•
Affordability: Decide
how much home you can afford. Generally, you
can afford a home equal in value to between
2 and 3 times your gross income.
• Wish List: Develop
a wish list of what you’d like your home
to have. Then prioritize the features on your
list.
• Selection:: Select
three or four neighborhoods you’d like
to live in. Consider items such as schools,
recreational facilities, area expansion plans,
and safety.
• Down Payment: Determine
if you have enough saved to cover your down
payment and closing costs. Closing costs, including
taxes, attorney’s fee, and transfer fees
average between 2 and 7 percent of the home
price.
• Credit Score: Get your
credit in order. Obtain a copy of your credit
report.
• Qualify For Mortgage:
Determine how large a mortgage you can qualify
for. Also explore different loans options and
decide what’s best for you.
• Documentation: Organize
all the documentation a lender will need to
pre approve you for a loan.
• Research: Do research
to determine if you qualify for any special
mortgage or down payment assistance programs.
• Assess Costs: Calculate
the costs of home ownership, including property
taxes, insurance, maintenance, and association
fees, if applicable.
• Realtor:
Find an experienced REALTOR? who can help you
through the process.
How Much Can I Afford?
This calculation assumes a 28-percent income
tax bracket. If your bracket is higher, your
savings will be too.
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.
Reasons to Own Your Own Home
• Tax Breaks:
The U.S. Tax Code lets you deduct the
interest you pay on your mortgage, property
taxes you, pay, as well as some of the costs
involved in buying your home.
• 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.
• 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.
• Predictability:
Mortgage payments don’t go up over the
years so your housing costs may actually decline
as you own the home longer but keep in mind
that property taxes and insurance costs will
rise.
• Freedom: The
home is yours to decorate any way you want and
benefit from your investment for as long as
you own the home.
• 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.
Common First-Time Home buyer Mistakes
1. Don’t ask enough questions of their
lender and miss out on the best deal.
2. Don’t act quickly enough to make a
decision and someone else buys the house.
3. Don’t find the right agent whose willing
to help them through the home buying process.
4. Don’t do enough to make their offer
look good to a seller.
5. Don’t think about resale before they
buy. The average first-time buyer only stays
in a home for four years.
Tips for First-Time Home Buyers
1. There is no perfect home, Be picky, but don’t
be unrealistic
2. Do your research and decide what features
are most important to you.
3. Check your credit report and ensure you have
enough money for your down payment and your
closing costs.
4. Get pre qualified from a lender for a mortgage
before you start looking.
5.
Use your own judgment and ask one or two people
for advice and not opinions, will drive you
crazy.
6. Know ahead of time when you could move. When
is your lease up? Are you allowed to sublet?
How tight is the rental market in your area?
7. Decide if you stay in the home long term
or short term this will help you decide to move
into a starter home or something more permanent,
and will help you choose the type of mortgage
that is right for you.
8. Keep some money when you move in, If you
max yourself out to buy the biggest home you
can afford, you’ll have no money left
for maintenance or decoration or to save money
for other financial goals.
9. Protect yourself and insist on a home inspection
and if possible get a warranty from the seller
to cover defects within one year.
10. Need help looking, hire a Realtor, whose
will be working for you best interest, unlike
the listing agent whose responsibility is to
the seller.
Things to Take the Trauma Out of Home
Buying
1.
Find a real estate agent that’s both skilled
and a good fit with you personality. Home buying
is not only a big financial commitment, but
also an emotional one.
2. Remember, there’s no “right”
time to buy, any more than there’s a right
time to sell. If you find a home now, don’t
try to second-guess the interest rates or the
housing market by waiting. A good home will
not stay on the market long.
3.
Don’t ask people for too many opinions,
it nice to have their approval for such a big
decision, but too many ideas will make it much
harder to make that decision.
4.
There are no perfect house, try and focus on
what features are most important to you and
let the minor ones go.
5.
Don’t try to be a killer negotiator, by
trying to “win” by getting an extra-low
price may lose you the home you love.
6.
Don’t get so caught up in the physical
aspects of the house itself—room size,
kitchen—that you forget such issues as
amenities, noise level, etc., that have a big
impact on what it’s like to live in your
new home.
7.
Don’t wait until you’ve found a
home to get approved for a mortgage, investigate
insurance availability, 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.
Consider maintenance and repair costs in your
post-home buying budget, a new home will still
have some 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 your
first home, is a big commitment, but it also
yields big benefits.
10.
Choose a home first because you love it; then
think about appreciation, a home’s most
important role is as a comfortable, safe place
to live.
How High Tech is Your Home?
For
the tech savvy buyers who want the latest technology
or entertainment options then you need to check
the home for these options
1.
Are there cable TV and high-speed Internet hookups
jacks in every room?
2.
Are there telephone extensions or jacks in every
room?
3.
Is the home pre wired for home theater or multi-room
audio and video?
4.
Does the home have a local area network for
linking computers?
5. Is the home already wired for DSL or other
high-speed Internet connection?
6.
Does the home have multi zoning heating and
cooling controls with programmable thermostats?
7.
Is the homes equipped for multi room lighting
controls and window-covering controls?
8.
Is the home wired with multipurpose in-wall
wiring that allows to update services as technology
changes?
Home Defects to Watch For
• Water Leaks: Look for
stains on ceilings and near the baseboards,
especially in the attics.
•
Shifting Foundations: Check
for large cracks along the home’s foundation.
•
Drainage: Look for standing
water, either around the foundation of the home
of in the yard.
•
Termites: Check for weakened
or grooved wood, especially near ground level.
•
Roofs: Look for broken or missing
couplings and buckled shingles as well as water
spots on ceilings.
•
Inadequate wiring: Check for
antiquated fuse boxes, extension cords (indicating
insufficient outlets), and outlets without a
place to plug in the grounding prong.
•
Plumbing: Look for very low
water pressure, banging in pipes
Questions to Ask A Home Inspector
1.
Are you a member of the American Association
of Home Inspectors and what are your qualifications?
2.
Are currently licensed? Inspectors are not required
to be licensed in every state.
3.
On average, how many inspections of properties
such as this do you do each year?
4.
Can I contact past clients whom you did inspections
fort?
5.
Do you have professional errors and omission
insurance? May I have a copy of the policy?
6.
Is your work guaranteed, and for how long?
7.
What will the inspection cover?
8.
Will I get a copy of the report after the inspection?
9.
How long will the it inspection take?
10.
How much will the home inspection cost?
What Should Your Home Inspection Cover
•
Siding:
Look for dents or buckling
• Foundations: Look for
cracks or water seepage
• Exterior Brick: Look
for cracked bricks or mortar pulling away from
bricks
• Insulation: Look for,
adequate rating for climate (the higher the
R value, the more effective the insulation is)
• Doors and Windows:
Look for loose or tight fits, condition of locks,
condition of weather stripping
• Roof: Look for age,
conditions of flashing, pooling water, buckled
shingles, or loose gutters and downspouts
• Ceilings, Walls, and Moldings.
Look for loose pieces, dry wall that is pulling
away.
• Porch/Deck: Loose railings
or step, rot
• Electrical: Look for
condition of fuse box/circuit breakers, number
of outlets in each room.
• Plumbing: Look for
poor water pressure, banging pipes, rust spots
or corrosion that indicate leaks
• Water Heater: Look
for age, size adequate for house, speed of recovery,
energy rating.
• Furnace/Air Conditioning:
Look for age, energy rating. Furnaces are rated
by annual fuel utilization efficiency; the higher
the rating, the lower your fuel costs.
• Garage: Look for exterior
in good repair; condition of floor—cracks,
stains, etc.; condition of door mechanism.
• Attic: Look for adequate
ventilation, water leaks from roof.
• Septic Tanks (if applicable):
Adequate absorption field capacity for the percolation
rate in your area and the size of your family.
• Driveways/Sidewalks:
Look for cracks, heaving pavement, crumbling
near edges, stains
How Comprehensive is My Home Warranty?
Review
your home warranty policy to see which of the
following items are covered, and if the policy
covers the full replacement cost of an item.
• Plumbing
• Electrical
Systems
• Water
Heater
• Furnace
• Heating
Ducts
• Water
Pump
• Dishwasher
• Stove/Cook top/Ovens
• Microwave
• Refrigerator
• Washer/Dryer
• Swimming
Pool (may be optional)
Property Tax Questions To Ask
•
The assessed
value of the property is generally less than
market value. Request a recent copy of the seller’s
tax bill to help you determine this information.
• How
frequently are properties reassessed and when
was the last assessment done? Taxes jump most
significantly when a property is reassessed.
•
Will the sale
of the homey trigger a tax increase? Often the
assessed value of the property may increase
based on the amount you pay for the property.
•
How comparable
are the taxes to other properties in the area?
If not, it might be possible to appeal the tax
assessment and lower the rate?
• Check
the current tax bill to see if it reflects any
special exemptions that you might not qualify
for? For example, many tax districts offer reductions
to those 65 or over.
What I Need To Know From The Condo Board
1.
What percentage of units is owner-occupied versus
tenant-occupied? 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 and what grandfather clauses are
in place? Ask for a copy of the bylaws to determine
if you can live within them.
3.
How much does the association keep in reserve
and how much of that money is being invested?
4.
Are association assessments keeping pace with
the annual rate of inflation? To determine if
the assessment is reasonable, compare the rate
to others in the area.
5.
What does and doesn’t the assessment cover—common
area maintenance, recreational facilities, trash
collection, snow removal?
6.
In the past five years what special assessments
have been mandated? How much was each owner
responsible for, is some special assessments
are unavoidable.
7.
How much turnover occurs in the building?
8.
Is the project in litigation or the builders
or homeowners are involved in a lawsuit, reserves
can be depleted quickly.
9.
How reputable is the developer? Find other projects
the developer has built and visit one if you
can. Ask residents about their perceptions.
If the roof, windows, and bricks aren’t
in good repair, they become your
problem once you buy.
10.
How many associations are 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.
Understanding Homeowners Insurance
1. Look for exclusions to coverage,most insurance
policies do not cover flood or earthquake damage
as a standard item. These coverage's must be bought
separately.
2. Look for dollar limitations on claims. Even
if you are covered for a risk, there may a limit
on how much the insurer will pay. many policies
limit the amount paid for stolen jewelry unless
items are insured separately.
3. Understand replacement cost. If your home is
destroyed you’ll receive money to replace
it only to the maximum of your coverage, so be
sure your insurance is sufficient. This means
that if your home is insured for $150,000 and
it costs $180,000 to replace it, you’ll
only receive $150,000.
4. Understand actual cash value. If you chose
not to replace your home when it’s destroyed,
you’ll receive replacement cost, less depreciation.
This is called actual cash value.
5. Understand liability. Generally your homeowners
insurance covers you for accidents that happen
to other people on your property, including medical
care, court costs, and awards by the court. However,
there is usually an upper limit to the amount
of coverage provided. Be sure that it’s
sufficient if you have significant assets.
Lowering Your Home Owners Insurance
1.
Raise your deductible, If you can afford to
pay more toward a loss that occurs, your premiums
will be lower.
2.
Buy your homeowners from the same company you
have your auto insurance and you’ll usually
qualify for a discount.
3.
Make your home less susceptible to damage. Keep
roofs and drains in good repair. Retrofit your
house to protect against natural disasters common
to your area.
4.
Keep your home safe by installing smoke detectors,
burglar alarms, and dead-bolt locks which will
usually qualify for a discount.
5.
Insure your house for the correct amount, remember,
you’re covering replacement cost, not
market value.
