|
Common First-Time Home Buyer Mistakes
1. They don’t ask
enough questions of their lender and end up missing out on the best deal.
2. They don’t act quickly enough to make a decision and someone else buys
the house.
3. They don’t find the right agent who’s willing to help them through the
homebuying process.
4. They don’t do enough to make their offer look appealing to a seller.
5. They don’t think about resale before they buy. The average
first-time buyer only stays in a home for four years.
Source: Real Estate Checklists and Systems,
www.realestatechecklists.com.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with permission of the NATIONAL
ASSOCIATION OF REALTORS®.
Copyright 2008. All
rights reserved.
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Lender Checklist: What You Need for a Mortgage
-
W-2 forms — or business
tax return forms if you're self-employed — for the last two or three years
for every person signing the loan.
-
Copies of at least one
pay stub for each person signing the loan.
Account numbers
of all your credit cards and the amounts for any outstanding
balances.
-
Copies of two to four
months of bank or credit union statements for both checking and savings
accounts.
-
Lender, loan number,
and amount owed on other installment loans, such as student loans and car
loans.
-
Addresses where
you’ve lived for the last five to seven years, with names of landlords if
appropriate.
-
Copies of brokerage
account statements for two to four months, as well as a list of any other
major assets of value, such as a boat, RV, or stocks or bonds not held in
a brokerage account.
-
Copies of your most
recent 401(k) or other retirement account statement.
-
Documentation
to verify additional income, such as child support or a pension.
-
Copies of personal tax
forms for the last two to three years.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All
rights reserved.
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Specialty Mortgages: Risks and Rewards
In high-priced housing
markets, it can be difficult to afford a home. That’s why a growing number
of home buyers are forgoing traditional fixed-rate mortgages and standard
adjustable-rate mortgages and instead opting for a specialty mortgage that
lets them “stretch” their income so they can qualify for a larger loan.
But before you choose one
of these mortgages, make sure you understand the risks and how they work.
Specialty mortgages often
begin with a low introductory interest rate or payment plan — a “teaser”—
but the monthly mortgage payments are likely to increase a lot in the
future. Some are “low documentation” mortgages that come with easier
standards for qualifying, but also higher interest rates or higher fees.
Some lenders will loan you 100 percent or more of the home’s value, but
these mortgages can present a big financial risk if the value of the house
drops.
Specialty Mortgages
Can:
·
Pose a
greater risk that you won’t be able to afford the mortgage payment in the
future, compared to fixed rate mortgages and traditional adjustable rate
mortgages.
·
Have
monthly payments that increase by as much as 50 percent or more when
the introductory period ends.
·
Cause your
loan balance (the amount you still owe) to get larger each month instead of
smaller.
Common Types of
Specialty Mortgages:
·
Interest-Only Mortgages:
Your monthly mortgage
payment only covers the interest you owe on the loan for the first 5 to 10
years of the loan, and you pay nothing to reduce the total amount you
borrowed (this is called the “principal”). After the interest-only period,
you start paying higher monthly payments that cover both the interest and
principal that must be repaid over the remaining term of the loan.
·
Negative
Amortization Mortgages:
Your monthly payment is
less than the amount of interest you owe on the loan. The unpaid interest
gets added to the loan’s principal amount, causing the total amount you owe
to increase each month instead of getting smaller.
·
Option
Payment ARM Mortgages:
You have the option to
make different types of monthly payments with this mortgage. For example,
you may make a minimum payment that is less than the amount needed to cover
the interest and increases the total amount of your loan; an interest-only
payment, or payments calculated to pay off the loan over either 30 years or
15 years.
·
40-Year
Mortgages: You
pay off your loan over 40 years, instead of the usual 30 years. While this
reduces your monthly payment and helps you qualify to buy a home, you pay
off the balance of your loan much more slowly and end up paying much more
interest.
Questions to Consider
Before Choosing a Specialty Mortgage:
·
How much
can my monthly payments increase and how soon can these increases happen?
·
Do I expect
my income to increase or do I expect to move before my payments go up?
·
Will I be
able to afford the mortgage when the payments increase?
·
Am I paying
down my loan balance each month, or is it staying the same or even
increasing?
·
Will I have
to pay a penalty if I refinance my mortgage or sell my house?
·
What is my
goal in buying this property? Am I considering a riskier mortgage to buy a
more expensive house than I can realistically afford?
Be sure you work with a
REALTOR® and
lender who can discuss different options and address your questions and
concerns!
Learn about the
NATIONAL ASSOCIATION OF REALTORS® Housing Opportunity Program at
www.REALTOR.org/housingopportunity.
For more information on predatory mortgage lending practices, visit the
Center for Responsible Lending at www.responsiblelending.org.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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5
Factors That Decide Your Credit Score
Credit scores
range between 200 and 800, with scores above 620 considered desirable for
obtaining a mortgage. The following factors affect your score:
1. Your payment history. Did you pay your credit card obligations on
time? If they were late, then how late? Bankruptcy filing, liens, and
collection activity also impact your history.
2. How much you owe. If you owe a great deal of money on
numerous accounts, it can indicate that you are overextended. However, it’s
a good thing if you have a good proportion of balances to total credit
limits.
3. The length of your credit history. In general, the longer you have
had accounts opened, the better. The average consumer's oldest obligation is
14 years old, indicating that he or she has been managing credit for some
time, according to Fair Isaac Corp., and only one in 20 consumers have
credit histories shorter than 2 years.
4. How much new credit you have. New credit, either installment
payments or new credit cards, are considered more risky, even if you pay
them promptly.
5. The types of credit you use. Generally, it’s desirable to have
more than one type of credit — installment loans, credit cards, and a
mortgage, for example.
For more on evaluating and understanding your credit score, visit
www.myfico.com.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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6
Creative Ways to Afford a Home
1. Investigate local, state, and national down payment assistance
programs. These programs give qualified applicants loans or grants to
cover all or part of your required down payment. National programs include
the Nehemiah program,
www.getdownpayment.com,
and the American Dream Down Payment Fund from the Department of Housing and
Urban Development,
www.hud.gov.
2. Explore seller financing. In some cases, sellers may be willing to
finance all or part of the purchase price of the home and let you repay them
gradually, just as you would do with a mortgage.
3. Consider a shared-appreciation or shared-equity arrangement. Under
this arrangement, your family, friends, or even a third-party may buy a
portion of the home and share in any appreciation when the home is sold. The
owner/occupant usually pays the mortgage, property taxes, and maintenance
costs, but all the investors' names are usually on the mortgage. Companies
are available that can help you find such an investor, if your family can’t
participate.
4. Ask your family for help. Perhaps a family member will loan you
money for the down payment or act as a co-signer for the mortgage. Lenders
often like to have a co-signer if you have little credit history.
5. Lease with the option to buy. Renting the home for a year or more
will give you the chance to save more toward your down payment. And in many
cases, owners will apply some of the rental amount toward the purchase
price. You usually have to pay a small, nonrefundable option fee to the
owner.
6. Consider a short-term second mortgage. If you can qualify for a
short-term second mortgage, this would give you money to make a larger down
payment. This may be possible if you’re in good financial standing, with a
strong income and little other debt.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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8 Tips to Guide for Your Home Search
1. Research before you
look. Decide
what features you most want to have in a home, what neighborhoods you
prefer, and how much you’d be willing to spend each month for housing.
2. Be realistic.
It’s OK to be picky,
but don’t be unrealistic with your expectations. There’s no such thing as a
perfect home. Use your list of priorities as a guide to evaluate each
property.
3. Get your finances in order. Review your credit report and be sure
you have enough money to cover your down payment and closing costs. Then,
talk to a lender and get prequalified for a mortgage. This will save you the
heartache later of falling in love with a house you can’t afford.
4. Don’t ask too many people for opinions. It will drive you crazy.
Select one or two people to turn to if you feel you need a second opinion,
but be ready to make the final decision on your own.
5. Decide your moving timeline. When is your lease up? Are you
allowed to sublet? How tight is the rental market in your area? All of these
factors will help you determine when you should move.
6. Think long term. Are you looking for a starter house with plans to
move up in a few years, or do you hope to stay in this home for a longer
period? This decision may dictate what type of home you’ll buy as well as
the type of mortgage terms that will best suit you.
7. Insist on a home inspection. If possible, get a warranty from the
seller to cover defects for one year.
8. Get help from a REALTOR®. Hire a real estate professional who
specializes in buyer representation. Unlike a listing agent, whose first
duty is to the seller, a buyer’s representative is working only for you.
Buyer’s reps are usually paid out of the seller’s commission payment.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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10 Questions to Ask Your Lender
1.
What are the most popular mortgages you offer? Why are they so popular?
2. Which type of mortgage plan do you think would be best for me?
Why?
3. Are your rates, terms, fees, and closing costs negotiable?
4. Will I have to buy private mortgage insurance? If so, how much
will it cost, and how long will it be required? (NOTE: Private mortgage
insurance is usually required if your down payment is less than 20 percent.
However, most lenders will let you discontinue PMI when you’ve acquired a
certain amount of equity by paying down the loan.)
5. Who will service the loan — your bank or another company?
6. What escrow requirements do you have?
7. How long will this loan be in a lock-in period (in other words,
the time that the quoted interest rate will be honored)? Will I be able to
obtain a lower rate if it drops during this period?
8. How long will the loan approval process take?
9. How long will it take to close the loan?
10. Are there any charges or penalties for prepaying the loan?
Used with permission from Real Estate Checklists & Systems,
www.realestatechecklists.com.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Budget Basics Worksheet
The first step in getting
yourself in financial shape to buy a home is to know exactly how much money
comes in and how much goes out. Use this worksheet to list your income and
expenses below.
|
INCOME |
 |
|
Take Home Pay (all
family members) |
|
|
Child Support/Alimony
|
|
|
Pension/Social
Security |
|
|
Disability/Other
Insurance |
|
|
Interest/Dividends
|
|
|
Other |
|
|
Total Income
|
|
|
EXPENSES |
|
|
Rent/Mortgage
(include taxes, principal, and insurance) |
|
|
Life Insurance |
|
|
Health/Disability
Insurance |
|
|
Vehicle Insurance |
|
|
Homeowner’s or Other
Insurance |
|
|
Car Payments |
|
|
Other Loan Payments |
|
|
Savings/Pension
Contribution |
|
|
Utilities (gas,
water, electric, phone) |
|
|
Credit Card Payments |
|
|
Car Upkeep (gas,
maintenance, etc.) |
|
|
Clothing |
|
|
Personal Care
Products (shampoo, cologne, etc.) |
|
|
Groceries |
|
|
Food Outside the Home
(restaurant meals and carryout) |
|
|
Medical/Dental/Prescriptions |
|
|
Household Goods
(hardware, lawn, and garden) |
 |
|
Recreation/Entertainment |
|
|
Child Care |
|
|
Education (continuing
education, classes, etc.) |
|
|
Charitable Donations |
|
|
Miscellaneous |
|
|
Total Expenses
|
|
|
Remaining Income
After Expenses
(Subtract Total
Income from Total Expenses) |
|
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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How Big of a Mortgage Can I Afford?
Not only does owning a
home give you a haven for yourself and your family, it also makes great
financial sense because of the tax benefits — which you can’t take advantage
of when paying rent.
The following calculation assumes a 28 percent income tax bracket. If your
bracket is higher, your savings will be, too. Based on your current rent,
use this calculation to figure out how much mortgage you can afford.
Rent: _________________________
Multiplier: x 1.32
Mortgage payment: _________________________
Because of tax deductions, you can make a mortgage payment — including taxes
and insurance — that is approximately one-third larger than your current
rent payment and end up with the same amount of income.
For more help, use Fannie Mae’s
online mortgage calculators.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Loan Types to Consider
Brush up on these
mortgage basics to help you determine the loan that will best suit your
needs.
·
Mortgage
terms.
Mortgages are generally available at 15-, 20-, or 30-year terms. In general,
the longer the term, the lower the monthly payment. However, you pay more
interest overall if you borrow for a longer term.
·
Fixed or
adjustable interest rates.
A fixed rate allows you to lock in a low rate as long as you hold the
mortgage and, in general, is usually a good choice if interest rates are
low. An adjustable-rate mortgage is designed so that your loan’s interest
rate will rise as market interest rates increase. ARMs usually offer a lower
rate in the first years of the mortgage. ARMs also usually have a limit as
to how much the interest rate can be increased and how frequently they can
be raised. These types of mortgages are a good choice when fixed interest
rates are high or when you expect your income to grow significantly in the
coming years.
·
Balloon
mortgages.
These mortgages offer very low interest rates for a short period of time —
often three to seven years. Payments usually cover only the interest so the
principal owed is not reduced. However, this type of loan may be a good
choice if you think you will sell your home in a few years.
·
Government-backed loans.
These loans are sponsored
by agencies such as the Federal Housing Administration (www.fha.gov)
or the Department of Veterans Affairs (www.va.gov)
and offer special terms, including lower down payments or reduced interest
rates to qualified buyers.
Slight variations in
interest rates, loan amounts, and terms can significantly affect your
monthly payment. For help in determining how much your monthly payment will
be for various loan amounts, use Fannie Mae’s
online mortgage calculators.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Get Your Finances in Order: To-Do List
1. Develop a household
budget.
Instead of creating a budget of what you’d like to spend, use receipts to
create a budget that reflects your actual spending habits over the last
several months. This approach will factor in unexpected expenses, such as
car repairs, as well as predictable costs such as rent, utility bills, and
groceries.
2. Reduce your debt. Lenders generally look for a total debt load of
no more than 36 percent of income. This figure includes your mortgage, which
typically ranges between 25 and 28 percent of your net household income. So
you need to get monthly payments on the rest of your installment debt — car
loans, student loans, and revolving balances on credit cards — down to
between 8 and 10 percent of your net monthly income.
3. Look for ways to save. You probably know how much you spend on
rent and utilities, but little expenses add up, too. Try writing down
everything you spend for one month. You’ll probably spot some great ways
to save, whether it’s cutting out that morning trip to Starbucks or eating
dinner at home more often.
4. Increase your income. Now’s the time to ask for a raise! If that’s
not an option, you may want to consider taking on a second job to get your
income at a level high enough to qualify for the home you want.
5. Save for a down payment. Designate a certain amount of money each
month to put away in your savings account. Although it’s possible to get a
mortgage with only 5 percent down, or even less, you can usually get a
better rate if you put down a larger percentage of the total purchase. Aim
for a 20 percent down payment.
6. Keep your job. While you don’t need to be in the same job forever
to qualify for a home loan, having a job for less than two years may mean
you have to pay a higher interest rate.
7. Establish a good credit history. Get a credit card and make
payments by the due date. Do the same for all your other bills, too. Pay off
the entire balance promptly.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Tax Benefits of Homeownership
The tax deductions
you’re eligible to take for mortgage interest and property taxes greatly
increase the financial benefits of homeownership. Here’s how it works.
Assume:
$9,877 = Mortgage
interest paid (a loan of $150,000 for 30 years, at 7 percent, using
year-five interest)
$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value)
______
$12,577 = Total deduction
Then, multiply your total
deduction by your tax rate.
For example, at a 28
percent tax rate: 12,577 x 0.28 = $3,521.56
$3,521.56 = Amount you
have lowered your federal income tax (at 28 percent tax rate)
Note: Mortgage interest may not be deductible on loans over $1.1 million.
In addition, deductions are decreased when total income reaches a certain
level.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Tips for Lowering Homeowner’s Insurance
Costs
1. Review the Comprehensive Loss Underwriting Exchange (CLUE) report
on the property you’re interested in buying. CLUE reports detail the
property’s claims history for the most recent five years, which insurers may
use to deny coverage. Make the sale contingent on a home inspection to
ensure that problems identified in the CLUE report have been repaired.
2.
Seek insurance coverage as soon as your offer is approved. You must obtain
insurance to buy. And you don’t want to be told at closing that the insurer
has denied your coverage.
3.
Maintain good credit. Insurers often use credit-based insurance scores to
determine premiums.
4.
Buy your home owners and auto policies from the same company and you’ll
usually qualify for savings. But make sure the discount really yields the
lowest price.
5.
Raise your deductible. If you can afford to pay more toward a loss that
occurs, your premiums will be lower. Avoid making claims under $1,000.
6.
Ask about other discounts. For example, retirees who tend to be home more
than full-time workers may qualify for a discount on theft insurance. You
also may be able to obtain discounts for having smoke detectors, a burglar
alarm, or dead-bolt locks.
7.
Seek group discounts. If you belong to any groups, such as associations or
alumni organizations, they may have deals on insurance coverage.
8.
Review your policy limits and the value of your home and possessions
annually. Some items depreciate and may not need as much coverage.
9.
Investigate a government-backed insurance plan. In some high-risk areas,
federal or state government may back plans to lower rates. Ask your agent.
10.
Be sure you insure your house for the correct amount. Remember, you’re
covering replacement cost, not market value.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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What You Can Do to Improve Your Credit
Credit scores, along with
your overall income and debt, are big factors in determining whether you’ll
qualify for a loan and what your loan terms will be. So, keep your credit
score high by doing the following:
1. Check for and correct any errors in your credit report. Mistakes
happen, and you could be paying for someone else’s poor financial
management.
2. Pay down credit card bills. If possible, pay off the entire
balance every month. Transferring credit card debt from one card to another
could lower your score.
3. Don’t charge your credit cards to the maximum limit.
4. Wait 12 months after credit difficulties to apply for a mortgage.
You’re penalized less for problems after a year.
5. Don’t order items for your new home on credit — such as appliances
and furniture — until after the loan is approved. The amounts will add to
your debt.
6. Don’t open new credit card accounts before applying for a
mortgage. Too much available credit can lower your score.
7. Shop for mortgage rates all at once. Too many credit applications
can lower your score, but multiple inquiries from the same type of lender
are counted as one inquiry if submitted over a short period of time.
8. Avoid finance companies. Even if you pay the loan on time, the
interest is high and it will probably be considered a sign of poor credit
management.
This information is copyrighted by the Fannie Mae Foundation and is used
with permission of the Fannie Mae Foundation. To obtain a complete copy of
the publication, Knowing and Understanding Your Credit, visit
www.homebuyingguide.org.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Your Property Wish List
What does your future
home look like? Where is it located? As you hunt down your dream home,
consult this list to evaluate properties and keep your priorities top of
mind.
Neighborhoods
What neighborhoods do you
prefer?
Schools
What school systems do
you want to be near?
Transportation
How close must the home
be to these amenities:
·
Public
transportation
·
Airport
·
Expressway
·
Neighborhood shopping
·
Schools
·
Other
Home Style
·
What
architectural style(s) of homes do you prefer?
·
Do you
want to buy a home, condominium, or townhome?
·
Would
you like a one-story or two-story home?
·
How
many bedrooms must your new home have?
·
How
many bathrooms must your new home have?
Home
Condition
·
Do you
prefer a new home or an existing home?
·
If
you’re looking for an existing home, how old of a home would you consider?
·
How
much repair or renovation would you be willing to do?
·
Do you
have special needs that your home must meet?
Home
Features
Please circle one of the
choices: Must Have, Would Like, Willing to Compromise, Not Important
Front yard
Must Have Would Like
Willing to Compromise Not Important
Back yard
Must
Have Would Like Willing to Compromise Not
Important
Garage ( __ cars)
Must Have Would Like Willing to Compromise Not
Important
Patio/Deck
Must
Have Would Like Willing to Compromise Not
Important
Pool
Must Have Would Like Willing to Compromise Not
Important
Family room
Must
Have Would Like Willing to Compromise Not
Important
Formal living room
Must Have Would Like Willing to Compromise Not
Important
Formal dining room
Must
Have Would Like Willing to Compromise Not
Important
Eat-in kitchen
Must Have Would Like Willing to Compromise Not
Important
Laundry room
Must
Have Would Like Willing to Compromise Not
Important
Finished basement
Must Have Would Like Willing to Compromise Not
Important
Attic
Must
Have Would Like Willing to Compromise Not
Important
Fireplace
Must Have Would Like Willing to Compromise Not
Important
Spa
in bath
Must
Have Would Like Willing to Compromise Not
Important
Air conditioning
Must Have Would Like Willing to Compromise Not
Important
Wall-to-wall carpet
Must
Have Would Like Willing to Compromise Not
Important
Wood floors
Must Have Would Like Willing to Compromise Not
Important
Great view
Must
Have Would Like Willing to Compromise Not
Important
Other notes:
Reprinted
from REALTOR® magazine (REALTOR.org/realtormag)
with permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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5 Things to Know About Title Insurance
Title insurance protects
the holder from any losses sustained from defects in the title. It’s
required by most mortgage lenders. Here are five other things you should
know about title insurance.
1.
It protects your ownership right to your home, both from fraudulent claims
against your ownership and from mistakes made in earlier sales, such as
mistake in the spelling of a person’s name or an inaccurate description of
the property.
2.
It’s a one-time cost usually based on the price of the property.
3.
It’s usually paid for by the sellers, although this can vary depending on
your state and local customs.
4.
There are both lender
title policies, which protect the lender, and owner title policies, which
protect you. The lender will probably require a lender policy.
5.
Discounts on premiums are sometimes available if the home has been bought
within only a few years since not as much work is required to check the
title. Ask the title company if this discount is available.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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7 Reasons to Own Your Home
1. Tax breaks.
The U.S. Tax Code lets you deduct the interest you pay on your mortgage,
your property taxes, as well as some of the costs involved in buying your
home.
2. Appreciation. Real estate has long-term, stable growth in value.
While year-to-year fluctuations are normal, median existing-home sale prices
have increased on average 6.5 percent each year from 1972 through 2005, and
increased 88.5 percent over the last 10 years, according to the NATIONAL
ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is
expected to rise 15 percent over the next decade, creating continued high
demand for housing.
3. Equity. Money paid for rent is money that you’ll never see again,
but mortgage payments let you build equity ownership interest in your home.
4. Savings. Building equity in your home is a ready-made savings
plan. And when you sell, you can generally take up to $250,000 ($500,000 for
a married couple) as gain without owing any federal income tax.
5. Predictability. Unlike rent, your fixed-mortgage payments don’t
rise over the years so your housing costs may actually decline as you own
the home longer. However, keep in mind that property taxes and insurance
costs will increase.
6. Freedom. The home is yours. You can decorate any way you want and
benefit from your investment for as long as you own the home.
7. Stability. Remaining in one neighborhood for several years gives
you a chance to participate in community activities, lets you and your
family establish lasting friendships, and offers your children the benefit
of educational continuity.
Online resources: To calculate whether buying is the best financial option
for you, use the “Buy vs. Rent” calculator at www.GinnieMae.gov.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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10 Questions to Ask Home Inspectors
Before you make your
final buying or selling decision, you should have the home inspected by a
professional. An inspection can alert you to potential problems with a
property and allow you to make an informed decision. Ask these questions to
prospective home inspectors:
1. Will your inspection meet recognized standards? Ask whether the
inspection and the inspection report will meet all state requirements and
comply with a well-recognized standard of practice and code of ethics, such
as the one adopted by the American Society of Home Inspectors or the
National Association of Home Inspectors. Customers can view each group’s
standards of practice and code of ethics online at
www.ashi.org or
www.nahi.org. ASHI’s Web site also provides
a database of state regulations.
2. Do you belong to a professional home inspector association? There
are many state and national associations for home inspectors, including the
two groups mentioned in No. 1. Unfortunately, some groups confer
questionable credentials or certifications in return for nothing more than a
fee. Insist on members of reputable, nonprofit trade organizations; request
to see a membership ID.
3. How experienced are you? Ask how long inspectors have been in the
profession and how many inspections they’ve completed. They should provide
customer referrals on request. New inspectors also may be highly qualified,
but they should describe their training and let you know whether they plan
to work with a more experienced partner.
4. How do you keep your expertise up to date? Inspectors’ commitment
to continuing education is a good measure of their professionalism and
service. Advanced knowledge is especially important in cases in which a home
is older or includes unique elements requiring additional or updated
training.
5. Do you focus on residential inspection? Make sure the inspector
has training and experience in the unique discipline of home inspection,
which is very different from inspecting commercial buildings or a
construction site. If your customers are buying a unique property, such as a
historic home, they may want to ask whether the inspector has experience
with that type of property in particular.
6. Will you offer to do repairs or improvements? Some state laws and
trade associations allow the inspector to provide repair work on problems
uncovered during the inspection. However, other states and associations
forbid it as a conflict of interest. Contact your local ASHI chapter to
learn about the rules in your state.
7. How long will the inspection take? On average, an inspector
working alone inspects a typical single-family house in two to three hours;
anything significantly less may not be thorough. If your customers are
purchasing an especially large property, they may want to ask whether
additional inspectors will be brought in.
8. What’s the cost? Costs can vary dramatically, depending on your
region, the size and age of the house, and the scope of services. The
national average for single-family homes is about $320, but customers with
large homes can expect to pay more. Customers should be wary of deals that
seem too good to be true.
9. What type of inspection report do you provide? Ask to see samples
to determine whether you will understand the inspector's reporting style.
Also, most inspectors provide their full report within 24 hours of the
inspection.
10. Will I be able to attend the inspection? The answer should be
yes. A home inspection is a valuable educational opportunity for the buyer.
An inspector's refusal to let the buyer attend should raise a red flag.
Source: Rob Paterkiewicz,
executive director, American Society of Home Inspectors, Des Plaines, Ill.,
www.ashi.org.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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10 Questions to Ask the Condo Board
Before you buy, contact the condo board with the following questions. In the
process, you’ll learn how responsive — and organized — its members are.
You’ll also be alerted to potential problems with the property.
1. What percentage of units is owner-occupied? What percentage is
tenant-occupied? Generally, the higher the percentage of owner-occupied
units, the more marketable the units will be at resale.
2. What covenants, bylaws, and restrictions govern the property?
What grandfather clauses are in place? You may find, for instance, that
those who buy a property after a certain date can’t rent out their units,
but buyers who bought earlier can. Ask for a copy of the bylaws to determine
if you can live within them. And have an attorney review property docs,
including the master deed, for you.
3. How much does the association keep in reserve? Plus, find out how
that money is being invested.
4. Are association assessments keeping pace with the annual rate of
inflation? Smart boards raise assessments a certain percentage each year
to build reserves to fund future repairs. To determine if the
assessment is reasonable, compare the rate to others in the area.
5. What does and doesn’t the assessment cover? Does the assessment
include common-area maintenance, recreational facilities, trash collection,
and snow removal?
6. What special assessments have been mandated in the past five years?
How much was each owner responsible for? Some special assessments are
unavoidable. But repeated, expensive assessments could be a red flag about
the condition of the building or the board’s fiscal policy.
7. How much turnover occurs in the building? This will tell you if
residents are generally happy with the building. According to research by
the NATIONAL ASSOCIATION OF REALTORS®, owners of condos in two-to-four unit
buildings stay for a median of five years, and owners of condos in a
building with five or more units stay for a median of four years.
8. Is the condo building in litigation? This is never a good sign. If
the builders or home owners are involved in a lawsuit, reserves can be
depleted quickly.
9. Is the developer reputable? Find out what other projects the
developer has built and visit one if you can. Ask residents about their
perceptions. Request an engineer’s report for developments that have been
reconverted from other uses to determine what shape the building is in. If
the roof, windows, and bricks aren’t in good repair, they become your
problem once you buy.
10. Are multiple associations involved in the property? In very large
developments, umbrella associations, as well as the smaller association into
which you’re buying, may require separate assessments.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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17 Tips for Packing Like a Pro
Moving to a new home can
be stressful, to say the least. Make it easy on yourself by planning far in
advance and making sure you’ve covered all the bases.
1. Plan ahead
by organizing and budgeting.
Develop a master “to do” list so you won’t forget something critical on
moving day, and create an estimate of moving costs. (A
moving calculator is available at
REALTOR.com)
2. Sort and get
rid of things you no longer want or need.
Have a garage sale,
donate to a charity, or recycle.
3. But don’t
throw out everything.
If your inclination is to just toss it, you're probably right. However, it's
possible to go overboard in the heat of the moment. Ask yourself how
frequently you use an item and how you’d feel if you no longer had it. That
will eliminate regrets after the move.
4. Pack similar
items together.
Put toys with toys, kitchen utensils with kitchen utensils. It will make
your life easier when it's time to unpack.
5. Decide what,
if anything, you plan to move on your own.
Precious items such as family photos, valuable breakables, or must-haves
during the move should probably stay with you. Don't forget to keep a
"necessities" bag with tissues, snacks, and other items you'll need that
day.
6. Remember, most movers
won’t take plants.
If you don't want to leave them behind, you should plan on moving them
yourself.
7. Use the
right box for the item.
Loose items are prone to
breakage.
8. Put heavy items in
small boxes so they’re easier to lift.
Keep the weight of each box under 50 pounds, if possible.
9. Don’t
over-pack boxes.
It increases the likelihood that items inside the box will break.
10. Wrap every
fragile item separately and pad bottom and sides of boxes.
If necessary, purchase
bubble-wrap or other packing materials from moving stores.
11. Label every
box on all sides.
You never know how they’ll be stacked and you don’t want to have to move
other boxes aside to find out what’s there.
12. Use
color-coded labels to indicate which room each item should go in.
Color-code a floor
plan for your new house to help movers.
13. Keep your
moving documents together in a file.
Include important phone numbers, driver’s name, and moving van number. Also
keep your address book handy.
14. Print out a map and
directions for movers.
Make several copies, and
highlight the route. Include your cell phone number on the map. You don’t
want movers to get lost! Also make copies for friends or family who are
lending a hand on moving day.
15. Back up
your computer files before moving your computer.
Keep the backup in a safe
place, preferably at an off-site location.
16. Inspect
each box and all furniture for damage as soon as it arrives.
17. Make
arrangements for small children and pets.
Moving can be stressful and emotional. Kids can help organize their things
and pack boxes ahead of time, but, if possible, it might be best to spare
them from the moving-day madness.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Closing Documents You Should Keep
On closing day, expect to
sign a lot of documents and walk away with a big stack of papers. Here’s a
list of the most important documents you should file away for future
reference.
-
HUD-1 settlement
statement.
Itemizes all the costs — commissions, loan fees, points, and hazard
insurance —associated with the closing. You’ll need it for income tax
purposes if you paid points.
-
Truth in Lending
statement.
Summarizes the terms of your mortgage loan, including the annual
percentage rate and recision period.
-
Mortgage and note.
Spell out
the legal terms of your mortgage obligation and the agreed-upon repayment
terms.
-
Deed.
Transfers ownership to
you.
-
Affidavits.
Binding statements by
either party. For example, the sellers will often sign an affidavit
stating that they haven’t incurred any liens.
-
Riders.
Amendments to the sales
contract that affect your rights. Example: The sellers won’t move out
until two weeks after closing but will pay rent to the buyers during that
period.
-
Insurance policies.
Provide a
record and proof of your coverage.
Sources:
Credit Union National Association; Mortgage Bankers Association;
Home-Buyer’s Guide (Real Estate Center at Texas A&M, 2000)
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Common Closing Costs for Buyers
You’ll likely be
responsible for a variety of fees and expenses that you and the seller will
have to pay at the time of closing. Your lender must provide a good-faith
estimate of all settlement costs. The title company or other entity
conducting the closing will tell you the required amount for:
·
Down
payment
·
Loan
origination
·
Points, or
loan discount fees, which you pay to receive a lower interest rate
·
Home
inspection
·
Appraisal
·
Credit
report
·
Private
mortgage insurance premium
·
Insurance
escrow for homeowner’s insurance, if being paid as part of the mortgage
·
Property
tax escrow, if being paid as part of the mortgage. Lenders keep funds for
taxes and insurance in escrow accounts as they are paid with the mortgage,
then pay the insurance or taxes for you.
·
Deed
recording
·
Title
insurance policy premiums
·
Land survey
·
Notary fees
·
Prorations
for your share of costs, such as utility bills and property taxes
A Note About
Prorations:
Because such costs are usually paid on either a monthly or yearly basis, you
might have to pay a bill for services used by the sellers before they moved.
Proration is a way for the sellers to pay you back or for you to pay them
for bills they may have paid in advance. For example, the gas company
usually sends a bill each month for the gas used during the previous month.
But assume you buy the home on the 6th of the month. You would
owe the gas company for only the days from the 6th to the end for
the month. The seller would owe for the first five days. The bill would be
prorated for the number of days in the month, and then each person would be
responsible for the days of his or her ownership.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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How High Tech Home is Your Home?
If the latest technology or entertainment options are important in your new
home, add the following questions to your buyer’s checklist.
1. Are there enough jacks in every room for cable TV and high-speed
Internet hookups?
2. Are there ample telephone extensions or jacks?
3. Is the home pre-wired for home theater or multiroom audio and
video? Does it have in-wall speakers?
4. Does the home have a local area network (LAN) for linking
computers?
5. Does the home already have wiring for DSL or another high-speed
Internet connection?
6. Does the home have multizoning heating and cooling controls with
programmable thermostats?
7. Does the home have multiroom lighting controls, window-covering
controls, or other home automation features?
8. Is the home wired with multipurpose in-wall wiring that allows for
reconfigurations to update services as technology changes?
To rate the home on its
technological sophistication, fill out the Consumer Electronics
Association’s TechHome checklist at
www.ce.org/techhomerating.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Pros and Cons of Going Condo
Condominiums and
townhouses offer an affordable option to single-family homes in many
markets, and they’re ideal for those who appreciate a maintenance-free
lifestyle. But before you buy, make sure you do your legwork. These are some
of the important elements to consider:
·
Storage.
Some condos have storage lockers, but usually there are no attics or
basements to hold extra belongings.
·
Outdoor
space. Yards
and outdoor areas are usually smaller in condos, so if you like to garden or
entertain outdoors, this may not be a good fit. However, if you dread yard
work, this may be the perfect option for you.
·
Amenities.
Many condo properties have swimming pools, fitness centers, and other
facilities that would be very expensive in a single-family home.
·
Maintenance.
Many condos have onsite maintenance personnel to care for common areas, do
repairs in your unit, and let in workers when you’re not home — good news if
you like to travel.
·
Security.
Keyed entries and even doormen are common in many condos. You’re also closer
to other people in case of an emergency.
·
Reserve
funds and association fees.
Although fees generally help pay for amenities and provide savings for
future repairs, you will have to pay the fees decided by the condo board,
whether or not you’re interested in the amenity.
·
Resale.
The ease of selling your unit may be dependent on what else is for sale in
your building, since units are usually fairly similar.
·
Condo
rules.
Although you have a vote, the rules of the condo association can affect your
ability to use your property. For example, some condos prohibit home-based
businesses. Others prohibit pets, or don’t allow owners to rent out their
units. Read the covenants, restrictions, and bylaws of the condo carefully
before you make an offer.
·
Neighbors.
You’re much closer to your neighbors in a condo or town home. If possible,
try to meet your closest prospective neighbors.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Questions to Ask When Choosing a REALTOR®
Make sure you choose a
REALTOR® who will provide top-notch service and meet your unique needs.
1. How long have you been
in residential real estate sales? Is it your full-time job?
While experience is no guarantee of skill, real estate — like many other
professions — is mostly learned on the job.
2. What designations do
you hold?
Designations such as GRI and CRS® — which require that agents take
additional, specialized real estate training — are held by only about
one-quarter of real estate practitioners.
3. How many homes did you
and your real estate brokerage sell last year?
By asking this question,
you’ll get a good idea of how much experience the practitioner has.
4. How many days did it
take you to sell the average home? How did that compare to the overall
market?
The REALTOR® you
interview should have these facts on hand, and be able to present market
statistics from the local MLS to provide a comparison.
5. How close to the
initial asking prices of the homes you sold were the final sale prices?
This is one
indication of how skilled the REALTOR® is at pricing homes and marketing to
suitable buyers. Of course, other factors also may be at play, including an
exceptionally hot or cool real estate market.
6. What types of specific
marketing systems and approaches will you use to sell my home?
You don’t want someone who’s going to put a For Sale sign in the yard and
hope for the best. Look for someone who has aggressive and innovative
approaches, and knows how to market your property competitively on the
Internet. Buyers today want information fast, so it’s important that your
REALTOR® is responsive.
7. Will you represent me
exclusively, or will you represent both the buyer and the seller in the
transaction?
While it’s usually legal to represent both parties in a transaction, it’s
important to understand where the practitioner’s obligations lie. Your
REALTOR® should explain his or her agency relationship to you and describe
the rights of each party.
8. Can you recommend
service providers who can help me obtain a mortgage, make home repairs, and
help with other things I need done?
Because REALTORS® are immersed in the industry, they’re wonderful resources
as you seek lenders, home improvement companies, and other home service
providers. Practitioners should generally recommend more than one provider
and let you know if they have any special relationship with or receive
compensation from any of the providers.
9. What type of support
and supervision does your brokerage office provide to you?
Having resources such as in-house support staff, access to a real estate
attorney, and assistance with technology can help an agent sell your home.
10. What’s your business
philosophy?
While there’s no right answer to this question, the response will help you
assess what’s important to the agent and determine how closely the agent’s
goals and business emphasis mesh with your own.
11. How will you keep me
informed about the progress of my transaction? How frequently?
Again, this is not a
question with a correct answer, but it reflects your desires. Do you want
updates twice a week or do you not want to be bothered unless there’s a hot
prospect? Do you prefer phone, e-mail, or a personal visit?
12. Could you please give
me the names and phone numbers of your three most recent clients?
Ask recent clients if
they would work with this REALTOR® again. Find out whether they were pleased
with the communication style, follow-up, and work ethic of the REALTOR®.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Take the Stress Out of Home Buying
Buying a home should be fun, not stressful. As you look for your dream home,
keep in mind these tips for making the process as peaceful as possible.
1. Find a real estate
agent who you connect with.
Home buying is not only a
big financial commitment, but also an emotional one. It’s critical that the
REALTOR® you chose is both highly skilled and a good fit with your
personality.
2. Remember, there’s no “right” time to buy, just as there’s no perfect
time to sell. If you find a home now, don’t try to second-guess interest
rates or the housing market by waiting longer — you risk losing out on the
home of your dreams. The housing market usually doesn’t change fast enough
to make that much difference in price, and a good home won’t stay on the
market long.
3. Don’t ask for too many opinions. It’s natural to want reassurance
for such a big decision, but too many ideas from too many people will make
it much harder to make a decision. Focus on the wants and needs of your
immediate family — the people who will be living in the home.
4. Accept that no house is ever perfect. If it’s in the right
location, the yard may be a bit smaller than you had hoped. The kitchen may
be perfect, but the roof needs repair. Make a list of your top priorities
and focus in on things that are most important to you. Let the minor ones
go.
5. Don’t try to be a killer negotiator. Negotiation is definitely a
part of the real estate process, but trying to “win” by getting an extra-low
price or by refusing to budge on your offer may cost you the home you love.
Negotiation is give and take.
6. Remember your home doesn’t exist in a vacuum. Don’t get so caught
up in the physical aspects of the house itself — room size, kitchen, etc. —
that you forget about important issues as noise level, location to
amenities, and other aspects that also have a big impact on your quality of
life.
7. Plan ahead. Don’t wait until you’ve found a home and made an offer
to get approved for a mortgage, investigate home insurance, and consider a
schedule for moving. Presenting an offer contingent on a lot of unresolved
issues will make your bid much less attractive to sellers.
8. Factor in maintenance and repair costs in your post-home buying
budget. Even if you buy a new home, there will be costs. Don’t leave
yourself short and let your home deteriorate.
9. Accept that a little buyer’s remorse is inevitable and will probably
pass. Buying a home, especially for the first time, is a big financial
commitment. But it also yields big benefits. Don’t lose sight of why you
wanted to buy a home and what made you fall in love with the property you
purchased.
10. Choose a home first because you love it; then think about
appreciation. While U.S. homes have appreciated an average of 5.4
percent annually over from 1998 to 2002, a home’s most important role is to
serve as a comfortable, safe place to live.
Reprinted
from REALTOR® magazine (REALTOR.org/realtormag)
with permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Tips for Buying in a Tight Market
Increase your chances of
getting your dream house in a competitive housing market, and lower your
chances of losing out to another buyer.
1. Get prequalified for a
mortgage.
You’ll be able to make a firm commitment to buy and your offer will be more
desirable to the seller.
2. Stay in close contact
with your real estate agent to find out about the newest listings.
Be ready to see a house as soon as it goes on the market — if it’s a great
home, it will go fast.
3. Scout out new listings
yourself. Look
at Web sites such as REALTOR.com, browse your local newspaper’s real estate
section, and drive through the neighborhood to spot For Sale signs. If you
see a home you like, write down the address and the name of the listing
agent. Your real estate agent will schedule a showing.
4. Be ready to make a
decision.
Spend a lot of time in advance deciding what you must have in a home so you
won’t be unsure when you have the chance to make an offer.
5. Bid competitively.
You may not want to start out offering the absolute highest price you can
afford, but don’t go too low to get a deal. In a tight market, you’ll lose
out.
6. Keep contingencies to
a minimum.
Restrictions such as needing to sell your home before you move or wanting to
delay the closing until a certain date can make your offer unappealing. In a
tight market, you’ll probably be able to sell your house rapidly. Or talk to
your lender about getting a bridge loan to cover both mortgages for a short
period.
7. Don’t get caught in a
buying frenzy.
Just because there’s competition doesn’t mean you should just buy it. And
even though you want to make your offer attractive, don’t neglect
inspections that help ensure that your house is sound.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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Tips for Finding the Perfect Neighborhood
Your neighborhood has a big impact on your lifestyle. Follow these steps to
find the perfect community to call home.
·
Is it
close to your favorite spots?
Make a list of the activities — movies, health club, church, etc. — you
engage in regularly and stores you visit frequently. See how far you would
have to travel from each neighborhood you’re considering to engage in your
most common activities.
·
Check
out the school district.
This is especially important if you have children, but it also can affect
resale value. The Department of Education in your town can probably provide
information on test scores, class size, percentage of students who attend
college, and special enrichment programs. If you have school-age children,
visit schools in the neighborhoods you’re considering. Also, check out
www.schoolmatters.com.
·
Find out
if the neighborhood is safe.
Ask the police department
for neighborhood crime statistics. Consider not only the number of crimes
but also the type — such as burglaries or armed robberies — and the trend of
increasing or decreasing crime. Also, is crime centered in only one part of
the neighborhood, such as near a retail area?
·
Determine if the neighborhood is economically stable.
Check with your local city economic development office to see if income and
property values in the neighborhood are stable or rising. What is the
percentage of homes to apartments? Apartments don’t necessarily diminish
value, but do mean a more transient population. Do you see vacant businesses
or homes that have been for sale for months?
·
See if
you’ll make money.
Ask a local REALTOR® or call the local REALTOR® association to get
information about price appreciation in the neighborhood. Although past
performance is no guarantee of future results, this information may give you
a sense of how good of an investment your home will be. A REALTOR® or the
government planning agency also may be able to tell you about planned
developments or other changes in the neighborhood — like a new school or
highway — that might affect value.
·
Make
personal observations.
Once you’ve narrowed your focus to two or three neighborhoods, go there and
walk around. Are homes tidy and well maintained? Are streets quiet? How does
it feel? Pick a warm day if you can and chat with people working or playing
outside.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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What a Home Inspection Should Cover
Home
inspections will vary depending on the type of property you are purchasing.
A large historic home, for example, will require a more specialized
inspection than a small condominium. However, the following are the basic
elements that a home inspector will check. You can also use this list to
help you evaluate properties you might purchase.
For more information, try
the virtual home inspection at
www.ASHI.org,
the Web site of the American Society of Home Inspectors.
Structure:
A home’s skeleton impacts
how the property stands up to weather, gravity, and the earth. Structural
components, including the foundation and the framing, should be inspected.
Exterior:
The inspector should look
at sidewalks, driveways, steps, windows, and doors. A home’s siding, trim,
and surface drainage also are part of an exterior inspection.
·
Doors
and windows
·
Siding
(brick, stone, stucco, vinyl, wood, etc.)
·
Driveways/sidewalks
·
Attached
porches, decks, and balconies
Roofing:
A well-maintained roof protects you from rain, snow, and other forces of
nature. Take note of the roof’s age, conditions of flashing, roof draining
systems (pooling water), buckled shingles, loose gutters and downspouts,
skylight, and chimneys.
Plumbing:
Thoroughly examine the water supply and drainage systems, water heating
equipment, and fuel storage systems. Drainage pumps and sump pumps also fall
under this category. Poor water pressure, banging pipes, rust spots, or
corrosion can indicate problems.
Electrical:
Safe electrical wiring is essential. Look for the condition of service
entrance wires, service panels, breakers and fuses, and disconnects. Also
take note of the number of outlets in each room.
Heating:
The home’s heating
system, vent system, flues, and chimneys should be inspected. Look for age
of water heater, whether the size is adequate for the house, speed of
recovery, and energy rating.
Air Conditioning:
Your inspector should describe your home cooling system, its energy source,
and inspect the central and through-wall cooling equipment. Consider the age
and energy rating of the system.
Interiors:
An inspection of the inside of the home can reveal plumbing leaks, insect
damage, rot, construction defects, and other issues. An inspector should
take a close look at:
·
Walls,
ceilings and floors
·
Steps,
stairways, and railings
·
Countertops and cabinets
·
Garage
doors and garage door systems
Ventilation/insulation:
To prevent energy loss, check for adequate insulation and ventilation in the
attic and in unfinished areas such as crawlspaces. Also look for proper,
secured insulation in walls. Insulation should be appropriate for the
climate. Excess moisture in the home can lead to mold and water damage.
Fireplaces:
They’re charming, but
they could be dangerous if not properly installed. Inspectors should examine
the system, including the vent and flue, and describe solid fuel burning
appliances.
Source: American Society
of Home Inspectors (www.AHSI.org)
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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What Not to Overlook on a Final Walk-through
It’s guaranteed to be
hectic right before closing, but you should always make time for a final
walk-through. Your goal is to make sure that your home is in the same
condition you expected it would be. Ideally, the sellers already have moved
out. This is your last chance to check that appliances are in working
condition and that agreed-upon repairs have been made. Here’s a detailed
list of what not to overlook for on your final walk-through.
Make sure that:
·
Repairs
you’ve requested have been made. Obtain copies of paid bills and warranties.
·
There are
no major changes to the property since you last viewed it.
·
All items
that were included in the sale price — draperies, lighting fixtures, etc. —
are still there.
·
Screens and
storm windows are in place or stored.
·
All
appliances are operating, such as the dishwasher, washer and dryer, oven,
etc.
·
Intercom,
doorbell, and alarm are operational.
·
Hot water
heater is working.
·
No plants
or shrubs have been removed from the yard.
·
Heating and
air conditioning system is working
·
Garage door
opener and other remotes are available.
·
Instruction
books and warranties on appliances and fixtures are available.
·
All
personal items of the sellers and all debris have been removed. Check the
basement, attic, and every room, closet, and crawlspace.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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What’s a Home Warranty?
A home warranty is a
service contract, normally for one year, which helps protect home owners
against the cost of unexpected covered repairs or replacement on their major
systems and appliances that break down due to normal wear and tear. Coverage
is for systems and appliances in good working order at the start of the
contract.
Check your home warranty
policy to see which of the following items are covered. Also find out if the
policy covers the full replacement cost of an item.
·
Plumbing
·
Electrical
systems
·
Furnace
·
Water
heater
·
Heating
ducts
·
Water pump
·
Dishwasher
·
Garbage
disposal
·
Stove/cooktop/ovens
·
Microwave
·
Refrigerator
·
Washer/dryer
·
Swimming
pool (may be optional)
Source: American Home
Shield,
www.ahswarranty.com, REALTOR® Benefits Partner
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All
rights reserved.
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Why You Should Work With a REALTOR®
Not all real estate
practitioners are REALTORS®. The term REALTOR® is a registered trademark
that identifies a real estate professional who is a member of the NATIONAL
ASSOCIATION of REALTORS® and subscribes to its strict Code of Ethics. Here
are five reasons why it pays to work with a REALTOR®.
1. You’ll have an expert
to guide you through the process.
Buying or selling a home usually requires disclosure forms, inspection
reports, mortgage documents, insurance policies, deeds, and multi-page
settlement statements. A knowledgeable expert will help you prepare the best
deal, and avoid delays or costly mistakes.
2. Get objective
information and opinions.
REALTORS® can
provide local community information on utilities, zoning, schools, and more.
They’ll also be able to provide objective information about each property. A
professional will be able to help you answer these two important questions:
Will the property provide the environment I want for a home or investment?
Second, will the property have resale value when I am ready to sell?
3. Find the best property
out there.
Sometimes the property you are seeking is available but not actively
advertised in the market, and it will take some investigation by your
REALTOR® to find all available properties.
4. Benefit from their
negotiating experience.
There are many
negotiating factors, including but not limited to price, financing, terms,
date of possession, and inclusion or exclusion of repairs, furnishings, or
equipment. In addition, the purchase agreement should provide a period of
time for you to complete appropriate inspections and investigations of the
property before you are bound to complete the purchase. Your agent can
advise you as to which investigations and inspections are recommended or
required.
5. Property marketing
power. Real
estate doesn’t sell due to advertising alone. In fact, a large share of real
estate sales comes as the result of a practitioner’s contacts through
previous clients, referrals, friends, and family. When a property is
marketed with the help of a REALTOR®, you do not have to allow strangers
into your home. Your REALTOR® will generally prescreen and accompany
qualified prospects through your property.
6. Real estate has its
own language.
If you don’t know a CMA from a PUD, you can understand why it’s important to
work with a professional who is immersed in the industry and knows the real
estate language.
7. REALTORS® have done it
before. Most
people buy and sell only a few homes in a lifetime, usually with quite a few
years in between each purchase. And even if you’ve done it before, laws and
regulations change. REALTORS®, on the other hand, handle hundreds of real
estate transactions over the course of their career. Having an expert on
your side is critical.
8. Buying and selling is
emotional. A
home often symbolizes family, rest, and security — it’s not just four walls
and a roof. Because of this, home buying and selling can be an emotional
undertaking. And for most people, a home is the biggest purchase they’ll
ever make. Having a concerned, but objective, third party helps you stay
foused on both the emotional and financial issues most important to you.
9. Ethical treatment.
Every member of the NATIONAL ASSOCIATION of REALTORS® makes a commitment to
adhere to a strict Code of Ethics, which is based on professionalism and
protection of the public. As a customer of a REALTOR®, you can expect honest
and ethical treatment in all transaction-related matters. It is mandatory
for REALTORS® to take the Code of Ethics orientation and they are also
required to complete a refresher course every four years.
Reprinted from REALTOR®
magazine (REALTOR.org/realtormag) with
permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights
reserved.
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