Home Buyers Know Before Go

THE BEST TIME TO PURCHASE A HOME IS USUALLY NOW                           

When you consider buying a new home, keep in mind that interest rates and home prices tend to move in opposite directions.

Some people mistakenly believe buying a home is a bad idea when prices are up or when interest rates are high. In fact, either of those situations can create good buying opportunities.

History shows that high interest rates dampen demand for homes. With fewer buyers available, sellers can’t raise their prices — in fact, they may have to drop asking prices to get their homes sold. That’s a good opportunity for buyers, who can always refinance their mortgages when interest rates drop, as they eventually will.

Low interest rates, on the other hand, bring buyers into the market, bidding home prices up. The low rates, however, make those higher prices more affordable.

DO’S AND DON’TS FOR HOME BUYERS

Do
• Ask a real estate agent to be your buyer’s agent.
• Project your future needs, as children multiply, get older and move out.
• Review last year’s tax and utility bills.
• Consider privacy for you and your spouse.
• Walk the property boundaries with survey in hand, looking for encroachments on the site.
• Review the homeowner documents thoroughly.
• Purchase a home warranty for unforeseen breakdowns the first year.
• Keep meticulous records of home repairs once you move in for capital basis calculation once you sell.

Don’t
• Accept as absolute truth statements by the seller or broker. Document everything.
• Make verbal agreements.
• Look for a home without financing pre-approval.
• Make your moving schedule too tight.
• Buy the biggest home in a neighborhood — it’s usually the hardest to sell.
• Purchase without a quality home inspection.

HERE’S WHO HELPS OUT WITH YOUR HOME PURCHASE

If you’ve decided it’s time to buy your first home, you may be a little overwhelmed about all the things you need to do and decide on. Here’s a handy list of steps you should take on the way to your new home.

1. Select a professional real estate agent
2. Investigate mortgage programs
3. Contact a reputable lender
4. Get pre-approved for a loan
5. Develop a “needs and wants” list for your house
6. Research housing inventory with your agent
7. Tour homes
8. Pare down your choices using your “needs and wants” list
9. Write a purchase offer for the home with your agent
10. Negotiate the contract with the sellers
11. Sign the bottom line!
12. Schedule a home inspection
13. Schedule a pest inspection
14. Schedule a radon test (if necessary)
15. Attend the home inspection (wearing old clothes!)
16. Negotiate defects found on home inspection
17. Prepare for the move
18. Hire movers; or
19. Get lots of boxes and invite all your friends to help
20. Complete final walk-through of the home
21. Attend settlement
22. Move in and celebrate!

HERE’S WHO HELPS OUT WITH YOUR HOME PURCHASE
Lots of people need to be involved in the purchase of a home. If you’re purchasing your first home, you may need introductions.

Real Estate Professional
Real estate agents play an invaluable role in the home-buying process. You can contract with a buyer’s agent to represent your interests, rather than the seller’s. An agent can show you every home available in your price range that meets your specifications. He or she can help you make a purchase offer and negotiate the terms of the contract, offering up-to-date information and advice all along the way. Once your offer is accepted by a seller, your agent will help keep you on track to the settlement table, where the terms of the contract are fulfilled.

Mortgage Broker
A mortgage broker provides home-purchasing funds from many investors, banks and lending institutions. This access gives them a wide array of mortgage products to offer buyers. Brokers account for more than 50% of the total residential loan origination volume in the United States.

Mortgage Banker
The other common lender is the mortgage banker, who works for a financial institution and provides company funds directly to the buyer. These loans are often quickly sold to the secondary mortgage market, to free up more funding for future borrowers. Some mortgage bankers hire loan officers to process their loans. These are sometimes called retail mortgage bankers, whereas wholesale mortgage bankers obtain business directly from mortgage brokers.

Title Company
The title company plays a very important role by guaranteeing the title to your house is free of problems and that you will actually own the property. The home buyer will purchase title insurance policies to protect himself and the lender in case hidden tax liens or other title problems surface down the road.

Settlement Agent
Your settlement agent (also called a “closing agent”) could be an attorney, or an escrow or title company agent, acting as an impartial third party to the transaction and ensuring the process is completed properly and lawfully.

Appraiser
If you’re buying a home with a mortgage, then you’ll definitely be hearing from an appraiser. This professional determines the true market value of your house for you and your lender.

Credit Reporting Agency
Credit reporting agencies, such as Equifax, Experian and TransUnion, are companies that research your credit records and place these facts in a credit report. Their records include documentation from databases that store credit information; public records, such as judgments and bankruptcies; employers; banks; and previous landlords.

PMI Provider
The private mortgage insurance company insures the mortgage when it exceeds 80% of the value of the property. This policy protects the lender in case you default on the loan. The premium is included in your monthly payment.

Property Insurer
Hazard or property insurance companies cover the outstanding loan on the property against unforeseen accidents and will pay the lender for any outstanding debt on the loan.

Pest Inspector
The termite inspector protects the lender and buyer from hidden dangers of termite infestation. If the pests are discovered, the bank requires treatment of the problem before loaning money on the property.

Underwriter
One of the people you’ll hear a lot about but probably never meet is the underwriter. This is the person who receives your mortgage application with all of its documentation and deciphers what it means as far as your creditworthiness. Your lender may call you during the application process, saying the underwriter needs clarifications on your paperwork.

ARE YOU READY TO BUY NEAR HOME?

Most renters end up purchasing a house not far from where they live, according to a recent Fannie Mae National Housing Survey.

If you’re a buyer and like your neighborhood, be sure to work with a real estate agent who knows your area — even if that means overlooking a friend or a family member who sells real estate, but isn’t familiar with your area.

If you’re looking to sell your house, your purchaser could be a renter living just down the street from you. Or they could live right on your block — many renters live in single-family developments as well.

Do renters want to buy? You better believe it. The survey revealed that 60% of renters polled said buying a house is either their No. 1 priority or a very high priority.

PLAN FOR HOMEOWNING EXPENSES BEYOND THE MORTGAGE

 Having a new monthly payment isn’t the only consideration for a new homeowner. There will most definitely be residual expenses that come with a home purchase.

In order to avoid becoming “house rich but cash poor,” you may not want to borrow the maximum a lender will allow. Don’t forget to consider the expenses below when making up a budget for your new home:

• Commuting costs. If you’re driving farther to work, this is going to affect your budget with larger gas bills, more auto repairs and possibly new tolls. Be sure to weigh in these expenses.
• Redecorating allowance. Many homeowners purchase a home, and then find they want to dress it up. That means more money, so be sure to budget for these items.
• New furniture. Is the home larger? Then you’ll probably want to fill it with some new chairs, end tables and the like. They’ll add up!
• Maintenance expenses. If you were renting, you now will discover the joys of homeownership you didn’t have before — replacing hot-water heaters, paying for air conditioning or heating system check-ups, and other expenses that used to be absorbed by the landlord.
• Higher utility bills. If the home is larger than your last dwelling, you might be paying more for household utilities to heat and cool the place. Take a look at the previous owner’s utility bills if you can.

SOLUTIONS TO ALMOST ANY HOME-FINANCING CHALLENGE

Problem: “I don’t have enough cash for the down payment.”
Solution: Some common mortgage programs require down payments as low as 3%. If you have a strong income and excellent credit, you may qualify.

The Federal Housing Administration accepts down payments as low as 3.5%. Conventional loans require minimum down payments of 3% to 5%.

You might even consider borrowing your down payment from yourself. As long as the extra debt would not adversely affect your buying power, your current assets, such as a car, boat or life insurance policy, could be resources to draw upon. In addition, first-time buyers can withdraw from their Individual Retirement Accounts to purchase a home, without an early withdrawal penalty. (Restrictions apply.)

Problem: “I don’t have enough money for — or I don’t want to pay for — up-front fees and points.”
Solution: Look for no-cost programs. These days, investors offer finance packages that require no points and no fees. A point equals 1% of the loan amount and, in essence, is pre-paid interest to give you a lower interest rate. While you may have to pay a slightly higher interest rate (and therefore a higher monthly payment) a no-points/no-fees loan can get a buyer into a house when there’s just not enough money left after the down payment.

Problem: “After making my down payment and closing costs, I don’t have money left for up-front mortgage insurance.”
Solution: Buyers who put down less than 20% must purchase private mortgage insurance to protect the lender in case of default. In today’s market, however, some insurance companies will let buyers finance the up-front mortgage insurance over time.

There are also “self-insure” programs available to you if you are able to handle paying a higher interest rate.

Problem: “I want to buy a home, but I have a bad credit record.”
Solution: What seems like bad credit to you may actually be sufficient to get you into your next house. If you know for certain your credit is blemished, but with good reason — such as illness or loss of job — a letter of explanation goes a long way with the underwriter.

For those who have bad credit with no explanation, all is not lost! Change your credit habits, consolidate debt and pay your bills on time. It’s going to take 12 to 24 months of good credit history to clean up your record, but the benefits of home-ownership are worth it.

Problem: “I have a special situation that would prevent me from getting a loan.”
Solution: The bottom line in qualifying for a home mortgage includes a combination of income, debt ratios and credit ratings. Anything outside those three can usually be explained or documented. Below are some special situations and how to work around them.

• Self-employed or commission-paid borrowers must provide federal tax forms for the past two years, along with a current year-to-date profit and loss statement.
• Divorced or separated borrowers will need to provide a copy of the divorce decree and separation agreement, plus documentation of any alimony or child support payments they are required to make. If alimony or child support payments are to be considered as income, proof of this income (such as the clerk of court’s history of payments or canceled checks for the past 12 months) must be included.
• Retired borrowers and others receiving pension, disability, Social Security or any form of public assistance benefits as income will need to provide a copy of an award certificate or a check from the issuing agency
• Bad-credit borrowers who have bankruptcy, foreclosure or other judgments against them in the past seven years should provide information on the proceedings. Information on bankruptcies should include a copy of the bankruptcy discharge and a schedule of both debts and assets. Judgments against the borrower should include an attorney’s letter that discusses the outcome of the proceedings.

If your ready to get pre approved please GO HERE for a quick pre-approval that can be done on-line securely.