buyers agent

Thinking About Buying Your First Home?

Thinking About Buying Your First Home?

Several factors should be considered when purchasing a home

Your Financial Health … your credit & home affordability

Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, solid lenders are more skeptical if your credit history is not good.

Generally, a couple of blemishes on a credit report will make you a good credit risk and could qualify you for the lowest interest rates. If you have more than a couple of blemishes on your report, lenders like e-Loans may still provide you with a loan, but you may just have to pay a higher interest rate and fees. Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow.

This is a decision only you can make. Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching financially? Make sure that whatever you do, it’s within your comfort zone. To determine how much home you can afford, talk to a lender or go online and use a “home affordability” calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the “28/36” rule applies, in today’s home mortgage market, lenders are making loans customized to a particular person’s situation. The “28/36” rule means that your monthly housing costs can’t exceed 28 percent of your income and your total debt load can’t exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential and other factors, lenders can push the ratios up to 40-60% or higher. While I’m not advocating you purchase a home utilizing the higher ratios, its important for you to know your options.

How long you plan to live in the home

If you purchase a home and get a job transfer or decide to move after only a short time, you may end up paying money in order to sell it. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home. The length of time that it will take to cover those costs depends on various economic factors in the area of the home. Most parts of the country have an average of 5% appreciation per year. In this case, you should plan to stay in your home at least 3-4 years to cover buying and selling costs. If the area you buy your home in experiences an economic up turn, the length of the time to cover these costs could be shortened, and the opposite is also true.

How long the home will meet your needs

What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you’ll need to ensure that the home has the amenities that you’ll need. For example, a two-bedroom dwelling may be perfect for a young couple with no children. However, if they start a family, they could quickly outgrow the space. Therefore, they should consider a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you’ll need will help you find a home that will satisfy you for years to come.

Where the money for the transaction will come from

Typically homebuyers will need some money for a down payment and closing costs. However, with today’s broad range of loan options, having a lot of money saved for a down payment is not always necessary – if you can prove that you are a good financial risk to a lender. If your credit isn’t stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender.

The ongoing costs of home ownership

Maintenance, improvements, taxes and insurance are all costs that are added to a monthly house payment. If you buy a condominium, townhouse or in certain communities, a monthly homeowner’s association fee might be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your realtor and your lender aware of your desire to limit these costs. If you are still unsure if you should buy a home after making these considerations, you may want to consult with an accountant or financial planner to help you assess how a home purchase fits into your overall financial goals.

Sellers & Buyers Negotiate … Agents Advise

Sellers & Buyers Negotiate … Agents Advise

The ability to negotiate successfully is crucial not only for successful real estate transactions, but also for daily life events in general. As your agent my job is to advise and counsel you and present your offer/counter offer in the absolute best way possible, but you are the only one who can negotiate in a real estate transaction … it’s your money and your choice what to do with it.

Here are some general guidelines:

Challenge the ideas that are presented to you

Negotiating requires you to be assertive and question what you are being told. If you disagree with someone regarding the price, value or condition, speak your mind. Of course, be sure to do so diplomatically.

Become a good listener

Listening carefully and critically thinking about what you are being told can prevent a considerable amount of confusion and ensure that the negotiations run smoothly.

Be prepared

If you’re buying, what exactly does the property have that could take away from its value? What is community like? What is the average selling price in the neighborhood? If you’re selling, know your property extremely well; you cannot allow yourself to be taken aback by what a prospective buyer might say.

Aim high

If you’re selling, try marking the price of your home about 5% above what you would actually want. This will leave you some negotiating space to come down. If you’re a buyer, offer a price that is lower than what you normally would; enter negotiations with the optimistic attitude that the seller will come down.

Just a little patience

Relax. This could take a while.

Be diplomatic

Because negotiations may be a long and tedious process, it can be very easy to get irritated. Getting frustrated with negotiations that seem to be going nowhere will only perpetuate any difficulties you may be having, and may even result in an end to all talks. Keep your cool.

Be aggressive

While you don’t want to be hostile, you do want to be assertive and dominate negotiations. When negotiating with the prospective buyer or seller’s agent, be sure to try to take control of the negotiations. Talk with a strong and confident voice, and be sure to have responses for any potential arguments that may be thrown your way.

Don’t get nothing for something.

Whenever you agree to give something, be sure to get something in exchange. For example, if you are the seller and you agree to lower the price, you may want to hold back on any additional goods that you may have initially been willing to give away (like furniture).

Always give the appearance of being willing to walk away

Even if you are in love with the property as a buyer or are dying to sell as the owner, never reveal your desperation. Always give the impression that you will be willing to walk away.

Time is on your side

It’s most likely that you and the other party are eager and pressured to resolve the transaction. Acting calm and under control, in addition to taking time to think rationally, will help you in the long run. In short, just think before you speak.

DO’s & DONT’s When Applying For a Mortgage

DO’s & DONT’s When Applying For a Mortgage

Okay, you’ve found a great home to purchase, but you’ve got to replace your car and your furniture is hand-me-downs from your grandparents. Before you start doing your duty to the God of Consumerism, here is some wise advice to follow:

DO’s

  • Notify your mortgage broker of income changes … any changes from when you applied need to be above board
  • Keep documentation of any large deposits … lenders will need to verify where you received the money from
  • Pay all your bills on time … keeping current on all existing accounts is extremely important
    (a single late payment 30 days could affect your credit score between 50 and 100 points and may change your mortgage rate)

DONT’s

  • Apply for new credit of any kind … credit scores will be requested and this will be recorded, your score could be adversely affected
  • Go over your limit on credit cards …try to keep your balance below 50% of your available credit limit on any/all of  your cards
  • Consolidate your debt over 1 0r 2 credit cards … appearance is reality, it will look like you’re maxed out on the remaining cards, again could adversely affect your credit score
  • Change or quit jobs … if anything – especially your employment changes from your initial application your approval may change or be revoked.

Your mortgage company will verify your employment and credit score approximately 2 days before the closing, so keep everything steady and calm and you’ll be fine and get that great home you wanted.

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