Frequently
Asked Questions
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: Contact
a lender to determine what type of loan is best for you and how
much you can afford. Desk top underwriting technology now allows lenders
to issue pre-approvals in minutes! Generally your mortgage payment,
taxes and insurance should not exceed one third of your gross monthly
income.
Q: How much cash
will I need to buy?
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% or less down.
VA for qualified veterans offers 0 money down. First time home buyer
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: When home buyers
were asked by the National Association of Realtors 82%responded that
they relied on a real estate broker/sales associate as source of information
during their home search. A
real estate professional is integral to relocation process. Print
media advertising was cited as being used by about 50%, followed by
open houses and for sale signs. Recent research estimates that over
70% of homebuyers will use the internet as a source of information.
Q: Will I save
money buying a "For Sale By Owner?
A: At first glance
it may appear that a buyer might save the real estate commission. Consider
that the seller has the same motive. 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: It is unrealistic
to expect a home that is priced right and in market ready condition
to be sold for under market value.
Some homes sell for the asking price and more. Ultimately the sale price
of a home will be affected by terms of the contract, market conditions
and seller motivation. A low offer may insult the seller, resulting
in a break down of negotiations. 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 base 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 were aware of.
It may take a few hours and cost a few hundred dollars, but can save
you time and money in the long run. The purchase contract may 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 Associate?
A: Yes. Buying
a home is a complex process. Your real estate associate 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 associate can help you obtain financing,
provide you with information and guidance. Your associate 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 associate that specializes in the area you want to live in. Select
an associate that can handle all aspects of your transaction. They should
demonstrate knowledge, expertise and integrity. Ultimately they can
save you time, energy and money.
