INFORMATION FOR BUYERS
BUYING YOUR HOME
When you purchase a home you’re probably making the biggest investment you’ll ever make. It involves a lot of decision-making and a lot of know how—it helps to get input and advice from a real estate professional.
WHAT WE DO FOR YOU
We help you determine how much home you can afford. We can suggest various ways to accrue your down payment and can explain alternative methods for financing. We can also introduce you to a mortgage counselor and arrange to have you “pre-approved.” Pre-approval greatly improves your negotiating position and helps you purchase a home faster and with less stress.
We can work for you as a buyer’s agent and help negotiate the best price and terms for you. Or, we can serve as a transaction broker, acting as a liaison between you and the seller to present offers and counteroffers until an agreement is reached.
We will help you determine the type of home best suited to your needs—size, style, features, location, accessibility to schools, transportation, shopping, and other personal preferences.
We have access to a listing of all available homes, can evaluate them based on your needs and price range, and will only show you homes that meet your requirements.
We are able to suggest ways a home could be easily modified and made more suitable for you. We can also suggest how you can improve a home’s utility and value.
We can provide information about real estate values, taxes, utility costs, municipal services, and facilities. We may also have knowledge about proposed zoning changes that might affect your buying decisions.
We can recommend attorneys you can use during the home-buying process. The law does not normally require an attorney to review documents or oversee real estate closings, but some homebuyers choose to use their services.
We can walk you through the closing process and provide the closing figures for your review in advance.
We can provide you with a list of qualified and recommended home inspectors, pest inspectors, and surveyors, and help coordinate the various appointments.
TOP 10 TIPS FOR SUCCESSFULLY BUYING A HOME
The right home doesn’t just drop into your lap. You have to uncover the gems yourself by investing time in reading available materials, talking to friends and experts, and looking at different homes, schools, and neighborhoods.
Develop a home-buying plan to help you organize the entire process. You may even want to use a binder with sections on house hunting, home financing, service providers, etc.
Getting pre-approved for a loan will help you determine the home price you can afford. Pre-approval also makes you look more attractive to the seller. Lenders typically use the 28% formula (your monthly mortgage can’t exceed 28% of your monthly income) in approving your loan.
No matter how carefully you cross your t’s and dot your i’s something unexpected can still come up. But when you make a home-buying plan and get your loan pre-approved everything will go smoother and you will be better positioned to take advantage of opportunities. Plus, both will save you time and money!
The days of 10-30% annual appreciation are gone. Nowadays, growth is slow and not always steady. The time-honored rule of buying the worst house in the best neighborhood applies today more than ever. Buy a home with an eye towards improvement, and while you’re at it you can customize the home to fit your needs. As they say, “make money buying a home, not selling one.”
Before you begin shopping for a home, create a list of the features you want and can’t live without. Your list may include things like a fireplace, an attached garage, central heating, a fenced yard, new appliances, etc. Determining what you want early on will keep you from looking at unsuitable homes and may stop you from buying a home on a whim.
As detailed in Tip #3, your top reason for buying a home should be “value.” You may decide to sacrifice items on your list if you come across an incredible value.
Adjustable Rate Mortgages (ARMs) begin with a fixed rate and follow with a period of adjustment intervals. The rate adjustments are based on the performance of several key indexes. Typically the initial fixed rate on an ARM is slightly lower than the comparable rate of a Fixed Rate Mortgage.
Fixed Rate Mortgages allow buyers to take out a long-term loan without having to worry about changing interest rates or monthly payments. Most Fixed Rate loans are offered in either 15- or 30-year terms.
Most buyers will be well served by a Fixed Rate loan but situations vary. ARM loans have become less popular in recent years, but they remain a viable option for some, especially those planning to resell in the short term.
No matter which type of loan you choose, be sure to scrutinize the closing costs. If you are required to have a mortgage escrow account and private mortgage insurance, make sure you understand the terms and cancellation procedures (your Real Estate Agent can provide information to assist you). You should also confirm that there are no penalties for prepayment—that way you can take advantage of an accelerated mortgage plan. A good mortgage reduction plan can save you tens of thousands of dollars in interest and shorten the length of your loan, with only small extra principal payments. In the event that your ability to pay changes, you can revert to the standard payments in your mortgage contract.
Make sure that the contract you sign on a house allows you to arrange financing, inspect the home, and negotiate if you uncover any problems with the home.
You are about to make a decision that affects your life and the seller’s life. If you take time to understand why the seller bought the home, why they’re selling it, and what they’ve done (or haven’t done) to improve it over the years, you’ll be well-positioned to evaluate it and negotiate the best deal possible. In the end, buying a home comes down to the parties who are buying and selling it, not the professionals. Stepping into the seller’s shoes may help you decide if you want to buy the home and how much you want to pay for it.
One of the biggest decisions to make before signing a contract on a home is how to finance the purchase. There are 10,000 lenders competing for your mortgage business. These days you can still walk into the community bank and negotiate, but you can also apply for a loan over the Internet, or even use a mortgage broker. When choosing a lender, be sure you’re comparing apples to apples—compare fixed rate to fixed rate, not fixed rate to adjustable rate. To help make your decision, create a chart listing the different types of loans, fees, and at least five mortgage providers (including a mortgage broker).
Never buy a home without first getting an inspection. Paying a qualified professional to inspect the home before you buy it isn’t just spending “a little extra” for peace of mind. It’s absolutely essential. You need to know what you’re walking into—what needs to be repaired and how much it’ll cost. Without a Home Inspection, you can’t make an informed negotiation and you might end up having to spend thousands of unexpected dollars on repairs.
The best way to get peace of mind when you buy a home is to get yourself a Home Protection Plan. A Home Protection Plan (or Home Warranty) is a service contract, usually lasting a year, that protects homeowners against the cost of unexpected repairs or replacement of major systems and appliances that break, due to normal wear and tear. Home Protection Plans are distinct from the homeowner’s insurance policy—Protection Plans cover mechanical breakdowns while insurance typically covers repairs for related damage. For example, if a water heater bursts and destroys a wall in your home, the Protection Plan would repair the water heater while your insurance would pay to fix the wall. Home Protection Plans save both the new homeowner and the seller a lot of stress and provide both with a sense of security.
CHECK OUT THE WINTER 2023 HOME BUYER GUIDE
