What should you know about buying a home?

Check out these helpful tips for home buyers...

Including:
The home buyers check list
Enlisting a professional (what that entails)
Buy a home with "No Money Down"
Renting vs. buying


1.  Get pre-approved for your mortgage.
It gives you more negotiating power.
Your bid carries more weight when the seller knows you have a mortgage approval.
It let’s you know how much house you can truly afford.
You don’t waste time looking at homes that are out of your reach.

Get pre-approved now!

A pre-approval is based on several factors.  First, on how much you have as a down payment* and your income.  Then the type of mortgage will be determined by your credit score, how long you plan to own the property and your personal risk tolerance.  When all of this is combined we can first compute how much you can afford monthly and then how much your maximum total loan amount can be based on current interest rates.  Your total loan amount plus your down payment will be the maximum amount you can spend on your home.

* Your down payment can be from funds you currently have on deposit, a gift from a relative, or equity in a home you currently own. 

There are ways to buy a home with no money down.  For example, there is a program called an 80/20 piggyback.  This program would consist of two loans, a first mortgage for 80% of the value of the home and a second mortgage for 20% of the value.  This avoids having to pay PMI (Private Mortgage Insurance) but the second mortgage would usually be at a slightly higher interest rate.  Ask me for more details.


2.  Consider having a professional realtor help you. Realtors are a big plus if you are new to the area.  A good realtor can tell you things about the area you are interested in that you might never have known including housing costs, new developments planned and potential problems. 

Realtors can also provide technical help when making an offer on a home.  But, remember when you sign a sales agreement you are signing a contract.  You should always have a real estate attorney look over the contract immediately to protect your interests.

Using a realtor will probably cost you a little more for your home but the benefits can vastly outweigh the cost.  Realtors will show you homes that are listed in the MLS (Multiple Listing Service).  Both realtors get paid from the proceeds of the sale.  The amount of commission is written into the listing agreement.  Remember, the Listing agent is working for the seller.  Usually the listing (sellers agent) agent and buyers agent will split the commission equally.  If you buy a home that is listed in the same office as your realtor, you might be more likely to negotiate a lower commission.

However, if you choose to buy a home that is not listed with a realtor (directly from a seller), as in FSBO (For Sale By Owner) you should consult a real estate attorney to protect your interests.

I work with a network of great professionals and would be happy to recommend a Realtor or Attorney for you.

Either way, use the following checklist(s):

Home buyers checklist: (you can print it out right from this page or from the word file below)

3.  Decide on the area where in which you want to live.  Have specific boundaries in mind.
Are housing values stable or rising?
Is it convenient to where you spend much of your time? (Work, family, etc)
Are the schools good?
Are there parks and recreation areas near?
Shopping?
Is a hospital or medical center near?
Is the area safe?
Is it near a river or lake that might flood?
Will an airport, train, or business create noise?

4.  Know what you want in a house.
Style
Number of levels?
Age of house
Older, newer or in between?
Size & Space
Bedrooms, how many?
Bathrooms, how many?
Kitchen, large enough?
* Storage space: Closets, basement, attic?
Decide how long you plan to own the home.


5.  Use this checklist when viewing a home
Is it structurally sound?
Foundation (cracks, moisture)
Does it look straight? (not leaning or bowing)
Check roof.  Look at edges of shingles.  If they are curling they are old.
When was it replaced last?
Will it need a tear off or can you still add to it?
Amenities
Fireplace
Air conditioning
Garage (one, two, three car)   Does the door work properly?
Washer & dryer
Kitchen:  The kitchen is a big part of our lives.  Space is a key issue. 
* Space for storage, space on counters and space to move around.
Ample cabinets for storage (or room to add more)?
Counters
Lighting
Dishwasher
Ground fault outlet(s) (If there is one, it usually means they are all linked together)
Basement
Look for cracks and moisture (smell for moisture)
Check Furnace
Check hot water tank
* Check plumbing (locate the shut-off)
* Check electrical (look at circuit breakers)
Outside
Check siding, tuck pointing and paint
Walkways, concrete level?
Driveway, concrete asphalt level?
Lawn, Trees, Bushes healthy?
Windows: check screens and glass for broken panes.
Check entry doors for secure closing and locks.
Patio (shade in the afternoon?)
Decks/porches?
Is the neighborhood safe and well lit at night?
Inside
Check (open and close)  windows
Flush toilets
* Run water faucets (check for pressure while flushing toilet)
Are there ample electrical outlets in each room?
Are there ground fault outlets in the kitchen and bathrooms?
Are floors level?
Is paint peeling?
General
Look at recent utility bills for both summer and winter months.
What are the taxes?
Is hiring a home inspector necessary?
* Where will the sun rise and set?
* How will the sunlight affect the feel of the house inside and out?
(When sitting on the deck do you want shade or sun?)
* How is the view?  Is there enough privacy?

* Seems minor and often times overlooked, but don’t discount these factors.

Be critical. Get in the habit of taking a critical look at each house during your search. Conduct walk-through's the way you want to - checking out the areas that are important to you. Feel free to take pictures, use polariods or a video camera.
Word Version of Checklist

Renting vs. buying

Why are you throwing your rent payments down the drain?

Do you enjoy smelly hallways, loud neighbors, broken down appliances, white walls and limits on decorating?

Facts:

Inflation (inevitably) will have a major effect on your housing:
    Rents will go up with inflation.  You will pay more in the future.
    Home values will go up with inflation.
       This means:  If you rent you lose.  If you own you win!
You can own your own home for just about what it costs to rent!
    Your mortgage payments would be lower than you think!
You can buy a home for very little or even nothing down!
    There are many mortgage options available now.
We can work with poor credit and low down payments.

When you have your own home you enjoy the following benefits:
  Fixed rate mortgage payments will remain the same*.
   Tax breaks
   Equity appreciation: 
      Build equity by making payments and as housing prices rise.
   Psychological value from the security of home ownership
       You can improve your home to fit your lifestyle.
       You can decorate anyway you like
       You can have all the amenities and appliances that you desire.

* The principle and interest portion of a fixed mortgage payment does not change, however the payment may increase due to property tax increases.


The downside of owning your own home:
If you are planning to move from the area within two years buying will probably not make sense for you.
You have to maintain the house.
    Repairs, improvements, maintenance and upkeep
You will have to pay property taxes and they can go up over time.

The downside of renting:
You lose out on appreciating.  You are not adding to your net worth
    Throwing your money away (giving it to the landlord to build his net worth)
Housing prices go up. 
   If you put it off now you will need more to buy the same type/size home in the future
Your rent payments will go up over time.
You can't make your house as nice as you would like:
    You can't improve your home to fit your lifestyle.
    You can't decorate anyway you like
    You can't have all the amenities and appliances that you desire.
We will help you get the best loan at the lowest cost, with quick & easy closings.
We link to real estate mortgage loan consultants, licensed in the state of Illinois, specializing in low cost home loans, providing helpful information and honest answers to your mortgage questions.
The Mortgage Vendor.com
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