Benefits of Hiring a Realtor

Do hire a Realtor.  Buying a house is quite complicated and hiring a Realtor can make it easier for you.  Realtors are skilled negotiators with other agents, expert financial advisors with clients and superb navigators around the neighborhood.  They can save you huge amount of money and time. 

A knowledgeable Realtor can tell you the general and specific information about the community such as schools, shopping locations, transportation, local market conditions, neighborhood profiles, local tax laws and crime rates. 

A knowledgeable Realtor can help you find the best lenders in the area.  He or she can also discuss down payments, closing costs and monthly payment options that suit you. 

An experienced Realtor has all the resources from sale by owner (FSBO) listings to access to Multiple Listing Service (MLS). The more access he has to other properties, the easier for you to find a home.  Furthermore, once you find the house that you are planning to purchase, the Realtor will be able to negotiate the best price for you.  

The good thing about having a Realtor is that their services are free!  It is the seller who pays the commission to the Realtor. 

Next topic: Negotiating the Best Price

Cost of Buying a House Part 3

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Private Mortgage Insurance (PMI) - This is an extra insurance that the lender may require if the downpayment is less than 20% of the total home value to protect the lender for possible loss if a borrower defaults on a loan.

Property Tax - To be paid to the seller when the seller has paid the property taxes in advance that covered the month you'll be moving into the property.

State Recording Fees - This is the fee paid to the state for recording the transaction.

Survey cost - The survey is done to determine the exact boundaries of the property.  If there is already an existing survey, you don't have to obtain one again.

Title insurance - The insurance guarantees that no other person can claim your property. It makes sure that there are no unexpected debts from your new property.

Next: Choosing your real estate agent

 

Cost of Buying a House Part 2

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Home Inspection Costs - Home inspection is required to make sure that the home is in good working condition. This will serve as your protection in case there is something goes wrong with the house that would cause you to back out of the deal before buying the house.

Homeowner's Insurance Costs - This is paid for the insurance policy covering losses occurring to one's home, its contents, loss of its use, or loss of other personal possessions of the homeowner as well as a liability insurance for accidents. It's a lender requirement before you can take possession of the house.

Legal Fees - This is the consultation fee paid to the lawyer regarding the transaction.

Pest Inspection Fee - Pest inspection is required to be done in older homes to check for pests such as termites as well as mold.   This is not required if you are buying a brand new home.

Points or Origination Fee - An origination fee is paid to the bank or lender for their services in evaluating, processing and approving mortgage loans.

Next: Continuation of Cost of Buying a House

Cost of Buying a House Part 1

Do consider your budget.  It is normal to ask how much you can afford in buying a  house. Buying a house can be costly, which if you do not budget for can come as a surprise (or a shock!). Here is the list of costs of buying a house that you should be aware and prepared for:

Deposit or downpayment - the downpayment ranges anywhere from 3.5% to 20% of the  purchase price. Generally, the higher the downpayment, the lower the interest rate and monthly mortgage payment.

Appraisal Costs - This is the cost paid to a professional home appraiser to appraise the home's value.  This is needed for the lender to approve the loan.

Credit Report Costs - Credit report is simply a rundown of your payment history, listing your accounts, balances and payment behavior for each.

Document Preparation Costs - It is used to pay attorney's fees, broker or lender to cover the preparation of the required documents for the loan.

Escrow fees - This fee is paid to a third party who accepts monies from the buyer and a grant deed from the seller until such time that the buyers and sellers will settle on a final price and set of terms. 

Next Topic: Continuation of Cost of Buying a House

Get a Pre-approved Loan

Do get pre-approved loan. Getting a pre-approved loan is one of the first and important steps in the home buying process. Having a pre-approved loan will let you know exactly how much you're able to afford before you begin your home shopping.  Here are the steps on obtaining a pre-approved loan:

1. Shop for the best loan programs and rates.  You can do this by visiting or calling the lenders or you may even do it online. If it's possible, go to someone someone highly recommended by someone you trust. You may also ask your friends who have gone through the home buying process.  They may be able to share some information on who or which lender you should go with.

2. Choose the loan program that best suits your personal and financial needs and capabilities.  Think about how long you will stay in your new home or if your income will be increasing in the future. 

3. Supply your lender with the requirements. The requirements would be: most recent recent two years' W-2 forms; most recent month's pay stubs; the last two years' federal tax returns; your purchase agreement (if you already have it); profit  and loss statements (if you're self-employed); most recent two years' corporate returns (if you own a corporation); your last three months' bank statements on all accounts (to verify down payment); bankruptcy papers (if applicable); and a completed loan application.

4. Wait for the lender's approval. The loan process might take from one and a half to three weeks.  It usually takes longer if you have incomplete requirements.

Keep in mind that having a good credit history makes it easier for you to obtain a loan. So make sure you always pay your bills on time. 

Criteria in Choosing a Home

As a first time home buyer, you want to make sure that you find the right home for you.  Determining your criteria is an important first step.  Having a list of your requirements will save you time in looking for the right home for you.  Here are some criteria that might help you in choosing a house:

	CONDOMINIUM	TOWNHOUSE	SINGLE FAMILY HOME	MULTI-FAMILY HOME
Location	Usually centrally located	Usually centrally located	It varies	Usually centrally located
Affordability	Affordable than single family home	Affordable than single family home	Most expensive	Affordable than townhouse and single family home
Security	Guards provided by the developer	Guards provided by the developer	Security device provided by the owner	Security device provided by the owner
Maintenance	Provided by the developer (Only for the common area and amenities)	Provided by the developer (Only for the common area and amenities)	If HOA exists - Provided by the developer (Only for the common area - lawn mowing are not included); If not, it will be provided by the owner	Provided by the owner
Wellness Amenities (i.e. swimming pool, gym or tennis court)	Usually included at developers expense for the common use of unit owners	Usually included at developers expense for the common use of unit owners	Provided by the owner	N/A
Lot Ownership	No ownership	Owner	Owner	Owner
Fees	Condo Fees - For maintenance of the common areas	Homeowners Association Fees - For maintenance common grounds	May or may not have HOA fees depending on the location	N/A
Privacy	Not so much	Not so much	Full privacy	Full privacy
Resale Value	Lower resale value as compared to single family home	Lower resale value as compared to single family home	Highest resale value	Higher resale value
Potential for Expansion or Improvement	N/A	Subject to HOA's approval	Full expansion and improvement	Full expansion and improvement
Rules	Follow association rules & CC&Rs	Follow association rules	May or may not have a homeowners’ association and CC&Rs	N/A

Interior Specification:  There are also other things to consider like the number of bedrooms and bathrooms that you need.  2 bedrooms appeal primarily to first-time home buyers.  Usually they use the extra bedroom as a guest room or an office.  Most people often prefer to have more than one bathroom.  One bath homes are often less expensive.  Sometimes it’s less expensive to put in an extra bath than it does to buy a two-bath home.  For other home buyers, kitchen is also an important part of the house that they look at.

Neighborhood:  Married couples prefer to live in a quiet neighborhood because of the children. While singles prefer to live in places closer to their place of work and preferably walking distance to theaters and restaurants. 

Additional considerations: Condition of plumbing, electrical, heating & cooling units; Garage (covered or not covered); Available utilities such as cable or DSL, satellite; Proximity to school districts.

It is very important to have a list of all your requirements.  As a rule, you cannot find everything you are looking for in one house, so you might have to compromise.  For example, you found a nice house that is perfect based from your list except that the heater is not working.  Would you take it?  The choice that you make will affect you for a long time so make sure that you get everything right.

Next topic: Pre-Approved Loan