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|
| Q. |
Should
I rent or buy? |
| A. |
To determine whether it makes
sense to rent or buy, list reasons for and against each.
Can you afford the mortgage payment? Do you need a tax
break? Estimate the return on your capital investment.
Consider your lifestyle and how long you plan to live
in the area. Are you frustrated that your rent payment
is building equity for your landlord, not you? Do you
want to take advantage of appreciation and possibly hedge
inflation?
|
| Q. |
What can I afford?
|
| A. |
Generally your mortgage payment,
taxes and insurance (PITI) should not exceed one third
of your gross monthly income. Contact a lender to determine
what type of loan is best for you and how much you can
afford. Desktop underwriting technology now allows lenders
to issue pre-approvals in minutes!
|
| Q. |
How much money will
I need to put down? |
| A. |
Some financing programs require
little or no money down. Be prepared for costs in addition
to a down payment. Earnest money or a good faith deposit
will generally be required when an offer is made and will
be deposited in an escrow or trust account upon contract
acceptance. Earnest money should be significant enough
to demonstrate that a buyer is serious. Other costs may
include credit report, appraisal fee, loan application
fee, inspection fees, origination fees, title fees, escrow
fees and homeowner's insurance.
|
| Q. |
How can I buy with
little money down? |
| A. |
A number of loan programs
are available that require little or no money down. FHA
requires 5 percent or less down. VA for qualified veterans
offers zero money down. First-time homebuyer programs,
state, community and certain conventional programs are
sources of little or zero down options. It may also be
possible to finance costs or negotiate seller assistance
to minimize cash needed to close.
|
| Q. |
What are the biggest
challenges of buying a home? |
| A. |
Paperwork! You may sign and
initial over a hundred times to complete the process.
The number of decisions to make and time involved will
surprise many buyers.
|
| Q. |
How will I find a
home? |
| A. |
These days, buyers find out
about homes for sale through a variety of sources. Eighty-six
percent of buyers use a real estate agent during their
search, often supplementing that information with the
Internet (65%) and newspapers (49%).
|
| Q. |
Will I save money
buying a For Sale By Owner? |
| A. |
Most home buyers and sellers
believe that a For Sale By Owner transaction will save
them the real estate commission. And it may. But a real
estate transaction is a complicated process. Many do-it-yourself
buyers and sellers have found the cost of a poorly managed
transaction to be far greater than the perceived commission
savings.
|
| Q. |
How do I make an offer
to buy a home? |
| A. |
Your offer needs to be in
writing. Verbal offers to buy are not binding to buyer
or seller. Many purchase offers are a minimum of five
pages and some are much longer. Seek professional assistance,
and take time to understand the documents. Ask questions.
Obtain and review all available and required disclosures.
Your offer will not only address price. Typically, it
will include financing contingencies, inspection clauses,
deposit amounts, seller warranties, closing and occupancy
dates, and personal property. Contingency clauses may
provide for return of earnest money if the contingency
is not satisfied. The offer should be written and reviewed
with great care as it may result in a binding contractual
agreement.
|
| Q. |
Should we come in
with a low offer? We can always go up. |
| A. |
Homes that are priced right
and in market ready condition sometimes sell for the asking
price and more. A low offer may insult the seller, resulting
in a break-down of negotiations. Ultimately, the sale
price of a home will be affected by terms of the contract,
market conditions and seller motivation. Understand the
value of property and the market. Make realistic offers
and negotiate favorable terms.
|
| Q. |
Do I need disclosures,
inspections and a home warranty? |
| A. |
Most states have mandatory
property condition disclosures for properties sold with
the assistance of a licensed real estate professional.
Federal laws require the disclosure of known lead-based
paint hazards when selling or renting homes. Disclosure
forms require sellers to answer certain questions regarding
known property conditions. Disclosure forms are not a
substitute for inspections. An inspection is an independent
examination by a professional to discover unknown conditions
that neither the buyer nor seller are aware of. It may
take a few hours and cost a few hundred dollars, but inspections
can save you time and money in the long run. The purchase
contract should identify who will be responsible for correcting
these defects. If not, the contract may be voided or renegotiated.
A home warranty provides protection for unexpected repairs
during a certain warranty period. It does not cover pre-existing
defects and is limited to items stated in the warranty.
Not all warranties are alike. Compare the cost, deductible,
items covered and effective dates of the warranty.
|
| Q. |
Should I use a Real
Estate Agent? |
| A. |
Buying a home is a complex
process. That's probably why 89% of homebuyers who use
a real estate agent would definitely use or consider using
their agent again.
Your real estate agent has a network of professionals
including lenders, appraisers, accountants, inspectors,
attorneys, title companies, insurance agents and contractors
to assist you in a smooth transaction. Your agent can
help you obtain financing and provide you with information
and guidance. Your agent can help you negotiate and assist
you in managing the purchase process. Select a licensed
professional that will be a capable business partner.
Select an agent that specializes in the area you want
to live in. Select an agent that can handle all aspects
of your transaction. They should demonstrate knowledge,
expertise and integrity. Ultimately, they can save you
time, energy and money.
Statistics used throughout this section are from The National
Association of Realtors® 2003 Profile of Homebuyers
and Sellers. |
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