BUYERS TIPS

Scott Miller Owner/Qualifying Broker

REAL ESTATE IS STILL ONE OF THE BEST INVESTMENTS YOU CAN MAKE.

Buying your new home is a serious venture. It can be an absolute pleasure or a massive headache. Your house is not just your home, it is a serious investment in the dwelling, the area and your future.

When buying a home – you’re bound to have many questions. For example, “In what area can I find a home that suits my needs?”, “How much money will I need to afford the monthly payments?” and “How long will the home buying process take?”

Advice for First-Time Buyers

Pre-Qualification: Meet with a mortgage broker and find out how much you can afford to pay for a home.

Pre-Approval: While knowing how much you can afford is the first step, sellers will be much more receptive to potential buyers who have been pre-approved. You’ll also avoid being disappointed when going after homes that are out of your price range. With Pre-Approval, the buyer actually applies for a mortgage and receives a commitment in writing from a lender. This way,assuming the home you’re interested in is at or under the amount you are pre-qualified for, the seller knows immediately that you are a serious buyer for that property. Costs for pre-approval are generally nominal and lender swill usually permit you to pay them when you close your loan.

List of Needs and Wants: Make 2 lists. The first should include items you must have (i.e., the number of bedrooms you need for the size of your family, a one-story house if accessibilityis a factor, etc.). The second list is your wishes, things you would like to have (pool, den, etc.) but that are not absolutely necessary. Realistically for first-time buyers, you probably will not get everything on your wish list, but itwill keep you on track for what you are looking for.

Representation by a Professional: Hire your own real estate agent, one who is working for you, the buyer, not the seller.

Focus & Organization: In a convenient location, keep handy the items that will assist you in maximizing your home search efforts. Such items may include: • One or more detailed maps with your areas of interest highlighted. • A file of the properties that your agent has shown to you, along with ads you have cut out from the newspaper. • Paper and pen, for taking notes as you search. • Instant or video camera to help refresh your memory on individual properties, especially if you are attending a series of showings.

Location: Look at a potential property as if you are the seller. Would a prospective buyer find it attractive based on school district, crime rate, proximity to positive (shopping, parks, freeway access) and negative (abandoned properties, garbage dump, source of noise) features of the area?

Visualize the house empty & with your decor: Are the rooms laid out to fit your needs? Is there enough light?

Be Objective: Instead of thinking with your heart when you find a home, think with your head. Does this home really meet your needs? There are many houses on the market, so don’t make a hurried decision that you may regret later.

Be Thorough: A few extra dollars well spent now may save you big expenses in the long run.Don’t forget such essentials as: • Include inspection & mortgage contingencies in your written offer. • Have the property inspected by a professional inspector. • Request a second walk-through to take place within 24 hours of closing. You want to check to see that no changes have been made that were not agreed on (i.e., a nice chandelier that you assumed came with the sale having been replaced by a cheap ceiling light).

All the above may seem rather overwhelming. That is why having a profes- sional represent you and keep track of all the details for you is highly recom- mended.Please email me or call me directly to discuss any of these matters in further detail.

How to Negotiate with Seller: Buying a home is one of the most important purchases most people will make. In order to make the right decision the first time, potential buyers need to be prepared. Consider the following Be prepared

Be Prepared: Research the housing market in the target area. Once you have information about the general area, focus on the particular property and seller. Look for answers to questions such as:
• Why is the homeowner selling? (If they’re moving because they find the area undesirable, you might want to consider this issue.)
• How long has the home been on the market? (If it has been on the market for a long time, perhaps there are negative facts about the property that you need to know.)
• How much did the seller pay for the home compared to the current asking price? (If the seller paid more, find out why. Was it a general real estate trend, or did property values in that particular neighborhood go down?)
• What is the seller’s time frame for selling and moving? Does it fit within your needs?
• Are there any defects in the home or problems with the surrounding neighborhood? (For example, is the roof so old that it will likely leak during the next storm? Is there a new construction project in the area that will lead to major traffic congestion?)
• As the potential buyer, you want the advantage. While you want answers to all your questions to the seller, reveal very little about your circum- stances. Do not give the seller personal information such as your income, the maximum you are able to pay for a down payment or the home, or when you want to move. Make sure that your agent knows not to reveal any such information to the seller or his/her agent.

Also, do not let the seller see how much you want the property. If you appear desperate or overly enthusiastic, the seller then has the stronger bargaining position. When meeting with the seller or listing agent, keep your emotions in check.

Establish a Timeline: Find out if the seller needs to have the sale closed sooner rather than later. If the seller is feeling pressured to sell, use that to your advantage in negotiating. Even if you, the buyer, are the one with the deadline for purchasing a home, don’t let yourself be rushed into making concessions or a purchase you may regret later.

Advice for First-Time Buyers: Fortunately for buyers, there are a variety of mortgages to choose from. It is in your best interest to investigate each of them to determine which is the best for your situation. You probably won’t qualify for all of them. In fact, you may only qualify for one. But if you do qualify for more than one, you may save yourself money (and worry) in the long run if you do your home-work before signing on the dotted line.

Establish a Timeline: Find out if the seller needs to have the sale closed sooner rather than later. If the seller is feeling pressured to sell, use that to your advantage in negotiating. Even if you, the buyer, are the one with the deadline for purchasing a home, don’t let yourself be rushed into making concessions or a purchase you may regret later.

Types of Mortgages: Fortunately for buyers, there are a variety of mortgages to choose from. It is in your best interest to investigate each of them to determine which is the best for your situation. You probably won’t qualify for all of them. In fact, you may only qualify for one. But if you do qualify for more than one, you may save your-self money (and worry) in the long run if you do your homework before signing onthe dotted line.

Fixed Rate Mortgages:
• You plan on living in your new home for many years, and/or
• You are not a risk-taker and prefer the stability of knowing how much your payment will be each month.

Since most home loans are for a period of 30 years, if you want a payment you can count on for that long of a period of time, a fixed rate mortgage may be what works best for you. Once your loan amount and interest rate are calculated and locked in, a fixed rate mortgage will guarantee that you will have the same payment over the life of the loan. Making extra payments to principal will allow you to pay your loan off sooner.

This may not always be the best choice, however. If interest rates are very high at the time you take out your loan, with a fixed rate mortgage you’ll be stuck with that high interest for the life of the loan(unless you choose to refinance). Conversely, if interest rates are very low, you’ll come out the winner with interest rates that will stay low no matter how high interest rates go in the future.

The following are the advantages and disadvantages of the varying lengths and terms of fixed-rate mortgages.

Fixed Rate Mortgages:
• Pay off the loan in half the time of a 30-year loan.
• Equity builds up more quickly than in a 30-year loan.
• Payments are higher (which may be a problem if you lose your job or become unable to work).

20-Year Fixed-Rate:
• Pay off the loan in 2/3 the time of a 30-year loan.
• The overall interest paid is considerably less than for a 30-year loan.

30-Year Fixed-Rate:
• The most common choice, especially for first-time homebuyers, as it’s the easiest of the fixed-rate loans to qualify for.
• Monthly payments are lower than for 15-year and 20-year loans. This can prove especially helpful if you do not have a lot of “padding” between the amount you can afford to spend and the monthly payment for your desired property.
• More desirable if you plan on staying in the same home for years, since equity builds more slowly than for shorter-term loans.
• For income tax purposes, this term provides the maximum interest deduction.

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Scott Miller Qualifying Broker

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