The insider s guide for homebuyers. The insider s guide for homebuyers

Transcription

1 The insider s guide for homebuyers The insider s guide for homebuyers 1

2 Contents 1. Doing your preparation Find out how much you can afford Advice for smart searching on the go Find the best REALTOR Touring homes and making an offer Preparing for your move Home search worksheet Loan checklist REALTOR and the realtor.com name and logo are trademarks of the NATIONAL ASSOCIATION OF REALTORS and are used with its permission. These and all other trademarks used in this work are the property of their respective owners. The information in this work is believed reliable but is not warranted or guaranteed, is general in nature and not based on knowledge of your specific circumstances, and should be independently verified in concert with your tax, technical, legal, real estate, investment, accounting and/or other professional advisors prior to use. Individual results may vary from testimonials. 1

3 If you re like most people, buying a home represents your single biggest investment. As such, the home buying process can be one of the most exciting - but sometimes also stressful - experiences you ever go through. This may be true whether you ve bought many homes or you re looking to buy your first and whether you re in the market for a new primary residence, an investment property or that perfect vacation getaway. The end goal is to find a property that fits both your emotional and financial requirements. Right now the real estate market offers plenty of great opportunities and there are many factors to consider and choices to make. When buying, it s crucial for you to have all the available resources necessary to make a well-informed decision. 2

4 1. Doing your preparation Start with your list of must-have s. What do you need and what can you not live without? The planning stage is very important to the process of buying a home, especially for firsttime homebuyers. Some people start searching immediately, find a home they want and then scramble to get their affairs in order. Such urgency can sometimes lead to poor decision making. Given that buying a home is such a big step, it s important for you to educate and prepare yourself in advance. This means clearly determining why you re buying, what your long term plans are, and what kind of home you re looking for. Because buying and financing a home are so closely related, it also means examining your current financial situation and projecting how much you can afford. Although you can buy a home with a low down payment, the more you put down, the lower your mortgage will be. Also there are other costs, including home inspections and taxes. Plan to budget around 2-4% of the total value of your home to be able to handle these expenses with ease. Also you will need to make sure you have enough in your savings to pay for any repairs and necessary upkeep. Some people make the mistake of using all their savings to fund their home purchase but this can leave homeowners unprepared in case of a sudden illness, unemployment, or other emergency. It is best to have enough money readily available that you could survive for at least six months without your regular paycheck. Are you planning a family, getting married, or going back to school? All of these changes will impact both your lifestyle and your financial future. It s important that the home you choose be the right size for you not just now but over the next few years. Choose the location of your new home carefully Many studies have said that having a short commute is a key to happiness. When choosing between more space and a longer commute or a smaller home and a shorter commute, many people choose to endure the long commute. While this may be bearable in the short term it can add stress to your life and diminish the amount of time you actually get to enjoy your home. Another consideration is employment 3

5 1. Doing your preparation prospects in the area. Even if your job is very secure, it s always a good idea to be aware of what other opportunities in your industry are available nearby. In order get the most out of your investment you will likely want to make sure that you are going to stay put for a few years. If you have plans to move within a year or so you may want to wait until then. You don t want to be in the position of needing to move and having to sell your home quickly. This guide includes a Home search worksheet on page 12. If you are making this purchase with another person it may make sense to each fill out your lists separately and then come together to compare notes. That way you each get to see each other s true feelings. Make sure that your wishes are aligned with reality. Also remember that the house that you are imagining while filling out this worksheet may not match with what is available in the area. Location is still the most important factor when choosing the home that is both right for you and has good resale potential. Be ready to factor in the proximity to major roads, school districting, crime levels, and other considerations once you are out shopping. 4

6 2. Find out how much you can afford It is recommended that you get pre-qualified for a loan before you start viewing homes with the serious intention of buying. If you don t have this in place you may end up losing out on a home if you are in a multiple offer situation. Home sellers give precedence to those who demonstrate that they are able to pay for the home. The benefits of pre-qualification include: You ll have information about what you can afford and be able to plan accordingly As a qualified, motivated buyer you ll be taken more seriously when you make an offer on a home Lenders can tell you whether you qualify for any special programs that will enable you to afford a better home (particularly if you re a first-time buyer) The pre-approval process can sometimes involve meeting with a lender and authorizing them to examine your current financial situation and credit history. On the basis of this examination the lender will provide you with a document that details how much you can borrow to buy a home. Before you begin this process it is important to have all of your financial information readily available. 5

7 2. Find out how much you can afford Gather your information regarding your income and savings. This guide includes a Loan checklist on page 14 that should help you get your documents in order. Also you may want to run your credit score ahead of time just to make sure your potential lenders don t uncover any surprises you aren t aware of. Lenders are more cautious than they were a few years ago and are making sure that all potential mortgage holders are very carefully screened. Check local market rates Interest rates remain low so it is a great time to get a mortgage and it is very important to make sure that all your financial affairs are in order. If you previously sold a short sale you may need to wait at least two years before being able to get another mortgage. Just as many people these days begin their home search online, they also head to the internet to see what different lenders offer. We recommend that home buyers shop around for mortgage quotes. You can get free, updated mortgage quotes from hundreds of lenders at Another way to prepare for what you will face is to go through a blank purchase contract ahead of time so you ll know what decisions you ll face when you make an offer. 6

8 3. Advice for smart searching on the go Download the realtor.com app for your iphone, ipad or Android TM and get ready to search like a pro while driving around the neighborhood you love. Realtor.com has the largest and most accurate database of homes for sale from hundreds of MLS organizations nationwide, with most listings updated every 15 minutes. Keep it on your home screen for easy access at all times. Explore the area you are interested in. You can draw your search on the screen or put in your parameters to see what s available in your price range. The app will make sure you see all the homes on the market. Zoom in on the map results to see the most accurate status of the listings, such as just taken off the market, recently sold or price-reduced. Save your search. As you begin to zero in on that perfect home that has everything you are looking for, save your search so that you are always kept up to date on everything going on with the home. Set up alerts to go right to your device. You can set up price change notifications for your saved listings right on your mobile device so you can act quickly on the latest information. Stay up-to-date with real time price change alerts on the realtor.com mobile app Search homes by schools. Schools are a top consideration for many home buyers. You can search for homes based on school and district assignment boundaries. Keep good notes. Touring multiple homes is a confusing experience for most people. Rather than relying on memory, you can rate and make notes about the home you are interested in right in the app - that way they are always with you. 7

9 4. Find the best REALTOR In addition, you should ideally view homes with the help of an experienced and eagle-eyed REALTOR who ll notice things you might miss, provide expert analysis, and act as an impartial sounding board. Buying real estate is a complex matter at the best of times, given that there are so many factors to consider, and no two homes are transactions alike. Given that there are so many factors to consider, and no two homes or transactions are alike. However, with all the unique opportunities and potential pitfalls of the current market, it s even more important for you to contact a REALTOR once you ve definitely decided to buy. In choosing a REALTOR to guide you through the property search, financing, negotiation and transaction processes, you should consider their local market knowledge, experience and track record. In making your decision to work with an agent, there are certain questions you should ask when evaluating a potential agent. Search more than 1 Million REALTORS nationwide. Ask whether the agent is a REALTOR. You will also want to make sure the agent has an active real estate license in good standing. To find this information, you can check with your state s governing agency. You may also want to ask if real estate is their full-time career and what real estate designations they hold. With realtor.com HyperSocial tools you can login with Facebook and see which agents you are connected to through friends or mutual interests. You can also read recommendations and see badges which denote designations and specific trainings. 8

10 5. Touring homes and making an offer As you narrow down your home search, excitement begins to build. Don t make a hasty decision, especially if you feel yourself becoming guided by emotion. Selecting a home takes time, thought and analysis. You should carefully weigh the pros and cons of each house you like. Things to keep in mind include: Ask about other monthly expenses including utilities and condo or home owner association fees. Inspect bathrooms and kitchens carefully as these are the most expensive rooms to renovate. Calculate your budget for renovations before deciding whether this house is the right one for you. Consider the integrity of the structure. Are there cracks in the walls, improperly hanging doors or mold? These may indicate serious flaws in the structure of the home. Check all the systems in the house, including plumbing, heating and air conditioning. Look at the electrical outlets for clues to the condition of the house s wiring. Old fashioned outlets indicate old wiring that may need to be updated. Modern homes, with televisions, computers and a plethora of kitchen appliances, require much more electricity than older homes. Make sure to have sufficient closet space for your clothes, kitchen cabinets for your dishes and a shed or garage big enough to house your vehicles and other items. Think about the windows. Do you enjoy the sun streaming in the wide windows or do you prefer your privacy? Is there sufficient lighting? Drive around your selected neighborhood at different times of the day to get a feel for the area. Also consider transportation factors. Does this neighborhood have convenient access to public transportation? How far will you need to commute to work and what does rush hour look like? The general location of the neighborhood is also an important thing to look for when buying a house. Take a drive in the neighboring areas. Is the neighborhood close to an airport? Does the quality of the neighborhood drastically drop a few blocks over? 9

11 5. Touring homes and making an offer Remain in close contact with your agent. This is extremely important if you re in a strong seller s market. Many markets are experiencing low inventory, especially at the starter home level, and homes that are priced right go fast. You want a good agent who will alert you of new listings and who will show you houses as soon as they re listed. If you find a house you like, be ready to offer a competitive bid. You may be competing against other offers. Your REALTOR can advise you on what to offer and can also help you present your offer in the most appealing light. Make the offer contingent upon the findings of a professional home inspection because if the inspector finds anything major you will want to be able to renegotiate or reconsider the purchase. A buyer s agent will negotiate on your behalf. Some compromise may be necessary. Rather than approaching negotiations from an adversarial winner-take-all perspective, focus on your top priorities and don t let your emotions overrule your better judgment. Successful REALTORS tend to be experienced negotiators. They ve seen what works and what doesn t in countless real estate transactions, and they ve established a track record of bringing buyers and sellers together. 10

12 6. Preparing for your move Moving can be stressful but careful planning makes it easier. Make sure to plan your move in advance rather than leaving it to the last minute. Here are some tips for making the move to your new home as smooth as possible: Use moving as an opportunity to go through your belongings and cull out what you may not have used in a long time. The lighter the load the more money you will save on your move and the less clutter you will bring to your new home. Label boxes with both the details of what they contain and the room they belong in. Pack rooms individually. Pack heavy items in smaller boxes and lighter items in larger boxes. Personal financial information and important papers such as birth certificates, wills, and passports should be taken with you or shipped to you by family or a friend after your movein. Identity theft is one reason, but so is the difficulty in replacing important documents, recreating bank statements or losing passports. unpacking them when you get to your new home. For stuffed animals, towels and other soft items, consider using large trash bags, they are much cheaper than moving boxes. Pack essentials such as sheets, utensils and plates, and personal care items for the first few nights separately so you aren t digging through boxes to find them. Make sure this box is packed last so it will be unloaded first. You can download a move planner at Moving.com Use plastic storage bins for items you think will be stored in the attic, garage or closet at your next home. This will save you on buying extra boxes and 11

13 Home search worksheet Main Requirements Price range: Area: Detached/Attached: House style(s): Age of property: Lot size: Square footage: Number of bedrooms: Number of bathrooms: Garage: Specific Features (e.g., waterfront, view, large lot, pool, fireplace, basement, garage size, builtin vacuum, distance to school, additional room preferences, etc.): Additional Comments 12

14 Home search worksheet Main Requirements Price range: Area: Detached/Attached: House style(s): Age of property: Lot size: Square footage: Number of bedrooms: Number of bathrooms: Garage: Specific Features (e.g., waterfront, view, large lot, pool, fireplace, basement, garage size, builtin vacuum, distance to school, additional room preferences, etc.): Additional Comments 13

15 Loan checklist Here are some, but not all, of the documents your lender will ask for when you start the loan process. Your lender should provide the exact list of documents needed but to ensure a smooth loan application, it pays to get your documentation in order before you apply: 1. W-2 forms for each person on the loan. You will also want to provide contact information to the person within your company who can verify your income. 2. Copy of the fully executed sales contract. Include contact information of both the buyer and seller s agent. 3. Copy of one month s worth of pay stubs. If you are self-employed, you ll need to show profit and loss statements for the current year. 4. Copy of the last 2 bank statements for every bank account, including retirement accounts. Lenders may require up to 6 months of history if you are using gift money for the down payment. 5. Copy of complete federal tax forms for the last 2 or 3 years. Primarily required of selfemployed individuals or those who are claiming rental income. 6. If a gift is involved, such as funds from family members, the lender will need proof the gift giver has the funds and a gift letter affidavit indicating the funds are a gift and do not have to be repaid. Also needed is a copy of the check, the deposit receipt and a bank statement to verify the transaction. 7. List of your addresses in the last two years. 8. Proof of identity. Picture ID and a copy of your social security card Move Sales, Inc. All rights reserved. 2633CA 14