Home-Buying Tips home-buying terms such as Annual Percentage Rate (APR) (NAPSA)—Purchasing a home can be the most important financial decision a person makes. That’s why it is important to understand the process of buying a home and to evaluate your budget and credit score. Here are some tips to help you navigate the home-buying process: 1. Save for your down pay- and escrow. Knowing certain ter- ment. Zero down payment mort- gages are rarely available, so it’s important that you save ahead of time. The more money you put down on the house, the lower your mortgage payment will be. And if you make a down payment of at least 20 percent of the home’s worth, you can avoid having to pay Private Mortgage Insurance (PMI). PMI is an additional cost built into your mortgage that protects the mortgage lender in the event of a default. There are a variety of programs that can assist first-time homebuyers or low- to moderateincome families. Check with the Federal Housing Administration or the state’s housing authorities for more information. 2. Shop for a mortgage before you shop for a home. Most real estate professionals recommend that you obtain a credit preapproval before you begin looking for a home. Getting preapproved generally means you receive a loan commitment from your mortgage company before you have found a home, based on a review of your credit and finances. Credit re- Owning your own home can be easier to accomplish if you heed a few hints. quirements are more stringent than they’ve been in years past, so you should review your credit report, find out what your credit score is and immediately contact the credit reporting bureaus to correct any errors. You will want your credit report to be accurate and your credit score to be as high as possible. Having your credit application preapproved shows sellers that you're a qualified buyer and helps you establish a realistic price range. You can access an online tutorial on credit from the GMAC Financial Services’ financial liter- acy program, SmartEdge, that can help you understand how credit affects your loan options, what affects your credit score and how to get on the right track. 3. Become familiar with all mortgage-related terms. The SmartEdge Web site also offers a real estate and home-financing glossary, which defines important minology can help you better understand and converse with a real estate agent or a loanofficer. 4, Ask for a comparative market analysis (CMA) before you make a purchase offer. The best way to avoid offering too much for a homeis to ask for a written CMA, which your real estate professional should be able to provide. This will show recent sales prices of comparable neighborhood homes and the asking price of nearby homes. The CMA can be shown to the seller when you make your offer. This may justify your purchase offer and show the seller why youroffer is reasonable. 5. Decide what conditions (also known as contingencies) you want to place on buying the house. Your purchase may be made contingent on obtaining financing, a building inspector’s satisfactory report or selling your present home. Real estate contracts today already include many of these standard contingencies. In addition to offering mortgage information, the SmartEdge program teaches consumers how to establish good credit, manage a budget and evaluate financing options. You can visit the SmartEdge Web site at www.SmartEdgeby GMAC.com orcall (800) 766-GMAC for more mortgage information.
