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Tip #1: Research Is The Key To Discovery
Home sellers won't call you with an offer to buy a maintenance-
free home with a wonderful mortgage. You may have to create the gems yourself! Reading available materials, talking to
friends and experts, and spending time comparing different schools and neighborhoods will help you end up with your
American dream. I can assist with my expertise and labor to get the gem you find "polished" to suit your needs.
Tip #2: Make A Plan And
Get Pre-Qualified
Every important decision needs to be clearly thought out.
Developing a home buying plan can help you focus on the
important factors and organize the entire process. You may even
want to use a binder with sections on house hunting, home
financing, service providers, etc. Loan pre-qualifying helps you
determine the home price you can afford and presents you as a
genuine prospect to the seller. A lender typically uses the 28%
formula (your monthly mortgage can't exceed 28% of your monthly
income) in approving your loan. Planning your actions and
getting pre-qualified will keep you out of the panic mode and
allow you to take advantage of opportunities. A thorough plan
will save both time and money!
Tip #3: Value, Value, Value
The days of 10-30% annual appreciation have passed. Home buyers
in the 1970's benefited tremendously from what seemed like ever
appreciating home prices. Nowadays, you're looking at slow
growth while guarding against the possibilities of falling
prices, skyrocketing ARM rates and corporate layoffs that can
dramatically affect your home values. The classic rule of buying
the worst house in the best neighborhood still applies. If you
buy with an eye towards improvement, you can customize the home
to fit your needs. Stay focused on the long-term importance of
the purchase price and interest rates.
Tip #4: Create A Top 10 List of Amenities
When shopping for a home, list the features (fireplace, fenced-
in yard, new appliances, etc.) that are most important to you in
deciding on which home to buy. Establishing "your criteria"
early on will save time shopping for inappropriate homes and may
keep you from buying a home on a whim -- for example, because of
a circular stairwell -- that doesn't meet your fundamental
requirements. As detailed in Tip #3, your top reason for buying
a home should be the value you are getting. Some of your top 10
amenities should logically be sacrificed if an incredible value
is available.
Tip #5: Fixed vs. Adjustable Rate Mortgages
Which type of loan fits your particular needs? If this will be
your first home or a "transitional home" -- one you plan to own
for a short time, an ARM may be the best type of loan. If it's
going to be your dream home or one you plan to raise a family
in, then you may want the stability of a fixed rate mortgage.
Talk in depth to your lender about the consequence of early pay-
off or rising interest rates.
Whichever loan you choose, make sure that you scrutinize all
the closing costs. If you are required to have a mortgage escrow
account and private mortgage insurance, make sure you understand
the terms and cancellation procedures. Also, make sure there are
no prepayment penalties so that you can utilize an accelerated
mortgage plan. A good mortgage reduction plan can save you tens
of thousands in interest costs, and shorten your loan term, with
only small extra principal payments. If you experience negative
changes in your job, health, or marital status, you can revert
to the standard payments in your mortgage contract.
Tip #6: Sign A Contract That Protects You
Make sure that the contract you put on a house allows you to
arrange financing, inspect the home and negotiate any problems
that you uncover. Ensuring that the contract you sign will
minimize potential legal battles, don’t be intimidated, make
sure your agent fully explains any point of the contract which
is unclear.
Tip #7: Put Yourself In The Seller's Shoes
You are about to make one of the most important decisions that
will affect both your life and the life of the seller. If you
take time to understand the reasons the seller bought the home,
their reasons for selling, and the home improvements they have
or have not made, you'll be in a better position to evaluate the
home. In the end, the home buying process excludes the
professionals and comes down to the individuals buying and
selling the home. Your decisions are the only ones that matter
when spending your money.
Tip #8: Develop A Mortgage Shopping Chart
One of the biggest decisions to make before putting a contract
on a home is how to finance the purchase. There are 10,000
lenders competing for your mortgage business. The days of simply
walking into the community bank and negotiating with the loan
department manager are over. Today, you can apply for a loan
over the Internet or even use a mortgage broker to shop for your
loan with hundreds of lenders. When choosing a lender, you want
to avoid apples to oranges contrasts by comparing fixed rates to
fixed rates, not fixed to ARM's. Create a chart that lists
different types of loans, fees, and at least five mortgage
providers (including a mortgage broker).
Tip #9: Get A Quality Home Inspection
Paying for a qualified home inspection before you buy a home
isn't just spending "a little extra" for peace of mind; it's
absolutely essential for anyone who doesn't want to spend
thousands of dollars for repairs. Be available to walk the
property with your inspector, don’t rely on the written report
to explain each circumstance.
Tip#10: Peace of Mind: Home Protection Plans
To protect both yourself as a buyer, as well as the seller, it
may be a good idea to purchase a home protection plan. What
exactly is it? A home warranty, or home protection plan, is a
service contract, normally for one year, which protects
homeowners against the cost of unexpected repairs or replacement
on their major systems and appliances that break down due to
normal wear and tear. A negotiable contract between the buyers
and sellers which do not overlap or replace homeowner's
insurance policy, this type of warranty can save the new
homeowner lots of headaches, as well as put seller's fears to
rest. The warranty covers mechanical breakdowns, while insurance
typically repairs the related damage, for example: if a hot
water heater burst and destroyed a wall in your home, the
warranty would repair the water heater and your insurance would
pay to fix the wall. All protection plans are not created
equal, be sure to read the fine print before you buy.
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