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Frequently Asked Questions
(Buying)
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 Agent?
A: Yes. Buying a home is a complex
process. Your real estate agent 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 agent can help you obtain
financing, provide you with information and guidance. Your
agent 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 agent that specializes
in the area you want to live in. Select an agent that can
handle all aspects of your transaction. They should demonstrate
knowledge, expertise and integrity. Ultimately they can save
you time, energy and money.
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