Five Simple Steps to Homebuying

Are you planning to buy a new home? If this is your first home purchase, understanding the ins and outs of purchasing a home can be a bit overwhelming and confusing. With these simple steps, however, the process can be much simpler and easier to understand.

Step 1: Hiring a Real Estate Agent

Depending upon the route you want to take to purchase a home, you might want to hire a real estate agent to help you with the purchase process. If you are interested in purchasing a home directly from the homeowner, however, hiring an agent may not be necessary. Still, you should hire someone to represent you when finalizing the deal. That way, you can be certain you are not signing something that you will regret later.

Step 2: Get Pre-Approved for a Mortgage

In order to expedite the buying process, it is helpful to get pre-approved for a loan. When you get pre-approved for a loan, you know exactly how much you can spend on your home and how much you can expect to be able to borrow. This will give you a better idea of which homes you should look at and will also help you seal the deal more quickly after you find the home of your dreams.

Step 3: Determine the Location that is Right for You

Now, it is time to actually start doing some house hunting. In order to narrow down your choices, decide upon the type of setting you would like for your new home. Do you want to live in a rural location? Perhaps you would like to live in the suburbs or in the city. Or, maybe you want a home on the beach or in the mountains. Do you want lots of land or is a small city lot sufficient? Remember to consider your current family situation as well as your future plans so you can make a wise decision.

Step 4: Decide Upon the Type of House You Want

Once you have determined the right location for your dream home, it is time to consider the style of house that you want. Do you want a simple ranch home or are you looking for one with multiple stories? Do you want a basement? Are you interested in a condo or would you prefer a log home? The better you formulate a vision of the home you want, the easier it will be to find the one that suits your taste and needs.

Step 5: Consider the Amenities

Although you will pay extra for certain amenities, it is certainly easier to find a home with the ones you want rather than trying to add them on later. Some popular amenities that you might want in your home include:

• Air conditioning
• Deck
• Eat in kitchen
• Extra bathrooms
• Fireplace
• Formal dining room
• Jacuzzi / Pool
• Patio
• Screened porch
• Three car garage
• Wooded lot
• Proximity to schools / Work
• Location

Remember, purchasing a home with these amenities will cost extra, so make certain you are willing to pay more for the amenities you desire.

Whether you hire a real estate agent to help you find a home or you decide to work directly with a homeowner, you will have a much better experience if you know what you are looking for in a home. This way, you can narrow down your choices and view only those that truly suit your needs.


About the Author: Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.electronicappraiser.com/, which is a leading provider of home appraisals that offers a nationwide personalized instant informational report about house values. For more information, please visit http://www.electronicappraiser.com/.

What is PMI?

You have probably seen the initials PMI when you have applied for a home loan. If you are paying PMI, also known as Private Mortgage Insurance, it is probably because you put less than 20% down on your home mortgage.

PMI can be defined as an insurance that is required to protect the lender in the event the borrower defaults on their loan. PMI is paid for by the borrower and is included in each monthly mortgage payment. Private mortgage-insurance companies offer the insurance to lenders, who then are able to accept lower down payments than they would normally accept. The insurance then provides what the equity of a higher down payment would provide to cover a lender's losses in the unfortunate event of foreclosure. Therefore, without mortgage insurance, you might not be able to buy a home without a 20% down payment.

The cost of PMI increases as your down payment decreases. For example: The cost of PMI on a 10% down payment is less than the cost of PMI on a 5% down payment. Your PMI premium is normally added to your monthly mortgage payment.

The decision on when to cancel the private insurance coverage does not depend solely on the amount of equity in you home. The final say on terminating a private mortgage-insurance policy is reserved jointly for the lender and any investor who may have purchased an interest in the mortgage. However, in most cases, the lender will allow cancellation of mortgage insurance when the loan is paid down to 80% of the original property value. Some lenders may require that you pay PMI for one or two years before you may apply to remove it.

To cancel the PMI on your loan, you must contact your lender. In most cases, an appraisal will be required to determine the value of your property. You will probably also be required to pay for the cost of this appraisal. Another way of canceling the PMI on your loan is to refinance and to get a new loan without PMI.

At one time, homeowners didn’t know they had the option of canceling their PMI. Then, in 1998, a new federal law called The Homeowner’s Protection Act (HPA) required lenders or servicers to provide certain disclosures concerning PMI for loans secured by the consumer's primary residence obtained on or after July 29, 1999.

In the past, most lenders honored consumers' requests to drop PMI coverage if their loan balance was paid down to 80 percent of the property value and they had a good payment history. However, consumers were responsible for requesting cancellation and many consumers were not aware of this possibility. Consumers had to keep track of their loan balance to know if they had enough equity and they had to request that the lender discontinue requiring PMI coverage. In many cases, people failed to make this request even after they became eligible, and they paid unnecessary premiums ranging from $250 to $1,200 per year for several years. With the new law, both consumers and lenders share responsibility for how long PMI coverage is required.


Under HPA, you have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less. You also need a good payment history, meaning that you have not been 30 days late with your mortgage payment within a year of your request, or 60 days late within two years. Your lender may require evidence that the value of the property has not declined below its original value and that the property does not have a second mortgage, such as a home equity loan.

Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant home appraisal service. For more information, please visit www.electronicappraiser.com.