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Buyers
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8 Tips for Protecting Yourself When You
Buy a House
by Michele Dawson |
If you're getting ready to buy a house during what is typically
the busiest buying and selling time of the year, then offers
may be flying, loans may seem confusing, and everything may
be moving way too fast. That's why it's important to do everything
you can to protect yourself throughout the entire homebuying
process.
Low mortgage interest rates and a strong underlying demand
for housing drove total state existing-home sales to a new
record in the first quarter of 2003 with 34 states experiencing
sales increases over the first quarter of 2002, according to
the National Association of Realtors.
And the NAR says that many states that saw sales decline actually
had a shortage of homes for sale - and the biggest price increases.
"Too many buyers, not enough sellers is making this an
exceptional sellers' market ... Some bidding wars are here
again especially in the first-time buyers market of single-family
homes," said Ben Lambert, a Realtor in Herndon, Virg.
The same phenomenon is being felt in other parts of the country.
"The lack of inventory continues to be a concern for the
buyer," said Dave Petruncio, a broker in Western Springs,
Ill.
What this means if you're buying during the frenzied spring
and summer months is that you'll need to do everything you
can to protect yourself as you make offers, obtain your loan,
buy insurance, and strike up contracts.
Freddie Mac offers a number of tips:
- Get pre-approved for a loan. With competition fierce,
you'll want to be ready to make an offer. With a pre-approved
loan, you'll have more clout as the seller considers your
offer.
- Make sure it's in writing. Don't settle for verbal agreements.
If the seller says he'll replace the carpet or leave his
washer and dryer, get it in writing.
- Get a good-faith estimate. Your mortgage lender is
required to provide you with a good-faith estimate of closing
costs within three days of receiving your application. They
need to provide it in writing. If you don't have to pay
loan application fees, you may want to compare lenders and
compare closing costs.
- Don't settle for the first lender you come across.
Contact at least three lenders and compare rates.
- Lock-in your rate. One of the most stressful parts of
the loan process is watching rates inch up and down each
day and trying to figure out when to lock in your rate. Once
you do lock in, be sure to get a written statement that
outlines your interest rate and length of the lock.
- Get a home inspection. A professional home inspector
will examine the house's major systems and let you know if
there are any problems or defects. You can then use the
information in your negotiations. Look for an inspector who
is a member of the American Society of Home Inspectors.
Members are required to have completed at least 250 paid
professional home inspections and passed two written exams
that test the inspector's knowledge. Also, ask for
references.
- Shop for homeowners' insurance as soon as your offer
is accepted. The National Association of Realtors recently
cautioned homebuyers to not take homeowners insurance for
granted. You and your spouse may have a clean claims history
and a stellar credit history - something insurance companies
use to determine whether they will insure you - but it's not
just you they're looking at. If the house you're eyeing has
had claims, there's a chance they won't insure you, especially
if it's a water-related claim.
- Read everything. When you have the closing meeting to
sign the mountain of papers, make sure you read through
everything carefully and don't hesitate to ask questions if
there are something you don't understand.
Finally, give yourself enough time between your closing and
your move date, just in case there are delays in the closing
process.
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The Art of House Hunting: 8 Tips to Help in Your Search
by Michele Dawson |
Armed with your down payment and your pre-approved mortgage
loan, the next step is finding the house that will best meet
your family's needs. With realistic expectations, patience,
and plenty of research, you'll be well on your way.
Once you narrow it down to the neighborhoods you like, you'll
want to determine the maximum house price you can afford. Even
though you're pre-approved for a set loan amount, it doesn't
mean you can afford it. You'll want to factor in other expenses,
including retirement and college savings, vacations, and home
maintenance and repairs, when you calculate how much you can
afford for a monthly payment. And don't forget to budget for
homeowners insurance and property taxes.
Next, differentiate your needs versus your wants. You need
three bedrooms, but a fourth room would be nice for a play
room or guest room. You need a two-car garage, but a larger
one would be nice for storage. You need a functional kitchen
but want hardwood floor. You need two bathrooms but want a
luxurious master suite. You get the picture.
As you begin on your house-hunting venture, you may want to
prepare a checklist, perhaps in a table form on your computer.
Break it down between exterior and interior characteristics.
Make notes on each feature and give each a 1 to 10 score.
Some of the exterior features to rate might include size of
yard, quality of fence, paint condition, roof condition, window
conditions, garage, back yard. When it comes to interior,
think about square footage; the floor plan; condition of walls;
the size, quality, and functionality of the various rooms;
and closet and storage space.
Your checklist should also include any other general factors
you deem important - the amount of traffic, the appearance
of the neighborhood in general, safety in the area, the reputation
of local schools, etc.
Meanwhile, Freddie Mac,
the stockholder-owned corporation chartered by Congress in
1970 to create a continuous flow of funds to mortgage lenders
in support of homeownership and rental housing, and other
industry experts make additional suggestions, including:
- Take a camera with you to capture an image of each
house you look at that makes it to the "maybe" list.
- Don't make a hasty decision, especially if you feel
yourself becoming guided by emotion. Selecting a home takes
time, thought, and analysis. You should carefully weigh the
pros and cons of each house you like.
- Review your checklist and notes and compare it against
your needs, wants, and budget.
- Bring your spouse, friend or family member with you
to get a second opinion. They may notice a shortcoming that
you've overlooked.
- Find out how much utilities and maintenance cost.
- Stay on top of newly listed houses via a Multiple Listing
Service on the Internet.
- Remain in close contact with your agent. This is extremely
important if you're in a strong seller's market in which
homes that are priced right go fast. You want a good agent
who will alert you of new listings and who will show you
the houses as soon as they're listed.
- Be prepared to look at the potential of a house rather
than what you see in front of you. Set your priorities and
decide what can be sacrificed. It's more important that
the layout of the house and the number of bedrooms you
need fit your needs and that all major systems are functional
versus your dislike for the avocado green carpet or the
lack of landscaping. Those types of cosmetic shortcomings
can be easily remedied once you buy the house.
If you find a house you like, offer a competitive bid. Keep
in mind you'll likely be competing against other offers - especially
if interest rates stay low and the spring buying season is
in full bloom.
And don't forget - once you make an offer, make it contingent
upon the findings of a professional home inspection. If any
major defects surface, you'll want to have the leverage to
renegotiate or back out of the deal completely.
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Questions Every Buyer Should Ask
by Realty Times Staff |
When you're in the market for a home, it seems as if there
are millions of questions to ask -- and no doubt plenty more.
As buyers we become so wrapped up in the physical aspects of
the house -- the rooms, amenities, and structure -- that we
give less attention to quiet issues which may strongly impact
our ability to enjoy a home.
What kinds of factors will affect your quality of life? The
obvious ones are the first to come to mind: the distance to
work, the special programs available through the local school
system, and neighborhood shopping and recreation.
Those factors, while important, may not touch the issues specific
to your situation.
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, and proximity to police stations,
emergency medical services and fire houses is important. 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 in 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 Mondays 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 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 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. But the ones above
are a good place to start.
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Tips for Buying in a Tight Market
by Michele Dawson |
Just as summer temperatures heat up in sections of the country,
home sales in pockets of the nation are sizzling, too. That's
great news for sellers, but is enough to make a potential buyer's
stomach churn watching prices mount on a monthly basis.
So, if you are a buyer, it's more important than ever to be
prepared and be ready to make an offer at a moment's notice.
That's especially crucial in a market like Arlington, where
entry- and move-up homes are receiving multiple offers.
"Strong demand and low supply have been in effect for
the last three years," said associate broker Casey O'Neal.
"So far this year it has been typical to see more buyers
looking than (there are) homes for sale. In the third quarter
so far, inventory is still low and demand is strong."
California is also experiencing a dwindling inventory of homes
and soaring prices.
"Just when I thought inventory could not get any lower,
and prices any higher, it happens again," said Realtor
Peter Tichinin, of Chico, located 90 miles north of Sacramento.
"The seven-year average of homes on the market in July
is 308. As of July 9, there were 130 homes on the market."
Across the country in Jacksonville, Fla., similar conditions
exist.
"June 2002 was the craziest month ever in real estate in
Jacksonville," said broker Dana Hancock. "Resales
were selling in record time and getting top dollar. The title
companies, lenders and most of us Realtors had our best month
ever. Our market here in Jacksonville is still very healthy
despite what we're hearing about the rest of the country."
So what's a buyer to do? For starters, you should:
- Research and determine what you want beforehand - how
many bedrooms, approximate square footage, preferred neighborhoods,
and how much you can afford to spend.
- Make sure your credit report is accurate. There would
be nothing worse than finding the perfect house and missing
your chance to make an offer because there's an error on
your credit history that places you in an unfavorable light
with a lender.
- Get pre-qualified for a mortgage before you begin looking
at homes. Not only will this give you an exact price range
for your purchase, but pre-qualification will add muscle
to your offer.
- Stay in close contact with your agent and clearly
express your needs. This is especially important if you're
in a market where inventory is low. You'll want to be notified
as soon as a home that fits your criteria goes on the market.
A good agent in a tight market stays on top of the listings
on a daily basis and calls you the minute a good match
shows up, especially in communities where homes are listed
and pending sale in the same week, or even same day.
- Use the Internet to scout out new listings on the Metro
Listing Service.
- Keep in mind that there's no such thing as the "perfect"
home especially if you're in a market where prices have been
consistently rising. Instead, set priorities. Determine
what you're willing to sacrifice.
- Bid competitively. Keep in mind you'll likely be competing
against other offers. Now's not the time to play games and
how low the seller will go.
- Forget about making a contingent offer. When multiple
offers are flying, a contingent offer - one that is based
upon you selling your house first - will wind up in last place.
Sell your house first, have your down payment in hand, and
be ready to rent or live with family or friends temporarily.
- Get a professional inspection before you buy the home
and sign the final mortgage loan papers. Otherwise you'll be
left in the dark about any hidden defects in the property.
Most importantly, if you're determined that now is the time
to buy, don't be timid. You'll need to be ready to act on a
moment's notice and present an attractive offer as soon as
you see that close-to-perfect home that hits the market.
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