Common Homeowner Questions
1. Why should I buy, instead of rent?
Answer: A home is an investment. When you rent, you write your monthly check and that money is gone forever. But when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. This will save you a lot each year, because the interest you pay will make up most of your monthly payment for most of the years of your mortgage. You can also deduct the property taxes you pay as a homeowner. In addition, the value of your home may go up over the years. Finally, you'll enjoy having something that's all yours - a home where your own personal style will tell the world who you are.
2. Can I become a homebuyer even if I have I've had bad credit, and don't have much for a down-payment?
Answer: Today, there are more options than ever when it comes to financing a home. At TCRcolorado, we work with the best lenders in the home building industry. Chances are they have a program tailored to meet your needs and your budget.
3. Are there special homeownership grants or programs for single parents?
Answer: There is help available. Although as a single parent, you won't have the benefit of two incomes on which to qualify for a loan. Again, come in and visit with any of our TCRcolorado Sales Associates. They'll work with you to get you the answers you need.
4. Should I use a real estate broker?
Answer:If you are unsure about where to live or if you would feel more comfortable working with a professional, then using a real estate broker is a very good idea. A good real estate professional can help guide you through the entire process and make the experience much easier. Like our Sales Associates, a real estate broker will be well-acquainted with all the important things you may be considering...the quality of schools, the number of children in the area, the safety of the neighborhood, traffic volume, and more. He or she will help you figure the price range that works for you. In short, a broker will be there to hold your hand and answer last-minute questions when you sign the final papers at closing.
5. How much money will I have to come up with to buy a home?
Answer: Again, it depends. There are a number of factors, including the cost of the house and the type of mortgage you choose. In general, you need to come up with enough money to cover three costs: earnest money - the deposit you make on the home when you submit your offer; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and closing costs, the costs associated with processing the paperwork to buy a house.
When you make an offer on a home, your earnest money will be put into an escrow account. If we accept the offer, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies. And at some of our communities, we are working with our preferred lenders to offer special incentives where you won't need down payment or closing dollars. As these programs are constantly changing, we suggest that you visit one of our communities to discuss these programs with our Sales Associate. However, in general the more money you can put into your down payment, the lower your mortgage payment will be. Some types of loans require 10-20% of the purchase price, others don't. Again, we suggest visiting one of our communities for more information.
6. How do I know if I can get a loan?
Answer: In the Get Financed! area of our site, we have included a mortgage calculator to help you better understand what your payment might be. If you have visited our community and have chosen a home that works for you, our Sales Associate will put you in touch with our preferred lenders to get the process started. They will be able to work with you, helping you know how much you can afford.
7. How do I find a lender?
Answer: While you can hire any lender you desire, we recommend working with our preferred lenders. They have solid relationship with us and understand our communities...our construction practices...and have unique incite to our buyers. They have access to over a hundred loan programs, so you can be assured that they will have a loan...and payment to fit your budget.
8. In addition to the mortgage payment, what other costs do I need to consider?
Answer: Well, of course you'll have your monthly utilities. If your utilities have been covered in your rent, this may be new for you. Our Sales Associate will be able to help you get information from the seller on how much utilities normally cost. In addition, you will have homeowner association dues and you will definitely have property taxes, along with city or county taxes. Taxes normally are rolled into your mortgage payment but, as we've mentioned, these are tax-deductible. Again, our Sales Associate will be able to help you anticipate these costs.
9. So what will my mortgage cover?
Answer: Most loans have 4 parts: principal: the repayment of the amount you actually borrowed; interest: payment to the lender for the money you've borrowed; homeowners insurance (RMI): a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders; and property taxes: the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year. During the life of the loan, you'll pay far more in interest than you will in principal - sometimes two or three times more! Because of the way loans are structured, in the first years you'll be paying mostly interest in your monthly payments. In the final years, you'll be paying mostly principal.
10. What do I need to take with me when I apply for a mortgage?
Answer: Good question! If you have everything with you when you visit your lender, you'll save a good deal of time. You should have: 1) social security numbers for both your and your spouse (if applicable); 2) copies of your checking and savings account statements for the past 6 months; 3) evidence of any other assets like bonds or stocks; 4) a recent paycheck stub detailing your earnings; 5) a list of all credit card accounts and the approximate monthly amounts owed on each; 6) a list of account numbers and balances due on outstanding loans, such as car loans; 7) copies of your last 2 years' income tax statements; and 8) the name and address of someone who can verify your employment.
11. I know there are lots of types of mortgages - how do I know which one is best for me?
Answer: You're right - there are many types of mortgages, and the more you know about them before you start, the better. Most people use a fixed-rate mortgage. In a fixed rate mortgage, your interest rate stays the same for the term of the mortgage, which normally is 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it. Another kind of mortgage is an Adjustable Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index, such as the U.S. Treasury Securities index. The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower. Again, we suggest talking to our Sales Associate first. They will put you in touch with our preferred lenders, who will help you determine which loan is best for you.
12. So what will happen at closing?
Answer: Basically, you'll sit at a table with your broker and/or a broker for our preferred lenders, and a closing agent. The closing agent will have a stack of papers for you and the seller to sign. While he or she will give you a basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to make sure you know exactly what you're signing. After all, this is a large amount of money you're committing to pay for a lot of years! Before you go to closing, your lender is required to give you a booklet explaining the closing costs, a "good faith estimate" of how much cash you'll have to supply at closing, and a list of documents you'll need at closing. If you don't get those items, be sure to call your lender BEFORE you go to closing. Be sure to read our booklet on settlement costs. It will help you understand your rights in the process. Don't hesitate to ask questions.
