When a person wants to buy a new home, he cannot just look at real estate on sale, find one he likes, go, and get it. The first thing a potential buyer has to consider is how much he can afford when buying a new house.
This will depend on what his current salary levels are, current and future financial commitments, size of the property he wishes to purchase etc. Very few people can purchase a property outright and most need to get a decent home loan to facilitate this process.
To help them with calculating how much home loan they need to take, they can use a free online tool called the mortgage calculator. This calculator is dissimilar to the traditional calculator for it uses certain specific formulae to calculate monthly home loans that a person will need to pay.
One type of mortgage calculator will help you determine how much you can afford when you buy a new home. You will need to input figures like down payment amount you can afford, current interest rates and how much you can repay each month towards your home loan. Then the mortgage calculator will give you the purchase price of a property that you will be able to afford.
By using this type of mortgage calculator, you can save yourself the heartache and headache of bidding for a property you cannot afford. Some calculators will ask you the estimated value of a property, interest rates, and down payment amount and then calculate how much you need to pay each month.
If you use this type of calculator and find the monthly repayment of the home loan is beyond your budget, then modify the value of the property and find one that will suit your budget.
A mortgage calculator is useful for people of all categories to help them accurately predict how much they can afford. There are different types of mortgage calculators, each to calculate different figures and you can use them throughout the process of buying a new home. Apart from using a mortgage calculator, here are some other important steps to follow when you start the home loan process:
• Get pre-approved mortgage
• Use the service of a real estate agent
• Contract is accepted
• Submit application
• Property is appraised
• Underwriters examine loan
• Escrow company prepare to transfer assets
• Mortgage documents signed
• Home loan funded
• Buyer moves in
A home loan pre-approval will help the buyer determine how much he can afford, monthly home loan repayment amounts and if he will qualify for a mortgage loan. By using the service of a real estate agent, the buyer will not only be able to get advice on what property to purchase but the entire home loan process will be simply explained to him.
A realtor will be paid usually by the seller:
hence the buyer can get his services for free. The realtor will negotiate the sale price of the property on behalf of the buyer, negotiate the terms of his sales contract and also help the buyer identify where to buy a property.
For example, if a person is looking to buy a family home, then the realtor will show homes in good, safe neighborhoods within close proximity of schools, hospitals, shops, parks etc. If you are looking for a commercial property, the realtor will show property in a business district that will suit your business – a restaurant in a shopping center, a law office near the high court and such.
Once the home loan or contract is accepted, the property will be placed in escrow. The buyer can now identify the type of home loan he wants and the rates. He has to submit a loan application with details of income and assets.
The buyer’s details are verified and the property is appraised for its current worth in the market. Also, the property documents are checked to ensure it does not have any encumbrances and a smooth purchase is possible.
Once the underwriters examine the documents and approve the loan:
the escrow officer will prepare to transfer the home loan documents and the funds collected will be put in an escrow account. The title office will now have the relevant documents for the buyer to sign after which the home loan is approved and recorded. Once these home loan processes are completed satisfactorily, the buyer becomes the proud owner of a new piece of real estate.