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Savvy Shopping-8 Things to Know When Buying a Home

Spring is here, and along with the buds and flowers comes a new crop of home buyers-Are you one of them? If so, you want to be well prepared to get that home you have always wanted.

  1. Mortgage Matters

“Pre-qualified” sure sounds good, but in fact, it doesn’t ensure that homeowners or realtors will consider your offer. Getting “pre-approved” for a bank loan will signal to an informed seller that your offer is within your means and should be given serious consideration which can tip things in your favor in a tight housing market. Pre-approval is more difficult now than in the past, so, beginning the process early allows you to be prepared to make an offer that will be considered seriously when you find your dream property.

When signing mortgage papers, get any help needed to understand what you are agreeing to, including all of the terms, closing costs, and fees. Take the time to understand the difference between the various types of mortgages including fixed rates, adjustable rates and balloon payments as well as the benefits and costs of different loan terms such as 15 and 30 year mortgages. Also, be sure to explore if you qualify for discounts or credits based on income, being a first-time buyer, or a veteran.

  1. Credit Counts

Higher credit scores garner lower mortgage rates and monthly payments. Financial experts recommend reviewing your credit report to identify and remedy any erroneous entries prior to making major purchases to ensure you attain the highest credit score possible. In addition, since applying for credit can lower your credit score, prospective home buyers should avoid applying for additional credit during the year prior to buying (and through closing) your new property. Credit scores of 750 and above often get the best rates, and while you can get a mortgage loan with scores below 650, you will generally have higher costs. A little planning and preparation can reap significant financial rewards.

  1. Know Your Budget

A safe “rule of thumb” for mortgage payments is that it should not exceed 28% of your gross monthly income. This ensures you have enough discretionary income available for upkeep, maintenance, and insurance. Buying within your means will also help in the event of any unforeseen circumstances. While plenty of lending institutions are willing to give you a higher mortgage, be mindful of all the costs of owning your home, your other financial commitments as well as the cost of pursuing your hobbies and interests.

Online calculators can help you estimate monthly payments on homes you are considering, and you can see how those payments compare to your current payments. If you plan on buying a home with larger payments than you pay now, think about putting the difference into a savings account each month to confirm the higher payments are realistic. An added benefit is these funds will be available to apply toward a down-payment or closing fees when you are ready to purchase your new property.

  1. Location, Location, Location

Decide where you want to live, both in terms of general areas and specific geographic requirements. This is as important as the actual house you buy, it will affect your commute, schools, your neighbors, and where you shop and do business. This preparation might be more difficult if you come from further away, however, a real estate agent who gets to know you will help steer you in the right direction. Some locations have specific issues – parking, grounds fees, or other specifics that come with living in a certain locale and a realtor that knows your desires will be able to evaluate any issues accordingly when searching for properties.

You can build your knowledge of an area by reading the local newspaper, visiting local stores and schools, dining at local restaurants, and shopping at a local supermarket.

  1. Timing Things

When do you want to move? Often, buying a home is a game of hurry up and wait – except when it’s not. Sometimes buyers or sellers want to move quickly, and want expedite the process. Be up front with your moving schedule, and willingness/ability to be flexible. While you may or may not be able to impact the schedule, the more prepared you are with the logistics of the sale; the better off you will be in the long run. Paperwork takes time, and depends on how fast the bank and other institutions move, and how much additional information is needed. Following up with lenders, escrow officers, and your agent can be critical to ensure that documents move through the system in a timely fashion.

Timing affects moves in multiple ways, from the moving of possessions, to completing repairs, to enrolling in schools. Moving on the fly can cost more than those with a little planning. Establish a timeline. If you plan in advance for the home purchase and for the actual move, you gain time to shop around for the best deals on everything from mortgages to moving vans. Additionally, advanced planning and research enables you to move faster on things if you need to move up closing dates or shift schedules for any reason.

  1. Terms of Endearment

Are the terms that you agree to going to work for you? Negotiate terms you can love as you finalize the sale/purchase of a home. While everything might not be exactly what you want, know the terms you are agreeing to. If you compromise in one area, you might be able to use that compromise to get something in another area.

For example, if the owner needs extra time in the home after closing, and you don’t have to move right away, you can agree to a rental agreement so that they can stay a bit longer while you are orchestrating your own move. In exchange, you might let them know that you will be having some repairs made while they are renting and before you move in. This can all be spelled out in the terms of sale.

  1. How Handy are You?

Biting off more than you can chew with a fixer-upper can come back to haunt you in the end. Properties that require extensive work might also require more time and money for the move, and any building permits you might need to get. Purchasing a home in good repair or one in which the seller has recently replaced the roof, carpets, and flooring may come with a higher price, but it might still be worth it if you don’t intend to make those repairs yourself.

On the other hand, if you want your home to be your new project, come prepared with what it will take accomplish various tasks in your new area. Doing some things in climates that differ from your own might surprise you – projects that include roofing, heating and cooling can differ substantially between regions.

  1. Permissions

If you purhcase a home with remodeling in mind, take a cursory look into permits before assuming that you can do what you want to. The permitting issues of communities and towns, time-frames around getting those permits and inspections, and costs involved, can all vary. Be certain that the permissions needed for the desired improvements are within your budget and schedule, on top of the cost of materials and labor. There might also be special restrictions if this is in an apartment or community.

It isn’t every day that you shop for a home, but when we do, its best to do it with us much knowledge and preparation as possible. Doing your homework can be daunting and challenging, but on that closing date, you’ll be glad you followed through and got the best home you could get.

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Jerry Pelker – Realtor (Sands & Company Real Estate)

Jerry Pelker is a graduate of Wilson High School and has an associate degree in applied science and is pursuing an associate degree in business management. He has a background in marketing, photography and multimedia marketing. Previously, he was a food and beverage quality manager learning most of his current work disciplines.

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10 Tips for Home Buying


The top 10 things you need to know before you buy

  1. Don’t buy if you’re a mover: If you can’t commit to remaining in one place for at least a few years, then owning is probably not for you at this time in your life. The costs of buying and selling a home, you may have you ending up losing money.
  2. What’s your credit: Most of us will need to get a mortgage to buy a house, make sure your credit score is strong. A few months before you start house hunting, get copies of your credit report. Make sure it’s correct, and fix any issues you discover. Your score can affect the type of loan and interest you will receive.
  3. Get Pre Approved so you know what you can really afford: Talk to a lender of your choice and see what loan types, are available for your credit score, to determine your purchasing power.
  4. The Down Money: There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a small down payment.
  5. Study the community and school district: Do your research to determine the community and school district where you are planning to purchase. This is important since your children will be attending the school, and your family will be interacting in the community. If you don’t have children it’s still an important factor since high demand school district tend to sell well when you resell the home in the future
  6. The Realtor: Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Just remember just because a Realtor is with a big firm does not mean they are experienced. Do your homework. A Realtor can share the nuances of the area and historical data that is not available on the web
  7. Choose carefully between points and rate: Ask your lender when picking a mortgage; you usually have the option of paying additional points — a portion of the interest that you pay at closing — in exchange for a lower interest rate. If you stay in the house for a long time — say three to five years or more — it’s usually a better deal to take the points. The lower interest rate will save you more in the long run. There is a difference between points and lender origination points.
  8. Before house hunting make a wish list: Create a list of what you are looking for in a home. Prioritize the list to what a necessary and what is a bonus. Most likely you will never find a home that matches your list perfectly, but you can determine easier if the home fits your needs when the emotions kick in.
  9. Do your homework before bidding: Your opening bid or offer should be based on the sales trend of similar home sales in the neighborhood. Your Realtor can supply a list of homes recently sold in your area that are comparables and help you determine a good starting offer point based on the condition of the home you wish to make an offer on.
  10. Hire a home inspector: After the offer is accepted a licensed home inspection should be strongly consider to evaluate the condition of your new home. The lender will not usually require home inspections so it it up to you to make this decision. Regardless of age or visual condition a home inspection is important. You should Interview several “local” home inspectors. The inspector should be licensed, experienced, and a member in good standing of NAHI,( National Association of Home Inspectors)and be a unbiased source. If you suspect a conflict of interest do not select that home inspector. His or her job will be to point out potential problems that could require costly repairs down the road. It is also an excellent time to get to know your new home better and understand how to maintain in after the closing.

Home buying is a big investment “Buy Wise”

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Tips on Reading an Inspection Report

When interviewing a home inspector, ask the inspector what type of report format he or she provides. There are many styles of reports used by property inspectors, including the checklist, computer generated using inspection programs, and the narrative style.

Some reports are delivered on site and some may take as long as 4 – 6 days for delivery. All reporting systems have pros and cons. The most important issue with an inspection report is the descriptions given for each item or component. A report that indicates the condition as “Good”, “Fair” or “Poor” without a detailed explanation is vague and can be easily misinterpreted. An example of a vague condition would be:

Kitchen Sink: Condition – Good, Fair, or Poor. None of these descriptions gives the homeowner an idea what is wrong. Does the sink have a cosmetic problem? Does the home have a plumbing problem? A good report should supply you with descriptive information on the condition of the site and home. An example of a descriptive condition is:

Kitchen sink: Condition – Minor wear, heavy wear, damaged, rust stains, or chips in enamel finish. Recommend sealing sink at counter top.

As you can see, this narrative description includes a recommendation for repair. Narrative reports without recommendations for repairing deficient items may be difficult to comprehend, should your knowledge of construction be limited.

Take the time and become familiar with your report. Should the report have a legend, key, symbols or icons, read and understand them thoroughly. The more information provided about the site and home, the easier to understand the overall condition.

At the end of the inspection your inspector may provide a summary with a question and answer period. Use this opportunity to ask questions regarding terms or conditions that you may not be familiar with. A good inspector should be able to explain the answers to your questions. If for some reason a question cannot be answered at the time of the inspection, the inspector should research the question and obtain the answer for you. For instance, if the inspector’s report states that the concrete foundation has common cracks, be sure to ask, “Why are they common?” The answer you should receive will be along these lines: common cracks are usually due to normal concrete curing and or shrinkage. The inspector’s knowledge and experience is how the size and characteristics of the cracking is determined.

We recommend that you accompany your inspector through the entire inspection if possible. This helps you to understand the condition of the home and the details of the report.

Read the report completely and understand the condition of the home you are about to purchase. After all, it is most likely one of the largest investments you will ever make.

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Avoid the pitfalls of Buying a FSBO

Did you know that you could actually lose money and create risk for yourself by buying directly from an owner?  Home buying is an emotional process and most buyers wear their emotions on their sleeves. They don’t ask the crucial questions which can open them up to potential risks factors, besides that typically are not good at negotiating the best deal for themselves.

Solution is to hire an experienced Buyer’s Broker to handle and negotiate the deal for you.  This typically cost 1- 3% of the purchase price, but sometimes you can negotiate a flat fee arrangement.  The Buyer’s Broker knows how to ask the serious questions about the property and can coordinate a 3rd party home inspector for you. Additionally they have access to the history of the home and the sales data for the area and know the nuisances of the area and the effect that it may have on value. Most buyers do not have access to the complete data, and even if they have some of it from the web they truly do not have the experience on how to interpret it and apply it to a successful negotiation strategy.
Buyers Brokers understand the physiology of the selling process and can be your front man to negotiate the best deal as your advocate.  After the sale is nailed down they can save you time and money in coordinating and guiding you through the various steps before you reach the closing table which eliminates time and money not to mention stress.

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Dirty little secrets about selling your home for a clean profit!

You need to get rid of 1/3 of your stuff. Buyers cannot see beyond clutter and excess furniture.  Either sell your excess or rent a storage unit and move your things out so your home appears open an airy as possible. Paint the walls bright color in the white tones, open windows and let light in. It’s a proven fact that light sells homes! Clean the windows and brighten up your home and décor. Also buyers need to see themselves in your home so it’s important for your home to be as de-personalized so they can visual their family not yours in the home.

House cleaning is very important as well. A well cared for home that is clean, bright and open is a real motivator for buyers.