Why should I use a real estate agent?

A real estate agent is more than just a "sales person."  They act on your behalf as your agent, providing you with advice and guidance and doing a job - helping you buy or sell a home.  Due to the fast changing market, the data on available listings is not 100% accurate.  There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with an agent.

There are two types of agents, "Buyer's Agents" and "Seller's Agents".  It used to be common for all parties involved to work for the seller, hence the term "Seller's Agent".  Nowadays, you will most often find a different type of agent, the "Buyer's Agent".  If you are in the market to buy, it would be advisable to use a Buyer's Agent.  They can make recommendations on what terms and prices to offer as well as negotiating a deal with your best interest in mind.  If you happen to be working with a Seller's Agent, never disclose to them the top dollar you are willing to pay for any property.  Keep it narrowed down only to things that you would tell the seller directly.  

What is the difference between a real estate agent and a real estate broker?

Most states require real estate sales professionals to be licensed by the state, so that they can control education and experience requirements and have a central authority to resolve consumer problems.

The terminology used to identify real estate professionals varies a little from state to state.  Brokers are generally required to have more education and experience than real estate salespersons or agents.

The person you normally deal with is a real estate agent or salesperson.  The salesperson is licensed by the state, but must work for a broker.  All listings are placed in the broker's name, not the salesperson's.

A broker can deal directly with home buyers and sellers, or can have a staff of salespersons or agents working for him or her. 

How can I figure out my debt-to-income ratio?

To figure out where you stand on the debt-to-income ratio, you must first understand the meaning of the figure.  Most lenders use the ratio 28/36.   The first number, which is also referred to as the front-end ratio, is the percentage of your gross monthly income that you could comfortably afford to spend on your housing payments or mortgage.  This figure includes the money you spend on property taxes and insurance as well as the loan payment itself.  

The second number, which can also be referred to as the back-end ratio, is the percentage of your gross monthly income that should be spent on all long-term monthly debts combined.

Use the following guidelines to find out where you stand:

Step 1:  First, figure out your gross monthly income (your income before taxes).  To do this, take your gross yearly income and divide it by 12.  Step 2: Multiply this figure by 28 percent (.28).  The amount you come up with is TYPICALLY the amount you could comfortably afford to spend on your housing payments per month. Step 3: Now, take your gross monthly income (your gross yearly income divided by 12) and multiply it by 36 percent (.36).  

The figure shown should be the TOTAL amount of money you spend on ALL LONG-TERM DEBTS COMBINED.  To get a more accurate mortgage estimate, tally up your monthly bills - which include car payments, credit cards, child support, alimony, etc. - and subtract this amount from the figure you just came up with.  However much money is left over is the amount you should truly be spending on your housing payments per month.

What are basis points?

Basic points relates to changes in the interest rate for your home.