The Buying Process... |
When buying a home, you can gain from the knowledge and skill of a seasoned Real Estate Agent.
Buying a home is probably the biggest investment you will make, with long-term financial ramifications. It calls for many informed decisions and for good advice from a real estate professional.
What can the right Real Estate Agent do to help you buy the best home for you?
They will help you determine how much home you can
actually afford. Often, they can suggest additional ways to accrue the
down payment and explain alternative financing methods. They can also
introduce you to a mortgage counselor and arrange to have you
"pre-approved" which can improve your negotiating position and
enable you to achieve your home-buying objectives faster and with less
stress.
Providing "client-level services", they can
work for you as a buyer's agent and help negotiate the best price and
terms for you. Or, they can serve as a seller's sub-agent (or disclosed
dual agent), acting as a liaison between you and the seller to present
offers and counteroffers until an agreement is reached.
They will help you work out a realistic idea of the
home best suited to your needs - size, style, features, location,
accessibility to schools, transportation, shopping, and other personal
preferences.
They have access to a listing of all available homes
in the multi-list system, can evaluate them in terms of your needs and
affordability, and will not waste your time showing you unsuitable homes.
They can often suggest
simple, imaginative changes that could make a home more suitable for you
and improve its utility and value.
They can supply
information on real estate values, taxes, utility costs, municipal
services and facilities, and may be aware of proposed zoning changes that
could affect your decision to buy.
Although the law does not
normally require an attorney to review documents or oversee real estate
closings, they can provide you with a list of law practitioners to choose
from if you would like to use the services of an attorney.
They can help familiarize
you with the closing process and they will obtain closing figures in
advance of closing for your review.
They can provide you with a list of qualified home inspectors, pest inspectors, surveyors, and help to coordinate inspection appointments.
Top 10 Tips to Successful Home Buying 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.
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. Planning your actions and getting pre-qualified will keep you
out of the panic mode and allow you to take advantage of
opportunities. A thorough plan will save both time and money!
Tip #3: Value, Value, Value
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.
Tip #4: Create A Top 10 List Of Amenities
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. Some of your top 10 amenities should
logically be sacrificed if an incredible value is available.
Tip #5: Fixed vs. Adjustable Rate Mortgages
Which type of loan fits your particular needs? If
this will be your first home or a "transitional home" --
one you plan to own for a short time, an ARM may be the best type of
loan. If it's going to be your dream home or one you plan to raise a
family in, then you may want the stability of a fixed rate mortgage.
If you choose an ARM, the index should be based on the Cost of Funds
Index if rates are increasing, and Treasury Bills if they are
decreasing. The COFI's are less volatile over time than T-Bills;
make sure the teaser rate is understood and what the real rate would
be.
Whichever loan you choose; make sure that you scrutinize all the closing costs. If you are required to have a mortgage escrow account and private mortgage insurance, make sure you understand the terms and cancellation procedures (your Real Estate Agent has publications to assist you). 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. Ensuring that the contract you sign will
minimize potential legal battles will let you swim in your new pool
with your family and neighbors instead of with the sharks.
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, 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. In the end, the home buying
process excludes the professionals and comes down to the individuals
buying and selling the home. A closer look at the seller may help
you in deciding whether and for how much to buy a particular home.
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. 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. Create a chart that lists different types of
loans, fees, and at least five mortgage providers (including a
mortgage broker).
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.
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 a home protection plan.
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. 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.
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