7 Steps to Buying a House

30 07 2012

(I love working with home buyers, especially first time home buyers! I think they went a little light on the last step, but it is a good summary.)

Find out how much you can afford.

Before your first steps to buying a new home, your mortgage lender will look at a couple different numbers to find out your spending limit. The first figure is your take-home pay. Banks like to follow the 28/36 rule: Your monthly mortgage payments should total no more than 28 percent of your net paycheck, and your total debts, including car payments and student loans, shouldn’t inch over 36 percent.

Get preapproved for a loan.

For a small fee, a lender will contact your employer, bank, and others to verify your income, assets, debts, and credit history. You’ll then get a letter stating that your mortgage is approved for a certain amount (which will help you determine your price limit!) up until a certain date. This document is more for the home seller’s benefit to prove that you’re a serious buyer. There’s no obligation on your part to actually get a mortgage.

Start searching for new digs.

A good way to start is to look at advertisements of homes located in neighborhoods you might want to check out. Then see who the listing agent is — chances are that company does a decent amount of business in the neighborhoods you’re interested in. Also use our finding a home tool.

Make an offer.

Do your own research in your local paper, office of public records, or Zillow to find out what similar homes in the area have recently sold for. Choose a number for your initial offer. If it’s far below the asking price, be prepared to defend it with your research. Don’t let your real estate agent pressure you into making the first number any higher than you’re comfortable with.

Settle on a price.

The seller will respond in one of three ways: an acceptance, a counter-bid (giving you a number somewhere between your offer and the asking price), or declining by sticking to their original asking price. Find out why the sellers are digging in their heels. If you can agree on a number, you’ll sign a contract and be asked to put down a “binder” or “earnest money.” Make sure the contract specifies that you can get this money back if you withdraw your offer.

Get an inspection.

Ask a realtor to recommend a certified inspector or check out the American Society of Home Inspectors. Have our home inspection checklist handy.

Close the deal.

Once the inspection is done, you’ll need to contact your lender and hire a lawyer to set up a closing date. Go buy some champagne and celebrate!

via 7 Steps to Buying a House – Buying a Home – Real Estate.


10 homes first-time buyers should avoid: MSN Money

26 07 2012

10 homes first-time buyers should avoidFrom hidden damage to crummy neighbors, beware these 10 signs that your dream home may turn into a nightmare — before you sign the contract.

Youve scraped together a down payment, with just enough money left over to pay closing costs. What youre unlikely to have, as a first-time homebuyer, is a big pot of cash to pay for repairs — or a clear understanding of how much certain home flaws can cost you down the road.With that in mind, I consulted with appraisers and inspectors from across the country to uncover the major home problems first-time homebuyers should watch out for and avoid.Novices should be particularly cautious about “bargain” homes, according to appraiser Dan Fries, of Daniel Fries & Associates in Cumming, Ga. They may come with problems that are expensive to repair or impossible to fix.”Avoid the killer deal, as the chances are good there is some issue that made the other owner walk,” said Fries. “Buying a dog of a house will always be less desirable than the cream puff with a good location.”Read on for some of the bigger issues of which to beware.

via 10 homes first-time buyers should avoid – housing & buying guide – MSN Money.

By Liz Weston, MSN MoneyShare

10 Important Things to Do After Purchasing Your Home via Elliman.com

15 06 2012

10 Important Things to Do After Purchasing Your Home

If you’ve just purchased a home, or you’re in the market to buy one, you will want to pay attention to the broadcast “Ten Things to Do After Buying Your Home.” It’s a discussion between Dottie Herman, the CEO of Eliman and Eric Tyson, real estate author and expert.

Dottie began her “Eye on Real Estate” show talking about the many hurdles of homeownership with Eric Tyson. “There’s a lot of information out there written by journalists who don’t have the knowledgeable experience on what is going on in the real estate market currently,” he stated. Eric partnered with other real estate professionals to come up with an experienced book called “Home Buying for Dummies and Real Estate Investing for Dummies.”

Eric touched on several items of interest during this discussion. He stated, “Consumers need to take a look at their financial situation to determine the amount they can afford; what type of personal financial obligations that they have; and to make a decision that they are comfortable in making.”

The following are 10 interesting tips based on Tyson’s book.

1. Solicitors:  There are going to be an assortment of people trying to sell you additional items and services like extra insurance in case you lose your job, or you have an accident.

2. Hire a Professional Financial Planner: For additional information on this subject, please check out his book.

3. Hire a Knowledgeable Real Estate Team: Tyson talks about the importance of a buyer doing their homework and hiring a real estate team that is knowledgeable from start to finish.

4. Refinancing: The low interest rates can make it confusing to the average consumer on whether or not they should refinance. Since refinancing costs you money, you need to determine if it’s worth it in the end. Be sure to ask about no closing cost options.

5. Automated Payments: This is a great way for your payment to be received on time and you won’t have to worry about missed payments and low credit scores.

6. Put Away Cash: A standard rule of thumb to follow is to put away at least three months of living expenses in case of an emergency. If the economy is in a weakened state, Tyson recommends saving up to six months.

7. Mortgage Insurance: A classic life insurance policy has more benefits than a mortgage life insurance policy.

8. Challenge Tax Assessments: Tyson recommends paying attention to your property taxes, tax assessments and the current market values in case the local municipality makes an error.

9. Homeowner Documents: Always hang on to your homeowners documents and put them in a safe location in case you need to refer to them at a later date.

10. Take time to Smell the Roses: Tyson discusses buyer’s remorse in his book and recommends people purchase a home that is best suited for them financially, and it gives them peace of mind.

Tyson began his career as a personal financial advisor in the early 90s at Bain & Company. He began his writing career with five national best-sellers. He received the Benjamin Franklin Award and is the only person to have four books published simultaneously on Business Week’s best-seller list.

contact information: MGates@elliman.com or http://www.elliman.com/    or   http://erictyson.com/

Short Sales: Answers for First-Time Buyers | Trulia Pro – March 2, 2012

12 03 2012

Many people in the market today are first-time home buyers who would not have been able to buy when home prices were higher. Enticed both by lower prices and bank promotions, these eager hopefuls are have taken the signs of deals as the best chance to make their first real estate move  .

While all home buyers need help with the short sale process, it’s especially challenging to address the needs and concerns of a first-time home buyer who has decided a short sale is the home for them. Here’s how to get answers to first-time home buyers’ top three questions about short sales.

1. How long does it take for a bank to approve a short sale?

This is the million-dollar question. While it takes an average of three to six months, the timeline – and the process – vary quite a bit from one bank to another.

Short sale approval timelines depend on the bank (some just take longer than others). While each bank has different short sale guidelines, the short sale has to make sense to the bank. The more sense the short sale offer makes to the bank, the faster the approval process.

Here are some things that slow down the process by several weeks or more – these usually involve more people or more factors:

  • Multiple liens on the property
  • A third party negotiating the short sale on behalf of a seller. Some states allow third parties to do this, for a fee; some states, like Virginia, limit this to real estate licensees, attorneys, and employees of attorneys.
  • Private Mortgage Insurance (PMI) on the property
  • Additional investors

Action: To make an accurate prediction about the short sale timeline for a particular property, research the bank’s general timelines, the property’s liens, and whether there is PMI before writing the offer.

2. Will the bank make repairs to the property?

The short answer is, probably not.

Here’s why:

The bank does not have possession of the property and has no authority to make repairs on behalf of the seller.

Many short-sale sellers do not have the financial means to make repairs.

Many banks require the short sale to be sold strictly “as-is” and do not allow the seller to pay for any repairs.

Why wouldn’t a bank allow the seller to make repairs? your buyer may ask. A short sale is a sticky situation for a bank, and that the bank wants to avoid potential liability. For example, if the bank allowed the seller to make repairs and the repairs proved to be faulty, the buyer might potentially hold the bank liable, since the seller doesn’t have money (which is how the short-sale situation came about in the first place).

Action: Find out how the bank and the seller feel about making possible repairs. A short-sale buyer needs to understand that the home will most likely be sold strictly “as-is” and all repairs will be at their expense.

3. How do other types of debt affect the short sale outcome?

Many short-sale sellers are more than just “house-poor.” Many have additional debts that place a cloud on title. These include tax liens – income and property, medical liens, mechanic’s liens, and child support judgments.

Depending on your state, some creditors can try to collect debt by going to civil court and getting a judgment lien placed on the property against the homeowner. These liens must be cleared before the short sale transaction can be closed.

Surprisingly, tax liens are probably the easiest to clear off the title. The IRS has several avenues to collect back taxes, and doesn’t want to become a real estate holding company. Removing a tax lien can take up to 120 days, so it is imperative that this process is started well in advance of the short sale.

Medical liens can usually be negotiated and a payment plan worked out. However, this is a time-consuming process and needs to be started as soon as possible.

Mechanic’s liens are a little harder to get removed. There is not much recourse for tradespeople and bad debts.

Child support judgments are also difficult to remove because they usually involve government agencies.

In short, additional debts can tie up the short sale process.

Action: Make sure to ask the listing agent if a preliminary title search has been performed on the property so you can advise your buyer about possible obstacles.

The more information you can offer your first-time home buyer, the more confident they can be about the transaction. The more confident they are about the transaction, the more likely they will see the transaction through to the closing table.

via Short Sales: Answers for First-Time Buyers | Trulia Pro.

About the author

Sarah Stelmok is an Associate Broker with Champion Realty and a Short Sales Specialist from Fredericksburg, Virginia. She’s the author of SarahiouslySpeaking.com/ and travels the country training agents in the areas of Contracts, Fair Housing, Ethics, Short Sales and Foreclosures, Technology, Agency, and other real estate related courses.

The Home Buying Process

5 08 2011
Buying a Home

1. Figure out how much you can afford
What you can afford depends on your income, credit rating, current monthly expenses, downpaymentand the interest rate. 

 - How much home can you afford?
 - Buying vs. Renting
 - Home Economics
 - Homebuying programs in your state

2. Know your rights

 - Fair Housing: Equal Opportunity for Allbrochure
 - Real Estate Settlement Procedures Act (RESPA)
 - Borrower’s rights
 - Predatory lending

3. Shop for a loan

 - Looking for the best mortgage: shop, compare, negotiate– brochure
 - Let FHA help you
 - Learn about interest only loans
 - Avoid Predatory Lenders

4. Learn about homebuying programs

 - Homebuying programs in your state
 - Let FHA help you (FHA loan programs offer lower downpayments and are a good option for first-time homebuyers!)
 - HUD’s special homebuying programs 

 - Good Neighbor Next Door(formerly known as Teacher/Officer/Firefighter Next Door)
 - Hurricane Evacuees discounted sales
 - Homeownership for public housing residents
 - Indian Home Loan Guarantee Program(Section 184)

5. Shop for a home

 - Choose a real estate agent
 - Wish list– what features do you want?
 - Home-shopping checklist? take this list with you when comparing homes
 - Homes for sale(including HUD homes)
 - Fixer-Uppers – home purchase and repair programs
 - Manufactured (mobile) homes
 - Build a home

6. Make an offer

 - Making an offer

7. Get a home inspection

 - For Your Protection Get a Home Inspection
 - 10 Questions to ask a home inspector

8. Shop for homeowners insurance

 - Homeowners insurance
 - 12 ways to lower your homeowners insurance costs

9. Sign papers
You’re finally ready to go to “settlement” or “closing.” Be sure to read everything before you sign!

 - Settlement Costs and Helpful Information