10 tips to guide you through the home-buying process
By Brigitte Mesa
The centerpiece of the American Dream is a home you can call your own. And right now your shot at a home is as good as it’s been in nearly a decade. The post boom bust market offers slashed prices, record low interest rates, seller concessions and even discounts from real estate agents. The market is yours for the taking, however, if this is your first time buying a home the purchase can quickly overwhelm you with details large and small.
To keep you focused, here are 10 step-by-step tips.
1. Cure your credit. Go to AnnualCreditReport.com, the only federal government-sanctioned service for obtaining a truly free credit report from one or all three of the major credit bureaus. Check your reports for errors, omissions and other marks that need attention — before the lender gets a look.
Pay the nominal fee to also get your credit score. The best mortgage rates require a credit score of more than 700. Learn how to boost your score before you apply for a mortgage. A low credit score can also prevent you from obtaining a mortgage.
2. Check your budget. Without a budget you have no idea where your money goes, where you can cut costs and ultimately, how much money you have to spend on a mortgage payment. Budget how much house you can afford and what you really need. You may not need that $300,000 loan the bank offers.
3. Get the money in the pipeline. Find your dream home and then discover you can’t qualify for it will be a sinking feeling you’ll never forget. Shop around, then get pre-approved for a mortgage so you’ll shop within your means. The seller will see you as a serious buyer and you’ll level the playing field with other bidders.
4. Get married to the home you need. Like planning a wedding, you must decide what you can and cannot live without. The cans are wants. The cannots are needs. Be prepared to compromise, substitute and rethink what you really need.
5. Get you ducats in a row. A 20 percent down payment will land you the best interest rate and the best terms. Ten percent down is better than 5 percent and so on. The more money down, the lower your monthly payment and the greater stake you’ll have in the home.
Get good help
6. Employ the best Realtor. Ask family members, friends, co-workers, professionals and others you trust, who’ve also recently enjoyed a successful buying experience, for referrals to Realtors. He or she is your point person for the transaction. You will be working one-on-one with him or her for awhile, so it is important that you feel comfortable working together. Interview prospective Realtors just as you’ve been interviewed for jobs you’ve worked.
7. Deploy good legal counsel. Likewise, when necessary, find a trusted real estate attorney who is comfortable to work with. Seek an attorney with a fixed escrow closing fee so you can budget the cost with other home buying expenses.
Begin the hunt
8. Visit and compare numerous properties. Use the Internet and your Realtor’s directions to get started, but you also need to touch-and-feel visit a variety of homes to learn just what your money can buy. Due diligence will leave you confident you’ve left no stone unturned.
9. Don’t get emotional. Don’t fall in love with the first home you see. Beware of bidding wars. They are emotional hot beds. If your emotions drive up the price, you won’t be able to put a price on those emotions when it’s time to sell. Detach yourself. Take ample time to comparison shop.
10. Ask many questions. Direct many questions at your real estate agent, your lender and your attorney. You pay them for answers. The only dumb question is the one you didn’t ask.
By Charlene Storozuk, Dezigner Digz
Spring is in the air in some parts of Canada and the U.S., although it hasn’t quite reached my little corner of the world yet. This is the time of year when thoughts turn to spring cleaning; whether or not you’re selling your home. Of course, if you are listing anytime soon, you’ll want to be even more meticulous.
The busy spring market will be upon us before you know it, so here are some tips for getting the exterior of your home shipshape:
1. Remove glass from light fixtures and take out any little critters that may have found a home over the winter. Be sure to use glass cleaner on the panes before replacing them in your fixtures.
2. Clean your mailbox. If it hasn’t weathered well over the winter, it’s probably time to replace it.
3. Clean and polish, if necessary, your front door’s hardware. Replace it as well if necessary.
4. Check your house numbers. Are they still in good shape and visible from the street? If not, replace them.
5. Wash down your front door and garage door. If you find that the previous summer’s sun has faded the paint, consider repainting. (Your garage door should be painted a color that blends in with the brick or vinyl siding on your home.) Before painting, check with the paint manufacturer to see what the optimal outdoor temperature should be. You don’t want to paint when it’s still too cold outside.
6. Wash the windows. If this isn’t your strong suit, hire a professional.
7. Hose down the porch and driveway to remove any excess salt left over from de-icing.
8. Sweep the porch, driveway and patio to get rid of any rogue leaves etc. left over from the fall.
9. Check your porch, driveway, and patio for any cracking or lifting of patio stones that may have taken place during a deep freeze.
10. Check your roof to make sure no shingles are missing or were damaged during the winter.
11. Remove debris from your gutters and drain spouts.
12. Rake the lawn. However, before doing that it’s very important to check with your local garden center first to be sure it’s not too early. If raked too soon before the ground thoroughly dries, you could potentially damage your lawn.
13. Remove winter displays from your urns. For a burst of color, plant spring flowers as soon as weather permits.
14. Tidy up your gardens in preparation for planting season.
15. Organize the garage. Put away shovels, snow blowers, toboggans, and any other items that made their way into your garage over the winter.
16. If you don’t use your barbeque year round, it’s time to bring it out. If it’s a built-in unit that will be staying with the house, be sure to clean the grills and wash down the lid. If you have a cover for it, replace it if it’s worn.
17. Remove the cover from your swimming pool and clean your pool as soon as your pool service company advises that it’s OK to do so.
18. Bring out your patio furniture and set it up. Although it may be too cold to sit outside just yet, you want potential buyers to see your outdoor living space’s potential.
Follow three key steps to buy your house
By Michele Dawson
Once you’re preapproved for a loan and you’ve survived the rigors of house hunting, the time will come when you find a house that you’d like to call home. But first, you’ll need to make an offer.
The offer is the first step in the negotiation process. A good basic offer includes the price you’re willing to pay for the house, your financing terms, and contingencies, such as specifying what will happen if negative findings come up during the inspection.
Purchase contracts vary from state to state. Regardless of where you live, if you’re making an offer, you want it to be carefully worded and well thought out.
In the book “Home Buying for Dummies (Hungry Minds Inc., 2001),” authors Eric Tyson and Ray Brown say there are three key elements to a good offer.
Begin, they say, with a realistic offering price. Your agent will help you with this, but basically you want to come up with a price based on similar houses sold in the neighborhood in the past six months. You’ll also want to keep the local conditions in mind. In other words, if houses are selling quickly and many houses are receiving multiple offers, you’ll need to bid competitively.
That would be the case in some regions of the country, including Pennsylvania.
“The market is strong for sellers,” said Maureen Clay, a Carlisle, Penn. Realtor. “Homes that are being placed on the market are selling quick with multiple offers being presented. There is a high demand for homes up to $220,000. With supply low and demand high, buyers are being caught in a bidding war.”
But if you’re in a market in which houses are on the market longer, like Denver, Colo., then you can be proceed a bit more cautiously with a bit more wiggle room for negotiation.
“In past years, selling a home in Denver was about as easy as putting a for sale sign in your front yard and waiting for buyers to come in droves,” said Denver Realtor Laurie Erb. “The economy was hot, high tech jobs were plentiful and, as a result, homeowners got top dollar and plenty of offers. Not any more. Like the jobs that fuel home buying, the days of easy sales are gone.”
The second element to include in your offer is realistic financing terms. If you’re pre-approved for a loan, be sure to include that in the offer so the seller knows you’re serious. It will also give you an edge over any other offers that don’t have a pre-approved loan.
And finally, include a property inspection clause. What if it’s determined the roof needs to be replaced, or the heating and cooling system is faulty and it will take $3,000 to fix it?
“It’s smart to use property inspection clauses that enable you to reopen negotiations regarding any necessary corrective work after you’ve received the inspection reports,” the homebuying Dummies book says.
Meanwhile, Freddie Mac says there are additional items that should be covered in the offer:
•Any concessions you’d like the seller to make, like paying part of the closing costs or providing an allowance to get worn carpet replaced.
•Financing contingencies. If you’re in a hot seller’s market, your loan should already be approved. But if it’s not, you may choose to make the offer contingent on approval of a mortgage with a specific rate and terms.
•Conveyances. This includes what is included in the sale. For instance, a refrigerator.
•The amount of your deposit.
Also, most offers include a deadline for a response, perhaps three days.
Finally, put everything in writing. Don’t rely on verbal agreements. If the seller tells you he’ll provide a carpet allowance for the shabby avocado-colored carpet but it isn’t specified in the offer, then you may not get the money — and be stuck with green carpet.
Copyright © by Realty Times
A strategy for bargain hunters
If you’ve been thinking about buying a new home, winter is the time to start getting serious. Here are a few reasons to brave the cold and go on a house hunt:
The winter season has fewer units on the market, and sellers tend to need to move from their property. You can use that to your advantage to get a favorable deal.
Winter has fewer buyers in the market. Looking for a home in the winter can be inconvenient, and people are less likely to move. Families also tend to be on a September to June cycle because they are unwilling to move their children to a new town in the middle of the school year. Fewer buyers means less competition.
Lenders also usually have fewer loans to process and less paperwork to deal with (though this can change quickly if rates fluctuate). With lenders less hassled, you can expect a smoother process to get approved for a mortgage. But, as reported in Bankrate.com, there are exceptions to this rule, most notably in warmer parts of the country (especially Florida), ski towns, and in parts of the country where demand is so strong that it will not slacken during the winter months.
Here are five reasons why getting a pre-approval letter is a good idea.
By Marcie Geffner
Most home buyers know they should get a mortgage pre-approval letter from a lender before they begin seriously shopping for a home. But the reasons for this advice aren’t always clear, and buyers sometimes are dismayed by the amount of paperwork involved. Here is some of the reasoning behind the advice:
1. A pre-approval letter is more reliable than a pre-qualification letter. Getting a pre-qualification letter is easy. You just call a mortgage broker or lender, provide some basic financial information, then wait a few minutes for the letter to come through your fax machine. Getting a “pre-qual” from a Web site is just as easy. Enter some information, click “submit” and voilà. A pre-approval letter, on the other hand, involves verification of the information. Rather than taking your word on faith, the lender will ask for documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Granted, a pre-approval is more time-consuming (and possibly more stressful) than a pre-qualification The additional due diligence is exactly why the pre-approval carries more weight.
2. You’ll know how much money you can qualify to borrow. Most home buyers have a rough idea of how much they would feel comfortable paying every month on their mortgage. However, there’s no quick-and-dirty way to translate that monthly payment into a specific maximum mortgage amount because other factors — down payment percentage, mortgage insurance, property taxes, adjustable interest rates and so on — are part of the calculation. And, you might not be qualified to borrow as much as you think you should be able to borrow, depending on your income, your debts and your credit history.
3. You’ll have more leverage in negotiations with the seller. Sellers often prefer to negotiate with pre-approved buyers because the sellers know such buyers are financially qualified to obtain the financing they need to close the transaction. A pre-approval letter is an especially favorable point in a close multiple offer situation. And, you might feel more confident about making an offer with a pre-approval letter in hand and the knowledge that you’ll be able to obtain a mortgage.
4. Your real estate agent will work harder on your behalf. A pre-approval letter signals to your real estate agent that you’re a well-qualified buyer who is serious about purchasing a home. The increased likelihood of a closed sale — and a commission — will naturally motivate your agent to devote more time and energy to you. In fact, some agents won’t even show property to buyers who don’t have a pre-approval letter.
5. A few caveats: Pre-approval letters aren’t binding on the lender, are subject to an appraisal of the home you want to purchase and are time-sensitive. If your financial situation changes (e.g., you lose your job, lease a car or run up credit-card bills), interest rates rise or a specified expiration date passes, the lender will review your situation and recalculate your maximum mortgage amount accordingly.
Copyright © 2000 Marcie Geffner. All rights reserved.
How to attain curb appeal
By Al Heavens
A house should have curb appeal, they say, but what exactly does that mean?
What it means is that, if a buyer drives past a house at 5 or 10 m.p.h., the front of the place should be alluring enough for that buyer to stop the car. If the seller has done the job properly, the buyer should then get out of the car and write down the real estate agent’s name and number.
You can achieve curb appeal – which the National Association of Realtors says sells 49 percent of all houses – whether you have a city townhouse with no front yard or a suburban house with trees and a lawn.
One facet of curb appeal you may not be able to control is the condition of your neighbors’ houses and yards. If they all look nice, then the buyer will become as intrigued with the neighborhood as with your house. If the other yards are filled with kids’ toys, and the buyer has children, that means potential playmates.
If the other yards are filled with rubbish and junk cars, good luck to you.
From my personal curb-appeal file, here’s how to handle prettying up city and suburban (or semi-suburban) houses for sale:
The yardless townhouse: It is 1987, the real estate market is beginning to deflate, and there is a surplus of townhouses for sale downtown. There is the added disadvantage of living near a public-housing project with the accompanying perception of high crime.
The advantages: Close-knit neighborhood with nice, well-done townhouses, a school around the corner, a turn-of-the-century social club being renovated as apartments, children playing in the street serve as a deterrent to criminals, no abandoned cars, and lots of street trees.
In this case, I touched up the blue paint on the trim and on the front door, and added shutters to the living room window.
I bolted a flower box to that window ledge and a half-barrel on the side of the two marble steps up to the front door and filled both – and a small area around the tree in front of the house – with impatiens.
I made sure the steps were washed and bleached white.
On open-house days, I rewarded the children with ice cream if they kept the noise down to a roar and sat on someone else’s steps for two hours.
Results: The ultimate buyer was at the first open house, even though the house was on the market for five months and two real estate brokerages.
Lessons learned: Give all the kids ice cream. I missed one, who erroneously, and loudly, reported that someone had stolen her bike during an open house.
The city house with front yard: It is June 2001, the real estate market is unstoppable, and there is a shortage of housing in the $150,000-to-$300,000 range.
The advantages: There’s the shortage, of course. The semi-suburban neighborhood is beautiful, filled with trees, the azaleas are in bloom, the street is open again after a year of railroad-bridge replacement, and my neighbors are tired of my writing about them and would do anything to see me go.
The disadvantages: The beer distributorship at the corner produces a lot of trash. The street is a main route between two major city avenues.
The solution: Touch up the front of the house, including washing the mildew from the porch columns and rails. Put a new coat of paint on the porch floor, keep the hedges trimmed neatly, plant plenty of flowers, and use lots of dark mulch that you should water regularly.
Repaint the concrete bench under the dogwood. Replace and paint the stairs to the porch. Repair the sidewalk.
Make sure the lawn is mowed once a week and watered regularly. Dead-head the flowers. Pick up trash not only in front of your house but in front of your neighbors’ houses.
Wash the windows.
Results: House is on the market for a weekend. Eighteen couples have appointments on day two, 50 groups appear at open house on day three. Seven offers, two at asking, five over.
Lessons learned: A lot of ugly houses sold over asking price last spring, but you can’t assume that your ugly house will. Never take risks, but don’t go overboard trying to pretty up.
Remember, at first contact, it is not how good the house feels but how good it looks.
But once you get them through the door, you better be real sure that what’s inside looks as good as what’s outside.
Copyright © by Realty Times