Home Buying - 9 Helpful Hints

Doesn't it make sense to become as completely informed as possible before you buy your next home? With the information provided to you in this special report, you'll be armed. Armed with the knowledge that will make the process quick and easy! Don't buy without knowing exactly what you are doing! Read this Real Estate report today and soon you'll be living in the perfect home that's just right for your lifestyle!

Hint #1 - How to Avoid Stupid Mistakes

Homebuyers today face a steep learning curve. There's much to know, much to learn and a great potential for "rookie mistakes"--with potentially costly consequences.

What should you check? Here are 10 basic issues to consider.

1. Rushing into the transaction. Buyers looking for homes in extremely tight markets may feel pressured to make an immediate offer. Instead, it makes sense to become familiar with the local market before making a purchase offer.

2. Not asking enough questions. First-time homebuyers, by definition, simply don't have homebuying experience. It may be uncomfortable to ask questions, but ask anyway. Brokers can't answer unasked queries.

3. Searching in vain for the "ideal" house. Many buyers run themselves and their brokers ragged as they repeatedly dismiss homes that meet most--but not all--of their specifications. A buyer who turns down a house that meets most criteria may lose the best available property as well as good financing if market conditions change.
First-timers should surely view different homes before making an offer. That way they can better understand the marketplace and know more about local prices. Brokers will often recommend that buyers, and particularly first-time buyers, avoid jumping on the first property they see--but that they don't drag their feet when the find a house they love, either.

4. Avoid Overbuying. Homes routinely seduce buyers into becoming "house poor," spending so much for a home that they must forego annual vacations, restaurant meals and other forms of entertainment. Pre-approval can help determine a reasonable target price range and also identify the mortgage programs which can work best for you.

5. Waiting for 20 percent down. That's an admirable goal, but years in the future for many first-time buyers. Instead--especially in markets with rising values--buy now with little down. Consider VA, FHA and loans with private mortgage insurance (PMI).

6. Be realistic. It's tough to ignore a home's curb appeal, but what about practical matters? Enough space? Off-street parking? Good construction? Low maintenance? How far to work? Boring stuff--but important.

7. What about zoning? Is the property next door zoned for a 24-hour service station? Fire station? Nuclear test site? Ask the broker about zoning for the property and also the surrounding area.

8. Ignoring representation. The odds are overwhelming that the seller has a broker. What about professional help for you? Ask about buyer brokerage services so you can have equality at the bargaining table.

9. Skipping an inspection. A professional home inspection is simply a "must" whether you are buying an existing home or a new one. Speak with inspectors before you enter the marketplace to see how they work, what they cost and what they recommend.

10. Don't underestimate closing costs. There is more to buying a home than a downpayment. I can help you estimate probable closing expenses--information you need to avoid unwanted financial surprises.

Is there more you can do? Sure. Buying a home is a complex process--so feel free to ask any questions and let me help you prepare before you go into the marketplace.

Hint #2 - Questions Every Buyer Should Ask

Consider the thousands of families who have an aging parent residing with them. The average age of our population has grown older, meaning we are living longer lives, spending longer periods as widows and widowers and increasingly choosing to take up residence with our children. In such situations, the distance from our homes to the nearest hospital is vitally important.

·  Public transportation is also something we tend to overlook in a nation of drivers. As more of us get older, many elect not to drive; thus nearby public transportation becomes important--especially if buses stop frequently.

·  Public safety is a major issue, as is proximity to police stations, emergency medical services and firehouses. Community groups--including homeowner associations, PTAs and a neighborhood crime-watch--are also important.

·  No one wants to hassle with parking issues, so what is the parking situation? What if you have guests? Take note of any parking restrictions, which could result in a visitor's car--or your car--being towed from the front of your house.

·  What about trash pick-ups? Okay, this isn't a glorious subject, but consider the alternative. In rural areas there are often communal dumpster zones to which residents haul trash. If the community will pick-up from you, great. If they recycle, better. Check for pick-up dates--if Monday is your pick-up day ask how holidays are handled.

·  Is the area impacted by local conservation efforts? For example, what about water supplies in the summer? Electric power?

·  If you're moving to a new community, you might look forward to such recreational facilities as clubhouses, playgrounds, exercise rooms and other offerings. Before you sign on the dotted line, check out the "fine print" details. Is use free or is there an additional cost? Are there plans to build a playground or other amenity next to the property you want to purchase? Do you regard a nearby playground as a convenience or noisy problem? What about that nice stand of trees behind the lot where you want to build--is that land being preserved or will a zoning change allow it to become a gas station next year?

·  Another issue concerns property taxes: you know what the owners pay today, but is that what you will pay tomorrow? Property tax rules may allow special benefits for older citizens, veterans, or long-time residents--benefits which may not apply to you.

·  Here's one more: that nice condo or homeowner association you're thinking about. You know about their assessments now, but are they planning a "special" assessment soon? If yes, you could be out big money (or you could make an offer which is discounted to reflect the cost of the special assessment).

Are there more questions to ask? You bet. Let's talk at your convenience about the ones that most concern you.

Hint #3 - Is Now the Time to Buy?

The answer is this: if you're looking for that first house or if you've thought of moving up, now is as good a time as any to get into the marketplace, and perhaps a better time than seen in recent years.

But how can this be? Let's look at several key issues.

Interest Rates are Down

If rates for 30-year fixed-rate mortgages are at 8 percent--about where they were a year ago according to HSH Associates, a leading financial publisher--your monthly payment for a principal and interest on a $200,000 mortgage would be $1,467.53. Add in, say, $350 for taxes and insurance and the total monthly payment comes to $1,817.53. If lenders allow 28 percent of your gross monthly income for these four baseline costs, you would need $6,492 monthly to qualify for the loan ($1817.53 = 28 percent of $6,491.17).

But suppose financing is available at today's rates, perhaps 6.85 percent. Now the monthly cost of principal and interest is $1,310.52. Add in $350 for taxes and insurance and the total monthly cost is $1,660.52. In this case, lenders would require a monthly income of $5,930 to qualify.

In other words, when compared with a year ago, you could get the same loan for $157 less per month and you could qualify with $6,744 less income per year. Lower rates mean more people can qualify for given levels of financing--and that more people can borrow additional dollars.

National Trends

Much is made of national trends and with good reason: national trends are easy to track, get lots of attention and provide useful benchmarks.

That said, national trends do not reflect a baseline reality: real estate is local. If the local population is growing, if the nearby job base is increasing, if nearby new home starts are not sufficient to meet demand and if mortgage rates are low, then you can logically expect local home values to rise over time. It's not a guarantee--there are no guarantees--but price increases in such situations are at least reasonable.

Perspective

We live in an era of measures, numbers and statistics. For instance, the September jobless rate, according to the Bureau of Labor Statistics, reached 4.5 percent, up from 3.9 percent a year earlier.

But did you also know that while 7 million people were unemployed, 135.2 million had jobs? Did you know that a 4 percent unemployment rate is considered "full employment" by many economists?

As a nation, we've been doing so well for so long that any blip on the economic radar tends to get noticed. That's fair and we should be concerned. At the same time, let's not ignore the whole picture. Most people are doing well--and will continue to do well.

We're Having a Recession

A recession is not a hideous event. It's a slow-down, not a depression. National economies move up and down, so recessions are normal--we had them in 1973, 1980, and 1991. But even with the current slow-down, we still have a $10 trillion economy.

Most people have jobs today and will have jobs tomorrow. Will there be tough times in certain industries? Absolutely. Will some communities be hurt? Yes. But you need to ask what a recession means to you. Have you lost your job? Is your job in jeopardy? Is your household income about to decline?

If no, then what about your housing needs? If you need to buy a first home, if you would like to move up, what objective barriers stand in your way?

It's true that some prospective buyers will delay purchases because of the current slow-down--and for some buyers, postponement makes sense. But the issue is not what other people are doing, it's the question of what's best for you given your particular circumstances.

At the very least, review your personal finances, check mortgage rates, take a look at your local marketplace and consider your needs. You may find that now is indeed a very good time to be a buyer.

Hint #4 - New or Old? The Debate Continues

Existing and new homes each offer many considerations for potential homebuyers.

Existing Homes

Here are some existing home considerations:

·  Maintenance And Repair. If you're considering an existing home, be sure you have a good handle on the working status of all major systems. Hire a professional home inspector to check out the house. As appliances and systems age, they naturally require repair and replacement, something which may be reflected in a purchase price.

·  Existing Features. When you buy an existing home, you typically don't have to worry about buying the extras, such as blinds for the windows, fences, built-in cabinets, a security system or a landscaped back yard.

·  Land. In most metro centers, existing homes have more land than newer properties. Why? Because of changes in land-use patterns.

·  Location. Existing homes are often found in older, more convenient metro core areas rather than outlying suburbs.

·  Remodeling. In some cases buyers may prefer an older home in a particular location which can be modernized or expanded. In effect, they use the existing home as a base to build a unique property over time.

·  Price. In general terms, existing homes tend to be less expensive than new ones. According to the National Association of Realtors, the median price for an existing home a year ago was $146,600. In contrast, says the National Association of Home Builders (NAHB), the median price for a new home this year is less.

·  Traditional Layout. If you like formal living and dining rooms, an existing home will likely satisfy you.

·  Warranties. Existing homes are often sold with limited warranties provided by owners.

New Homes

On the other hand, new home considerations include:

·  Warranties. Many homebuilders offer 10-year warranties from third-parties who will be there if certain problems develop over time. In additional, there are manufacturers' warranties for such items as stoves, clothes washers, etc.

·  Modern Architecture And Design. If you prefer a great room (an oversized family room), bigger closets, more bathrooms and media niches over formal dining and living rooms, a new home is likely to better accommodate you.

·  Options. When you buy a new home, you get to decide the particulars of what you want. You can also select any of the upgrade features the builder may offer, choose the right paint for each room, select the cabinets you want and do much to customize the property itself.

·  Price. As we saw above, new homes are typically more expensive than existing homes. But new homes are likely to need fewer repairs or replacements because everything is, well, new; warranties are in place and normal wear and tear has yet to begin.

·  Safety Features. Most new homes now have hard-wired smoke detectors on every floor. They are usually interconnected so that if one goes off, they all go off.

·  Energy Efficiency. Over time, homes have become better insulated, and energy costs for given purposes have been reduced. With better windows, more efficient heating and cooling equipment, better control of air infiltration and greater use of insulation, new homes consume half the energy of homes built prior to 1980, according to the NAHB.

·  Less Maintenance. New homes are often made with materials that require less maintenance, such as aluminum siding, vinyl windows and trim that never needs painting, and wood decks made with pressure-treated wood that resists rot and insects.

The Real Answer

So which is the better choice--new or existing?

There's no single, objective answer that's right for everyone. We each have different preferences, and the values that best suit Jones may be all wrong for Smith.

Moreover, terms such as "new" and "existing" are among the many factors to consider when looking for a home. All homes are unique--they each offer a combination of factors that no other home quite duplicates. There are trade-offs with every property.

The real question is not which is "better"--new or existing--but rather which specific property best meets your needs. The only "correct" answer is unique to you: it's whatever you prefer.

Hint #5 - Fixer-Uppers: Wise Investment or Money Pit?

All homes are different, but there are certain criteria which can help you spot a fixer-upper with good potential. Here are a few basic questions to ask:

What needs to be changed?

There are some homes which are structurally sound that require only cosmetic changes--say that worn carpet from the 1960's, the historic appliances or that inefficient heating system which consumes more fuel than a high school.

It makes sense to inventory a home to see what can remain and what must go. A good home inspection can help you spot mechanical, structural and system upgrades that should be made and also provide some cost estimates.

Does the area support a new and higher price?

If you buy a home for $300,000 and add improvements worth $100,000, are you ahead if area homes only sell for $350,000? What about $400,000? You need to recover the value of your investment, your time and the cost of improvements. Many who specialize in fix-up work won't touch a project unless they can get a 100 percent mark-up--two dollars in new value for each dollar invested.

What about the land?

In some close-in areas, a home may simply not be worth an up-grade; instead, it's the land and location that have value. In this case, the question is not whether to improve--it's whether to tear down. Essentially, the property's purchase price is equal to the combination of what you pay to buy it plus the expense of removing the old house. The addition of a new house is extra.

Who will do the work?

The economics of fixing-up vary enormously depending on whether you're considering a do-it-yourself project or reconstruction contracted out to professionals. For the lowest cost and highest quality, it often makes sense to do both--do much of the work yourself and then call in professionals for specialized work such as wiring, gas and roofing.

How Much Time do You Have?

The general rule for fixing up is that everything takes longer than planned. If you need to re-sell quickly, then fixing-up becomes increasingly risky. If you have more time available, getting the job done becomes more plausible.

How Will You Pay for Your Fixer-Upper?

A fixer-upper requires two forms of financing: acquisition money to buy the home and additional dollars to do the actual repairs and improvements. In the best case, you want one loan to provide both forms of financing so that you do not have to pay for a second closing. Some mortgages to consider include the FHA 203(k) program, Fannie Mae's HomeStyle loans, Freddie Mac's HomeWorks financing and similar programs. If you now live in a home and need money for improvements, consider HUD's Title 1 program for loans up to $25,000.

For financing purposes, it makes a big difference whether you're an owner-occupant or an investor not living on the property. For more information and to discuss homes in our area that may have fix-up potential, please feel free to call at your convenience.

Hint #6 - Your Closing Date Will Make a Difference

All mortgage payments are paid in "arrears." This means that any mortgage payment covers the interest owed for the preceding month. It's the opposite of rent payments, which are due in advance.

Since mortgage payments are paid in arrears, your first mortgage payment will always be due at the end of the first full month you took out the loan. Here are two examples:

·  If you settle in early December, your first full month will be January and your first mortgage payment will be due February 1st--almost two months after the settlement.

·  If you settle at the end of November, your first full month will be December and your first payment will be due January 1st--about one month after settlement.

If you settle in at the beginning of any month, you will be required to pay the interim interest from the day you settle to the end of the month. For instance:

·  If you settle on the tenth of the month, you would pre-pay roughly 20 days of interest to cover the period from the tenth to the end of the month.

·  If you settle on the 30th, you wouldn't pre-pay any interest, but your first mortgage payment would be due in one month's time.

So, settling at the end of the month doesn't "save" you money. However, if you are short of cash, it will reduce the amount of funds required at the settlement table.

Special FHA Concerns

While we're on the subject of when to close, let's also talk a little bit about loan payoffs.

Millions of Americans are taking advantage of lower interest rates and refinancing their mortgage. For those folks who have Federal Housing Administration loans (FHA), it's important to know that FHA collects the entire month's interest when the loan is paid off.

Basically, this means that if you pay off your FHA loan on the first of the month, FHA will charge interest for the entire month. So for folks who are refinancing their FHA loan, it's best to settle at the end of the month.

Your broker or loan officer can answer specific closing questions. In all cases, after you settle, keep your closing documents in a safe place--you'll want them when you sell or refinance and also for tax and estate purposes.

Hint #7 - Five Keys to Successful Negotiation

So how do you develop a strong bargaining position, one that will help you get the most from a transaction? Experience shows there are five basic keys that will determine who wins at the negotiating table.

1. What Does The Market Say?

At various times, we're in a "buyers" market, a "sellers" market or a market where supply and demand are roughly equal. If possible, you want to be in the market at a time when it favors your position as a buyer or seller.

Because all properties are unique, it is possible to buck general trends and have more leverage than the marketplace would seem to allow. For instance, if you have a property in a desirable neighborhood with few sales, you may be able to get a better deal than elsewhere. Or, if you're a buyer who can quickly close, that might be an important negotiating chip when dealing with an owner who just got a new job 500 miles away.

2. Who Has Leverage?

If you're on the front page of the local paper because your business went bust--and the buyer knows it--you have less clout in the bargaining process. Alternatively, if you're among six buyers clamoring for that one special property, forget about dictating an agreement--the owner can sit back and pick the offer which represents the highest price and best terms.

What are the Details?

A lot of attention in real estate is paid to transaction prices. This surely makes sense, but the key to a good deal may be more complex.

Consider two identical properties that each sell on the same day for $275,000. The houses are the same, the sale prices are the same, but are the deals the same? Maybe not. For instance, one owner may have agreed to paint the property, replace the roof, purchase a new kitchen refrigerator and pay the first $5,000 of the buyer's closing costs. The second owner made no concessions.

In this example, the first house was actually sold at discount--the $275,000 purchase price less the value of the roof repairs, closing credit and other items. If you're a buyer, this is the deal you want. If you're a seller, you would prefer to be the second owner and give up nothing.

4. What About Financing?

Real estate transactions involve a trade--houses for money. We know the house is there, but what about financing? There are several factors that impact the money issue:

Has the buyer been pre-qualified or pre-approved by a lender? Meeting with a lender before looking at homes does not usually guarantee that financing is absolutely, unquestionably available--a loan application can be declined because of appraisal problems, title issues, survey findings and other reasons.

But buyers who are "pre-qualified" or "pre-approved" (these terms do not have a standard meaning around the country) at least have some idea of their ability to finance a home and know that they are likely to qualify for certain loan programs.

The result is that pre-qualified buyers represent less risk to owners than a purchaser who has never met with a lender. If the seller accepts an offer from a buyer with unknown financial strength, it's possible that the transaction could fail because the buyer can't get a loan. Meanwhile, the owner may have lost the opportunity to sell to a qualified buyer.

The lower the interest rate, the larger the pool of potential buyers. More buyers equal more potential demand, good news for sellers.

Alternatively, high rates or even rising rates may drive buyers from the marketplace--and that's not good for anyone.

It used to be that downpayments were a major financing hurdle--but not anymore. For those with good credit, loans with 5 percent down or less are now widely available. In fact, 100 percent financing--mortgages with nothing down--are now being made by conventional lenders. Reduced downpayment requirements are good for both buyers and sellers.

5. Who Has Expertise?

Imagine you're in a fight. The other guy has black belts in 12 martial arts--and you don't. Who's going to win?

Brokers have long represented sellers, and now buyer brokerage is entirely common. In a transaction where one side has representation and the other does not, who has the advantage at the bargaining table?

Hint #8 - How to Succeed with Counter-Offers

The seller is under no obligation to accept a counter-offer. An "offer" is an "offer"--it's not a "contract." Owners are free to look at--and accept--other offers.

Why?

Because a "counter-offer" is really a new offer. Even though the buyer and seller might agree to some or even most of the terms of a purchase/sale offer, any change effectively creates a counter-offer. In other words, all previous bets are off and the parties are back to square one in the negotiation process.

Why would a seller accept another offer? It could be that another buyer came in with a higher price, better terms or fewer contingencies. A competing buyer might have flashed more earnest money in front of the seller. Or perhaps the seller got tired of the tedium and stress produced by offers and counter-offers and wanted to bring the volley to a halt.

How might you do better? Here are three strategies.

1. Begin with the end in mind.

In other words, know which issues are most important for you, as well as what concessions you're willing to give up.

Suppose--in order--you require a price limit, minimal closing costs and a quick closing. If you got one of the three items would that be enough? Two of three? Must you get all three? If you got your price-- he top priority -- but not the other two items, would you go ahead with the purchase?

The trick here is to determine what's important--what's a "must" and what isn't.

2. Communicate your position.

If a buyer's agent is negotiating on your behalf, explain what you're willing to offer--and how much is too much. The broker can then look at current market conditions and suggest the best approach to take on the basis of price, terms and negotiating tactics.

If a buyer broker represents you, it's good to write out exactly what the agent can share with the seller and the seller's representative. That way there's less chance that inappropriate information can be leaked to the seller, information that might erode your negotiating power.

3. Show your interest.

Be honest with the seller about your interest in the property. This doesn't mean revealing all of your bargaining strategies or suggesting a willingness to pay any price. Instead, show just enough interest, involvement and motivation to signal that you're serious.

While counter-offers are designed to let the other party know you're still in the negotiating game, they represent some risk to both buyer and seller. A counter-offer is a new offer, and a new offer may not interest an owner or a buyer. Sensing what to ask--and when to back off--are both part of the bargaining process.

Hint #9 - Inspect, Inspect, Inspect

A home inspection is perhaps the most important chapter in the home-buying saga. You've seen the beautiful tile floors, the new carpet and the freshly painted walls, but do you know what lurks in the bowels of the heating system, what lies in the crevices of the roof and if anything--other than water--can be found in the interior plumbing?

You should--you're about to plop down a huge downpayment and commit to a 15- or 30-year mortgage. A home's condition is important to you.

Some 77 percent of all home sales in the United States last year involved a home inspection, according to a study by the American Society of Home Inspectors (ASHI) and the National Association of Realtors.

"It's clear from the study that more people are recognizing the importance of home inspections," said John Ghent, president of ASHI, the largest non-profit professional organization for home inspectors.

By following these pointers, you can maximize your home inspection benefits:

·  Know what it includes. Heating and central air conditioning systems, interior plumbing, electrical systems, the roof, attic, visible insulation, walls, ceilings, floors, windows, foundations and basements are among the key inspection points. Inspections may also include appliances and outdoor plumbing.

·  Know what an inspection does not include. Inspections for a typical home require several hours, but they do not inspect every dent and scratch. For details, speak with any inspector you are considering.

·  If you're selling, get a home inspection before you put your home on the market. This can avoid surprises down the road when potential buyers have the home inspected by their own professional. If major or potential problems are detected, they can be repaired before you try to sell.

·  Hire a qualified inspector. Try to get referrals from friends or anyone you know who has had a satisfactory experience with a home inspector. Also, look for affiliations with organizations like the American Association of Home Inspectors (AAHI) or ASHI. Both groups require its members to be certified, meet professional qualifications and adhere to specific business ethics.

·  Be cautious about hiring someone who may have a conflict of interest or may not be impartial. For example, a retired roofing contractor who now does home inspections to make a few extra dollars may find a problem with--you guessed it--the roof. This person could take advantage of your need to find someone to make repairs in a hurry, leaving you to wonder if the repairs were needed.

·  Include a proper home inspection contingency in your purchase agreement. This is important. If an inspector finds that the home can't survive another rainy season without $20,000 worth of roof repairs, you'll want to have the option of bailing out of the deal, asking the seller to make the repairs or lopping the appropriate amount off the purchase price.

·  Be there for the full inspection. Spending a few hours with the inspector could prevent headaches and save time in the future. As the home inspector examines the various systems and components of the home, ask him or her to explain what problems may be encountered down the road, what signs to look for, what repairs and replacements are likely to cost and how to prevent big maintenance bills.

·  Try to learn how things work and how to maintain systems and equipment during the inspection process. The inspector may also point out little flaws or oddities that don't measure up to being mentioned in the report, but may warrant watching.

·  In the case of new construction, consider three inspections: at the time the foundation is first poured, when walls are up but not closed and at the walk-through before closing. Yes, this is expensive, but in the context of a long-term investment--and a big investment, such as a home--the cost is easy to justify.

Once the inspection is complete, the inspector will write a report. If major problems are found, then you have the knowledge to better guide your negotiations. And if your new home receives stellar findings, then you'll have the peace of mind that will be a welcome relief once you're settled into your new home--priceless!

We sincerely hope you have enjoyed our "Home Buying Hints" report. We truly appreciate your business and look forward to keeping in touch with you.  Our site is frequently updated with new and valuable information. Please visit as often as you like and consider it as your personal real estate resource center.  Would you be so kind as to take a moment and let us know what we can do to help you? Do you need any further information about homes for sale? Do you have a home to sell? Do you want mortgage information?

It is our goal to make sure that you are 100% satisfied. We pledge to do what we can to make your real estate experience as stress-free as possible! We understand the importance of prompt attention and will be responding to any request you might have as quickly as possible. Again, thank you for your interest. We look forward to speaking with you soon. We hope you will visit us again in the future.