When a homebuyer accepts the sellers offer, or has the counter offer accepted by the seller, they now are on their way to possessing a more than likely worthwhile investment. Not only are homes historically great investments simply because their price will most likely continue to increase, they are great in investments because an owner will most likely be able to gain strong profits and equity from the home.

The price that is finally agreed upon by the buyer and seller as the cost of the home is not the actual total cost of the home. If it is a sellers market, all of the closing costs will usually fall upon the buyer. Closing costs may include anywhere from three to eight percent of the entire cost of the home. In addition, only a realistically small group of buyers are able to pay cash for their home. In fact, most buyers have a hard time coming up with the advised twenty percent of the down payment. Because buyers rarely have an excess of saved capitol on their hands, they will need to finance the purchase through a lending institution.

A lending institution makes money by charging a “rent” on their loan called interest. If a buyer decides to go with the minimum payments of a thirty year mortgage, they will soon discover that for the great majority of the life of the loan the payments are mainly being put towards the interest on the loan. Because loans vary so much with the rate at which they effectively cost, being extra particular and really shopping around for a lending institution is wise.

If a borrower is able, and is consistent and loyal in their repayment of the loan, they are actually making the lending agency a lot of money. If the borrower knows they are a low risk client, that they are positive they will not default on their loan and repayments, then they need to realize that the lending agency is not doing them any more of a favor than the lender is doing to the borrower.

A borrower needs to realize that there are a lot of different options in acquiring a loan. For first time borrowers there are the options of having extremely low money down, as low as five to zero percent. One issue with putting little money down is the interest rate will be a whole lot higher to compensate for the added risk of less investment on the borrowers behalf, and the monthly payment will be significantly higher.

The gold standard among lenders is to have the borrower put twenty percent down on the loan. Any less than twenty percent and lenders do get nervous and they will want an outside or another party insure the loan. Some of the insuring organizations that administer this extra investment are the veteran’s administration, some private companies, and other government agencies such as Fannie Mae.

As any buyer or borrower begins to start the process of filling out the loan application, realize that the lending institution is about to go increasingly deep into the borrowers life. They will look at pay stubs, credit history, work history, etc. During this particular part of the process, realize that the great investment buying a home is is all worth the pain of being thoroughly examined.

Author Bio: This article is brought to you by Our Best Real Estate, a website featuring Fountain Hills AZ homes for sale. Other features include Tempe AZ homes, Mesa Real Estate, and Scottsdale AZ homes for sale.

Category: Real Estate
Keywords: homes, real estate, buying a home, selling a home, realtor, realtors, loan, mortgage, foreclosure, s