The search for your dream home has nearly come to an end. You’ve done everything that needs to be done up to this point and now the reality of owning a home is just on the horizon. You can smell and taste your new home, but before you start shopping for new furniture, there are a few more things left. Last time we spoke of doing your part with all the inspections and appraisal. Now there is one item left before you can officially take ownership of the home, that is to secure financing! Continue reading
You found the perfect house, made an offer and it was ACCEPTED! You may think all is fine and dandy and in a short time you will be signing closing documents and the house will be your, this is where you can be WRONG! There is a long list of items that you must do, most of these items are written in the contract but usually not are clearly stated. Always ask your Realtor for a “checklist” of all the things that need to be completed. I provide all my buyers with a checklist of things along with due dates and the person that is responsible to do them. Most of these items need to be completed by me, the loan officer or settlement company but there are a few things that you must be aware of and these are:
Home Inspection: Even though you may think that the house is perfect, you must not let emotion trump reason. It is recommend that you order the home inspection and plan on being present to ask any questions that you may about your new home. Continue reading
It’s a well known fact that when you make your rent payment, the money is gone forever. If you rent a townhouse for three years at $1,500 per month, you’ve spent $54,000 that you will never see again. However, the decision to buy a house is never an easy one. No one knows what the future holds for you, your family, your job or your finances but I’m going to help you understand whether it is better for you to buy or rent.
There are many online calculators that you can use to compare the costs of renting vs buying. The calculator will take many things into consideration (i.e. interest, property taxes, tax savings, appreciation, opportunity costs, closings costs, selling cost, etc.) when comparing the two prices.
Over the years, people have given me many reasons on why they would rather rent than buy. Here are the top questions and answers to them:
“My credit is bad!” Most people think their credit is bad but in reality it is in fairly decent condition. Others have collections on their credit and think that will hurt them from buying. Please remember that most credit repairs are just minor fixes and can be fixed in a short time period. Also, there are a few lenders that will offer financing with credit scores as low as 580 and only 3.5% down payment.
“I don’t have the down payment!” With current FHA loan programs, you can purchase a home with down payment as low as 3.5% of sales prices. If you have good credit scores, you may qualify for programs that offer 100% financing. There are also some grants that will offer first time buyer $7,500 to help towards closing cost and down payment. With many of these programs combined, you may be eligible to purchase a home by paying less than your security deposit.
“I will have to pay taxes and insurance and it will exceed my monthly rent!” This is an incorrect statement in most cases. Currently the interest rates are and house prices are low which means that your principal and interest will be low also. For most buyers, the principal, interest, taxes and insurance (PITI) is typically lower by a few hundred dollars for a comparable home that they would rent.
“I would rather rent because I don’t have to worry about maintenance!” Even though it is true that you have less maintenance when you rent but it should not be deciding factor to limit your purchase. You can get home warranty for a full year for less than $500. For a small deductible, you can have “others” take of the maintenance of your home and don’t have to worry about extensive repairs.
Each area is different and in some areas it is better to rent than buy so make sure to consult a Realtor. Our Northern Virginia market offers a great deal of benefits for buyers. Just remember you can spend the same $1,500/month to buy a home valued around $230,000*. In five years, you will pay $14,405* towards principal and your home should appreciate at least $63,545** in value. Therefore, if you sell your home after five years, it should be worth $293,545 (or more) and your loan balance will be $215,595, which means you will OWN $77,950 in equity!
IF YOU’RE READY TO RECEIVE EXPERT ADVISE FOR YOU NEXT HOME PURCHASE, CONTACT NOUMAN MIRZA AT 703-577-4320.
*Based on 30 year fixed rate loan at 4.75%. Does not include down payment, closing costs, pre-paids/impounds or origination fee.
**Based on 5% appreciation per year which is the approximate national average from 2000 to 2007.
So you’ve found your dream home and are really excited to get it before someone else does? Before you let emotions take over, just remember that it is still an investment. Purchasing a home is not something as simple as buying gas, groceries or clothing. It requires research from a skilled professional to find the value, prepare legal contracts and then present your offer to the seller (or seller’s realtor)! When making an offer, make sure your Realtor covers these basics:
Price: You need to make sure that the price you are offering is the fair market value. If the house requires repairs, make sure to factor those into your cost when making an offer. If there are many buyers competing, more than likely the seller will get higher than their asking price so keep that in mind as you set your price. And ALWAYS Continue reading
Millions of new and existing homes are sold each year. There isn’t a shortage of homes but there is a shortage when it comes to finding the best homes that meet YOUR needs. Now that you’ve gotten the loan pre-approval, you must be very eager to go start looking at homes? Before you jump into a car and drive away, consider the following:
- Is Your “Needs-List” Ready? As I had said previously, you want to have a concrete list of things that you need in your room. There are many homes with 3 bedrooms, 2 baths and at the same price but each home will have a different design, location, taxes and interior and exterior finishes. Make sure you know exactly what you want in terms of location, amenities, design and any other features that you may want or need.
- Where Do You Begin Your Search? The best place to search for homes is online. You can use the advanced search at www.pwrealty.com to find your next dream home. When looking at homes online, you should avoid homes that have no photos or very little information as these can be signs of homes in poor condition or unprofessional real estate agents. You can also narrow or widen your search based on the mapped search feature. Continue reading
There are very few people that can buy a home with cash. In fact, a recent study done by the National Association of REALTORS® found out that 90% of buyers finance their home purchase. After you’ve hired your Realtor it is critical to apply for a loan before looking at homes for many reasons. Prior to issuing a “pre-approval letter” a loan officer reviews your credit, job history and other pertinent information to find the best mortgage program for your needs and goals. They can also review potential issues that may arise and fix them prior to writing a contract. When getting a pre-approval letter, make sure to ask the following questions:
- How Much Can I Afford? A loan officer will take into consideration your loan-to-value (LTV), debt-to-income (DTI) and property type scenario to determine the maximum price you can afford. The other thing you want to keep in mind is never to buy a house at the max price you qualify at since your DTI will be on the high end and can make it harder to obtain financing. Continue reading
Buying a home is not as simple as checking online sites and finding the perfect home at the right price. It involves a complex maze of forms, financing, inspections, pricing and negotiations. A Realtor is a licensed professional that can take the complexities of one of your largest and most emotional investments and make them quickly disappear. Last week, I wrote about the first step to home ownership in our weekly mini-series called “10 Steps to Home Ownership!” Now that you’ve made the decision that you’re ready to buy, it’s time for the next step.
STEP 2 : HIRING A REALTOR®!
Realtors are great sources of information and assistance in the housing industry. They have a responsibility to serve the real estate market with integrity but not all Realtors are created equal. Make sure to ask the following questions prior to enlisting the help of any real estate agent:
- How many homes have you sold in the last 12 months? There are over 1 million practicing real estate agents and some work full-time while others work part-time. The number of years one has been licensed has little correlation with the amount of experience they have. Some Realtors continue to repeat their first year mistakes every year while others gain 20 years of experience in a few months. Each real estate transaction is unique and provides a great amount of learning experience for the agent and the number of transactions they did will really help shine the light on their experience.
- How many times were you a Buyer’s Agent in the last 12 months? The representation ratio is as important to the agent’s ability to help you as their overall sales experience. Ask your Realtor how many times they have represented the buyer only in a real estate transaction because buyer representation and seller representation are two very different concepts.
- Where do you sell homes the most? When you begin looking for a home you will need to narrow down where your ideal living areas will be. Using an agent with extensive knowledge of the area will aid you in finding the right home much faster.
- Do you have a network of contacts? A well renowned Realtor will have a list of loan officers, home inspectors and appraiser that he can recommend to you. They should be able to provide you with network of contacts that will make the home buying process much smoother and faster.
- How quickly can I expect a response from you? A big concern for home buyers is what will happen once you do start the home buying process. Will your agent be available by phone, text or email? Will you have to wait days to get a response? The home buying process has a strict timeline and failure to complete things according to deadlines could have a negative impact. Make sure your agent is readily available when needed.
- Do you have any references? You can always search for any agent online and read their testimonials but a true professional will have no problem letting you talk to some of his/her past clients. Ask to see references and find out if you can contact them? Whether they’re a new or seasoned Realtor, they can provide references from past clients or employers. You can also contact your local real estate board and find out if there are any active or past complaints against the Realtor.
- What are the TOP THREE things that set you apart from the competition? A good Realtor won’t hesitate to answer this question and will be ready to fire off why he/she is the best suited for the job. A professional is the one that is honest, assertive, analytical, available by phones/text/e-mail, friendly and able to maintain a sense of humor under trying circumstances.
- How much do you charge? Typically a buyer’s agent will get paid by the seller but there are some circumstances where they may charge a fee. Such fees typically include administrative fees charged by the Realtor’s firm or in some rare cases when they sell you a home that is “for sale by owner.” Ask if the fees are fixed or based on a percentage and remember that all fees are negotiable!
Buying a home is one of the largest and most emotional decision that can be made towards a great future investment. It may seem like a really complicated and lengthy process but in reality its just 10 simple steps that can be the key to your future of home ownership. I will talk about the details of each step in this weekly mini-series called “10 Steps to Home Ownership!”
STEP 1 : ARE YOU READY?
Not everyone is ready to buy a home. Some people think they are ready but in reality they are only toying with the idea of home ownership in their minds. Here are some questions you should ask yourself to see if you’re ready to be a home owner:
- Is buying an option or a requirement? You need to consider whether you’re buying this house because it’s the best thing for your needs or if you’re just become a victim to someone’s home-ownership sales pitch. Just because you’re eligible to buy does not mean that you have to buy.
- Is it cheaper to rent or buy? In most cases it is cheaper to buy a house than rent but there are some locations around the country where it is the other way around. Look at the rental and sales market in your community to see what is the best option for you.
- What are the things you need in your new home? Having a concrete list of all the things that are top priorities in the new home will help speed up your search. You should think beyond the number of bedroom and bathrooms, think in terms of living space, community, schools, etc. Define your goals since it will be essential when your Realtor® begins the search for your dream home.
- Do you have the money? Financing a loan should not be your primary concern, the real concern is the cash needed for the down payment and closing costs. Currently, a standard FHA loan requires 3.5% down payment. There are other programs that do offer 100% financing but these have stricter guidelines and harder to obtain. Whether you plan to put 20% or the bare minimum, you need to figure out how and when you’ll have the money ready? If the cash is not an issue for down payment or closings costs, do you have reserve funds saved for repairs that may be required in the new home? What about money for new furniture and other stuff?
- How soon do you intend to buy? This is a major factor in deciding if you’re ready. If you lease ends in 30 days, you may not have the time to buy a house (unless it’s all cash). A typical real estate transaction takes 30 days AFTER both the buyers and sellers have agreed on the price and terms of the contract. A time line is critical in helping you decide on your new home.
P.S. Today is the day for primary elections in Virginia, so don’t forget to vote!