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Tips For Buying a Home

Purchasing a home is one of the biggest decisions most people will make in their life. It involves a long-term commitment financially and emotionally, but it can also be a very exciting and rewarding experience.   When buying a new home, there are a few things to consider:
  • What monthly payment can I afford?
  • What am I looking for in a home?
  • Should I work with a REALTOR®?
  • Once I find a home to purchase, what do I need to do next?
  • How much cash do I need at closing?
  • How do I obtain a mortgage loan?

Before you actually begin the process of looking at homes, you should complete the following:

 

Get Pre-Qualified: Unless you are able to pay cash for your home, most buyers will need to go through the process of applying for a mortgage. By contacting a mortgage loan specialist before you begin your search, you are able to determine the amount of loan for which you qualify. Typically, a borrower is pre-qualified for a loan that amounts to 28%, or less, of their gross monthly income. In addition, if you know the amount of the monthly payment you would be comfortable paying, a mortgage specialist can calculate the price range for your home search. Getting pre-qualified for a loan also increases your chances of your offer being accepted. A seller is more likely to accept an offer from a buyer who already has funding versus one who still needs to get a loan.

 

Prior to getting pre-qualified, you should obtain a copy of your credit report so that there are not any negative surprises when you are ready to apply for your loan. Correct any errors that you may discover on your credit report. Also, you will want to reduce your consumer debt as much as possible by paying down credit card balances.

 

By going through the pre-qualification process, your mortgage specialist can provide you with an estimate of how much cash you will need for the sales transaction. Cash is needed for the down payment, earnest money, and closing costs of the transaction.

 

Make an Amenities List: Decide what features are most important to you in a home. By establishing your criteria, you will save time shopping for homes that do not meet your needs. Also, consider what locations you are interested in. When making an amenities list, determine which criteria you absolutely cannot live without and which ones you are willing to budge on.

 

Some typical criteria may include:

  • Price range
  • Neighborhood or subdivision
  • School districts
  • Proximity to work
  • Proximity to shopping, restaurants, hospitals, etc.
  • Number of Bedrooms
  • Number of Bathrooms
  • Storage space
  • Garages
  • Lot sizes
  • Pools

 

Choose An Agent: Once you have decided on the price range and the features you are interested in, your next step will be to decide whether you will search on your own or use the services of a real estate agent. If you choose to use an agent, make sure you enter into a Buyer's Agency Agreement. This ensures that the agent will represent you, as the buyer, in the selling process, and not represent the interests of the sellers.

 

Talk to friends and family for their referrals of agents they have worked with. Once you have some names, interview several agents before making a final decision. Select a REALTOR® that you trust and with whom you feel comfortable working.

 

Remember, there are no out-of-pocket fees that you pay to the buyer's agent. These costs are incurred by the seller. Your agent will research property listings for potential matches to your criteria and schedule showings for you at a convenient time. In addition, they will provide guidance to you during the contract negotiation phase of the selling process. Many times, they will also coordinate and schedule the home inspection, appraisal, and closing for you, as well as provide you with referrals for mortgage lenders.

Once you have selected an agent and determined what you are looking for in a home, it is time to begin your active search for homes that interest you. Based on your criteria that you provide your REALTOR®, he/she will be able to search their listing database for homes that meet your needs.   While visiting properties that are on the market, compare homes. Every home is unique! Even if every home you visit has all of the main criteria you are looking for, each will have different characteristics. Bring your Amenities Checklist with you to all homes that you visit. Check off which features each house has. Make notes on each home of what you like and dislike.   Additional things to consider when touring homes:
  • Cost of upkeep and utilities
  • Amount of maintenance required
  • Cost of updating or decorating
  • Homeowner's dues
  • Traffic patterns in the neighborhood
  Taking notes and using your checklist will help you later when you can sit down and compare properties. By comparing notes, this will help to prevent you from making an emotional and impulsive decision.
Once you have found your dream home, it is time to prepare an offer to purchase. Your buyer's agent can provide guidance to you on the price you should offer to pay for the property. Have your agent compare prices for similar homes that have sold in the area recently. This will help you to determine a reasonable price to offer.   In addition to the selling price, the other items to include in the terms of the Offer to Purchase include:
  • The amount of earnest money (deposit) to offer.
  • Concessions that you want the seller to make, such as a carpet or paint allowance, or payment towards the closing costs.
  • Home inspection contingencies.
  • Financing contingencies.
  • A clear definition as to what is to be included with the home, such as appliances or window treatments.
  • A closing date.
  Don't be surprised if your initial offer is not accepted. Your REALTOR® will represent you in all contract negotiations until an agreement is reached between the seller and you.
Once your offer has been accepted, it is time to work on the final details of purchasing your home. There are several tasks that will need to be accomplished during this phase of the sales transaction:   Home Inspection: Arrange to have a professional come out to inspect your home. They are able to spot electrical, plumbing, and structural problems that may not be noticeable to you at first glance. The home inspection is not required, but it is in your best interest to have one done on the home so that you do not receive any surprises once you move in. This is an expense incurred by the buyer and is included in your closing costs.   You may also need to get a pest inspection on the property to make sure there is no structural damage to the property caused by termites. Your REALTOR® can usually make a recommendation of a reputable inspector.   Apply For A Loan: Once an offer has been accepted, you will need to contact your mortgage specialist to officially apply for a loan.   Items that you will need for your loan application include:
  • W-2s and/or tax returns from the past 2 years.
  • Proof of gross monthly income for the past 30 days.
  • Proof of investment income, including rental incomes.
  • A list of creditors, including account numbers, balances, and monthly payments.
  • Two months worth of banking statements.
  The Final Walkthrough: Prior to closing, you should be given access to the house so that you can walk through and give it a final inspection. This should be done as close to the closing date as possible, preferably on the morning of the closing proceedings. When you go to do your final walkthrough, your home inspector will not be with you. It is your responsibility to inspect the home and ensure that everything meets your approval.   Things to look for during your walkthrough:
  • The seller has repaired items included on the purchase agreement.
  • The house is in "as-was" condition (everything is in the same condition as it was when you signed the purchase agreement).
  • The house is vacant and clean. The home does not have to be spotless, but there should be no remaining trash or junk left behind in the house or in the yard.
  • Tenants have moved out prior to your closing unless you have agreed for them to stay.
  Closing: Usually at the time an offer is accepted, or after you have a commitment from your lender, a date and time will be arranged for your closing. The closing procedures will be handled by an attorney of your choosing. The day before, you will be told the total dollar amount you will need to bring to closing by the closing attorney. They will also provide you with any additional information you may need to prepare yourself for the proceedings.   On the day of closing, remember to bring:
  • A certified check for the total amount of your closing costs.
  • A picture ID, such as a driver's license.
  • Your personal checkbook.
  • Evidence of mortgage insurance (if this information has not already been requested).
  During the closing, details of the sales contract will be explained to you. If everything meets your approval, you will sign the contracts to finalize the deal. Congratulations! You are now a new homeowner!

Tips For Selling Your Home

The process of selling your home can be an emotional and exhausting process. There are many things you will need to do in preparation of placing your home on the selling market. By following some simple guidelines, selling your home can be a more enjoyable and smoother process.

If you are planning on purchasing a new home in the near future, it is a good idea to place your home on the market as far in advance as possible. If you wait to place your home on the market until after you have found a new one, you may end up paying two mortgages until you find a buyer for your home.

 

Also, consider the fact that closing and moving dates will need to be coordinated. More than likely, the buyer of your property is selling their current home as well. Make sure that all parties involved commit to a specific time period for the closing dates. Put your closing date agreement in writing and negotiate monetary penalties for failure to comply.

 

As you begin to think about looking for a new home to purchase, you may also want to start preparing your current residence to be placed on the market. Start cleaning out attics and basements of any unwanted or unused items. By doing this early on, it will save you time when beginning to pack for your big move.

Many homeowners decide to sell their property on their own to save themselves the cost of commissions paid out to a real estate agent. Commissions are generally around 5% or more of the selling price. You may want to consider, however, the costs you will incur to market your home yourself. You will be responsible for placing ads and creating flyers for your house. Also, you will have to devote much time to answering phone inquiries about your home and showing the property. Consider whether or not you will feel comfortable showing your home to strangers who show up unannounced.

 

Should you decide to sell through a licensed real estate agent, ask your friends and family for recommendations. Interview several agents before choosing the one you wish to hire. Find an agent that you trust and feel comfortable with.

 

Below are some of the advantages of working with a licensed real estate agent.

 

The seller’s agent will:

  • Help you to establish a fair asking price.
  • Handle all advertising and marketing of your home.
  • Schedule appointments and show your home without your presence.
  • Market your home to other real estate offices and agents.
  • Represent you in the negotiations with the prospective buyer.
  • Guide you through the closing process.

Once you have decided to sell, the next big step is to determine what the fair asking price should be for your home. Try to avoid overpricing your property; this may cause your home to remain on the market for an extended period of time. Instead, you should price your home so that you get a fair return on your investment and in a reasonable time period.

 

If you have chosen to use a real estate agent to represent your interests, he/she can guide you in setting the price at just the right amount. The agent, or a licensed appraiser, is able to complete a Comparative Market Analysis on your home. A CMA compares your home with similar properties that have sold within a specified period of time. This will enable you to set a comparable price to others that have been on the market.

 

Other factors to consider when setting a price for your home:

  • Economic conditions of your community
  • The supply and demand ratio in your local housing market
  • The location of your property (school districts and subdivisions)
  • Your home’s special features (garage, pool, fireplace, in-law or guest quarters)
  • The age and condition of your home
  • Seasonal influences (the housing market may be stronger during certain times of the year).

There are many minor things you can do to your home to enhance its marketability. Remember, you want your home to make a great first impression to a potential buyer. Spend some time prior to placing your home on the market cleaning out storage spaces, closets, and cabinets. Remove any excess clutter from your home as well. You want the prospective buyer to remember the architectural features of the house and not the furnishings you have in it. The potential buyer needs to be able to envision their furnishings in your home.

 

Below is a list of things you can do to increase the value of your home:
 

Consider Curb Appeal:

It is estimated that more than 50% of homes are sold before the buyers even get out of their cars. Stand across the street from your house and review the curb appeal.

  • Keep the lawn mowed and raked, shrubs trimmed, and the sidewalk swept.
  • Plant shrubs or install fencing to block unpleasant views.
  • Clean the exterior of your home. Clean oil stains from the driveway and garage.
  • Repair and/or paint exterior siding, trim, gutters, shutters, glazing, and window frames.
  • Repair or replace the street numbers on the house.
  • Make sure all exterior lighting is working.
     

Garages, Carports, and Sheds:

  • Replace burned out lights.
  • Clear away cobwebs.
  • Keep areas clean and uncluttered. Organize and put away tools.
  • Lubricate, adjust, or repair garage door.
     

Interior Maintenance:

On the inside, remove as much clutter as possible. Hire professionals to do a deep cleaning. Cleanliness is a sign to buyers that the home has been well cared for.

  • Clean and vacuum carpets. Replace worn carpet and use area rugs as needed.
  • Apply a fresh coat of paint.
  • Wash curtains and draperies.
  • Clean ceiling fans and light fixtures. Check for cobwebs in all corners.
  • Clean and organize all closets and cabinets.
  • Lubricate window slides; make sure doors close smoothly.
     

Kitchens and Bathrooms:

Overall, kitchens and bathrooms should be spotless. These two rooms alone can sell a home.

  • Clean all appliances inside and out.
  • Replace all light bulbs (appliances included).
  • Clean floors and light fixtures.
  • Deodorize disposal, dishwasher, and refrigerator. Neutralize odors and clean all mold and mildew.
  • Repair leaky faucets. Make sure toilet flushes properly.
  • Test all electrical outlets.
  • Unclutter counters and cabinets.
  • Clean shower door or replace curtain. Remove soap residue and lime deposits from sink, shower, and bathtub.
  • Put out fresh towels.
     

Create a Pleasant Atmosphere:

Overall, make sure your home exudes an inviting atmosphere. You want the potential buyer to have a pleasant experience visiting your home so that they remember the positive attributes that your home possesses.

  • Turn on all lights. Open drapes to allow natural light as well.
  • Light candles and put out fresh flowers.
  • Play quiet background music.
  • Turn on the air conditioner or heater so that your home is at a pleasant temperature.
  • Be absent during showings and keep pets outside.

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