Useful Tips for First Time Homebuyers

Buying a house is not a simple process and this is true if you are a first time homebuyer. There are several aspects that are considered in a home buying process and it is practically impossible to handle the home buying process on your own unless you have experienced people to handle the show. Since it is not possible for you to manage the entire show on your own, it is important that you trust people whose services you hire. For instance, the realtors, mortgage broker, home inspector etc they are the people who can help you to take a correct decision about buying a new home. Just keep in mind that they too are professionals and they have their share of commissions.

While a realtor can help you to find out the true value of your new home, he can also suggest whether buying a house in a particular locality is worth the money you will be shelling out. A home inspector can help you in identifying the areas that need to be repaired and the cost involved in the same. You can also talk to your friends and family members residing in that area, if you have one.

Although it is true that the home buying process cannot be handled alone, try to understand as much as you can and if you have any confusion, don't hesitate to get it clarified.

If you are a first time home buyer then you should follow the following useful steps
• Determine your affordability
• Find a good location
• Work out a budget
• Gain knowledge about the local market
• Read the fine print
• Make improvements before you start living

In addition to the factors mentioned above, there are very minute details that require your attention. Shop around for the best deals so that you don’t have to regret for your decisions later

Private Mortgage Insurance: Safeguard for Lenders

If you have purchased a house through obtaining a mortgage loan that exceeds 80% of the price of your house, then your lender would ask you to buy an additional insurance. This insurance is known as Private Mortgage Insurance. In simple terms, if you are a home buyer making a down payment below 20%, it becomes essential for you to buy PMI.

Advantages of PMI

Private Mortgage Insurance offers a number of advantages and they include the following:

1) PMI offers protection to a lender in the event of a loss resulting from a default in loan repayments by a debtor
2) It allows a potential home buyer to enjoy higher accessibility to home ownership if he does not have adequate cash for down payment
3) It helps a potential home buyer to buy a home with down payment as low as 3%-5%
4) You need not wait until you accumulate sufficient money for the purpose of purchasing a house.

New Prerequisites for PMI

According to the new federal regulation, The Homeowners Protection Act of 1998, lenders are required to provide particular disclosures about Private Mortgage Insurance for loans. The lenders have to make these disclosures in relation to PMI for loans obtained by the principal residences of the borrowers prior to, on or later than 29th July, 1999. There are also clauses for involuntary cancellation of PMI and termination of PMI asked for by the borrower.

What is covered Under the Homeowners Protection Act?

Usually, The Homeowners Protection Act of 1998 is pertinent for mortgage deals of home buyers buying houses later than 29th July, 1999. Nevertheless, it is also applicable for the loans taken earlier than 29th July, 1999. This act does not apply for VA and FHA loans. Furthermore, the new law has separate prerequisites for loans categorized as "high-risk" loans.