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Fairbanks Daily News-Miner, Friday, March 23, 2012
How much should I save before buying a home?
IF YOU WANT TO REMODEL . . .
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to push you into something you can’t afford. It is more to show you that you should explore your options, and realize that there can be a lot of creativity that is used in a home purchase, to adjust to your needs. You should still examine your finances and make a budget to ensure that you are in a good place to buy and can afford the monthly payment and other associated costs that come along with home ownership. Moral of the story is: Don’t wait. And if you are waiting for the market “to be at the lowest,” well then you won’t know that until it is already gone.
We can’t pinpoint a low point in a market until it has already reached that point and the market is climbing, and you missed it. Every market is different. The market in Fairbanks is very different from other markets around the United States. Questions? You may contact Zeb Mabie at 388-6348 or send e-mails to zeb@gci.net.
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Next, I would like to give you a little scenario. Here is a little food for thought: There are a lot of buyers Interest rates are at an who have a preconceived all-time low. notion on how much they They have been hovering need to save before buying a around 3.75 percent to 4 perhome. cent for the last year or so. A This is largely based on couple of years ago, interest what they have heard from rates were at 6 percent. Let their parents, friends, colme show you how different leagues, and others. The the payments are. truth is, there is no right Here are 2 scenarios. We answer for everyone. are going to use 3.875 perThere are many loan procent vs. 6 percent grams out there that require • Purchase price of different amounts of down $175,000, interest rate at payments. 3.875 percent = $1,186.16 Zeb Mabie There are programs like per month important step before VA that allow for 0 percent (With this example: Paydown, RD at 0 percent down, searching for a home. ments were calculated with Most sellers request that HUD 184 at 2.25 percent for a conventional loan, 5 perall buyers viewing their Alaska Natives or American cent down, a MIL rate of 17 Indians, FHA at 3.5 percent home are to be prequalified. percent, home owners insurAfter being prequalified down, conventional as low as ance of $615, and monthly you will get a letter from 5 percent down. Those are mortgage insurance. APR is your lending institution the most typical ones that 4.6071 percent ) stating you are prequalified. people use. • Purchase price of There are other loan pro- They also will prepare a cost $175,000, interest rate of grams that are out there for sheet for you that shows you 6 percent = $1,401.15 per the estimated payment per disabled veterans and low month income buyers that allow for month and the estimated (With this example: Payeven more creative loan pro- closing costs. ments were calculated with a Don’t let the closing costs conventional loan, 5 percent grams. scare you if you are short This could include down, a MIL rate of 17 perof funds at this time. Many reduced interest rates, cent, home owners insurance times closing costs can be reduced down payments, $615, and monthly mortgage negotiated, and paid by the grants for down payments, insurance. APR is 6.8556 no VA funding fees, reduced seller. percent) Also, you may have poor closing costs and more. That is a savings of credit, or what you think is The key to knowing how $214.99 per month at this poor credit. Leave that up to purchase price. The savings much you need to save the lender. before buying is two very per month is even larger on You may qualify for some important steps. larger purchase prices. loans programs, or if not, 1. Choose a Realtor and Not only are there advanmost lenders will help you schedule an appointment tages with interest rates plan to get your credit up to right now, but there are tax for a buyer’s consultation. the minimum level. A buyer consultation is a advantages to owning verMost importantly, you will sus renting also, but that meeting with a Realtor that discusses the general buying not know every loan program conversation will have to process and many of the spe- that may fit your needs, and be directed to a tax profesthe monies you have to come sional. cifics that are included like: up with, until you do this. talking about your needs, This article is not meant financing options, closing costs, appraisal process, as-built surveys, title companies, home inspection process, other inspections like well/septic, radon, arsenic and more. It is really important you get as educated as possible Call for your free in-home consultation. before you begin looking for homes. Building Alaska since 1977 2. Select a local lender We’ll be here next year! and make an appointment to get prequalified. Being prequalified is another By ZEB MABIE Century 21