| 1. What do Money Ideas do?
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| We use state of the art technology and experience
to weave the Home Loan lender minefield. We ask you
a series of questions; lenders are eliminated one by
one, until you are matched to the right lender or a
shortlist of comparable potential lenders depending
on your individual needs. |
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| 2. Why don’t I go straight
to the banks myself? |
There are now well over fifty home loan lenders in Australia.
Each lender has different lending policies and guidelines
to follow. A bank can only offer you the best of what
they have available. Unless you are extremely lucky
it is very likely that we will find you a better overall
deal than you could find for yourself. Remember interest
rates are important but are only part of a home loan
package.
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| 3. Would it really make much
of a difference? |
Yes. Imagine you found a property that you just had
to have. You are very confidant that you can afford
the repayments. What if the lender you chose said that
under their lending policy you will need to save more
or buy a cheaper house, either way you lose dream property.
Money Ideas would already have known their lending policy
and would have offered you alternative lenders to choose
from, maybe even at a lower rates of interest!
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| 4. What loan types does Money
Ideas work with? |
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Money Ideas are proud to say that whatever your finance
needs are we can assist.
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GETTING STARTED
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| 5. HOW DO I KNOW IF I'M READY
TO BUY A HOME? |
You can find out by asking yourself some questions:
Do I have a steady source of income (usually a job)?
Have I been employed on a regular basis for the last
2-3 years? Is my current income reliable?
Do I have a good record of paying my bills?
If purchasing. Do I have money saved for a deposit?
Do I have the ability to pay a mortgage every month,
plus normal living expenses?
If you can answer, "yes" to these questions,
you are probably ready to buy your own home.
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| 6. HOW DO I BEGIN THE PROCESS
OF BUYING A HOME? |
Start by thinking about your situation. How much can
you afford for a monthly mortgage payment and deposit?
We can then give you an idea of what price market you
are in to purchase. The next step is to work out what
area or suburbs you would like to live in or near. Do
you want a flat/unit/house? Garden? Schools and shopping
centers. Once you know what your limit is, you can then
look for what that buys you in the areas that you like.
Talk to friends and family, drive through neighborhoods,
and look in the "Homes for sale" section of
the newspapers and Internet.
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| 7.What about Real Estate Agents? |
No one knows properties in a suburb better than the
local real estate agent. They will love to hear from
you and will do all they can to help you buy a property
in their area. The agent is a great knowledge bank to
access and on the whole is extremely likeable and friendly.
But be warned! The agent can only show you properties
that they have listed for sale (other properties will
be listed with other agents) and remember at all times
that the agent is acting for the vendor (house owner),
trying to get them the highest amount.
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| 8. HOW DOES THE LENDER DECIDE
THE MAXIMUM LOAN AMOUNT THAT CAN AFFORD? |
The lender considers your debt-to-income ratio, which
is a comparison of your gross (pre-tax) income to housing
and non-housing expenses. Non-housing expenses include
such long-term debts as personal loan and credit card
payments, maintenance, or child support. The lender
also likes to see that you have saved a deposit over
at period of time or otherwise are able to pay a significant
deposit.
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FINDING YOUR HOME |
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| 9. WHAT SHOULD I LOOK
FOR WHEN WALKING THROUGH A HOME? |
In addition to comparing the home to your minimum requirement
and wish lists, consider the following:
Is there enough room for both the present and the future?
Are there enough bedrooms and bathrooms?
Is the house structurally sound?
Do the mechanical systems and appliances work?
Is the yard big enough?
Do you like the floor plan?
Will your furniture fit in the space? Is there enough
storage space? (Bring a tape measure to better answer
these questions.)
Does anything need to repaired or replaced? Will the
seller repair or replace the items?
Imagine the house in good weather and bad, and in each
season. Will you be happy with it year-round?
Take your time and think carefully about each house
you see. Ask your real estate agent to point out the
pros and cons of each home from a professional standpoint.
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YOU'VE FOUND IT |
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| 10. WHAT DOES A HOME INSPECTOR
DO, AND HOW DOES AN INSPECTION FIGURE IN THE PURCHASE
OF A HOME? |
An inspector checks the safety of your potential new
home. Home Inspectors focus especially on the structure,
construction, and mechanical systems of the house and
will make you aware of only repairs, which are needed.
The Inspector does not evaluate whether or not you're
getting good value for your money. Generally, an inspector
checks (and gives prices for repairs on): the electrical
system, plumbing and waste disposal, the water heater,
insulation and Ventilation, the HVAC system, water source
and quality, the potential presence of pests, the foundation,
doors, windows, ceilings, walls, floors, and roof. Be
sure to hire a home inspector that is qualified and
experienced.
It's a good idea to have an inspection before you sign
a written offer since, once the deal is closed, you've
bought the house as is." Or, you may want to include
an inspection clause in the offer when negotiating for
a home. An inspection t clause gives you an 'out"
on buying the house if serious problems are found, or
gives you the ability to re-negotiate the purchase price
if repairs are needed. An inspection clause can also
specify that the seller must fix the problem(s) before
you purchase the house.
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| 11. DO I NEED A LAWYER TO BUY
A HOME? |
Laws vary by state. Some states require a lawyer to
assist in several aspects of the home buying process
while other states do not, as long as a qualified real
estate professional is involved. Even if your state
doesn't require one, you may want to hire a lawyer to
help with the complex paperwork and legal contracts.
A lawyer can review contracts, make you aware of special
considerations, and assist you with the closing process.
Your real estate agent may be able to recommend a lawyer.
If not, shop around. Find out what services are provided
for what fee, and whether the attorney is experienced
at representing home buyers |
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| 12. DO I REALLY NEED HOMEOWNER'S
INSURANCE? |
Yes. A paid and current homeowner's insurance policy
is required at closing, so arrangements will have to
be made prior to that day. Plus, involving the insurance
agent early in the home buying process can save you
money. Insurance agents are a great resource for information
on home safety and they can give tips on how to keep
insurance premiums low.
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| 13. HOW DO I MAKE AN OFFER? |
Your real estate agent will assist you in making an
offer, which will include the following information:
Complete legal description of the property
Amount of initial deposit money
Total deposit and financing details
Proposed settlement date
Price you are offering
Length of time the offer is valid
Details of the deal, what you expect to be included
in the sale.
Remember that this is still only an offer until it is
signed as accepted by the vendor.
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| 14. HOW DO I DETERMINE THE
INITIAL OFFER? |
Unless you have a buyer's agent, remember that the agent
works for the seller. Make a point of asking him or
her to keep your discussions and information confidential.
Listen to your real estate agent's advice, but follow
your own instincts on deciding a fair price. Calculating
your offer should involve several factors: what homes
sell for in the area, the home's condition, how long
it's been on the market, financing terms, and the seller's
situation. By the time you're ready to make an offer,
you should have a good idea of what the home is worth
and what you can afford. And, be prepared for give-and-take
negotiation, which is very common when buying a home.
The buyer and seller may often go back and forth until
they can agree on a price.
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| 15. WHAT IS DEPOSIT MONEY?
HOW MUCH SHOULD I SET ASIDE? |
Deposit money is money put down to demonstrate your
seriousness about buying a home. It must be substantial
enough to demonstrate good faith and is usually between
5% to 10% of the purchase price (though the amount can
vary if both parties agree). If your offer is accepted,
the deposit money becomes part of your total payment
or closing costs. If the initial offer is rejected,
your money is returned to you. If your offer is accepted
and then you back out of a deal, you may forfeit the
entire amount.
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GENERAL FINANCING QUESTIONS:
THE BASICS |
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| 16. WHAT IS A MORTGAGE? |
Generally speaking, a mortgage is a loan obtained to
purchase real estate. The "mortgage" itself
is a lien (a legal claim) on the home or property that
secures the promise to pay the debt. All mortgages have
two features in common: principal and interest. |
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| 17. WHAT IS A LOAN TO VALUE
(LTV) HOW DOES IT DETERMINE THE SIZE OF MY LOAN? |
The loan to value ratio is the amount of money you borrow
compared with the price or appraised value of the home
you are purchasing. Each loan has a specific LTV limit.
For example: With a 95% LTV loan on a home priced at
$200,000, you could borrow up to $190,000 (95% of $200,000),
and would have to pay up to $20,00 as a down payment.
The LTV ratio reflects the amount of equity borrowers
have in their homes. The higher the LTV the less cash
home buyers are required to pay out of their own funds.
So, to protect lenders against potential loss in case
of default, higher LTV loans (80% or more) usually require
mortgage insurance policy.
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| 18. HOW LARGE OF A DEPOSIT
DO I NEED? |
There are mortgage options now available that only require
a down payment of 5% or less of the purchase price.
But the larger the down payment, the less you have to
borrow, and the more equity you'll have. Mortgages with
less than a 20% down payment generally require a mortgage
insurance policy to secure the loan. When considering
the size of your down payment, consider that you'll
also need money for closing costs, moving expenses,
and - possibly -repairs and decorating.
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| 19. WHAT STEPS NEED TO BE TAKEN
TO SECURE A LOAN? |
The first step in securing a loan is to complete a loan
application. To do so, you'll need the following information.
Pay slips for the past 2-3 months or a letter from your
employer.
Group certificates or tax returns for the past 2 years
6 to 12 months statements of your existing home loan(s).
6 months statements of any other loans.
Proof of any other income.
Sales contract if purchasing. Rates notice if refinancing.
During the application process, the lender will order
a report on your credit history and a professional valuation
of the property you want to purchase. The application
approval process typically takes between 1-6 weeks.
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| 20. HOW DO I CHOOSE THE RIGHT
LENDER FOR ME? |
That is where we come in! With so many choices it is
no wonder that people get confused. Remember that obtaining
the lowest interest rate may not mean that you have
the best loan for you. We listen to what your current
and future needs are and can then suggest several lenders
from which to choose.
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| 21. HOW ARE PRE-QUALIFYING
AND PRE-APPROVAL DIFFERENT? |
Pre-qualification is an informal way to see how much
you maybe able to borrow. You can be 'pre-qualified'
over the phone with no paperwork by telling a lender
your income, your long-term debts, and how large a down
payment you can afford. Without any obligation, this
helps you arrive at a ballpark figure of the amount
you may have available to spend on a house.
Pre-approval is a lender's actual commitment to lend
to you. It involves assembling the financial records
mentioned in Question 19 (Without the property description
and sales contract) and going through a preliminary
approval process. Pre-approval gives you a definite
idea of what you can afford and shows sellers that you
are serious about buying.
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| 22.What features and benefits
do I need? |
Your personal situation will determine the best kind
of loan for you. By asking yourself a few questions,
you can help narrow your search among the many options
available and discover which loan suits you best.
Is the interest and costs on the loan going to be tax
deductible?
Do you expect your finances to change over the next
few years?
Are you planning to live in this home for a long period
of time?
Are you comfortable with the idea of a changing mortgage
payment amount?
Do you wish to be free of mortgage debt as your children
approach college age or as you prepare for retirement?
Your lender can help you use your answers to questions
such as these to decide which loan best fits your needs.
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| 23. WHAT HAPPENS AFTER I'VE
APPLIED FOR MY LOAN? |
It usually takes a lender between 1-6 weeks to complete
the evaluation of your application. Its not unusual
for the lender to ask for more information once the
application has been submitted. The sooner you can provide
the information, the faster your application will be
processed. Once all the information has been verified
the lender will call you to let you know the outcome
of your application. If the loan is approved, a closing
date is set up and the lender will review the closing
with you. And after closing, you'll be able to move
into your new home.
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| 24. HOW DOES MY CREDIT HISTORY
IMPACT MY ABILITY TO QUALIFY? |
Greatly. Credit history is one of the major factors
that influence a lenders credit decision. A minor blemish
might rule out many lenders immediately. Major credit
impairment may mean that only a handful of lenders will
approve your loan, possibly with special conditions.
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| 25. WHAT IS MORTGAGE INSURANCE? |
Mortgage insurance is a policy that protects lenders
against some or most of the losses that result from
defaults on home mortgages. It's required primarily
for borrowers making a down payment of less than 20%.
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| 26. HOW DOES MORTGAGE INSURANCE
WORK? |
Like home or auto insurance, mortgage insurance requires
payment of a premium, is for protection against loss,
and is used in the event of an emergency. If a borrower
can't repay an insured mortgage loan as agreed, the
lender may foreclose on the property and file a claim
with the mortgage insurer for some or most of the total
losses.
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| 27. DO I NEED MORTGAGE INSURANCE?
HOW DO I GET IT? |
You will probably need mortgage insurance if you plan
to make a deposit of less than 20% of the purchase price
of the home. There are multiple mortgage insurers and
their premiums vary. Money Ideas will negotiate on your
behalf and explain your options.
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