For the First Time Home Buyer or Anyone Looking for a Home in this Volatile Market

With interest rates and housing prices at an all time low, foreclosures on every corner, and government incentives about to end, you (or someone you know) might be looking to buy a home. How exciting! But, in this market, no one can afford a home-buying mistake.

Although this article is especially designed to help those first time buyers who are new to the process, these five essential tips will ensure everyone a successful home-buying experience. Sell my home fast in Bronx

1) Work with a Full-Time Licensed Realtor

Real estate agents have training and experience with all types of homes including condo’s, co-ops, short sales and foreclosures. And they understand various forms of mortgages, including FHS, VA, Conventional, and HELOC’s. Agents understand trends in the market and can highlight the differences between competing neighborhoods. They can also connect you with reliable specialists, like home, pest and radon inspectors, as well as mortgage lenders and closing officers. Plus agents have access to thousands of available homes through the Multiple Listing Services in your area.

In addition, your agent has been trained in negotiating techniques, and will be there for you when a problem arises. I’ve been in real estate since 1986 and have never once seen a deal that didn’t depend on the outstanding negotiation skills of an experienced agent. And I’ve never had a closing without at least one tiny issue going awry. Buying isn’t as easy as some might think. A good agent definitely earns his or her commission.

But the best news is buyers don’t pay for all that expertise. That’s right. The seller pays the commission. Real estate practices vary from area to area, and ALL things in real estate are negotiable (yes EVERYTHING) but generally it doesn’t cost a buyer a cent to benefit from the knowledge and expertise of a well-qualified, licensed real estate agent. And the agent you hire works for you. So why not hire one! (If an agent is working for both you and the seller, that’s called Dual Agency and it must be disclosed up front.)

On the other hand, keep in mind the agent who initially shows you the property is the one generally entitled to the commission. So before you start wandering aimlessly through open houses, interview perspective agents and select one you like and trust. Here are five questions to help you decide if an agent is right for you:

*What do you do better than other real estate agents?

*How will you help me find the right home for my wants and needs?

*What are the most common things that go wrong and how do you solve them?

*What are some of the mistakes people make when buying their first home?

*Can you provide me with references or testimonials from recent clients?

2) Location, Location, Location

I’m sure you’ve heard this mantra before. Don’t underestimate its worth. Research all the areas where you might want to live. Weigh the pros and cons. But always choose a neighborhood that’s up and coming or, over time, has held its value. Although most real estate has recently adjusted, some areas hold their values better than others. You don’t want to invest your hard earned money in a location that’s declining. And you definitely don’t want to get stuck with a home you can’t resell.

3) Know What you can Afford and Stick to your Budget!

Don’t let buying become an emotional decision. NEVER buy something you can’t afford just because you were swept away by someone’s furniture or decor. Meet with your agent and a reputable mortgage lender (or 2), in advance, get pre-qualified (which will also make you a stronger buyer), and understand all the costs associated with buying a home and buy what you can comfortably afford. Here are some buying costs you want to investigate.

Get educated about the 28/36 approval ratio (often called front end and back end ratios), which means your house payment, principal, interest, taxes and insurance (PITI) shouldn’t exceed 28% of your gross monthly income, while your back end ratio, PITI plus fixed debts, school loans, car payments, and 10% of total credit card balances, shouldn’t exceed 35%.

Learn about closing costs and pre-paids. Closing costs are the one-time costs associated with the purchase of your home. These expenses vary geographically and can include appraisal reports, surveys, credit reports, title insurance and other expenses associated with a mortgage or home purchase. Prepaids are collected to set up an escrow (savings) account so that when taxes and insurance bills come due your mortgage company will have enough money to pay them for you. If your escrow account is short (under), you’ll usually have the choice to write a check for the full amount or have your mortgage payment increased. If your escrow account is over, you can allow the money to sit there or have it refunded. Since escrow accounts generally pay little or no interest, I suggest having it refunded.

PMI (Private Mortgage Insurance) is another purchasing expense you should understand. If your down payment is less than 20%, in most cases, you’ll be charged a one-time PMI fee, plus ongoing monthly fee until your home appreciates or the principal mortgage balance dips below 20%. At that time the PMI doesn’t automatically fall off your payment. You must contact your mortgage company and take whatever steps necessary, like another costly appraisal, to have it removed. If you can, avoid this expense from the get go.

4) It’s not the Purchase it’s the Carry

Besides knowing the cost of purchasing a home, understand the ongoing costs of ownership. For example if you’re considering a home with lots of open spaces and high ceilings, your heating bills might be higher than average. If you’ve fallen in love with an older home, you might need to set money aside for future repairs to expensive mechanicals or structural items like furnace, roof, or wiring. If you don’t know those costs, don’t guess, you can always get an estimate from a reputable contractor or ask the current homeowner for copies of his or her utility bills.

In addition, some communities have trash removal or monthly homeowner fees, while others don’t. Some have significantly higher taxes than others do, too. Gather all the facts on every property you’re considering. List them in a spread sheet, one column for each home. This will give you anticipated monthly ownership expenses and make properties easy to compare.

5) In the end, it’s all about what you want and need in a home

So make a list of the ten things most important to you. Decide which are deal-breakers, and rank items from most important to least. Don’t forget about curb appeal, structural integrity, and resale value. Make your decision based on facts, not fears or emotions. You probably won’t get all ten, but if you get seven, including your deal-breakers, you’re doing great.

 

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Home Buying Process Includes the 10 Complete Steps to Purchasing a Home

In some of the hottest real estate markets in the country some homes stay on the market just a few short hours and ultimately sell at or above their asking price due to a bidding war amongst multiple purchasers, making it imperative that serious buyers have the assistance of an experienced buyer’s real estate agent and understand the home buying process as well.

It’s quite natural for many buyers to spend several weeks or even months looking for the right home. However, in some of the flourishing property markets in the country things can sometimes move rather quickly in the final stages of the buying process. Ensuring you understand the entire process from beginning to end and knowing the most important things to do throughout the process can help make the home buying process much more enjoyable and successful.

Below, we have listed the necessary steps to complete the entire process of purchasing a new home successfully. Not only will you find all the steps needed for a great buying experience, you will also find valuable tips about the most important tasks throughout the buying process and many things you will want to remember to reference later on. Following our outline for the steps involved in the home-buying process will help you find a great buyer’s real estate agent who can also provide financial assistance to partner with and will allow you to handle all the requirements of purchasing a home effectively.

Step 1: Choose an Experienced Buyer’s Real Estate Agent

The absolute number one most important step in purchasing a home is the very first step, choosing the right buyer’s real estate agent to partner with. An experienced and savvy buyer’s agent can save you thousands of dollars throughout the property purchase process and will offer you valuable insights on a wide range of topics throughout your search for a home.

A knowledgeable buyer’s agent can help guide you on how much you should pay for a particular home, suggest the best mortgage lenders to work with and offer you the valuable advice you can only get from a real estate professional with extensive experience in the local market. Additionally, there are a few buyers agents that offer special incentives such as buyer cash back programs and down payment assistance you never have to repay!

If you only follow one of the steps we have included in this list, it should be this one. Partnering with a great real estate agent is many times the single most important factor in searching for a new home and successfully completing a purchase.

Step 2: Discuss and Review Needs with Your Buyer’s Agent

Once you select an agent to work with it is important to have a detailed initial meeting to discuss all the details of your situation with your agent. Keep in mind, a buyer’s agent should represent you and you alone. You do not want to work with a transaction agent who is working for both the buyer and the seller. A transaction agent has no fiduciary responsibility to either party and as such can disclose everything to the seller and vice versa. A buyer’s agent’s purpose is to negotiate for you alone always having your best interest in mind and to do everything they can to put you in the best possible negotiating position. They will review with your all disclosures and laws so you have an understanding of the home buying process legal requirements. Therefore, it’s important to openly discuss all the important aspects of your new home search with your agent including any financial concerns, family issues or any items that you absolutely cannot do without.

The better they understand your overall personal circumstances, the more effective they can be at helping you achieve all your objectives and requirements. Obviously, the topics discussed during your initial meeting will vary quite a bit from person to person, depending on your main concerns. However, the key areas below are typically the minimum amount of topics that should be covered during the meeting.

Lifestyle Needs

Your lifestyle will determine what type of home might be most suitable for you. Therefore, it is important to let your buyer’s agent know about your work, your family, and your overall lifestyle. Discuss the things in a home that will be the most important to you as well as the least important.

Financial Situation and Challenges

If you have any special requirements, limitations or credit issues now is the time to discuss them with your agent. If you are upfront and honest about it, then they can help you find viable solutions to any existing issues. If you choose to hold back information then they may not find out until it is too late for them to offer you help and or save the deal. Remember, your buyer’s agent is on your side and there to help you.

Establish Initial Price Range/Budget

You should always establish a budget in terms of monthly payment and total price before you begin shopping for a new home.

Step 3: Pre-Approval and Completing the Mortgage Approval Process

Once you complete your initial meeting with your buyer’s agent, it’s time to get pre-qualified for a mortgage. If you have chosen your real estate agent partner wisely, then they will most likely have some recommendations for which lenders might offer you the best options. Obtaining a mortgage pre-approval or pre-qualification is a crucial step in the home buying process.

Having a lender review your financial situation and give you a formal pre-approval letter will let sellers know you are not only willing to purchase their home, you are also able to make a purchase. In fact, some sellers will not even consider an offer unless you have gone through the lender pre-qualification process. It’s important to take care of this step very early on in the process and to keep your buyer’s agent informed of any communication or extra requirements of the lender.

There are many different types of mortgage programs available and all of them have advantages and drawbacks. The three most common types of mortgage loans are usually classified as FHA, VA or as a conventional mortgage. However, there are some specialty programs available as well, often connected with the classification of your employment or geographically specific related programs.

FHA Mortgage

An FHA mortgage is a federally insured mortgage sponsored by the Federal Housing Administration. If you qualify for this type of mortgage, then the Federal Government insures a portion of the mortgage in the event you are not able to fulfill your commitment and repay the loan. This reduces the risk for lenders who are facilitating the loan. An FHA insured mortgage usually requires around a 3% down payment plus closing costs and the maximum loan amount varies from county to county.

VA Mortgage

A Veterans Administration mortgage is a special program for former members of the U.S. military. Similar to FHA loans there are specific requirements that an applicant must meet in order to qualify for this type of loan. However, in certain circumstances this type of mortgage can offer significant advantages as the loan to value is normally 100%; meaning no down payment is required, yet there will still be some closing cost.

Conventional Mortgage

A conventional loan is a mortgage offered through a privately owned or publicly held lender that is not insured or guaranteed by the Federal Government. There are certain cases where this type of mortgage might be preferable to a VA or FHA loan, so do not immediately assume a federally backed mortgage is always the best option. Although conventional loans usually require a much greater down payment.

Other Specialty Mortgage Programs

PATH is a discounted mortgage program available in some states that is offered to some public employees. If you work for one of the following entities, then it might be worth checking into the details of PATH to see if you qualify and if it will offer you any savings.

• Public Employees-Department of Health and Other Local Authorities

• State or Local Public School District Employee

• State University Employee

• Community College Employee

• Employee of the Public Court System

• Members of PERA (Public Employee Retirement Association)

Buyer’s Agent Programs-Cash Back and Down Payment Assistance

A select few buyer’s real estate agents offer special programs to their clients who purchase homes through home buyer’s cash back rebate program or down payment assistance up to $19,000. that never has to be repaid. Not all agents offer these programs and the additional financial help can easily be thousands of dollars which is more than helpful when purchasing a home. The two programs usually cannot be combined as per lender’s regulations.

Get Recommendations from Your Real Estate Agent Partner

Based on the information you share with your agent they can offer you valuable advice for getting help with a mortgage and getting started in your search for a new home. It is always wise to listen carefully to the advice of your real estate agent as the chances are very good they have seen others in the exact same situation as you and are associated with lenders, home inspectors and title companies.

Step 4: Searching for a New Home

An obvious step in the home buying process is the actual home shopping stage. Your agent can analyze comparable property values and help compile a list of properties that fit the parameters discussed ahead of time and schedule a time or multiple times to begin looking at the homes with you. It is important to be open minded as you may come across options you have not spent much time considering.

At first, you might have a tendency to quickly dismiss certain options, only realizing much later, that the home was a perfect fit. You will naturally scale down your options as you begin to get a feel for the area and the homes and pricing available. However, do your best to begin with an open mind and listen to the advice and suggestions of your agent; as he/she is the experienced expert in the area you desire.

Step 5: Choose a Property and Make an Offer

Once you have taken the time to fully review all of your property options and you have discussed things with your agent, it is time to choose a home and make an offer. Most formal offers require a small earnest money deposit showing your good intention to follow through if your offer is accepted, a copy of the pre-approval letter from your lender and an offer in writing, which your agent will prepare and deliver for you. These days things move much faster due to the digital platforms all offers, counters and other documents are handled online on secure websites for everyone’s convenience.

Step 6: Negotiate and Finalize Purchase Agreement

Once you make an offer a number of things can happen. The seller can accept the offer, reject the offer outright or make a counteroffer. Your buyer’s agent will help you properly negotiate the terms in question, as they can include a wide variety of items that range from the selling price of the home to how much of the closing costs the seller may be willing to pay and even if certain repairs will be paid for by the seller.

Once your offer is accepted or final terms are negotiated, then it is time to get prepared to finish the final few steps of the home buying process and close on your new home.

Step 7: Consult with Your Lender and Buyer’s Agent on Mortgage Approval

Once an official sales contract is in place, it is best to consult with your lender and your buyer’s agent to find out what is needed to get the mortgage approval finished and ready to close. It is important to note, the pre-approval process at the beginning is only the first half of completing a mortgage approval. Most of the time, the lender will require updated documents, additional information, employment verification and a variety of details to get the loan ready for an actual closing date. It is very important not to take on or even apply for credit elsewhere as this can damage the successful outcome to a final mortgage approval.

Do not delay in supplying the lender with any additional documents or other requirements, as time is of the essence, each item in your contract will usually have a required completion date and often times final underwriting and approval to close can take a bit longer than was originally projected. Every last detail and piece of paperwork must be submitted and the lender’s underwriters will not grant a “cleared to close” until everything has been submitted and reviewed.

Step 8: Order Home Inspection and Review

Once you have talked with your lender and your buyer’s agent about the status of the mortgage approval then it is time to order a home inspection. A home inspection should always be completed and will sometimes prompt a few last minute details to be worked out between the buyer and seller. A home inspection is different from an appraisal. The home inspection is usually ordered and paid for by the buyer to help the buyer know the condition of the home they are purchasing and “what if” any repairs need to be done; whereas the appraisal is now ordered by the lending institution to determine whether the real value of the home is consistent with the loan amount they are lending to purchase it.

Step 9: Buyer Reviews and Approves Settlement Statement

Based on changes in current real estate regulation, a buyer now has to review and approve the Settlement Statement for the closing three days prior to the actual closing date. This is for the buyer’s protection so there are no surprises at the closing table. Your buyer’s agent will work with to review your settlement statement and explain any items that you may not understand or be totally familiar with.

Step 10: Final Walkthrough and Closing

Once you review and approve the Settlement Statement, it is time for the final walkthrough and to complete the closing. Whether this is your first home or your tenth home, finally getting the closing done is always a great feeling and a very good reason for celebrating!

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