Buyers Tips and Questions
What is a Multiple Listing Service (MLS)?
The MLS is a computerized listing of the homes for sale listed with real estate agents within specific geographic areas. Agents have access to this service to find homes by price range in specific areas.
Why Should I Use a Real Estate Agent?
A real estate agent may act on your behalf, giving you guidance and advice on the entire home buying process. They will have the most up to date information on properties, as listing information frequently changes. A Buyer’s Agent will make recommendations on what terms and prices you should offers, as well as negotiate for you with your best interests in mind. The Buyer’s Agent is typically paid by the commission offered from the Seller, even though they work for you, the Buyer.
How Much House Can You Afford?
1. Divide your annual salary by 12
2. Take your monthly salary and multiple by the % you want to spend (on average between 25% and 36% of your monthly income for house hold expenses
3. Calculate your debt ( all loans-car, student, etc., credit card, etc.)
4. Take your monthly salary, subtract your monthly debt and this will equal your maximum payment that you can afford to pay towards a home
5. Take this monthly payment and multiply by 12. This gives you the amount per year you can spend
6. Divide your annual payment by today’s current interest rate and this will equal your total mortgage amount
7. Take your total mortgage amount plus the cash you have on hand for the down payment and this wil give you the purchase price of a home that you can afford
What are Closing Costs?
These are customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed for the borrower after submission of a loan application.
What Does FSBO Mean?
This is a property tha is For Sale by Owner, usually not involving a real estate agent.
What is Title Insurance?
This is insurance that protects the Lender against any claims that arise from disputes about ownership of the property; also available for home buyers.
How Do Sellers Price Their Homes, How Much Should I Offer?
Sellers fall into 4 categories
1. Ridiculously overpriced. They are too emotionally attached, or have decided to go with the highest bidder agent who has given them bad advice. Their house will sit on the market too long and lose value.
2. A little overpriced. This is about 75% of the market. Sellers either feel their home is worth it or leave a little room for negotiation (about 4-10% of the price)
3. Fair market value. These are based on comparable homes in the area and will have the house sell quickly. Know what the listings are selling for in your area to be able to evaluate.
4. Under priced. The seller needs to move quickly, these homes usually sell within 10 days. If you see a good value, do not hesitate to put down an offer
What Are The Steps To Buying A Home?
1. Decide to purchase a home
2. Find a great real estate consultant who understands your needs
3. Secure financing- get a preapproval letter from a lender
4. Find your dream home
5. Make a written offer and negotiate the price, best reviewed by an attorney
6. Place the deposit in an escrow account
7. Have a home inspection
8. Sign the final documents (sign the Purchase & Sale Agreement) and move in (after signing the Deed and Mortgage Documents)
Should I Buy A New Car Before I Buy A Home?
A new car payment increases your debt ratio. It may make the difference as to what type of mortgage you can or can no longer afford
How Do I Qualify For A Home Mortgage?
1. Reduce your long term debt
2. Wait until you have a higher income
3. Add someone else to the mortgage to help qualify
4. Use financing that requires a lower down payment
What Are Signs That Can Mean Expensive Fixes?
1. Foundation. Does it have large cracks, is there mold or wood rot present?
2. Roof. Do you see broken warped, split or rough shingles? Are the eaves or soffit rotted? Any faulty gutters?
3. How does the house smell? Any mold or dead critters?
4. How are the floors? Slanting, warped, squeaking- these may be signs of sub flooring issues
5. Walls and Ceilings. Are there any cracks, wet spots, stains, bubbling or bowing?
6. Bathroom. Does the toilet flush? Is there good water pressure?
It is always recommended to use a professional inspector when you see a home you want to make an offer on
What Are Some Money Saving Secrets When Buying A Home?
1. Choose a low down payment
2. Have someone give you money for the closing costs (a relative, friend, etc)
3. Ask the seller to pay some of the closing costs
4. Don’t pay too much for closing insurance, get the minimum required versus what may be suggested
5.Be clear with your agent about your likes and dislikes and see a good variety of homes
6. Shop around for home insurance quotes
7. You can deduct money paid for discount points from your gross income before computing your tax, ask your accountant
What Are the Top 6 Things to Ask Yourself When Looking At A Home?
1. Is it the right distance to work, school and commuting?
2. Does it have enough bedrooms and bathrooms?
3. Is there enough storage space?
4. Is there parking?
5. Is it safe?
6. Is it the right school district?
How Do I Find a Good Mover?
1. Identify only licensed, insured and bonded moving companies
2. Ask for estimates, and get 2-3 from various companies. Information should include how long will it take, size of truck and cost.
3. Get extra liability insurance. Declare the value of your items before you move, otherwise they will be valued at $1.25 per pound
How Do I Avoid Being Beaten Out By Other Buyers On My Dream Home?
1. If a house has everything you desire, an offer close to or at asking price shows you are a serious buyer
2. Timing, he who hesitates is lost. If you see something you like, make the offer right away. Good properties don’t last
3. Be preapproved. This shows the seller you are ready to go
4. Communicate. Tell your consultant what your ultimate desire is so they can advise you on the best course of action
How Do I Save Thousands of $ On My Mortgage Interst & Pay It Off Sooner?
1. Round your monthly payment up to the nearest hundred. This shortens the length of your loan
2. Use your income tax refund as a one time payment, shortening the length of the loan
3. Start with a 15 year mortgage instead of a 30 year mortgage, it can save thousands of dollars
Who Are All The Players In A Home Purchase?
1. Real estate consultant. Know that a buyers agent represents the buyers interests, and a sellers agent works for the seller. Know who you are speaking with.
2. Lender. This is your mortgage company or bank. Their job is to verify your income, employment and credit history to qualify you for a loan.
3. Attorney. There could be several, one for the buyer, one for the seller and one representing the bank. Their job is to help you avoid pitfalls
4. Title Company. They check the history of the home with the public record creating an “abstract of title”, determining if there are any issues with the property that would not allow the title to pass from one owner to another.
5. Appraiser. Employed by the lender to examine the house for appearance, condition, size and quality, then estimate the home’s current value based on sales in the neighborhood
6. Surveyor. Checks the boundaries of your home, if needed
7. Home Inspector. Checks the working condition of electrical, mechanical, structural and plumbing systems
8. Pest Control. Checks for wood destroying pests, may be conductor by home inspector
How Do I Get The Home I Want, But What Do I Want?
Decide between what you need and what you desire. The determine the price range and start looking. Consider these items:
Location
Dinner. Do you dine out a lot, are their restaurants near by? Do you cook? Where are the super markets? Do you need a gourmet kitchen?
Layout. Do you need a separate living room and family room? Does the master bedroom need to be separate from the other bedrooms?
Bedrooms. How many? Do you need a master suite? Walk in closets? Where’s the baby’s room? Do you need a guest room?
My space. Do you need an office or a crafts room?
Garage/ Parking?
What Are the Most Important Things to Consider?
1. Cost. Can I afford it? Talk to a good lender who will lay out the numbers for you to let you see what you can really afford
2. Commitment. Are you ready to be in one location for at least one to five years? If you are still moving around a lot, home ownership is not for you. When you do buy, get a home that will be easy to resell.
3. The People. Who to trust? Everyone is trying to make a profit from your sale. Talk to your lenders and real estate consultants and check references. See who offers you information that is useful and who understands what your needs are. Not everyone is out to get you, find someone that is sensitive to what you want
How To Avoid 5 Expensive Home Buying Mistakes
1. Not knowing how much you can afford before you make an offer
2. Not realizing the wrong type of mortgage can cost thousands of extra dollars in interest
3. Know who the real estate consultant represents, the buyer or the seller
4. Not discovering hidden defects when buying a home- it is always recommended to get a home inspection
5. Not knowing how much your credit can affect your ability to buy or refinance a home. Check your credit history
How Can I Save Money When Buying a Home?
1. Get preapproved
2. Sell your home first, then buy. Contingencies can increase the price of purchasing your next home
3. Nines. Make a list of 9 things you want and 9 things you don’t want. Use this as a guide as you visit each home, Know what items can be changed in a home (the skin) and what can not (the bones)
4. Don’t be pushed into buying a home. You have to be comfortable with your purchase
How Do I Beat The Stress of Buying?
1. Begin with the end. Know your goal before you start looking. What will life be like when I move? Will it be better then where I am at now?
2. Be flexible. Over estimate costs by thousands of dollars so you have a cushion and are not surprised with expenses that pop up during the process
3. Trust the process. Don’t panic over all the details. Take one step at a time and let your real estate consultant guide you along
4. Be knowledgeable. Know in advance your financial capabilities. Ask lots of questions so you can feel empowered
How Can I Remember Each Home When I’ve Seen So Many?
1. Map it out. Look at a map of the area and mark the areas you want to live in. Then as you visit each home, place it on the map
2. Keep the listing sheets that the agents give you for each home
3. Take notes. As you are walking through the home, put notes on the back of the listing sheets, draw a floor plan, etc.
4. Take photos.
