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Buying a home

Buying a Home can be one of your most significant investments in life. Not only are you choosing your dwelling place, and the place in which you will bring up your family, you are most likely investing a large portion of your assets into this venture. The more prepared you are at the outset, the less overwhelming and chaotic the buying process will be. The goal of this page is to provide you with detailed information to assist you in making an intelligent and informed decision. Remember, if you have any questions about the process, you can contact me though the website or over the phone.

Benefits to owning your own home
Ready to buy a house
Why you should work with a Realtor
House Hunting Hints
How to determine the price and make an offer
Service Providers When Buying a Home
Buyer’s Remorse - Did You Make a Huge Mistake?

Benefits to owning your own home

1. It is probably going to be the best investment that you’ve ever made in your life

2. You are going to have income tax savings. Because of income tax deductions, the government is basically subsidizing your purchase of a home. All of the interest and property taxes you pay in a given year can be deducted from your gross income to reduce your taxable income.

Property taxes are deductible, too. Whatever property taxes you pay in a given year may also be deducted from your gross income, lowering your tax obligation.

3. When you rent a place to live, you can certainly expect your rent to increase each year ? or even more often. If you get a fixed rate mortgage when you buy a home, you have the same monthly payment amount for thirty years. Even if you get an adjustable rate mortgage, your payment will stay within a certain range for the entire life of the mortgage ? and interest rates aren?t as volatile now as they were in the late seventies and early eighties.

Imagine how much rent might be ten, fifteen, or even thirty years from now? Which makes more sense?

4. You are going to build equity. Some people are just lousy at saving money, and a house is an automatic savings account. You accumulate savings in two ways. Every month, a portion of your payment goes toward the principal. Admittedly, in the early years of the mortgage, this is not much. Over time, however, it accelerates.

Second, your home appreciates. Average appreciation on a home is approximately five percent, though it will vary from year to year, and in some years may even depreciate.. Over time, history has shown that owning a home is one of the very best financial investments.

5. Freedom and individualism. When you rent, you are normally limited on what you can do to improve your home. You have to get permission to make certain types of improvements. Nor does it make sense to spend thousand of dollars painting, putting in carpet, tile or window coverings when the main person who benefits is the landlord and not you.

Since your landlord wants to keep his expenses to a minimum, he or she will probably not be spending much to improve the place, either.

When you own a home, however, you can do pretty much whatever you want. You get the benefits of any improvements you make, plus you get to live in an environment you have created, not some faceless landlord.

Ready to buy a house?

The very first step you need to do before buying a home is to figure out how much you can afford. You can get a pre-qualification letter from most mortgage companies within several minutes.

Down payment
Most buyers do not have enough cash available to buy a home, so they need to obtain a mortgage to finance the purchase. Since you will probably make your purchase contingent upon obtaining a mortgage, the seller has the right to be informed of your financing plans in order to evaluate them. That is one of the major reasons that financing details are included in your offer.
As part of your offer, you will need to disclose the size of your down payment. Once again, this allows the seller to evaluate your likelihood of obtaining a home loan. It is easier to get approved for a mortgage when you make a larger down payment. The underwriting guidelines are less strict.

Interest rate

Another reason for including financing information in your offer is to protect yourself. If interest rates suddenly become volatile and rise quickly, as sometimes happens, you may looking at a mortgage payment much higher than you anticipated. By putting a maximum acceptable interest rate in the offer, you are protecting yourself from such an occurrence.
At the same time, the seller will probably want to see that you have some flexibility in the financing terms you are willing to accept. If interest rates are currently at eight percent and you indicate this is the highest rate you will accept, you would be able to cancel the contract without penalty if interest rates rose past that point. The seller would suffer because they have lost valuable marketing time and may have made their own plans based on successfully closing the transaction.

Why you should work with a Realtor?

Working with a professional Realtor to buy your home is a good idea for several reasons:

House Hunting Hints

Once you know how much you can afford, area where you would like to live, and all other qualities of your future home, you can start the search for your dream home. Once you have the list of your favorite homes, contact an agent, and we will be able to schedule all showings.

Thoughtful preparation in the beginning of your home search will help you find the home of your dreams that also fits your family?s needs.

Here are some tips how to find the house for you:

How to Determine the Price and Make an Offer

Once you?ve chosen your dream home, it?s time to make an offer. When you prepare an offer to purchase a home, you already know the seller?s asking price. But what price are you going to offer and how do you come up with that figure?

Determining your offer price is a three-step process. First, you look at recent sales of similar properties to come up with a price range. Then, you analyze additional data, such as the condition of the home, improvements made to the property, current market conditions, and the circumstances of the seller. This will help you settle on a price you think would be fair to pay for the home. Finally, depending on your negotiating style, you adjust your “fair” price and come up with what you want to put in your offer.

Gathering and analyzing information from comparable sales helps to establish the range of prices you should consider when making an offer to buy a home. More weight should be given to the most recent sales, but even so, you need to do a bit more analysis before setting upon the price you will offer. That is because you also need to consider the condition of the property, improvements, the current market, and the circumstances behind the seller?s decision to sell.
Once again, it is a very good idea to work with an agent, as your agent will guide you through this process, and prepare for you the ?Comparative Market Analysis? for free, so you definitely know the fair value of the property. Also your real estate agent should explain to you the condition of the real estate market. If it is ?sellers? market? than there is not too much room for negotiation, but if it is ?buyers? market?, then you definitely should negotiate a lot.

There is a lot of legal paperwork involved in making an offer, but your real estate agent will be providing you with a contract, all necessary disclosures (there are quite a few), obtaining all necessary disclosures from the sellers, handling all offers and counter-offers.

Service Providers When Buying a Home

You and the Seller Must Agree
Buying a home does not occur in a vacuum, involving only you and the seller. There are all kinds of people and services involved behind the scenes to make it happen. Since some of these services affect both you and the seller, there will have to be agreement on which companies you will use for them. When you make your offer, you should request your favorites for these services. If you are unfamiliar with these service providers, you can get recommendations from your agent.

Escrow and Settlement

For example, you are going to need an escrow or settlement company to act as an “independent third party” between you and the seller. Without having a third party involved, how do you know that when you fork over the money, you are going to get the deed? This is the type of service provided by escrow and settlement. They will hold your deposit and coordinate much of the activity that goes on during the escrow period.
Since this third party is very important to both you and the seller and both of you will pay fees to this company, it is important to agree on which service to use. Therefore, your choice should be part of the offer. Since you do not buy a home every other week or so, you are probably unfamiliar with companies that provide this service. Your agent will make a recommendation. You have the authority to accept this recommendation and include it in your offer, or make your own choice.
Keep in mind that the seller will also have a preference and this may be a point of negotiation in a counter-offer. It has become customary that one side will choose the escrow/settlement agent and one side chooses the title insurance company. Even so, everything in real estate is negotiable.

Title Insurance Company

Title insurance is important because, by providing you with an Owners Policy, they insure that you have clear title to the property. If there are any problems later, you can always go back to the title insurance company and have them clear it up. Since it is customary for the seller to pay for the owner?s policy, they have an interest in which company is used.
However, you are going to pay a fee to the title insurance company, too. This is for the Lender’s Policy. The lender’s policy insures your mortgage lender that there are no liens or judgments against the property and that the mortgage will be in first position. In other words, should you sell the property or refinance it, their mortgage gets paid first, before any other claims against the property.
The lender?s policy is less expensive than the owner?s policy.

Termite and Pest Inspection, Home Inspection

As part of your offer, you may require a termite inspection, and home inspection. This company not only inspects for termite damage and pest infestations, but also inspects for dry rot and water damage, among other things. The company that performs the inspection is important to you as a buyer, because you want to be sure they do a good job. Home inspector is going to inspect the whole house and make sure that everything in the house is in working order, also check for any structural damages.
You should determine which company you want to perform these inspections and make it a part of your offer. Otherwise the seller will choose. If you do not know which company to hire, your agent will make a recommendation.

Buyer’s Remorse - Did You Make a Huge Mistake?

You will get buyer?s remorse (it?s normal), but don’t let it to stress you. At some point of time, you start to doubt, and ask yourself questions: Did you make the right decision? Can you afford it? Is it the right time? Should you have waited? What if you lose your job? What if this happens? What if that happens? Anxiety and stress set in. Sleep may be hours in coming.
This is a normal reaction to buying a home. It is called “buyer’s remorse.”
This is what you do…

Take out a pen and paper right now and draw a line down the center of the paper. Calmly and logically, think of all possible advantages to buying a home and write them down on one side of the page. Afterwards, you should list all the disadvantages on the other side of the paper.
This process is supposedly how Ben Franklin used to weigh tough decisions.

After you get done writing your lists, you may think back on your anxiety and think you were being silly. After all, buying a home is obviously a good decision. Your list proves it. But your reaction was normal and shared by many. You see, buying a home is not entirely a rational process. It is an emotional process, too.
You will not be totally stress-free, but it will help.

Got a Question?

You can contact me directly from this website or by phone at: 407-383-8180