We hope you find the following resource helpful. We have gathered some of the more common questions first time home buyers have asked over the years and provided answers along with some resources to help you determine if your dream of owning your own home can become reality.

Please click on the questions to bring up the answers. Thank you for considering Kay Builders.


Why should I buy instead of renting? Why should I buy instead of renting?
	Interest rates are at historically low levels and affordability is at a very high level. That said, this is one of the best times to invest in a home. Owning a home means you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes, too. The interest portion composes nearly all of your monthly payment, for more than half the number of years you'll be paying your mortgage. This adds up to hefty savings at the end of each year. You can also deduct the property taxes you pay as a homeowner on your income taxes. Lastly, when you own there is a possibility the value of your home will increase over the years. This will be an advantage should you ever sell your home. Also, there is the personal satisfaction of having something that is your own. There is a certain thrill and pride in showing off and enjoying with others your beautiful tiled kitchen, a great room where guests can gather or a thriving vegetable garden in the backyard. With renting, you write a monthly check that is gone forever and you have no equity in the money you have spent. Talk to an accountant (if you have one) or banker so that either can help you calculate the monthly payments after your interest deductions and including property taxes and insurance. You may be quite surprised how this monthly payment figure compares to your monthly housing or rental expense now.
Why should I buy a new home? Why should I buy a new home?
	Perhaps the most compelling reason to buy a new home with Kay Builders is that you are able to pick the features and plan configuration that suits your individual tastes and needs. Additionally, there is a significant amount of new-home inventory on the market right now, which means good deals are out there. Since our market is still growing, this extra inventory is rapidly being bought. Pricing will not remain at this level for long - perhaps another six to eight months. Another and very practical reason to buy a new home is that product improvements have enabled builders to provide much more energy efficient materials in the newly built homes at good prices. A new home also requires much less maintenance than even a home that is five years old.
I've had bad credit, and I don't have much for a down payment. Can I become a homebuyer?
	You may be a good candidate for one of the federal mortgage programs that are available through the Federal Housing Administration (FHA). A good place for you to start is by contacting one of the Department of Housing and Urban Development (HUD)-funded housing counseling agencies or a trusted mortgage professional. Kay Builders has several that we trust and work with closely to help our clients. They can help you sort through your options. In addition, contact your local government to see if there are any local homeownership programs that might work for you. Look in the blue pages of your phone directory for your local office of housing and community development or, if you can't find it, contact your mayor's office or your county executive's office.
I'm a single mother. How would I go about buying a home?
	Although you won't have the benefit of two incomes on which to qualify for a loan, there's no reason that you can't become a homeowner. Become familiar with the process of buying a home, look at the newspaper and on-line sources to identify properties you might find affordable and interesting and go see the homes or communities. Sometimes it is best to take a friend to help you feel more comfortable. It is also a good idea to get pre-qualified for a loan to know what your budget is. You might want to contact one of the HUD-funded housing counseling agencies in your area to talk through your options. Also, contact your local government to see if there are any home buying programs that could help you. Look in the blue pages of your phone directory for your local office of housing and community development or, if you can't find it, contact your mayor's office or your county executive's office.
How much money will I have to come up with to buy a home?
	Well, that depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: earnest money - the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and closing costs, the costs associated with processing the paperwork to buy a house. The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20 percent of the purchase price, especially in today's lending climate. That's why many first-time homebuyers turn to HUD's FHA for help. FHA loans require only 3 percent down - and sometimes less. Closing costs - which you will pay at settlement - average 3 or 4 percent of the price of your home. These costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs so you won't be caught by surprise.
How do I know if I can get a loan? How do I know if I can get a loan?
	You first need to determine if you can afford the home your interested in. Here is a link to the FHA's free online Mortgage Calculator www.fha.com/calculator_afford.cfm. Use it to help you determine if you can afford the home. If the amount you can afford is significantly less than the cost of home that interests you, then you might want to wait awhile longer. But before you give up, why don't you contact a loan officer or a HUD-funded housing counseling agency? They will help you evaluate your loan potential. A loan officer will know what kinds of mortgages are being offered and can help you choose a program that might be right for you. A loan officer will also be able to get you pre-qualified for a loan. It is best to do this before you actually start looking for a home. Then you'll know exactly how much you can afford to spend, and it will speed the process once you do find the home of your dreams.
How do I find a lender? How do I find a lender?
	You can finance a home with a loan from a bank, savings and loan, credit union, private mortgage company, or various government lenders. We have several trusted mortgage professionals (not part of our organization) that we refer potential customers to. Shopping for a loan is like shopping for any other large purchase; you can save money if you take some time to look around for the best prices. Different lenders can offer quite different interest rates and loan fees, and as you know, a lower interest rate can make a big difference in how much home you can afford. Talk with several lenders before you decide. Most lenders need 3-6 weeks for the whole loan approval process. You can find FHA-approved lenders in the Yellow Pages of your phone book. HUD does not make loans directly; you must use a HUD-approved lender if you're interested in an FHA loan.
In addition to the mortgage payment, what other costs do I need to consider?
	Well, of course you'll have your monthly utilities. If your utilities have been covered in your rent, this may be new for you. In addition, you might have homeowner association or condo association dues. You'll definitely have property taxes and homeowners insurance, and you also may have city or county taxes. Taxes and homeowners insurance are normally rolled into your mortgage payment. Any mortgage calculator on the Web can be used to easily calculate these monthly expenses.
So what will my mortgage cover? So what will my mortgage cover?
	Most loans have 4 parts: principal: the repayment of the amount you actually borrowed; interest: payment to the lender for the money you've borrowed; homeowners insurance: a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders; and property taxes: the annual city/county taxes assessed on your property. (Divided this total by the number of mortgage payments you make in a year to get your monthly payment.) Most loans are for 30 years, although 15-year loans are available, too. During the life of the loan, you'll pay far more in interest than you will in principal - sometimes two or three times more! Because of the way loans are structured, in the first years you'll be paying mostly interest in your monthly payments. In the final years, you'll be paying mostly principal.
What do I need to take with me when I apply for a mortgage?
	If you have everything with you when you visit your lender, you'll save a good deal of time. You should have: 1) social security numbers for both you and your spouse, if both of you are applying for the loan; 2) copies of your checking and savings account statements for the past 6 months; 3) evidence of any other assets like bonds or stocks; 4) a recent paycheck stub detailing your earnings; 5) a list of all credit card accounts and the approximate monthly amounts owed on each; 6) a list of account numbers and balances due on outstanding loans, such as car loans; 7) copies of your last 2 years' income tax statements; and 8) the name and address of someone who can verify your employment. Depending on your lender, you may be asked for other information. Check with your lender before the scheduled meeting
I know there are lots of types of mortgages. How do I know which one is best for me?
	You're right; there are many types of mortgages, and the more you know about them before you start, the better. Most people use a fixed-rate mortgage. In a fixed rate mortgage, your interest rate stays the same for the term of the mortgage, which normally is 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it. Another kind of mortgage is an Adjustable Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index, such as the U.S. Treasury Securities index. The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower. There are several government mortgage programs that might interest you, too. Most people have heard of FHA mortgages. The FHA doesn't actually make loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders to give mortgages to people who might not otherwise qualify for a loan.
When I find the home I want, how much should I offer?
	There are several things you should consider: 1) Is the asking price in line with prices of similar homes in the area? There are many on line services available such as Realtor.com that will help you determine what homes have sold for. 2) How long has the home been on the market? If it's been for sale for a while, the seller may be more eager to accept a lower offer. 3) How much mortgage will be required? Make sure you really can afford whatever offer you make. 4) How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In some cases, you may even want to offer more than the asking price, if you know you are competing with others for the house.
What if my offer is rejected? What if my offer is rejected?
	They often are! But don't let that stop you. Now you begin negotiating. You may have to offer more money, but you may ask the seller to cover some or all of your closing costs or to include items that wouldn't normally be expected. Often, negotiations on a price go back and forth several times before a deal is made. Just remember, don't get so caught up in negotiations that you lose sight of what you really want and can afford!
So what will happen at closing? So what will happen at closing?
	Basically, you will sit at the table with the seller and a closing agent. If you are using a real estate agent, that person should be with you as well. The closing agent will have a stack of papers for you and the seller to sign. He or she will give you a basic explanation of each paper. Before you go to closing, your lender is required to give you a booklet explaining the closing costs, a "good faith estimate" of how much cash you'll have to supply at closing, and a list of documents you'll need at closing. If you don't get those items, be sure to call your lender BEFORE you go to closing. Be sure to read HUD's booklet on settlement costs @ http://www.hud.gov/offices/hsg/sfh/res/sfhrestc.cfm. It will help you understand your rights in the process. Don't hesitate to ask questions.
What is meant by the terms buyers' market and sellers' market?
	Those terms reflect the basic economic concept of supply and demand. If there are far more homes on the market than there are potential buyers, that's a buyers' market. In a sellers' market, the inventory of homes is not enough for the number of buyers out there looking to buy a home. This is not good news for you, as sellers tend to get full asking price -or even a price above the asking price. This is how the market works