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How to buy a home in today's market

Buying a home raises a lot of questions. We know because we answer those questions every day. Through the years we’ve found some basics questions turn up again and again. Yet different buyers have different needs and a constantly changing marketplace raises new questions. Our goal is to help you get straight answers to your specific questions, to make it easier for you. From experience, we know there is no substitute for the knowledge of a professional agent. In any case, home buying is an adventure to be enjoyed and an agent can make your home search easier and faster. We look forward to working with you.

Where do I start?

List what type of home you’d like and where you would like it to be. Be precise part the “must haves” from the “want to haves.” Think about area (city, suburban, country); community (north, south, east or west side); neighborhood (older and settled or sparkling new; a particular school; recreational facilities; and other community services, such as transportation, day care, library, stores, entertainment). Ask yourself how many minutes you are willing to commute to work.

Consider home styles (1-story, 2-story, Townhouse, condominium, etc.) How much space do you need, how much will you need in the foreseeable future (number f bedrooms, baths; kind of kitchen; total rooms)? Consider size and kind of property. Do you want a new home, an older one to fix up? Is the community a good area for resale? Someday you or your heirs will want to sell. Consider how long you expect to live in this particular home. Keep going with whatever you want to add.

Knowing accurately what you think you want makes house-hunting and later decisions easier when you get into the nitty-gritty aspects of buying. Many people like to start a “house-hunter’s notebook” to keep their requirements clearly in mind and to compare specific properties. You’ll find as you return again and again to your original thinking that your preferences become clearer--- and your search becomes more efficient.

Exactly how will a real estate agent help me buy a home?

Brokers and agents make it their business to provide every service connected with your home search, from expert advice in the early stages thought careful monitoring of your settlement (also “closing” or “escrow” --- term varies by area). The more closely you work with one agent, the better your needs are known and the more effectively you can be served --- saving you time and possible grief. All agents are bound by law to deal fairly and ethically with both buyer and seller. Some buyers may choose to work with a “buyer’s agent,” whose legal obligation is to represent the interest of the buyer. A buyer’s agent, whose fee or commission may be paid by either buyer or seller, is able to negotiate sale price and terms on behalf of the buyer. You will get the full report of the area where you buying your house. After all you are buying your dream.

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You benefit from an agent’s services in many ways such as:

Helping you set up a plan of action through an analysis of your needs and your finances, the current housing market, homes available in your price range, and lenders’ mortgage options.
Personally conducting your search to find neighborhoods and homes that fit your requirements.
Guiding you through the intricacies of making an offer on a home and presenting your offer to the seller.
Assisting you through both the pre-settlement and pre-closing or settlement or closing processes.

What are some of the tax advantages of owning a home?

Home Ownership

Your home provides shelter for both you and your taxes. For example:

The interest paid on your loan is deductible, as are your property taxes. This interest deduction is also a major tax advantage in owning a second home for you.
You may deduct a portion of your home expenses if you have a qualifying home office.
Many health-related addictions to your home required by your doctor (such as air conditioning for an asthma sufferer) are deductible, provided the addition does not add to the value of your home.
Casualty losses (such as flooding, hurricane damage, etc.) that are not reimbursed by insurance are deductible, subject to income limits.

What price home can I afford to buy?

An agent can help translate your affordable monthly payment into a total loan amount. Add this loan amount to your preferred down payment and you acquire the approximate range of home prices you can afford.

Your next step is to shop cautiously for the loan that will keep your mortgage payments in line with your budget. Different mortgage plans can dramatically affect your monthly payment --- and thus the price home you can afford, Also other plans, especially FHA and VA mortgages, may offer you much more liberal qualifying standards --- again showing you more home for your income.

How much down payment should I make?

There are advantages to both large and small down payments, and which you choose depends on both personal choice and your financial circumstances.

Advantages of a large down payment: less mortgage to pay off, smaller monthly mortgage payments and greater opportunity to find lower interest rates.

Advantages of a small down payment: Less cash out of hand, therefore more money for other costs; a larger monthly mortgage payment means a larger tax deduction for mortgage interest. With an FHA loan or less than a 20% down payment on a conventional loan, you will be required by the lender to take out mortgage insurance. The FHA calls it MIP (Mortgage Insurance Premium), while private companies call it PMI (Private Mortgage Insurance)

Should I shop for a loan before or after I find a place to buy?

It is a good idea to let an agent help you looks for financing before you find a home. The agent is in constant contact with many lenders, and can act as an invaluable “clearing house” of information. If you’re actively house hunting but have not found the right home yet, ask the lender to do a “screening application.” This details your income, debts and assets. Knowing where you stand concerning how much money a lender will lend you (based on your income ad credit rating) puts you in a good bargaining position. Sellers faced with deciding between two buyers --- one who is “pre-screened” by a lender – may favor the offer of the buyer for whom getting a loan is almost a sure thing.

What’s the best way to know what kind of home is right for me?

By examining your lifestyle carefully, Ask yourself such questions as:

How much time do I expect to be at home?” If you’re a real homebody, you might think about a single family home with an inviting yard that will take hours to care of. If you’re on the run a lot, a condominium – with no yard care – might suit you better.
Do I really like swinging a hammer?” If so, an older home’s a good bet
Do I like neighbors around but want a good-sized home, not an apartment?” Perhaps a townhouse would suit you best.
What style home attracts me?” Each has practical as well as aesthetic advantages. See the illustrations of specific home styles in this chapter.

What should I look for in a neighborhood?

Some neighborhoods speak loud and clear at first glance; the quality of life is apparent in its streets, parks, buildings, homes and yards/ you get a feel for it (either for or against) just by looking. A real estate agent can, of course, fill you in on community details not so obvious at first glance:

Where schools, supermarkets, libraries, hospitals, places of worship, fire and police stations are located.
What zoning regulations apply.
What community services are available.
What construction plans are in the offing.
What shifts in transportation facilities are occurring.
Whether home values have appreciated or depreciated.
What tax rates prevail.

What should I specifically look for in a new home?

New home construction in changing all the time as builders try to become accustomed with designs to today’s lifestyles, make the most of living space and incorporate new technology, building materials and equipment, while keeping price affordable. Buying a new home is attractive because everything’s new, from floors to appliances. Energy efficiency (insulation, weather-stripping, energy-saving heating/cooling systems and electricity) is required by building codes. Buying a new home while it’s under construction often lets you choose paint, wallpaper, tiling, etc.

Newness itself is a virtual assurance that your maintenance costs will be predictable, and a builder’s warranty (highly desirable) guarantees freedom from structural flaws.

Here are some of the signs of good construction to be checked out at the site:

Good carpentry throughout (well-fitted windows and moldings, non-squeaking wood floors, even wall surfaces).
Solid structure with sturdy support.
Basement floors and walls that have no cracks or damp spots.
Insulation that measures as advertised.
Everything in good working order (faucets, hating/cooling systems, electrical outlets, etc.).
A yard free of low, wet spots; grading that slopes away from the home for good drainage.

How do I evaluate a resale home?

Homes with a past have special appeal. An existing home is a settled place (literally): the foundation, the landscaping, the neighborhood, including its services, are about where they’re probably going to be for some time. The home has a lived-in look. Some rooms may be larger than in new homes, woodwork has mellowed; the yard is a generous size. Its price maybe lower (per square foot) and its financing possibilities more flexible than in new homes, especially if you can pick up an assumable mortgage.

The thing to be on the look-out for is wear-tear:

How firm is the foundation?
How sound are the sills, walls floors, ceilings and roof?
What kind of plumbing was installed, when?
What’s the shape and extent of the electrical system?
What shape is the heating/cooling system in?
What are monthly energy costs?
How well does the insulation protect the indoors?
What will it cost you to remodel if necessary (especially kitchen and baths) or to make necessary repairs?

If in doubt --- or just for your peace of mind --- you can hire a certified home inspector for a professional opinion.

What can I expect from a professional home inspection?

The job of a professional inspector is to look over every major part of a home, and write a report that judges the home’s quality and condition. A well-qualified building inspector who has adhered to federal licensing standards can spot problems that you might not to be able to see or get to. However, it’s wise for you to accompany the inspector so that you don’t have to get the report secondhand. Expect problems to be clearly explained, repair expenses closely calculated, maintenance costs estimated and a written report delivered within a day or two. Remember you are buying a resale home; the price reflects the fact that nothing is new.

The territory covered by inspection includes:

Exterior: the foundation (for holes, cracks), the gutters and down spouts (for gaps in joints, sagging), siding (for wrap), paint (for peeling, blistering), windows and doors (for cracks, loose caulking), roof (for worn or bald spots), chimney (for tilting, loose bricks or stones), driveways, retaining walls and walks (for holes, sagging, cracks), grounds (for proper grading and healthy landscaping).

Interior: general structure (for soundness, rot), floors and stairs (for squeaking, shaking, bowing), plumbing system (for condition of pipes and fixtures, leaks, clogging), heating/cooling system(s) (for condition and capacity), electrical system (for age, condition, adequacy of voltage and outlets, proper grounding, signs of wear), insulations in walls, attic and basement (for thickness and efficiency), walls (for cracks, loose plaster, signs of leakage), kitchen (age and condition of appliances and plumbing).

How do I make an offer on a home and negotiate with the seller?

You, as potential buyer, start the process by putting an offer with price and terms in writing and presenting it to the seller through an agent. Buying a home is probably the biggest financial investment you will make. Only you can decide which home you want, and the price is up to you and the seller.
Understand the seller has three basic options: to accept your offer, counter offer on specific details or reject your offer. If there is any negotiation, it usually takes place trading counteroffers if the seller doesn’t immediately accept or reject the offer. Keep up the dialogue until you arrive at the price you can pay and the price and terms the seller can accept.

This is where an agent’s help is invaluable. The agent keeps the negotiation process running smoothly. With knowledge of both your situation and the seller’s, plus a complete understanding of financing options, an agent can suggest strategies that bring about a satisfactory transaction.

What are “closing costs,” and how much should I expect to pay?

Depending on your area, the price of your home, your lender’s terms and other factors, your closing costs will vary. An agent can provide a rule-of-thumb figure for your situation. Also, your lender will give you a pre-settlement or pre-closing “good faith” estimate of specific costs. This estimate is sometimes low. Take extra funds just in case.

Closing costs typically include:

Loan origination fee, usually 1% of your mortgage amount.
Discount point (or points); each point is 1% of your mortgage amount.
Assumption fee if you assume the seller’s loan.
Lender’s title insurance fee.
Owner’s title insurance fee (optional but advisable).
Survey fee (if applicable).
Transfer tax (state and/or local tax and tax stamps in some areas; sometimes split with seller).
Lender’s appraisal fee.
Recording fees for settlement or closing documents.
Prepaid interest on your mortgage, covering the time between settlement and closing and your first monthly payment.
Prepaid mortgage insurance premium.
Homeowner’s hazard insurance premium.
Property tax escrows.
Lawyer’s or escrow company’s fee.

So the bottom line is, If you want an agent to fully represent your best interests, if you want help evaluating a property, if you want someone to negotiate to get you the best price and the best terms, if you want to purchase a home in what’s becoming the most popular way to buy, you’ll want to enlist the aid of my expertise and advice.