| For the First Time Home Buyer or Anyone | | | | because you were swept away by someone's |
| Looking for a Home in this Volatile Market- | | | | furniture or decor. Meet with your agent and a |
| With interest rates and housing prices at an all | | | | reputable mortgage lender (or 2), in advance, get |
| time low, foreclosures on every corner, and | | | | pre-qualified (which will also make you a stronger |
| government incentives about to end, you (or | | | | buyer), and understand all the costs associated |
| someone you know) might be looking to buy a | | | | with buying a home and buy what you can |
| home. How exciting! But, in this market, no one | | | | comfortably afford. Here are some buying costs |
| can afford a home-buying mistake. | | | | you want to investigate. |
| Although this article is especially designed to help | | | | Get educated about the 28/36 approval ratio |
| those first time buyers who are new to the | | | | (often called front end and back end ratios), which |
| process, these five essential tips will ensure | | | | means your house payment, principal, interest, |
| everyone a successful home-buying experience. | | | | taxes and insurance (PITI) shouldn't exceed 28% |
| 1) Work with a Full-Time Licensed Realtor | | | | of your gross monthly income, while your back |
| Real estate agents have training and experience | | | | end ratio, PITI plus fixed debts, school loans, car |
| with all types of homes including condo's, co-ops, | | | | payments, and 10% of total credit card balances, |
| short sales and foreclosures. And they understand | | | | shouldn't exceed 35%. |
| various forms of mortgages, including FHS, VA, | | | | Learn about closing costs and pre-paids. Closing |
| Conventional, and HELOC's. Agents understand | | | | costs are the one-time costs associated with the |
| trends in the market and can highlight the | | | | purchase of your home. These expenses vary |
| differences between competing neighborhoods. | | | | geographically and can include appraisal reports, |
| They can also connect you with reliable specialists, | | | | surveys, credit reports, title insurance and other |
| like home, pest and radon inspectors, as well as | | | | expenses associated with a mortgage or home |
| mortgage lenders and closing officers. Plus agents | | | | purchase. Prepaids are collected to set up an |
| have access to thousands of available homes | | | | escrow (savings) account so that when taxes and |
| through the Multiple Listing Services in your area. | | | | insurance bills come due your mortgage company |
| In addition, your agent has been trained in | | | | will have enough money to pay them for you. If |
| negotiating techniques, and will be there for you | | | | your escrow account is short (under), you'll usually |
| when a problem arises. I've been in real estate | | | | have the choice to write a check for the full |
| since 1986 and have never once seen a deal that | | | | amount or have your mortgage payment |
| didn't depend on the outstanding negotiation skills | | | | increased. If your escrow account is over, you |
| of an experienced agent. And I've never had a | | | | can allow the money to sit there or have it |
| closing without at least one tiny issue going awry. | | | | refunded. Since escrow accounts generally pay |
| Buying isn't as easy as some might think. A good | | | | little or no interest, I suggest having it refunded. |
| agent definitely earns his or her commission. | | | | PMI (Private Mortgage Insurance) is another |
| But the best news is buyers don't pay for all that | | | | purchasing expense you should understand. If |
| expertise. That's right. The seller pays the | | | | your down payment is less than 20%, in most |
| commission. Real estate practices vary from area | | | | cases, you'll be charged a one-time PMI fee, plus |
| to area, and ALL things in real estate are | | | | ongoing monthly fee until your home appreciates |
| negotiable (yes EVERYTHING) but generally it | | | | or the principal mortgage balance dips below 20%. |
| doesn't cost a buyer a cent to benefit from the | | | | At that time the PMI doesn't automatically fall off |
| knowledge and expertise of a well-qualified, | | | | your payment. You must contact your mortgage |
| licensed real estate agent. And the agent you hire | | | | company and take whatever steps necessary, |
| works for you. So why not hire one! (If an agent | | | | like another costly appraisal, to have it removed. |
| is working for both you and the seller, that's called | | | | If you can, avoid this expense from the get go. |
| Dual Agency and it must be disclosed up front.) | | | | 4) It's not the Purchase it's the Carry |
| On the other hand, keep in mind the agent who | | | | Besides knowing the cost of purchasing a home, |
| initially shows you the property is the one | | | | understand the ongoing costs of ownership. For |
| generally entitled to the commission. So before | | | | example if you're considering a home with lots of |
| you start wandering aimlessly through open | | | | open spaces and high ceilings, your heating bills |
| houses, interview perspective agents and select | | | | might be higher than average. If you've fallen in |
| one you like and trust. Here are five questions to | | | | love with an older home, you might need to set |
| help you decide if an agent is right for you: | | | | money aside for future repairs to expensive |
| *What do you do better than other real estate | | | | mechanicals or structural items like furnace, roof, |
| agents? | | | | or wiring. If you don't know those costs, don't |
| *How will you help me find the right home for my | | | | guess, you can always get an estimate from a |
| wants and needs? | | | | reputable contractor or ask the current |
| *What are the most common things that go | | | | homeowner for copies of his or her utility bills. |
| wrong and how do you solve them? | | | | In addition, some communities have trash removal |
| *What are some of the mistakes people make | | | | or monthly homeowner fees, while others don't. |
| when buying their first home? | | | | Some have significantly higher taxes than others |
| *Can you provide me with references or | | | | do, too. Gather all the facts on every property |
| testimonials from recent clients? | | | | you're considering. List them in a spread sheet, |
| 2) Location, Location, Location | | | | one column for each home. This will give you |
| I'm sure you've heard this mantra before. Don't | | | | anticipated monthly ownership expenses and |
| underestimate its worth. Research all the areas | | | | make properties easy to compare. |
| where you might want to live. Weigh the pros | | | | 5) In the end, it's all about what you want and |
| and cons. But always choose a neighborhood | | | | need in a home |
| that's up and coming or, over time, has held its | | | | So make a list of the ten things most important |
| value. Although most real estate has recently | | | | to you. Decide which are deal-breakers, and rank |
| adjusted, some areas hold their values better | | | | items from most important to least. Don't forget |
| than others. You don't want to invest your hard | | | | about curb appeal, structural integrity, and resale |
| earned money in a location that's declining. And | | | | value. Make your decision based on facts, not |
| you definitely don't want to get stuck with a | | | | fears or emotions. You probably won't get all ten, |
| home you can't resell. | | | | but if you get seven, including your deal-breakers, |
| 3) Know What you can Afford and Stick to your | | | | you're doing great. |
| Budget! | | | | Part two of this article will guide you on what to |
| Don't let buying become an emotional decision. | | | | do (and what to include in the contract) once you |
| NEVER buy something you can't afford just | | | | find your dream home. |