How to buy

Getting Started

• Should I buy a less expensive starter home and just keep saving for my dream home?

  Should I buy a less expensive starter home and just keep saving for my dream home?

  The marketing has been inundated with great low mortgage rates which ultimately make the home buying affordable. If you purchase a starter home today, you might start to build value that can lead to the purchase of a larger, dream home in the future.

• How much can I afford?

  How much can I afford?

  The general rule of thumb is that you can buy a home that costs about two-and-one-half times your annual salary. Your mortgage broker or lender will determine how much you can afford and estimate the maximum monthly payment based on the loan amount, taxes, insurance and other expenses. To find out now how your income, debts, and expenses can affect what you can afford, click here to figure out how much you may be able to borrow to purchase a home.

• What is the first step to buying a home?

  What is the first step to buying a home?

  Make sure you are ready both financially and emotionally. A house needs constant upkeep. Address the following questions:

  • Is my debt lower than my total income?
  • Do I have steady income?
  • Do I have enough money to pay for the down payment and closing costs?
• How do I decide to add on to an existing home or purchase a new one?

  How do I decide to add on to an existing home or purchase a new one?

  There are a few things to consider, including cost, individual needs, and what will add value down the road. Other points to consider would be:

  • Can you finance the home improvement with your own cash or will you need a loan?
  • How much equity is in the property?
  • Is it possible to develop the current space for an addition?
  • What is permissible under local zoning and building laws in your town or city?
  • Are there affordable properties for sale that would satisfy your changing housing needs?

Working with a Real Estate Agent, Realtor

• If I can find a home by myself on the internet do I need an agent?

  If I can find a home by myself on the internet do I need an agent?

  The agent will analyze data, handle all the paperwork that is involved in the real estate transaction. Further, he/she will answer questions, and share their professional expertise.

• what are the duties of a buyer’s agent?

  what are the duties of a buyer’s agent?

  By signing an Exclusive Buyer Agent Agreement, your agent will negotiate the best price and terms and protect your interests in the real estate transaction.

• What should I NOT tell my agent, and WHY?

  What should I NOT tell my agent, and WHY?

  Never disclose the maximum amount that you are willing to pay for a home. Maybe an agent could spend a lot of time showing you homes and sharing information, the truth of the matter is that she/he works for the seller, who ultimately pays each and every agent involved in helping to complete the home sale. The seller pays the agents in the form of a commission, a percentage of the proceeds from the home sale.

  Your best alternative is for you to hire your own real estate professional by signing an employment contract commonly known as a buyer’s agent or a buyer’s broker agreement.

• What should I expect from a good real estate agent?

  What should I expect from a good real estate agent?

  Good agents also adhere to a strict code of ethics – avoid high-pressure sales tactics, refrain from showing you properties that do not fit your needs or goals, and alert you to problems about the condition of the property. They have good knowledge of financing options, are up to date on the latest housing trends and share with prospective buyers data on the local housing market and home sales. They pre-inspected most properties, take the time to qualify buyers and show properties in their price range and plan showing routes.

Closing and Negotiations

• Negotiation tips to know when entering real estate transaction

  Negotiation tips to know when entering real estate transaction

  The asking or the listing price that the seller would like to receive for the purchase of the home does not necessary means that is the price that the seller will settle. It is good rule of thumb to check recent sales and the current listing prices of the neighborhood homes and compare them the seller’s asking price. Also, knowing the seller’s motivation to sell will enhance your negotiation position. Sometimes seller have to move quick do to various reason (contract on another home, divorce, job transfer etc) and might be willing to accept a lower price to speed up the process. Very important tips during any real estate transactions are to NOT allow emotions such as ego, anger, fear, love get in the way of negotiation. And, be flexible – never say this is the final. That will only leave you in a dead lock. ?

Home Inspector and Home Inspections

• What are the duties of a home inspector?

  What are the duties of a home inspector?

  Home inspector inspects your future property and run reports to make sure that it is safe by searching for defects or other problems that could lead to potential and costly issues by focusing on home’s construction, structure and other systems.

  After signing the purchase contract, typically the home inspection takes place.

  As you hire the home inspector to examine the structure of the property, you also have the rights and should consider hiring other experts to inspect your future home – radon gas, asbestos, water disposal system etc.

Market Value and Appraisal

• How do I establish the value of the property?

  How do I establish the value of the property?

  The market value is established when the buyer and seller meet and discussed the purchase of the home. Bottom line, the home’s value is what someone is wiling to pay and everything else is an estimate of value.

Closing Cost

• What do they mean by closing costs?

  What do they mean by closing costs?

  Closing costs are the ADDITIONAL cost above the price of the property. They are fairly costly and average between 2 to 3 percent of the total home purchase price. They include: title insurance, escrow fees, notary charges, property taxes, document process fees, loan points and lender fees.

  Parties, the buyer and the seller, absorb some of these costs upon transferring the ownership of the property. But, who pays what, all depends on buyer and seller negotiation and what is a the typical in your part of the market.

Insurance: Home, Mortgage & Title Insurances

• What kind of home owners insurance should i get?

  What kind of home owners insurance should i get?

  A standard policy is the typical policy that most home owners get. The policy does coverage for several natural disasters and catastrophic events. However, it does not guard against earthquakes, floods, war, and nuclear accidents. Please note that your lender might request from you to purchase flood or earthquake insurance if the house is in a flood zone or a region susceptible to earthquakes.

  While you are not required by law to have home owner’s insurance, mortgage lenders stipulate that you do. It protects their investment in the home in case of a natural disaster or catastrophic event.
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Property Taxes

• What is property tax and why do I have to pay it?

  What is property tax and why do I have to pay it?

  The property taxes are given by the city and the county and it is taxes solely based on how much the property you own is worth. The real property tax is an ad valorem tax, or a tax based on the value of property.

  The property taxes in general help pay for public services such as police and fire protection, libraries, schools roads etc.

Tax

• Do first time homebuyers get tax break?

  Do first time homebuyers get tax break?

  Yes. Many city and county governments offer Mortgage Credit Certificate (MCC) programs, which allow first-time homebuyers to take advantage of a special federal income tax write-off

  Program requirements for MCCs vary, although most go by the following guidelines:

  • The buyer must live in the home being purchased with an MCC-assisted mortgage.
  • Total household income cannot exceed certain limits.
  • The buyer cannot have owned a principal residence within the past three years. This restriction may be waived if a property is purchased within a certain targeted area.
  • The purchase price must fall within an established limit.

  For more detailed information your local housing or redevelopment agency

Lease Options

• What is lease option and how does it work?

  What is lease option and how does it work?

  Lease option is an agreement between the landlord and the renter in which the renter signs a lease with an option to purchase the property. The option is only binds the seller, and the renter has the choice to opt out.

  The landlord agrees to give the tenant an exclusive option to purchase the property. A portion of the rent/lease goes towards future down payments. The option price is usually determined at the beginning of the agreement and the agreement states when the purchase should take place.

  Lease option is very attractive to tenants that would like to own a home but do not have enough financial capital for closing costs and down payment. Some even have bad credit but are working on improving their FICO scores before applying with a lender for a home loan.

  Please consult attorney before you decide to do a lease option.