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Moncure, NC 27559
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A Guide to Buying a Home Planning. Mortgage, inspections, APR's- Oh my! If the idea of buying your own place ties you up in knots, just follow this road map and we'll walk you through every step of the process. Repeat after us: There's no place like home...02142008 Buying vs. Renting: What makes more sense economically? In a nutshell: If you plan on living in the same city for at least five years, it's usually worth it to buy. Advantages to Owning: Over the long term, real estate is rarely a bad investment. The recent market downturns in some areas just give you more choice and additional negotiating room. You'll build equity and establish a good credit history, and you won't have to deal with a landlord. (Read:Grow your assets) Disadvantages: You'll have to take care of all your own maintenance and improvements (hello, hardwood floors-Good by linoleum) and pay property taxes.Situations in which you should hesitate to buy: If your current rent is unusually low; if you're considering a co-op or condo apartment that has high maintenance costs that aren't tax deductible (these will be noted in the listing); if you think you might get laid off or be relocated in the near future; if your credit is so bad that you can qualify only for loans with very high interest rates. To help you make the right decision: Check out the "Buy vs. Rent Calculator" at ginniemae.gov, where you can plug in all the numbers and see a comparison. The results can be shocking. For example: If you're paying $1,500 a month in rent and thinking of buying a place for $200,000 (with 10% down payment), buying now could save you $110,000 over the next 10 years. How Much can you afford? A mortgage calculator (like the one at mortgage-calc.com) is the simplest way to get a ballpark idea. You punch in the loan amount, interest rate, and length, and it spits out your estimated monthly payment. ( Just keep in mind that insurance, property taxes, and maintenance will add to your costs.) If you want to find out for certain what your upper allowable limit is: Get preapproved (not pre-qualified) for a loan. Find a certified mortgage broker (see closing the deal later in this document), who will have you fill out a loan application. Based on your income, debt, and credit score, you will receive a letter stating the maxium amount a bank is willingto lend you. Bonus: Preapproval will give you an advantage over other buyers because the seller will know you definitely have the money available to make the purchase. Beyond the banks: Calculators and lenders don't take your lifestyle into consideration. Do your own detailed budget that includes all nonessential expenses, from movies to mocha lattes, and talk to a tax pro to see how home ownership can add up for you. Then ask yourself how much you can comfortably spend on your mortgage each month. For peace of mind,be sure you stick with that figure, even if a bank will give you a bigger loan with a larger payment. Down payments: Putting 20% down is great if you can swing it. You'll start with more equity, pay less total interest, and avoid some fees. But if you have high credit card debt, consider putting down less and using the rest of the money to pay off your cards-mortgage interest is tax deductible, but credit card interest isn't. If you're broke: Don't panic! You are not a lost cause. Check to see if you qualify for a Housing Finance Agency program in your state that helps first-time buyers (ncsha.org). Another option is to ask a familymember or friend to lend you some money interest free, or to cosign the mortgage. You can also save by negotiating for the seller to pay closing costs, which can add up to 3%-6% of the house price. Checklist: Have these things handy when just starting out.
The Department of Housing and Urban Development of things to note, such as proximity to good restaurants (hud.gov/buying/checklist.pdf)
Glossary of basic Terms: Mortgage banker: A lender, banker, or company that provides loans. Mortgage broker: A person or firm that arranges loans from multiple lenders. Preapproval: A lender's promise (subject to final guarantee) to supply you with a specific loan amount for a mortgage. Prequalification: A lender's informal estimate of the maximum you'd be allowed to borrow. Credit bureau score: A number showing how likely you are to default on a loan, based on your credit history (see yours at annualcreditreport.com). Check it and correct any mistakes, which can foil your mortgage plans. Down payment: The amount of a home's price you pay in cash; usually from 0%-20%. 85% of home buyers used a Real-Estate AGENT to help them during their search for a HOUSE.
Prepping for a PREFAB "Prefab" (technically, modular) homes are becoming increasingly popular- especially modern sytles, which can be hard to find already constructed. They are generally less expensive, quicker to errect, and more eco-friendly than traditional homes, but you have to find, buy and prep the land first. It can be a time-consuming process (walking parcels of land is required) so think ahead. Turn Your "I Can't" Into "I Can" Don't be so negitive! there are some good reasons to rethink your usual excusses for not buying a home.
Looking Okay- we're off to see the wizard! this part of the journey can end quickly if the right house practically drops out of the sky, or it can become an arduous, multiyear process. Ready buyers can expect to spend one to six months pounding the pavement- make that the Yellow Bricks. Where to start: Bury yourself in listings to get familar with the local market. local newspapers, broker websites, craigslist.org- they're all good. Websites like Realtor.com provide access to the multiple listing service(MLS) that licensed real-estate agents use. Zillow.com, besides having national listings of homes for sale from brokers and owners, also offers aerial satellite views. If you're looking in an unfamilar area: Realtor.com's "Find a Neighborhood" tool shows an area's average income, school rating, and hip factor." Zillow.com allows you to compare house features and prices within any specific area. But also be sure to spend some actual time in the field-if you are relocating to an unfamiliar place, it may be smarter to rent there before you go ahead and buy.02152008 If you're in a competitive market: Don't blow off open houses. Most homes that put up for sale start with an open house and can be sold quickly, so don't miss out. It's a good idea to devote a few hours on Sunday for the foreseeable future to checking them out. And it's a great way to see a lot of places very quickly. How to find a good real-estate agent: A buyer's agent represents you, where -as the listing agent, who appears on the ads, represents the seller. A buyer's agent works for you as your project manager throughout the whole process. Start by asking friends,and family if they have worked with an agent that they would use again. Then check to seeif he is a licensed Realtor(use Realtor.com).Realtors are generally your best bet because, as members of the National Association of Realtors, they have agreed to abide by a strict code of ethics above and beyond what is required by law(and can be disciplined if they do not). Don't forget the interview: You're going to be working together closely, so you better make sure you get along with your agent. Spend a day seeing properties with him/her. Ask about his process and what he will do for you. In addition to the obvious(helping you find houses to see), a good buyer's agent will provide objective advice on properties and prices, negotiate for you with sellers, and direct you to other qualified pros, such as lenders and inspectors. If your Realtor asks you to sign a Exclusive Buyer's Agreement. This simple contract is the Realtor's way of ensuring he is paid a commission if he finds you a house, and that you will use him exclusively. Do not sign anything you don't agree with, or feel confident that he/she is very familiar with your needs and desired neighborhood. Make surethere is an escape clause if it turns out you don't get along. It's a good idea to sign a short term trial agreement first(say, a week or so) before you commit to a long term one. No Sale means NO Fee While visiting homes: If you think you might be interested in buying a place, do not show your hand by saying "This is very reasonably priced!" or " This is so much better than everything else I've seen!" Comments like these could make negotiating more difficult. Ask the seller's agent(or the seller if he/ she is present) a lot of prying questions. For example, is the seller closing on another property and looking to wrap up quickly? make sure to note the location: Is it near train tracks, an airport,or a frat house? Is the street so dark that you'll be scared to come home late at night? Does it have desireable amenities, even those you don't need? (Picking a neighborhood with good schools,regardless of whether you have kids or not, will make the house easier to resell.) ⇒Lesson Learned: " I Wish I Had Asked About The Neighbors. We've experienced some bad ones. Good neighbors make you feel great about your purchase, but bad ones add a lot of stress to your life." How to Decipher HOUSING ADS (and avoid disappointment)Examples: "Cute", "Starter home", "Exciting neighborhood." ac= acre--a/c= air conditioning--appls= appliances--ba=bath--br/bd=bedroom--bring your decorator=Bring your wrecking ball--charming/has character=see "bring your decorator"--clsts=closets--converted 2 bedroom=one bedroom,1/2 living room,and a closet.--cute=small--desirable location=expensive--dk=deck--dr=driveway--d/w=dishwasher--FSBO=for sale by owner--gracious=totally meaningless--home office=room with no windows--lr=living room--fdr=formal dining room--exciting neighborhood=next to a night club--no expense spared=tacky--occ=occupancy--partial views=if you lean out the window you can see it--pkg=parking--peaceful/oasis=far from everything--showcased home= some decorator's twisted fantasy--spac=spacious--starter apartment/starter home=a grown-up should not live like this--stu=studio--terr=terrace--totally renovated=cheap fixturesand 49 coats of paint--unique=too weird to buy--w/d washer/dryer--w/w cpt=wall to wall carpet. Home styles: Ranch-single story/ split level with an attached garage usually retangular, L-shaped,or U- shaped. Colonial: A architectural style that includes many early 18th century homes; symmetrical and square, often with a large chimney or two. Victorian: Two or three stories high, with an asymmetrical porch, highly detailed accents, and sometimes-hued paint scheme. Cape Cod: Generally 1-1/2 stories with a rectangular frame, steep gabled roof, and large center chimney, popular in the Northeast. Modern: From early 20th century to present day, typically has large windows, an open floor plan and an irregular often boxy shape. Tudor: Characterized by a steep roof, decorative half timbering, tall windows and stucco walls; based on English Tudor styles. FarmHouse: Often two stories, with a few decorative details and a porch; typically found in a rural setting but gaining traction elsewhere. Appartment: Self-contained unit with a common entrance, noisy neighbors,and the joy of someone's stray underpants in the laundry room. What about houses that are "For Sale By Owner"? No broker? No problem! Except: Keep in mind that Joe Blow seller is not bound by any code of ethics, so he's not risking his real-estate license if, say, he tells you the boiler is brand new when it's really 40 years old. Also, read your buyer-broker agreement: You might have to pay your broker's commission yourself-which is usually paid by the seller- if the owner is not working through an agent. 49% of People between ages 25 & 35 own their own Home. Glossary of Basic Terms. Comparative market analysis: Also known as "Comps." A comparison of the value of a specific home with other similar properties in the area, based on sales and offering prices. Your agent will put this together when you start to zero in on a house you're interested in buying. Back on market(BOM): A property that's relisted because a previous deal fell through. Often described as "no fault of seller" to assure buyers that nothing's wrong with the house. Annual percentage rate (APR): Yearly interest on a loan, expressed as a percentage. Includes fees and other costs so you can compare offers from different lenders. The lower the APR, the better. Appraisal: An estimate of a property's value; a lender usually requires an appraisal, and won't approve a loan for morethan this figure. Closing attorney or escrow agent: A neutral party, she works with all parties- the lender,title insurance company,buyer and seller- to make certain all the details of the closing come together without a glitch. Lock-in: A lender's guarantee that you'll get a specfic interest rate if your loan is closed within a certain period. Interest rates can change at any time, so if you think you have a good rate, be sure to lock it in. Private mortgage insurance(PMI): Protects the lender if you default on a mortgage; only required if you downpayment is less than 20%. You might avoid paying it with a "piggyback" loan ( see "Which Loan is for You?" later in this letter).
Closing The Deal This part can get scary, but there are lots of people to hold your hand along the way, from your Realtor to your mortgage broker to your lawyer. Just use your brain, listen to your heart, and keep your courage up- you'll be waking up in your dream house in no time. Making an offer: Nothing quite gets the adrenaline pumping like a few hundred grand on your first house. Rely on your Realtor to help you arrive at a fair price and strategize about the bidding(see "How to Negotiate Like a Pro," below). Once you're ready to submit an offer, your agent will deliver it to the seller's agent, along with a check for your "Earnest Money"-- otherwise known as your "Good Faith" deposit. The seller will then either accept the offer or come back with a counteroffer, which you can accept or counter. Remember, if yougo back and forth for too long someone could swoop in and outbid you, because no matter how many you've shaken hands, nothing is legally binding until both parties sign a contract. Extra's worth asking for: Sometimes sellers will give in to requests for things other than a price reduction. Ask if they'll include appliances(or take them away if they are too old) or give the place a new paint job if it needs it. Don't get greedy, but do keep in mind that everything is negotiable. Before you sign an Offer: Make sure it has at least two key "contingencies", also known as get-out of the deal-free cards:(1) The sale should depend on the results of the home inspection(in case problems turn up);and (2) Thelender must actually give you the mortgage(Preapproval is not a guarantee). Otherwise, you could end up obligated to payfor the house or its problems yourself- or lose your downpayment because you have to back out of the deal. Picking a Mortgage broker: Now's the time to settle on a mortgage broker(and if one preapproved you for a loan, it's not too late to choose someone else). Instead of applying for mortgages directly with specific banks, she will send out queries to numerous lenders to try and get the best rate. Ask people you trust for recommendations. You can also search for references on the "state affiliate" sites listed with the National Association of Mortgage Brokers(namb.org)- NAMB has a strict code of ethics and business practices that all members agree to follow. When you talk to a potential buyer, try to negotiate not to pay application fees- you should aim to pay only for the home appraisal and possibly a credit report. Ask for details about the pros and cons of the loans you're considering(see page 7) to check whether the broker is willing to spend the time to help you understand the processs. Hiring a real-estate attorney: Once again,personal recommendations are the way to go. But, makesure she specializes in real-estate. Ask her to estimate how much she will charge to complete everything involved (usually a few hundred dollars). You can search abanet.org to find a real-estate lawyer in good standing in your state. Hiring an Inspector: Your real-estate agent can probably make a good recommendation(or search for one at hud.gov/offices/hsg/sfh/insp/inspectr.cfm). What to look for: Ask for a simple report to judge whether the information is clear and easy to understand(it should include write-in sections instead of just check boxes). Note whether any areas such as the roof and appliances, are excluded (they shouldn't be). What happens if the inspector misses something that you find later on- does the company have insurance covering such instances? A typical single-family house should take two-three hours to inspect, so if the inspector estimates 45 minutes, go with someone else. Be present for it if you can. $Pocket Money$ With a substantial down payment, figure on 18% to 24% of the purchase price to close the deal. An example: Price of house $250,000 cash needed on hand $48,027. Closing costs: $10,000, about 3%-6% of the house price; generally includes loan fees,title,and settlement fees, taxes and pre-paid items such as home insurance and attorneys fees. Professional inspection: $350.00 (usually $200-$500 to evaluate the condition of the house. Private mortgage insurance(PMI): $177 at least two payments of this monthly insurance are generally required when your downpayment is less than 20%. Downpayment: $37,500. 15%; most people pay something less than the standard 20%. How to Negotiate Like a Pro Set a limit-and stick to it. If you don't establish your cap, chances are good that you will exceed it. Make a low offer,but not too low. Some experts suggest 5% below the asking price as a good place to start-if the market justifies it. Some say any lowball offer could upset the seller, Ask your Realtor for advice. Point out defects. Note anything that could be seen as reducing the value of the house, even if it's actually not at all important to you, and ask the seller to come down on the price accordingly. Be open to compromise. The idea is for both parties to come out of the deal feeling satisfied, not screwed. Act as if you don't care. you'll have an emotional advantage. If the sellers think you are dying to live there, they'll probably be less flexible with the price. Think it over. When the offer/counteroffer process reaches a point where you're seriously considering sealing the deal, slow down. Try not to agree to anything until you've had one night to think it over. Remember you will beliving with this decision for a few years. Be ready to walk away. FOR REAL! Which Loan Is For You? There are a huge variety of mortgages out there. Some of the main ones to know about: Fixed Rate: Interest rate never changes, and you pay the same amount every month. Good if: Rates are low and you plan to stay in one place for a long time. Adjustable Rate(ARM): Rate fluctuates, usually after a fixed period- for example,a 5/1 ARM is fixed for 5 years, then it flucuates every year after that based on current lending rates. Good if: you areexpecting to sell within a couple of years. Interest Only: Allows you to pay only the interest for a set number of years-usually 5,7 or 10- If you prefer. Good if: you think you'll beearning more in a few years or your income fluctuates. Piggyback: Combines two mortgages, a financing trick that allows you to put less than 20% down without having to pay PMI. Good if: you're short on cash. FHA: Insured by the government's Federal Housing Administration, making it easier for you to get approved even if you can't afford a 20% down payment; limited to certain maximum amounts, which vary by location. Good if: you're cash poor or have a rotten credit history. Balloon: Has a low fixed monthly payment for a set number of years, usually 5 to 7, after which one large payment (the "balloon") is due for the remaining balance. Good if: you expect to sell the home before the final payment and expect the property to appreciate quickly. Extremely risky and not usually recommended.
Lesson Learned: "Always Have Selling In The Back Of Your Mind When you're looking to buy.'Curb Appeal' is not a cliche'-even in a bad Real-Estate Market".
Here it is-"The Countdown To Closing. Going-Going, Sold! Here at its fastest,is what happens and when: 3-4 Months get a copy of your credit. Make a budget and determine how much you can afford. Pick a motgage broker. Pick a real-estate agent. 2-3 months to closing, Apply for mortgage preapproval, Pick a real-estate attorney, make an offer. 1-2 months to closing once offer is accepted. Sign a purchase contract, Have the home inspected, Submit a formal loan application. 3-5 Weeks to closing. Get Homeowners' Insurance, arrange for utilities at new home, Receive official mortgage commitment letterfrom lender. 1 week to closing, get a cashier's check for closing costs 1 Day to closing, Arrange a final walk-through of the house. Closing Day.- Closing, crack open Champagne. Your done.
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Moncure, NC 27559
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