Is the real estate section of your local paper filled with stories about how slow the real estate market in your area is? Is it taking months to sell the homes on the market? If this description fits your area, and you have been waiting for the perfect time to buy a house, this is the time! This kind of market is referred to as a "home buyers' market" for good reason--it is an opportunity for buyers to select from a large number of homes that could satisfy their needs. Everyone involved is ready to bend over backwards to make it possible for you to buy your dream home. Most sellers are highly motivated and so are the local Realtors, loan officers, title companies, and other professionals involved in the transaction. It is important to remember that the real estate market runs in cycles, and conditions can change without a lot of warning. This could be the perfect time to contact a good Realtor to discuss your needs and to explore the possibilities available to you.
A Good Start!
When a real estate agent begins to work with a new buyer, he or she will sit down with them and ask a lot of questions, and do a lot of listening. In the initial buyer interview, we try to get a clear idea of what you are looking for, as well as the approximate price range, considering your overall financial picture. The agent will explain how we work to represent you, what the local market is like, and what we can do to help you locate that perfect home. At this initial interview, it is important for buyers to be as clear as possible about their needs. After you have talked and decided how much you can comfortably spend, he or she won't show you homes you might love that are way out of your price range. If the agent knows that you have bad knees and want to avoid stairs, you won't be taken through three-story colonials with top floor master suites. Promoting clear communication with our customers is good business for us, and it can save you hours of house hunting.
A Great Opportunity
It may seem like "the impossible dream" to first-time buyers who have to stretch in order to purchase their first home. Many younger buyers can afford the monthly mortgage payments, but they may have to get creative to cover the down payment and closing costs. If you are thinking about buying your first home, contact a real estate professional. If your funds are limited, there may be possibilities you have not considered, such as local or federal loan programs that can get you moved into your new home. Sellers are sometimes willing to extend a small loan to help cover closing costs in order to complete the sale. You should also consider the many housing options available. If you aren't sure that you can afford a single-family home, there are beautiful condominiums and townhouses with amenities and prices that are designed to appeal to first-time buyers.
A Realtors Services
"Few things in life are free", right? One thing is still free--the guidance and assistance of a real estate sales professional for home buyers. In the traditional real estate sales transaction, it is the seller who pays the commission that is divided among the various sales professionals involved in the transaction when the home is sold. Unless you are hiring a buyer's broker, you get several free services from the Realtor: 1) Target marketing which gives you quick, precise targeting of homes you want, in a price range you can afford. 2) Loan pre-qualification. This saves you much time and the potential disappointment of finding the perfect house (which you can't afford). 3) Guidance in obtaining the best mortgage terms. The marketing professional knows that if there is no financing, there is no purchase. Most Realtors have become quite expert in the mortgage market. Another old saying is "The best things in life are free."
Affording A Home
It is important to know how much you can afford before you begin looking at homes. You should also talk with a lender and get pre-approved for a loan. This puts you in a stronger negotiating position with a seller. As a rule, your monthly housing costs should not be more than 28% of your monthly pre-tax income, including the mortgage payment, real estate taxes, and insurance. If you have long-term debts, such as student loans or car payments, your monthly payments, including your housing costs, should be less than 36% of your pre-tax monthly income. Some loans, such as VA and FHA loans, are more flexible with these basic guidelines. Depending on which type of mortgage you select, you can consider houses in various price ranges. An adjustable-rate mortgage will usually enable you to qualify for a higher loan amount. Your Realtor can help you make the basic calculations. And remember, buying at the top end of your price range gives you more time to outgrow your home, and can save you money in the long run.
Bargaining
You have done everything that your agent recommended to make your home look wonderful--and, you have cut the price to the bone. Then an offer comes in which is so low that you are offended! Is it possible to reconcile your differences and reach a meeting of the minds when faced with such an offer? It may not take many concessions from you to make it work if the people who love your house also love to bargain. Even though it seems that you are very far apart in dollars or terms, the real distance may not be all that great. Your Realtor can help you determine if the buyers are ready, willing and able to carry through with the transaction. If they are qualified, the next step involves looking at your differences. Make a list of the discrepancies, and then begin to look for areas where you have some flexibility. You may have to go back and forth several times in order to make the transaction work. The trick is to be patient and to not take the process personally!
Credit Card Traps
It is not unusual for first-time buyers to be free of debt. They have been saving for their first home for many months or even years. Soon after they moved into their new home, they are deluged with pre-approved credit card applications from banks and stores they have never heard of. Before they realize what is happening, some new homeowners can get over their heads in debt. The consumer credit agencies know that mortgage companies do thorough checks before approving a loan, and those who have passed through that process are considered good credit risks. They also know that new homeowners often need to make major purchases of furniture and appliances at a time when they have depleted most of their savings accounts. After years of disciplined savings, new owners may be faced with a tremendous temptation to just say "charge it" for the things they need. If you have just purchased a home, be aware--and wary--when those applications start pouring in!
Finding A Loan
Now that you have found the perfect home and negotiated the price and terms with the sellers, you come to the most difficult part of the transaction--finding the perfect loan. You should do some comparison shopping among lenders. Your Realtor can refer you to several reputable lending institutions which should be able to complete the loan process before your proposed financial approval date. The loan officer will take your application and have you sign all the necessary papers to authorize credit and employment verifications. You and the Realtor should get periodic progress reports to make sure that all of the details are taken care of. Such reports will help to ensure that any potential problems are discovered and addressed before they can threaten the transaction.
Finding A Realtor
Finding a good Realtor whom you like and trust is the first step in locating your new home. Call or stop by a real estate office and ask to speak with the manager. Describe what type of home you are looking for. The manager can refer you to an agent who knows that market very well. You might also use weekend "open houses" as opportunities to look for a Realtor, as well as a new home. It is really a matter of chemistry! If you meet someone who is knowledgeable and with whom you feel comfortable, call that person! Once you establish a good working relationship with a Realtor, your agent can show you the homes for sale, even if they are listed with other companies. Often they can show you a property as soon as it is placed on the market. (Many of the best homes never even make it to the weekend classified section of the newspaper).
First Time Buyers
Most first-time buyers can qualify for a mortgage loan, but they may need help from parents to make the down payment or closing costs on their home. There are loan programs that minimize the down payment and closing costs for first-time buyers. These programs usually require that 3 to 5 percent of the purchase price come from the buyers funds, not from a loan or gift. Most lenders ask for the last three months' bank records, and the borrower will be asked to reveal the origin of any large deposits. If the money comes from the parents, the lender may not consider those funds when qualifying the buyers. If you are planning to help your children finance a home, you should transfer any funds several months before they begin their house-hunting. If it is a loan, you should draw up a formal re-payment agreement with your children to eliminate potential misunderstandings between you, your children, and any siblings.
First-Time Buyers
People who are selling their homes should know something about the market group from which their buyers are likely to appear. Many homes are perfect for a first-time buyer. First-time home buyers are usually younger (usually between 25 and 34 years of age) and have distinct buying patterns. First-timers often have to settle for homes that are smaller, and perhaps older, than repeat buyers. The median home size for first-timers is about 1450 square feet, for repeat buyers around 1900 square feet. Approximately four in ten first-timers will buy homes built before 1960, compared to two in ten repeat buyers. First-time buyers haven't developed a strong a sense of what they want in a house, and they may not have enough money to get exactly what they want at first. Seventy-four percent say they like their new home better than their previous residence. Two-thirds (67%) of repeat buyers say they their like their new home better, probably because they are upgrading.
Getting Organized
Looking at houses can become overwhelming for many prospective buyers. They start to run together, and you have trouble remembering which homes you liked a lot and which ones you didn't. Realtors use a few good tricks that you can use to help you remember what you have seen. Usually the Realtor will give you a copy of the listing with all the pertinent information. Write down one distinctive feature on the listing sheet that will help you remember the house. Maybe the house had unusual moldings in the dining room, a red door, or unusual wallpaper. If the house was particularly interesting to you, put a big star on the top of the page to remind yourself that you would like to see it again or even perhaps make an offer on it. If there are features for which you have a strong preference, or if you eliminate a house from consideration for any reason, be sure to tell the agent why. Communication between you and the Realtor is key. This will save you a lot of time and effort in your search because the agent will show only the homes that meet your special needs.
Good Faith Estimates
Several years ago the U.S. Congress tried to protect consumers from a few unscrupulous lenders by requiring all lenders to calculate and disclose the annual percentage rate (APR) you pay on your mortgage loan. Do yourself a favor. Forget about APR and instead direct your attention to the Good Faith Estimate of Settlement Costs (GFE). Though Congress meant well, in practice the APR is not helpful and is confusing. If you are looking for a good way to understand your costs of borrowing and/or to compare one lender's costs to another, the GFE is your best bet. Get your lender(s) to provide a written GFE before you commit your mortgage business. When reviewing a GFE, keep in mind that the lender actually controls only a handful of the disclosed costs. Other parties typically control costs of appraisal, settlement, title insurance, recording fees and taxes, survey, and the "prepaid" expenses of homeowner's insurance, mortgage insurance, real estate taxes, etc. Most of the remaining costs are controlled by your lender. Review these origination fees, discount points, etc. and you will have the ability to understand the full costs of your proposed mortgage loan.
House-Hunting Tips
You have just spent the entire day looking at homes and now they have all become a giant blur. Which house had the great dark room? Was it the same one with the small kitchen? You saw so much that you can't remember anything! Realtors have developed little tricks to help them remember the thousands of properties they see. Carry a notebook with you when you are house-hunting, and give each house its own page. At the top of the page, note the address and price. Write down the exterior construction, style and color, as well as the color of the living room carpet and walls and any other major feature that will jog your memory later. You can nickname the houses--"the white cat house" or "copper pots house"--anything to help you retain a mental picture of the property. This will enable you to recap the day and give your Realtor important feedback that can speed up your search for the perfect home!
Inspection Contingencies
Many purchase offers today have a contingency clause which allows the buyers to have an inspector or professional expert to inspect the property. If there is a significant defect in the property, the buyer can cancel the contract without losing the earnest money deposit. Such contingencies may make a seller nervous, but they are an excellent procedure for both the buyer and the seller. The time period for inspection contingencies is negotiable. In most parts of the country, the buyers have about a week in which to cancel the contract if the structural inspection reveals a serious and consequential defect. The positive side to such contingencies--the inspection usually addresses--and overcomes--the buyers' misgivings and confirms their decision to move ahead with the purchase.
Inspections
Your Realtor's job is to find the perfect home, in the right location and with all of the amenities you want--and at the right price. It is the home inspector's job to find any skeletons in the closet, or more likely in the plumbing, wiring, roof, basement and beams. The inspector won't pass or flunk a house based on what he finds, but will go over the house thoroughly to help you understand what it is you are buying. If there are any serious problems, and if they are reflected in the price, your inspector can give you a realistic idea of how much the repairs will cost. If there are surprises, you will have the opportunity to re-open negotiations with your sellers before you commit to the purchase. A good inspector will also explain how some of the basic emergency systems work, such as the main water cut off valve and the circuit breaker box, and go over the items that will need routine maintenance. If you are buying a house, we recommend that you make a professional home inspector part of your home purchase team.
Insuring Your Home
Many home buyers are concerned about whether they have an insurable interest in the property before the actual closing. The answer is an unqualified "yes". The buyer may not be the record owner of the property yet, but he or she has an insurable interest in the property as soon as the agreement of sale is executed by both the buyer and seller. So should you get hazard insurance before the closing? It depends. Buyers do not usually insure a property until the title passes to them from the seller. You should know what the agreement between you and the seller stipulates in regard to insurance. Most agreements provide that the property will be insured for a specific amount. This is very important to both parties. From the buyer's point of view, however, it is critical that an adequate sum or full replacement value be stipulated. Watch out for agreements which read "as now insured". This is an all-too-common practice which usually indicates that the seller does not to want to increase inadequate insurance coverage.
Lenders Want to Say "Yes"
If you consider yourself incapable of getting credit, you may be living in the past in terms of assessing your financial situation. Lenders are now bending over backwards to give money to borrowers. A recent survey of mortgage lenders found some interesting trends. Ninety-six percent of those surveyed had cut their standard down payment requirements for moderate-income buyers. Ninety-three percent said they are more lenient in their income-ratios (the ratio of your debts to income), and 94% of those surveyed said they now have more flexible approaches to credit histories, and look at rent and utility payments more than credit cards. Seventy-nine percent of lenders say they have relaxed employment criteria. They now look more at your capacity to generate a stable flow of income rather than requiring a long history at one job. There are more lenders today, and they are in fierce competition with each other. The home loan industry has created entire markets that cater to those with less-than-perfect credit.
Locate Your Lifestyle
If you are looking for a new home, it is important to communicate with your Realtor about any special aspects of your lifestyle that will influence your choice. This information will help the agent to locate the perfect home for you and your family. Are you a gourmet cook who loves giving lots of parties? Do you want to accommodate certain hobbies, such as painting, photography, or woodworking? Will your decision be influenced by the availability of a community gym or tennis courts? Does your son need space to rehearse with his hard rock band? Do you need a home office? Are you planning to enlarge your family? Is there someone in your household who cannot climb stairs? Knowing the significant factors that will influence your housing decision will help us narrow the selection of homes on the market.
Low Interest Rates
When you are buying a new home or refinancing your present one, it is smart to do some comparison shopping among lenders. A low interest rate isn't the only criterion by which to judge a loan. You should also consider the terms of the mortgage, what your closing costs will be and the reputation of the lender. Realtors are a good source of information about loans and lenders, whether you are buying a home or just refinancing your present home. We routinely assist buyers when they need a mortgage in order to purchase a home. We know what loan packages are available and the qualifying requirements. The companies with the lowest rates sometimes have very conservative underwriting guidelines, and may not be willing to make loans on certain types of property or to buyers who are marginally qualified. We can tell you which companies and loan officers will go the extra mile to provide excellent service to make sure that the transaction closes.
Making An Offer
You have found the perfect house and are thinking about making an offer. Even though you trust your Realtor, you are feeling some pressure just when you feel that you need time to consider the matter. The agent tells you that another party is thinking about making an offer, so you shouldn't waste time if you really want the house. What should you do? Trust your agent! It is natural to feel some pressure from even the most easy-going Realtor--and some uncertainty about making an offer. If you really like a house, there is always the possibility that someone else will share your same enthusiasm for it. Sometimes you can "sleep on it" and it won't matter. Whether the market is good or sluggish, it is a good idea to assume that another offer is likely to come in, and move as quickly as possible to minimizes the possibility of another buyer materializing.
Making Your Dream Home Come True
Your first child is on the way, and you are outgrowing your small apartment. The time seems right to seriously consider buying a house, but you are afraid you don't you have enough cash. Don't worry! Realtors are experienced in helping first-time buyers locate the financial resources to make such a move. The first step is to sit down with an agent who is familiar with available loan programs. You will need money for the down payment and your income must be high enough to meet the lender's qualifying standards. We may be able to minimize the amount of cash needed with a little help from either the sellers or the loan company. You may be able include some of the closing costs in your mortgage or the sellers might consider a lease/purchase agreement which would allow you to rent for a few months while accumulating the funds you need. If you are ready to buy your first home, let your Realtor assist you in making your dream a reality.
More Down Payment Help
Perhaps the most common deterrent to first-time home buyers is the lack of a down payment. The home loan industry has practically re-created itself in the last ten years, making it easier than ever to obtain a mortgage, and new mortgage programs are always cropping up. Some states have a state-sponsored loan program which allows buyers to purchase a home without putting any money down. A parent or other relative can guarantee repayment of ten percent of the loan if the buyer defaults. The only cash needed is for the closing costs, which typically run about three percent of the loan. Parents can also give their children down payment help through a personal note or second trust deed. The terms could be set up for monthly payments or annual payments amortized over a period of time. You could pay the interest only, and have the payoff due when the property is sold. With so many alternatives, doesn't it make sense to call your Realtor for a free consultation? You may be closer to the end of the rent trap than you think.
Property Appreciation
Most people who rent a home are probably paying less each month for housing than they would pay for a mortgage on a similar home. Why are people willing to pay more each month to own their own home? A home grows in value over the years. The rate of appreciation depends on many factors--the location, interest rates, and the general economic climate in the community. If you purchase a property for $100,000 which grows in value at the rate of 5 percent each year, it will be worth approximately $121,000 at the end of five years. At a 10 percent annual rate of growth, the value of your investment will go up to $146,000. As rent increases for those who lease a home, your payments (with a fixed-rate mortgage) will remain constant for the life of your mortgage, and the value of your home increases as you build up equity.
Realtors Questions
Realtors begin their professional relationship with buyers by asking a lot of questions about the buyer's personal and financial situation. The answers to these questions will give the Realtor a clear idea about their housing needs and price range. It is a waste of time for a Realtor to show a buyer homes they can't afford, and it can be depressing to consider unrealistic possibilities. In order to do a great job for you, your Realtor needs to have some basic information about your income, debts, and the amount of cash you have available for a purchase. Your agent also needs to know something about your lifestyle. How large is your family? Where do you work? Do you have school-age children? Do you enjoy entertaining? What hobbies would you like to accommodate? The Realtor who helps you find your new home will get to know you very well, so it is very important that you feel comfortable with that person and free to communicate openly.
Structural Inspection
If you have a house for sale your buyers will probably include a structural inspection contingency in the contract which will allow them to have an expert check the house and the major systems and appliances. A professional structural inspector can help buyers to "know" the house and to feel comfortable with it, but the inspection does not result in a pass or fail grade. The buyers will learn important things about the house, such as where the water cutoff valve is located, in case of an emergency. The inspection may also help buyers set up a budget for repairs and determine if they want to invest in cost-effective measures to increase energy efficiency. Buyers rarely back out of a sale after a structural inspection. Even if there are problems, you have the opportunity to negotiate a compromise and avoid any obstacles that could seriously threaten the sale.
Submitting Offers
Many of the offers we submit for prospective buyers aren't exactly what the sellers want; the price may be lower than they are asking or there might be terms that will require negotiation. What happens after the offer is submitted? The seller's Realtor will present the offer to the sellers, along with the buyer's qualifications. If the sellers accept the offer, then you have a purchase agreement. If the sellers counter the offer, the next action would be initiated by the buyers. If you want to buy a particular house, your chances of succeeding are greater if your offer is as close to the asking price as possible. You could save money by engaging in lengthy negotiations, but you run the risk of losing the home if another offer comes in or you risk offending the seller.
Tax Relief
The Taxpayer Relief Act of 1997 signed on August 5, 1997, allows married taxpayers to exclude from capital gains taxes up to $500,000 in gains from selling a home (singles could exclude $250,000). This exclusion replaces both the one-time $125,000 tax exclusion available for taxpayers over age 55 and the deferral of capital gains when purchasing a more expensive home. This change exempts over 99 percent of homes sales from capital gains taxes and dramatically simplifies taxes and record-keeping for over 60 million homeowners. Taxpayers can use this exclusion every two years. The new law allows capital gain exclusions whether you "buy up" to a more expensive home or "buy down" to a less expensive one. If you have a gain above the limit, it will be taxed at the new 20% capital gains rate, down from the current 28% rate. Beginning in 2001, the capital gains rate drops to 18% for taxable gains on a principal residence that you have occupied for at least five years. Homeowners can now consider several new options. Many people find themselves at an empty-nester stage (no children at home) in a four or five bedroom home with a large equity. For many of these people, their home has been their major investment and this new law will allow them to unlock the equity. They may help their children buy a first home, purchase that vacation dream-home or make other investments for retirement. Consult your tax advisor for your particular circumstance.
Termites
Most home purchase agreements have clauses that deal with termites. After the agreement is ratified, a termite inspection is arranged. Before the closing can occur, the sellers must be able to produce papers signed by a licensed exterminator stating that the house is free of infestation and any termite damage has been repaired. Before you sign an agreement to buy or sell a home, you should read the termite clause and be sure that you understand it. Who selects the exterminator and pays for the inspection? If bugs are found, who pays for the treatment? Are the sellers obligated to repair any damage and have they placed a limit of the dollar amount they will spend on those repairs? If treatment is required, the buyers may want a chance to discuss the options with the pest control company, especially if someone in the family is sensitive to the chemicals used to control the termites. Ask about the exterminator's guarantees or service contract options.
The "Perfect" House
You found a terrific house and like many smart home buyers, you included a structural inspection contingency in your purchase agreement. What happens when you find out that your "perfect" house needs some work? Do you ask the sellers to pay for the repairs? Before you answer "yes", there are some important considerations. Some contracts require all the systems, such as plumbing, heating, electrical and central air conditioning, to be in working order. In this case, the sellers may be obligated to repair any problems with these systems. Leaky roofs, damp basements, or other structural problems may not be covered, however. If you ask the sellers to make these types of repairs, you may void the contract by doing so. The sellers might prefer to negotiate the repairs to keep from losing the sale. If there are other buyers waiting in the wings with back-up contracts, however, you run the risk of losing the home.
The Buyer Interview
The first step to matching you with the perfect home usually involves an in-depth interview with the Realtor who will help you to establish a price range and to determine the features that you need in a home. The agent will ask a lot of questions, and many of them will seem very personal. What is your income and debt situation? Where do you work? Are schools an important factor? Do you have children or pets? Do you have hobbies that will create special needs? The more information your Realtor has, the easier it will be to eliminate the homes that will not work for you and show you the ones in your price range that should fit your needs. A good Realtor can be a tremendous resource in this process by providing you with information about the homes that are available, as well as about shopping facilities, community services, and public transportation. There is more to being a great real estate professional than merely marketing. The best Realtors are also the best listeners and counselors.
The Buyers Preference
Every purchase of a home involves a certain amount of compromise. When you are working with a Realtor, it is important that you give your agent a clear idea which of your criteria are flexible and which items you really must have in your new home. If you prefer a specific location, for example, discuss why you want to live in that neighborhood. The agent might be able to suggest alternatives areas which offer the same amenities or convenience to your office. How important is size? Do you really need four bedrooms or would three bedrooms work, if there is a den for your home office? How much are you willing to correct with redecorating or remodeling? Are you willing to expand your price range by using an adjustable rate mortgage to increase your buying power? We ask buyers a lot of questions so that we can use their time most efficiently and show them only houses that are real possibilities for them.
The Down Payment
Perhaps no single decision in a real estate purchase has more variables as "How much money do I put down?". All of the conventional wisdom centers around either putting down as much as you can or as little as the lender allows. If you put down a large payment, you get some leverage with the lender: little or no mortgage insurance, a good equity position, and perhaps a preferred mortgage deal. You will also have lower mortgage payments. A disadvantage of a large down payment is that you will be using after-tax dollars on which you could be earning interest. You will also have less tax-deductible interest. The advantages of a low down payment are not insignificant. You will have more tax deductible interest, and your investment value percentage will increase faster. Contrary to the effects of a large down payment, you will have little equity at the outset, and your payments (and perhaps your interest) will be higher. You will also keep more of your own money in hand to potentially earn more interest in other investments.
The Elements of Location
When you are in the market for a home, how should you evaluate the properties that appeal to you? There is an old cliché about the three most important factors of a piece of property--location, location and location. Some neighborhoods have a certain distinction that attracts buyers, but there are other factors to take into account. A house in the best part of town may have a few points subtracted if it is located on a busy street. There are buyers who would like to be close to schools, shopping, and churches, but don't want to live across the street from these facilities. You may want an easy commute to your job, but would not consider a location close to the "on" ramp for the major route into town. A location close to a airport could be convenient if you are a commercial pilot, but could make it difficult to sell even the most wonderful house. As you balance all of the factors, remember that a location liability which gets you a great house at a reasonable price, will probably require you to pass a similar savings on to future buyers.
The Perfect Home
When we help prospective buyers locate a new home we listen carefully to your goals. What are your criteria for selecting a neighborhood, what style of house do you prefer, what price range and floor plan meet your needs? Are there any special considerations that will go into making your decision? When we have a good picture of what you want, we will go to work as the master matchmaker to find the best property on the market for your needs. Our agents succeed when they can make our buyers' goals their goals. Finding you the perfect home is a collaborative effort. The buyers communicate what they want, why they want it, and where compromise might be possible, and the agent listens carefully and selects the homes that come as close as possible to meeting the needs expressed. When there is trust and communication between you and the Realtor you are working with, miracles can happen! Creating these miracles for buyers and sellers is "Job #1" for us.
The Rewards of Home Ownership
People buy a home for a lot of different reasons. They may want to put down roots in a community and create a sense of stability in their lives. Then there are the financial considerations and the "forced" savings that builds up in the form of equity. In addition, the monthly cost of owning a house is usually much more stable and predictable than renting. If you are considering the possibility of purchasing a home, contact a knowledgeable Realtor in your community. An important part of our job is to educate prospective buyers about the potential benefits and responsibilities of renting versus owning a home. We can help you determine your purchasing power and show you the best homes in your price range. We can also give you a side-by-side comparison of owning a home compared with what you pay for rent. When you fix up your home to suit your needs and taste, you benefit from the added value of the improvements instead of the landlord!
The Seller May Pay
You have finally saved enough for a down payment on your first home, with a little left over to buy the furniture you will need. Then you hear about additional closing costs you weren't anticipating which seem like a real setback. One way to cover such a shortage is to make the sellers an offer that calls for them to credit you for some of the closing costs. As a rule, the sellers may pay a maximum of 3 percent of the sales price if the buyer is putting five percent down. If the buyer is making a down payment of 10 percent or more, the seller can contribute up to 6 percent of the sales price to cover the buyer's closing costs. Some items must be paid by the buyers, such as prepaid taxes and the first month's mortgage payment. Sellers may also contribute to paying the appraisal, points, title insurance, settlement attorney fees, state or local transfer taxes and similar items. Keep in mind that if the credit is included in the price of the house, the appraiser will have to justify the amount, based on sales prices of similar homes in the neighborhood.
Time To Buy?
We are experienced in working with first-time buyers and are well-versed in the creative financing that can make dreams become realities. If you are low on cash, there may be a mortgage assistance program to help you purchase a home with limited funds. Your Realtor is familiar with these programs which have variable guidelines. A little creativity can often help you to enjoy the freedom and security of owning your own home and build up equity as your property increases in value.
Too Many Experts!
You have just found the house, and you are feeling excited and confused at the same time. You trust the agent who helped you find it and feel that the advice you received is solid. But you also want to get opinions about the house from your best friend, your parents, and your Uncle Chuck, who has an inactive real estate license. If you get too much input, you could find yourself even more confused than you already are. Your best friend can provide moral support, but probably doesn't know the market in your area. Your parents may go into shock because they feel that they got so much more house for their money 30 years ago--and it cost them a fraction of the price you are going to pay. Uncle Chuck may have passed the real estate exam a few years ago, but his insights are not as crucial as those of a professional who is currently working the market. It's not that you shouldn't consult your family and friends--just don't go overboard. Rely on the advice of professionals you trust--a structural inspector, loan officer, and a good Realtor so that you can feel comfortable about having made an informed decision.
Understanding the Bottom Line
An important part of buying a house is sitting down with your Realtor or a mortgage lender to get a clear idea of how much you can afford. They will add up all of your monthly expenses, the mortgage payment, insurance, real estate taxes, homeowners or condo association fees--and the grand total can throw you into shock. The important thing to remember is that the grand total isn't really the bottom line. When you add your tax savings to the equation, you may be pleasantly surprised. During the early years of your loan, almost all of the mortgage can be deducted from your state and federal income tax. The same is true of your real estate taxes. If you use part of your house as a home office, you may be able to qualify for additional tax savings. In some areas, homes with ground floor apartments are popular for offsetting part of the mortgage and offering even more tax savings. When you make calculations about your monthly costs that include the tax savings, you may find that owning your own home is less expensive than renting a house or apartment of comparable size.
What Can Go Wrong?
When you buy your first home, you want the best advice you can get. You want to show the house to friends and relatives before you commit. They will probably tell you about all of the things that went wrong during their own transactions so you can avoid the same mistakes. These experts all have good intentions, but so much advice can put you into a state of high anxiety. Real estate transactions are very complex, and difficulties can arise. If you are buying your home with the help of a professional Realtor, your agent will know how to make sure that any minor upsets do not turn into major problems. A Realtor's expertise is based on formal training and experience in many real estate transactions. Their reputation is on the line with each sale, so they are highly motivated to make your purchase or sale go as smoothly as possible. When you are dealing with a professional Realtor, you can worry about what might go wrong if you wish, but you don't have to!
Your Investment
Shelter is a very basic human need which most people fill by renting or buying a house or apartment. Rental property is often less-than-perfect. Tenants usually experience a rent increase every year or so and feel quite at the mercy of the owner. They don't necessarily feel a strong commitment to the property or the community. Making a decision to buy a house is a major commitment, and the decision is both an economic and an emotional one. Instead of paying the landlord's mortgage every month, homeowners pay their own mortgage and build up equity in their investment. When they paint, plant flowers or make improvements, their family reaps the benefits. Homeowners are much more selective than renters about finding the perfect home, and their sense of satisfaction creates a feeling of pride
This site is designed mainly for those looking for Temecula, Murrieta, Wildomar, Menifee, Winchester, French Valley, Lake Elsinore, Hemet Perris, San Jacinto, Romoland, Canyon Lake and Sun City property management, real estate, or rentals. However, the site is jammed pack with information that anyone looking for real estate or looking to rent will find most valuable. There also is quite a bit of in formation about the cities we service. Enjoy your stay and if you have any questions feel free to call us.