing by a lender to grant you a loan up to a specified amount.

Estimating Closing Cost
           Typically, buyer will pay between about 3 to 5 percent of the purchase price of home. Here is a list of fees:

Legal and Title Costs

1. Attorney Fee: Normally $850 and up, depending on the attorney and the transaction
 
2. Title Search: $300-$500 approx.
 
3. Title Insurance: Varies. Usually $2,000-$2,500 for houses from $500,000 - $600,000
 
4. Recording Fee: Required by local County clerk approx. $400 (per instrument to be recorded).
  
5. Survey: Averages $400-$650
Mortgage Costs
1. Application Fee: Set by lender, approx. $250-$500
 
2. Lender's Attorney Review Fee: $200 - $500 average where applicable
 
3. Appraisal Fee : $400 - $500
 
4. Prepaid Interest: Paid to lender. Covers interest on mortgage beginning from day of closing to end of first month
  
5. Escrow Fees: Paid to lender, covering approximately 3 months of real estate taxes, fire/flood insurance, and PMI premium where applicable
 
6. Points: Paid to lender usually 1-3 (1 point =1% of mortgage)
 
7. Private Mortgage Insurance (PMI): Usually required if mortgage is more than 80% of purchase price. Estimated cost: 0.5% -1.5% of the loan amount to pre-pay for the first year.
 
Home Inspection Fee
1. Home Inspection: $500 - $700
 
2. Radon inspection: $200 - $300
 
3. Wood destroying Insect inspection: $200 - $300
 
4. Under-Ground Oil Tank Search (if applicable): $500 approx.
 
Other Costs
 1. Homeowner's Insurance: One family house $600-$1,200/year.
 2. Flood Insurance (if applicable): approx. $600/year
 
 3. Mansion Tax on Residential Properties: 1% when Sales Price is over $1,000,000
 
Condo and Co-op
1. Community entry fee: Usually calculated by some formula of the maintenance, i.e.. 3 times the monthly maintenance
 
2. Move-in fees: $200 - $500 where applicable
 
3. Processing fee: $100 - $300 where applicable