Real Estate Advice
Things to think about when buying a home.
It's one of the most important large purchases and commitments of you life. Life can be challenging at times, jobs change, your needs change, and your neighbors homes can have an effect on the value of your home. A home is not something you can easily walk away from. Putting your home on the market and getting ready for the sale process can take months and cost a large sum of money. You have to account for fees that the agents will charge, closing costs and the cost of moving and storage. • How long do you plan to live in this home, three to five years or 30? • Are you ready to stop paying rent and take on a mortgage? Have you had your job for 2 years? How is your credit score? How much of a down payment will you have 5%, 10%, 20%? All of these are key factors that will yield the best mortgage rates. • Is now the best time to buy your new home? Has the area that you are interested in appreciated or declined drastically in the past 5 years? If so there may be a settling period • Your home may not be the best investment. During these tough economic, there are great deals to be had on every corner, so make sure you do your research.
Research, research, research
Once you're ready to take the plunge, figure out what you can afford. Many lenders prefer that your housing costs -- mortgage, property taxes and homeowners insurance -- amount to no more than 33% of your monthly gross income, but some will go much, much higher.
• MSN Money's Home Affordability Calculator factors in your credit and your available cash to give you a target price to shop by.
• If you're buying in an inflated market, a fixer-upper is a good choice. (See "7 creative ways to buy your first house.")
• You can buy anything from slum dwellings to upscale homes if you're looking into the foreclosure market. Don't count on massive cost savings. (See "The safest ways to buy foreclosures.")
When selecting a Realtor, make sure to choose an experienced Realtor, and also someone who is familiar with your area. They will be able to give you much more in depth details about Schools, Home Value, the best areas of that Section, etc. One of the best ways to go about finding a Realtor is to ask Friends and Family for referrals. A referral infers that someone already had a good experience with that particular realtor which bodes well for your impending experience.
• Try and talk to 2-3 Realtors. Make sure to follow up on any claims they may advertise, and check on the Licensing and any reviews they may have.
• Realtors -- agents who are members of the National Association of Realtors -- must abide by a code of ethics. Realtors also have access to the Multiple Listing Service.
• Make sure you have compatibility and chemistry with your Realtor. If you two don't see eye to eye, don't get along, or just simply aren't on the right page, your home search is going to be miserable and unfruitful and waste both of your times.
• Know who your real-estate agent represents. Unless you have a buyer's agent, your agent will be working for the seller.
Shop for a loan.
• Compare the APR -- annual percentage rate -- detailing the interest and fees you'll be charged to get the loan. Those who participate in first-time-homebuyer programs should beware. Is the loan officer paid a commission after steering you to a particular program? You can get a rough idea of what your monthly payments will be by using a mortgage calculator.
Figure out what you want in your home. How many bedrooms? Bathrooms? Square footage? Yard? Make a list of needs vs. wants and always have that with you to stay on track.
• Most people purchase a single-family home. Other options are available, like condominiums, tenancy in common (see "Tenancy in common questions and answers"), stock cooperatives and co-housing. (See "Co-housing.")
Once you think you've find your home, then really do your research. After all this is a very significant purchase you are about to make.
• Talk to potential neighbors, HOA, etc to find out anything you may need to know about the neighborhood before making your decision.
• Check the zoning on vacant lots.
• Ask to see the “comps” (Comparable pricing on similar homes) from your Realtor to see where current houses are being appraised and sold for.
More steps for your Due Diligence
Once you've found your home, done your research, and feel confident in your decision, it's time to present an offer listing the purchase price, earnest money, the closing and move-in dates and other details.
Once negotiations are complete, take several steps before you go to closing, the final meeting where you sign documents and take possession of the house.
• Get a home inspection, preferably by a member of the American Society of Home Inspectors. Attend the inspection and read the report. If the home has problems, ask the seller to agree in writing to make the repairs.
• Compare rates for homeowners insurance. An additional policy is needed for a home in a flood zone or earthquake-prone area.
• A home warranty may make sense if you're buying an older home. Read the fine print to learn what the policy will cover. Note that warranty companies prefer to repair rather than replace broken items. (See "A home warranty is no guarantee.")
If you're planning to sell your house, keep the following in mind:
• Set a reasonable asking price. If the price is too high, your home won't compare well with similarly priced houses, and you won't even get shoppers, let alone a buyer.
• Hundreds spent on landscaping, paint and deep cleaning can add to its value by thousands. (See "Speed your home sale with these fast fix-ups.") Bake cookies before you show your home.
• Make sure your real-estate agent has a detailed marketing plan that includes Internet exposure. Or explore ways to reduce the agent's commission. (See "3 ways to pay lower real-estate commissions.")
• Desperate to sell your house but now owe more than you can get? Persuade your lender to take a "short sale."