Tip #1: Research Is The Key To Discovery
Home sellers won’t call you with an offer to buy a maintenance-free home with a wonderful mortgage. You have to find the gems yourself! Only by reading available materials, talking to friends and experts, and spending time looking at different homes, schools, and neighborhoods will you end up with your American dream. Avoid the nightmares by learning how best to buy and maintain a home. I can help you with this because of the resources, education, training, and knowledge I have available…just ask!!! This is what I do everyday and it is experience you can count on!!!
Tip #2: Make A Plan And Get Pre-Qualified
Every important decision needs to be clearly thought out. Developing a home buying plan can help you focus on the important factors and organize the entire process. You may even want to use a binder with sections on house hunting, home financing, service providers, etc. Loan pre-qualifying helps you determine the home price you can afford and presents you as a genuine prospect to the seller. A lender typically uses the 28% formula (your monthly mortgage can’t exceed 28% of your monthly income) in approving your loan, but can be higher based on the loan type and your credit score. Planning your actions and getting pre-qualified will keep you out of the panic mode, allow you to take advantage of opportunities, and most importantly, risk losing money. A thorough plan will save both time and money! Decide how much money you have to work with, where it is coming from, what type of loan is best suited for you (fixed, adjustable, FHA, VA, Conventional, USDA, etc.), and get all the required documentation together ahead of time to save time and frustration. Getting a mortgage pre-qualification letter also allows you to shop for your home with confidence too!!! This can be done quickly and easily. Ask me for a list of lenders that my previous clients have had great experience with…I can help you avoid some of the nightmares that exist out there!!! My previous experience in mortgage lending really helps out in this arena.
Tip #3: Value, Value, Value (Pre-owned or a Brand New Homebuilder)
The days of 10-30% annual appreciation have passed. Homebuyers in the 1970’s benefited tremendously from what seemed like ever appreciating home prices. Nowadays, you’re looking at slow growth while guarding against the possibilities of falling prices, skyrocketing ARM rates and corporate layoffs that can dramatically affect your home values. The classic rule of buying the worst house in the best neighborhood still applies. If you buy with an eye towards improvement, you can customize the home to fit your needs. The saying, “make money buying a home, not selling one,” should keep you focused on the long-term importance of the purchasing price. Location, location, location is now accompanied by value, value, value!!! Ask me about a comparative market analysis on the purchase of that pre-owned or new home, so you can see how that home compares value-wise to others in that area you are interested in. Newer homes provided by Homebuilders may make you think you are getting a “bargain” with all the incentives that they throw out at you, but the reality may show something quite different. That is especially why a Realtor is important to have when negotiating any purchase with a Homebuilder. A Homebuilder’s incentives that are given to a Buyer are always tied to that Buyer’s ability to negotiate…and most Buyer’s do not have the skills nor the tools available to get the real value, much less the real story and every Homebuilder knows this!!!
Tip #4: Create A Top 10 List Of Amenities and Prioritize Them
When shopping for a home, list the features (fireplace, fenced-in yard, new appliances, etc.) that are most important to you in deciding on which home to buy. Establishing “your criteria” early on will save time shopping for inappropriate homes and may keep you from buying a home on a whim. As detailed in Tip #3, your top reason for buying a home should be the value you are getting as well as the location and lifestyle change you are searching for. Some of your top 10 amenities should logically be sacrificed if an incredible value is available and the location is right.
Tip #5: Fixed vs. Adjustable Rate Mortgages
Adjustable rate mortgages have an initial fixed rate, which is followed by a period of adjustment intervals during which the rate adjusts based on the performance of several key indexes. Typically the initial fixed rate on an ARM is slightly lower than the comparable rate of a fixed rate mortgage.
Fixed rate mortgages allow buyers to take out a long term loan without having to worry about changing interest rates or monthly payments. Most fixed rate loans are offered in either 15 or 30 year terms.
Most buyers will be well served by a fixed rate loan, but each situation is unique. While ARM loans have become less popular in recent years, they can still be a viable option for some buyers – especially those who plan on selling again in the short term.
Whichever loan you choose; make sure that you scrutinize all the closing costs. By law, your loan officer must provide you with a Good Faith Estimate and Truth-in-Lending Disclosure Statement. If you are required to have a mortgage escrow account and private mortgage insurance, make sure you understand the terms and cancellation procedures. Also, make sure there are no prepayment penalties so that you can utilize an accelerated mortgage plan. A good mortgage reduction plan can save you tens of thousands in interest costs, and shorten your loan term, with only small extra principal payments. If you experience negative changes in your job, health, or marital status, you can revert to the standard payments in your mortgage contract.
Tip #6: Sign A Contract That Protects You
Make sure that the contract you put on a house allows you to arrange financing, inspect the home and negotiate any problems that you uncover. Obtaining a Residential Service Contract that has certain warranties helps, but be sure to look over a Seller’s Disclosure statement carefully if there is one. This disclosure tells you everything that the Seller knows and, perhaps, doesn’t know about the property you are interested in. Ensuring that the contract you sign will minimize potential legal battles will let you swim in your new pool with your family, friends, and neighbors instead of with the sharks. Ask if you are not sure. As a qualified and licensed Buyer’s Agent Representative, my loyalties are to you, the Buyer, not the Seller, and best of all…my services are FREE to you!!!
Tip #7: Put Yourself In The Seller’s Shoes
You are about to make one of the most important decisions that will affect both your life and the life of the seller. If you take time to understand the reasons the seller bought the home, their reasons for selling (which is sometimes hard to find out), and the home improvements they have or have not made, you’ll be in a better position to evaluate the home and negotiate a better deal. This is usually an emotional time for the Seller as well as you.
Tip #8: Develop A Mortgage Shopping Chart
One of the biggest decisions to make before putting a contract on a home is how to finance the purchase. How much money do I have to have and when do I have to have it? How much are the closing costs and will the Seller help out with these? Should I go FHA, VA, Conventional, or USDA? Fixed rate or adjustable rate? What do I have to get together for my loan application? There are 10,000 lenders competing for your mortgage business. The days of simply walking into the community bank and negotiating with the loan department manager are over. Today, you can apply for a loan over the Internet or even use a mortgage broker to shop for your loan with hundreds of lenders. When choosing a lender, you want to avoid apples to oranges contrasts by comparing fixed rates to fixed rates, not fixed to ARM’s. What appears to be a great interest rate can be skewed by higher loan fees and closing costs…compare APR’s. Again, ask the lender to provide a Good Faith Estimate and Truth-in-Lending Disclosure Statement as this will answer a lot of questions up front. Need some help or advice on what to do once you have it…again, I am just a phone call away!!!
Tip #9: Get A Quality Home Inspection
Although it is hard to believe, more people pay for inspections before buying used cars than when making the biggest investment of their lives – their homes. Paying for a qualified home inspection before you buy a home isn’t just spending “a little extra” for peace of mind; it’s absolutely essential for anyone who doesn’t want to spend thousands of dollars for repairs later. Ask me for a list of qualified inspectors. Most purchase contracts allow for an option period so that an inspection can be performed, which usually involves a small fee, to allow you time to determine just what you are potentially purchasing. If there is well or septic system involved, even more reason to have an inspection. It is also crucial when purchasing a Bank-owned foreclosure, HUD-owned property, or a home that has been previously leased-out as many of these properties are not required by law to provide Seller’s Disclosure Statements to forewarn you as to the condition of a home. My motto…”FOR YOUR PROTECTION…ALWAYS GET A HOME INSPECTION!!!”
Tip#10: Peace Of Mind: Home Protection Plans
To protect both you as a buyer, as well as the seller, it is a good idea to purchase or negotiate a home protection plan or what is commonly called a “residential service contract”. What exactly is it? A home warranty, or home protection plan, is a service contract, normally for one year, which protects homeowners against the cost of unexpected repairs or replacement of their major systems and appliances that break down due to normal wear and tear. It can also cover swimming pools, wells, and septic systems as well. A negotiable contract between the buyers and sellers which does not overlap or replace homeowner’s insurance policy, this type of warranty can save the new homeowner lots of headaches, as well as put seller’s fears to rest. The warranty covers mechanical breakdowns, while insurance typically repairs the related damage. For example: if a hot water heater burst and destroyed a wall in your home, the warranty would repair the water heater and your insurance would pay to fix the wall. This is usually negotiated “up front” in your offer to purchase a home and I always recommend it!!! There are also many companies to obtain this type of warranty with. Ask me for a recommendation!!!