The Accredited Buyer Representative (ABR®) designation is the benchmark of excellence in buyer representation. This coveted designation is awarded to real estate practitioners by the Real Estate BUYER'S AGENT Council (REBAC) of the National Association of REALTORS® (NAR) who meet the specified educational and practical experience criteria.
The Accredited Buyer Representative (ABR) designation is awarded to those members who have completed a prescribed four module course, passed a written examination and a review board has examined and approved documentation of history of buyer representation experience.
Only one-half of one percent of real estate practitioners nationwide have earned the coveted ABR designation. Only 12,000 of us have spent the time and money to learn more about what our buyers need from us in today's environment
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Buying a home is an exciting time in one's life. Making the smart move of choosing a REALTOR® Buyer's Agent is your first step to ensuring that your new home and community meets your needs. My services and experience range from financial aid to helping you find the home that best suits you and your family. For your convenience, I also provide listings by email. I pride myself on repeat business and hope you'll come to understand why.
YOUR BUYER'S GUIDE:
Before you begin the process of buying a property or home you need to consider the following:
1. Determine Your Buying Objectives. Why do you want to buy a home? Need more room? Downsizing? Tired of paying a monthly rent for nothing in return?
2. Determine Your Needs. Prioritize what is most important to you in a home (style of home, size of home, neighborhood, schools, cost, etc.) Keep in mind, there is a difference between what you need and what you want, so be realistic.
3. Become Informed by talking to a real estate agent about the typical home buying scenario. A good agent will take 10 or 15 minutes for a general discussion to help you understand what to expect when your buying a home. If you're a first-time home buyer, learn everything you can about the buying process. Research the market by searching the internet to see what homes are for sale in the areas you desire. As well as looking at classified ads and home for sale magazines, and maybe even driving around neighborhoods you're interested in. After that you should have a good feel for what's available.
4. Get Your Financing in Order. This is not the time to make any major purchases on a credit card. Don't change types of work. Your credit reports are an ongoing look at how you manage your finances. You must know exactly what your credit reports say about your financial history before you apply for a mortgage, because the reports play an important role in the mortgage approval process and in determining the interest rate and other loan terms that a lender offers you.
Grab a piece of paper and divide it into three columns. If you have a co-owner, have that person make a list too, but don't share ideas just yet.
List must have features, Features you would like, Features you do not want,
Must-have features can include for example: location in a specific neighborhood or school district, If the house must have a certain number of bedrooms or bathrooms, a garage, a large kitchen, a view etc..., no restrictions, 1 or 2 stories. Try to list every feature you feel is a must.
The would-like column might include: Deck, whirlpool tub, walk-in closets, a type of architecture etc...
The do-not-want column might include: located next to a highway, certain types of architecture, homes that need a lot of work etc...
Review your list. If your co-owner made a list, compare them to see if your priorities match. If they don't, you'll need to compromise, revising your lists so that both of you are happy. Making a list is a good exercise because it forces you to think about your wants and needs, but I can almost guarantee you that the list will change and evolve when you actually begin to look at houses. Even home buyers with an unlimited budget rarely find the "perfect" home.
Knowing What You Can Afford
Congratulations on making the decision of buying a new home! The first thing you need to decide is how much you can afford. Determining this early in the buying process will save you a lot of time and frustration. Not only will you have a clearer idea of the amount you can spend, but you can also eliminate all those homes that are not in your range. You may even find that being pre-approved opens the doors to a home you hadn't considered before.
Steps To Home Financing
1. Credit Report - Contact one of the credit bureaus and get a credit report on yourself, just to make sure your report is accurate. If you don't like what you see, it's time to try to clean up any problem items or clear up any mistakes. You may also want to consider contacting a consumer credit counselor for help. For information on how to improve your credit or clean up your credit report please contact me for detailed instructions.
2. Save Money - Skip a vacation, movie or dinner out to save money for a down payment and closing costs. Try not to buy anything on credit and if you do, pay it off quickly. Try to avoid taking on another large credit expense or even applying for another credit card.
3. Get Pre-Approved for a Mortgage - - It pays to get pre-approved for a mortgage early in the process. Some think pre-qualifying for a loan is enough, but it's not. Pre-approval gives you more power when you've found that perfect house.
4. Buying Power. Lets you know in advance how much you can afford to spend on a home.
5. More Control. You have the negotiating power of a "cash" buyer when you can prove that you have financing in place.
6. Faster Closing. You can close in as little as 15 days compared to the average 30-45 days for those that are not yet approved.
7. Saves Money. You can lock in an interest rate early for a faster closing and better rate.
What Type of Loan Is Right For You?
When choosing a mortgage, find out about…
The down payment that is required
Both the interest rate and the annual percentage rate (APR)
Standard closing costs (and any extra fee the lender may charge and why)
The possibility that your mortgage will be resold on the secondary market
There are many different types of loans and loan programs available.
Bridge Loan. Should you sell your home first before buying a new one or buy first and then sell? Most people need the equity in their current home to purchase a new one. But what if you sell first and don't have anywhere to go? A bridge loan may be an option. A bridge loan is a temporary loan that you obtain from your lender until the permanent one can be put in place. Once the primary mortgage is in place, the bridge loan is paid off and closed out. But understand that while waiting for a closing on your home, you will be making two mortgage payments. You will owe your present mortgage payment plus the payment on the bridge loan. Be certain you can afford it.
Conventional Mortgages. A conventional mortgage offers a fixed rate. They typically come in 10, 15 or 30-year loans. Although conventional loans used to require 20% down, most people today put 10% down (68% of buyers today put less than 20% down). Just keep in mind, if you put less than 20% down, you'll be asked to carry private mortgage insurance (PMI). If you're a first-time homebuyer, there are many low down payment loans available that ask for 3-10% down.
Adjustable Rate Mortgages. Adjustable rate mortgages carry an interest rate that changes to keep pace with current market rates. This is a good idea for buyers planning to stay in their home for a short time. If you plan to stay in the home for an extended period of time, you're better of locking in a fixed rate with a conventional loan. When deciding whether an ARM is right for you, determine the following:
Will I be able to afford higher mortgage payments if interest rates go up?
Will I be making other sizable purchases in the near future such as a car or college?
How long do I plan to own this home?
FHA Mortgages. Loans through The Federal Housing Administration (FHA) help low-to-moderate income home buyers purchase homes with low down payments (approximately 3%). You can use a gift or unsecured loan for the down payment and closing costs. Also, these loans are usually assumable (along with the current interest rate) by the next qualified home owner when you sell your home, which is an added benefit when it comes time to sell.
VA Mortgages. Veteran Affairs loans are great because they provide the opportunity to buy a home with no down payment. They are offered up to a predetermined loan amount (not more than $200,000) and are assumable by qualified buyers. To qualify for a VA loan, the veteran must be on active duty or have a discharge (other than dishonorable), along with one of the following:
180 days active (not reserve) duty between September 16, 1940 and September 7, 1980
90 days service during a war (Korean, Vietnam, Persian Gulf, etc.)
Six years service in the National Guard
Assumable Mortgages. An assumable mortgage is a loan that stays with the property. It is simply transferred to the qualified home buyer. This means considerable savings for the next buyer. It may include no points, no interest rate change and low closing costs. Assumable mortgages are often the most valuable part of a property. FHA loans given before December 1, 1986 and VA loans given before March 1,1988 are completely assumable to the qualified buyer. This means that you can take the loan along with the real estate, just as it stands.
Balloon Mortgages. The Balloon Mortgage has a fixed rate for a certain time frame, typically seven years, followed by a "balloon" payment requiring repayment of the entire home loan balance. Interest rates are generally lower than conventional loans. People may choose this type of loan because they plan on either selling the home, paying it off, or refinancing before the balloon payment is due.
If you put less than 20% down on a loan, you will likely have to pay PMI or Private Mortgage Insurance. PMI protects the lender against a loss in the event of default by the borrower. You can ask your mortgage company to remove the PMI if you've paid 20% of the loan. However, you will be asked to provide an appraisal.
Most lenders require you pay real estate taxes and insurance on a monthly basis. This cost is included in your monthly mortgage payment, placed in an escrow account, and paid out by your mortgage company.
By securing financing, you are well on your way to your next home!
Beginning your home search
Become familiar with the area where you're considering buying in order to determine if it meets your needs (e.g. near a park, shopping, public transportation, etc.) Drive around. Attend open houses. Talk to friends and colleagues. You may want to select two or three neighborhoods to broaden your options.
It may also be helpful to take photos of each of the home's you're interested in. Make personal notes on the back. This will help you stay organized and remember what you've seen.
You may also want to create a profile of the home you're looking for in your next home.
Goals - why are you buying a home?
Features - what you need vs. what you want?
Location - is it close to work, in a particular school district, near
shopping, etc.?
Style - what type of home fits your needs, lifestyle and taste?
Lot - what is the size? What does it feature (wooded, fenced in, etc.)?
General condition - is it in good shape?
Neighbors - try to get an idea of what kind of neighbors you will have.
Taxes - verify taxes and any current assessments on the home you're considering buying.
Beauty is in the eye of the beholder, particularly when it comes to buying a home. Features that attract one home-buyer may repel another. However, the one feature of interest to every home-buyer is price. Getting the most home for your money is paramount. The real problem is figuring out whether that fixer-upper on one street is a better buy than the home in next-to-new condition two blocks away. That’s why knowing what to look for before you buy can save you time, energy and money down the line.
you would like information on a specific community, you can get great infornation by clicking here.
Making an Offer
Congratulations! You've found the home of your dreams! Before you make a formal offer, you need to make sure the home is priced correctly. You don't want to overpay. Typically used when selling a home, a comparable market analysis (CMA) lists the recent sale information of nearby homes, including how long each home stayed on the market, how close the asking price was to the actual sales price, etc. It then compares the information regarding these houses with the one in question. If you're using an agent, they will do this for you to help you determine a realistic price.
As you go through this buying process, remember that everything is negotiable, and everything should be in writing. You should be very specific when you prepare your purchase offer, and the seller should be equally specific when they issue their counter offer. Don't forget to think ahead in terms of the top price you're willing to pay. It's a very emotional time and making some decisions early on is a good idea. Other tips include…
Don't make a verbal offer.
Don't offer full price unless the home is a real steal. You need room to negotiate.
Include home inspections. Make sure you have an "out" written into the contract if the inspection turns up major repair problems that cannot be resolved with the seller.
Make sure the contract includes an "out" in the event you cannot secure financing.
If you're not using an agent, make sure you consult with a real estate attorney.
Earnest money proves to house sellers that you're serious. After all, they're going to take their home off the market on your behalf. Earnest money is typically between 1-5% of the purchase price, but less is possible. The money should be held by an attorney or title company in escrow. Never give the money directly to the house seller. Such a deposit does not mean you're bound to the contract. Your full deposit is credited toward the down payment and closing costs.
Once your offer is accepted, it becomes a binding contract, so be sure to include the necessary contingencies. Contingencies are clauses that, if not met, will render the contract null and void. Common contingencies are the sale being subject to approved financing, the sale of an existing home and/or a satisfactory home inspection.
Home Inspections
You've made your offer. Now you need to have an expert verify "what you see is what you're buying." A formal inspection determines if anything needs to be repaired or replaced. If you're using a real estate agent, they'll arrange the inspection for you. If you're on your own, make sure the contract indicates who pays for the inspection and whether you or the seller is responsible for any necessary work. The contract should also include a contingency in case the inspection reveals any repairs that cannot be resolved with the seller. The seller is requiried by The federal Real Estate Disclosure and Notification Rule to reveal any material defects that may effect the value of the home to the best of his/her knowledge. Obviously, This is of no help if there are adverse conditions of which the seller is not aware.
Licensed home inspectors inspect homes to determine what, if anything needs repairing or replacing. Typical inspections may include...
Termites - signs of termites in the home or foundation.
Plumbing - checks for leaks, dripping faucets, toilet tank leaks, etc..
Electrical - up to code? Checks that all light switches and wall sockets are working properly
Exterior - settling cracks, paint peeling
Interior - signs of leaks in walls or ceilings, structure and general condition
The Roof - checks for leaks or damage
Windows- good condition and sealed
Insulation - up to code?
Appliances - checks that they work along with heating and air conditioning units
Radon Gas - an odorless and colorless gas that is sometimes found in the earth's rock and soil
Lead-Based Paint - some older homes may still have lead-based paint that can be hazardous if ingested
Asbestos - homes built in the early 1970s and before often had asbestos tile floors and asbestos ceiling tiles. This substance poses a health risk and must be removed
The home inspector will write up an inspection report with all minor and major defects itemized. Good inspectors will find minor flaws in nearly any home. It's up to you to decide how important they are. It is also helpful to be present during the inspection. Inspectors often provide you tips on the maintenance and upkeep of the home and its systems.
Now that the inspection is done, it's time to move into the title and closing phase.
Understanding Title Insurance, Appraisal and Homeowner's Insurance
Some people can get confused about this area of the real estate transaction, but with a little knowledge and guidance, it's easy to understand. We'll break down the basics for you.
Title Insurance
When you buy a home, a title company examines the chain of owner's titles (previous owners) to insure that there are no problems with obtaining clear title to the property. Parties other than the current owner of the home may have rights to it for things such as mortgages, liens due to unpaid taxes, lien claims to those who the owner owes money, etc. As a new owner, you may know nothing about these risks, but you are still vulnerable to such claims on your property. A deed is not sufficient protection. That's why title insurance is necessary. Furthermore, There are two types of title insurance: Lenders title insurance, also called a Loan Policy, and Owner's title insurance. Most lenders require a Loan Policy when they issue you a loan. The Loan Policy is usually based on the dollar amount of your loan. It protects the lender's interests in the property should a problem with the title arise. The policy amount decreases each year and eventually disappears as the loan is paid off. Owner's title insurance is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts as long as you or your heirs have an interest in the property. This may even be after the insured has sold the property. Only Owner's title insurance fully protects the buyer should a problem arise with the title that was not uncovered during the title search. Owner's title insurance also pays for any legal fees involved in defending a claim to your title. It is very common for title companies to also handle the escrow portion of the transaction, meaning they serve as a neutral party to exchange funds and make sure both parties adhere to the agreed upon terms of the contract.
Home Appraisal
Lenders require appraisals to confirm that the home for which they're providing you a loan is in fact worth the amount you're paying. Appraisers are independent agents normally hired by the lender, however you may have a choice. The fees appraisers charge vary and are typically built into your loan costs. Your lender may also require a Location Survey that certifies the house is within the boundaries of the lot. The lender often selects the surveyor, but again, you may have a choice. The lender usually pays for the cost of the appraisal and the survey intially, Then it's factored into the buyer's closing
Homeowner's Insurance
If you are not assuming the seller's homeowner's policy, you will need to buy your own. Title will not be transferred until you can prove you have the home covered by insurance. This protects you for things such as fire, flood, tornados, or any other damage to the home. You may also consider additional levels of insurance to cover natural disasters that are more prevalent in your area. The typical homeowners policy has two main sections: Section I covers the property of the insured and Section II provides personal liability coverage to the insured. It's a good idea to insure your home for the total amount it would cost to rebuild in the event it was destroyed. Extra insurance such as Flood insurance may be required by the lender if your home is in a low-lying area and vulnerable to flooding. Your homeowners policy will not cover you for any damage due to flooding.
Escrow and Closing
Congratulations! You're only a few steps away from being in your next home! You've purchased a home, but you don't actually own it yet. You need to close on it. This is known as closing or settlement.
The escrow closing agent conducts the closing and is often affiliated with the title insurance company. Their job is to ensure the buyer obtains a clean title, the lender obtains a good mortgage, that the costs of the transaction are paid, that the seller's mortgage is paid off, and that the seller receives their proceeds
The escrow agent prepares a closing statement that outlines what the required funds are, who's paying and where the funds are going toward They will not disburse funds until they can guarantee that the above noted items have been taken care of.
Prior to the actual closing day, there are several things you should do to be certain that your real estate transaction will close on time, and that everything will go smoothly. A day or two before closing, you should review your final closing statement or HUD-1 Statement, whichever is used in your area of the country.
Before the closing takes place, it is customary that the buyer makes a final walk thru inspection of the property. Is the property in the same condition as when the buyer initially saw the home? Is the yard the same? These questions should be answered prior to the actual day of
closing.
Odds and Ends
Utilities - Water, gas and electric meters will be read on the day of closing and the seller will owe for the utility usage up until that day. You may also need to make deposits with both the water and electric companies.
Service Contracts - If you are taking over any service contracts from the home seller, you will owe the seller for the unused portion of those contracts that have been pre-paid. These could include pest control, pool and/or lawn services, home maintenance contracts, etc.
The Check - The title/escrow company you are using will tell you how much you need to bring to closing. Personal checks are not accepted, so bring a cashier's check.
Home Warranty - It's highly recommended that you purchase a home warranty. This will cover the repair or replacement costs in case items such as appliances break down after you purchase the home. The peace of mind is worth the expense.
There's nothing like the American dream of homeownership. The pride and stability you feel when you come home to a place that you know is yours is hard to describe. Salamon Realty's goal is to empower home buyers with easy to use information to ensure they make informed choices. We hope this guide provided you insight into and help with the home buying process.
As Your Agent, I Will:
Assure that you see all the properties in the area that meet your criteria.
Guide you through the entire home buying process, from getting the best financing, to finding the right homes to view with the least hassle and lowest possible price.
Make sure you get clear and concise information to make an informed offer for your new home and help you avoid costly mistakes.
Answer all of your questions about the local market area, including schools, neighborhoods, the local economy, and more.
Find out how much your closing costs could be.
Tax Tip: (IRS publication 523)
If you sold your main home in 2004, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). If you can exclude all of the gain, you do not need to report the sale on your tax return. If you have gain that cannot be excluded, it is taxable. Report it on Schedule D (Form 1040). You may also have to include Form 4797, Sales of Business Property.