» Buying Your New Home
» Buying a Home in a Buyer's Market
» 10 Questions to Ask Your Lender
» Your Guide to Buying Your Vacation Home
» Questions to Ask a Seller When Considering an Offer
» How to Prepare for Closing
As you will see, there are several steps you need to take before you move into your new home. The Coldwell Banker® HomeBuyer Guide is designed to inform you of your rights as a homebuyer and to introduce you to the world of real estate.
How Much Can You Afford?
Before you can begin to search for a new home, you need to determine your budget and estimate how much you can afford. One of the most important factors in figuring out your financial budget is getting pre approved for a mortgage.
What is a Mortgage?
The first step towards financing a new home is getting pre-approved for a mortgage. A mortgage is an advance of money from your lender that will cover the finances of your new property. Over an extended period of time, you (the mortgagee) must pay the bank back each month a percentage of the money they lent you plus interest, until the total sum is paid in full. This is how most homes are financed.
Documents Needed
When you apply for a mortgage, you will need to furnish information regarding your income, expenses and obligations. To save time, have the following items available for each borrower:
Repairing Credit Problems And Establishing Good Credit
At one time or another, most people have put blemishes on their credit reports. If your credit report is tarnished, here are a few suggestions you can do to repair the damage.
Examine the credit report thoroughly and make sure it's accurate. If there are mistakes on the report, contact the credit report agency and ask them to remove the mistakes immediately. Here are some other helpful tips:
Pre-approval uses basic information as well as electronic credit reporting to determine whether a lender will loan you money. If you are pre-approved for a mortgage, the lender has given you a commitment to support your new purchase.
Pre-qualification is not a mortgage approval but simply an estimate of what you can afford. When you pre-qualify for a mortgage, the lender also collects basic information regarding your income, monthly debts, credit history and assets, and then uses this information to calculate an estimated mortgage amount. The lender has not yet committed to supporting your financial needs and, therefore, you have not received an actual guarantee of funds.
People who are pre-approved for a mortgage are more attractive candidates to the seller and have a better chance of getting the property when they make an offer. Of course, a lender will only lend you money if they're sure your credit is strong and they're confident you have the ability to pay them back. A bank checks your credit by studying your financial history, income, federal tax returns, pay stubs, and long-term debt information (such as credit cards, auto loans, child support, etc.) to determine if you are a good candidate for a loan. If your credit report is good, then you have an excellent chance of obtaining a mortgage. If not, then you must take the appropriate steps to improve your credit rating.
Getting Approved Deciding Of course, a lender will only lend you money if they're sure your credit is strong and they're confident you have the ability to pay them back. A bank checks your credit by studying your financial history, income, federal tax returns, pay stubs, and long-term debt information (such as credit cards, auto loans, child support, etc.) to determine if you are a good candidate for a loan. If your credit report is good, then you have an excellent chance of obtaining a mortgage. If not, then you must take the appropriate steps to improve your credit rating.
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Following are some things that every homebuyer should keep in mind:
Don’t Try to Time the Market When home prices are lower, it is very tempting for potential buyers to try to wait as long as possible in the hopes that prices will decline even further. This strategy can be detrimental because when there is high inventory, smart sellers price their homes properly - not according to past sales but according to current conditions - so their homes will sell in a timely fashion. Once a home is priced to what the current market will bear, buyers will make offers.
Shop Around. But Don’t Wait Too Long. The National Association of REALTORS reports that, on average, homes stay on the market for 7.5 months. The increased inventory gives homebuyers a great opportunity to compare homes that meet their needs. However, this does not mean that homebuyers should procrastinate. If you find a house you love, put in your bid and negotiate. Don’t provide an opportunity for another buyer to make an offer.
Watch Mortgage Rates Studies such as the 2006 Coldwell Banker® Homeownership in America Index revealed that that majority of people move based on lifestyle changes such as new job, marriage, divorce or family expansion. Pay attention to the mortgage rates and recognize that buying a new house will likely result in a change in mortgage rates. How much? A monthly payment of a 30-year fixed 5.875 mortgage rate on a 300,000 loan is $1,774.61. The monthly payment at today’s 6.381 rate is $1,872.79, representing a $98.18 increase.
Negotiate on the Incentives Sellers eager to move their homes may offer you a variety of incentives such as cars, trips, and even credit card bill payment. If you accept an incentive, make sure it makes sense for you. Instead of having your bills paid, you may opt to have the seller renovate the master bathroom or install new flooring. Of course, you can always ask the seller to simply deduct the amount in question from the list price.
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Throughout this guide, I will attempt to answer some of the most common questions buyers tend to ask. For additional information, contact me at brad@bradbeacham.com.
Can I afford to buy and maintain a second home?
Second-home ownership is surprisingly affordable. According to the National Association of Realtors, the typical second-home owner earned a household income of $85,900 in 2003. Of course, your own personal finances will determine the purchase price you can afford. You should also keep in mind that, in addition to your mortgage payments, taxes and insurance, there would also be maintenance and travel costs to and from your primary residence. To offset some of these expenditures, you may want to consider renting your property or even investing in a vacant lot now and building later.
What type of property is best for me?
Single-family detached - From a rustic cabin to a waterfront mansion, the selection is endless. Single-family properties usually offer more privacy and fewer use restrictions than attached housing or planned-unit communities. Single-family, detached properties are generally more expensive than attached dwellings of similar size. And the single-family homeowner is responsible for exterior maintenance and landscaping.
Attached housing - From a studio condominium to a luxury townhouse, the choices vary here too. With an attached property, you typically own your particular unit and share ownership of the common-area amenities with other homeowners in the development.
However, you may or may not be able to own the land under your dwelling. An association normally governs attached properties through written protective Covenants, Conditions and Restrictions. Always read these carefully before your final decision to purchase, since all property owners in a development must comply with these terms and conditions.
Keep in mind monthly association dues are customary to cover the cost of exterior maintenance, taxes, fire insurance and reserves for future repairs. In some developments, portions of your utilities may also be included in association dues.
Let your interests guide you when deciding which type of property to buy.
What are my financing alternatives?
Financing a second home is similar to financing your primary residence. A lender will evaluate your credit history and rating, debt-to-income ratios, verify your employment and bank deposits.
While most lenders require a minimum down payment of 20%, some may require less - others more. But all require the borrower to have a source of income that covers repayment of the debt and allows adequate funds for expenses relating to the use of the property.
There's also certain guidelines most second-home lenders take into consideration:
The lender will also evaluate the appraised value of the property, its suitability for year-round occupancy and its conformity with local zoning regulations. As an option, you may also want to consider refinancing your primary residence as a down payment source.
As financing terms change frequently, keep in toucn with your sales associate for the most up-to-date programs. Coldwell Banker Seaside Realty offers an in-house mortgage company for your convenience. Visit www.midatlanticmtg.net for more information.
Who will take care of the property when I am not there?
Since you won't occupy your vacation home on a year-round basis, you should consider ways to maintain your investment when you're not there. Property management is available to homeowners in most resort areas on a fee basis with services ranging from maintenance to housekeeping.
If you plan to rent your property, using a professional property manager is highly recommended. They offer a variety of services including renter relations, security deposits and rent collection. And most important, they'll ensure you piece-of-mind while you're away.
If you are interested in putting your home in a vacation rental program, please visit our sister company, Seaside Vacations, at www.outerbanksvacations.com.
Is buying a second home a good investment?
Although it is not possible to accurately predict future investment potential for resort properties, certain trends indicate a promising future.
According to a recent survey by the National Association of Realtors, the aging of the baby boom generation and the historically strong performance of real estate as an investment are driving up demand for second homes.
Mortgage interest rates also play an important role when it comes to buying a second home. They increase affordability by lowering the monthly payment, often allowing homeowners to purchase a more expensive home.
Appreciation in home values also is helping boost second home sales. In the past five years, homes in the United States have appreciated an average of 37 percent in value. As a result, homeowners may be able to tap into the equity in their primary residence to make a down payment on a second home.
Coupling these factors together indicates that long-term investment potential in second-home ownership looks optimistic.
What tax benefits may be available to me?
Second-home ownership may offer certain tax advantages depending on the use of the property. In the United States, interest and property taxes on second homes are generally tax-deductible on your Federal income tax, and certain other rental expenses may also be deductible. Outside the U.S., other tax policies apply. Tax rules and regulations change frequently, so you should consult with your tax advisor prior to purchasing your second home.
What factors may affect the value of my home?
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Why are you selling?
In some sense, what you are really asking is: "how motivated are you to sell your home?" Assessing the type of answer you receive to the initial question may help you structure a potential offer. For instance, if the homeowner has already purchased another property or the family is trying to relocate, you might be dealing with a flexible seller. Gaining some insight into the seller’s motivation will help you determine not only how motivated they are to sell but also how they might assess your offer.
Another question that can help you understand how the seller might view your offer is:
How much did you pay for your home?
Though this might seem like privileged information, such statistics are actually public record. Generally speaking, the seller who purchased their home for a low price and built up equity in the property over several years may be more flexible when approached with offers. On the other hand, homeowners who haven’t seen such an increase in their home’s value might be more reluctant to lower their asking price.
After gaining an understanding of how the seller might treat a potential offer, you may want to ask questions about the upkeep of the home and the quality of the surrounding neighborhood. Beginning with the quality of the property itself, you will certainly want to inquire:
What types of repairs have been done recently?
You may want to start by asking the homeowner about your specific concerns. Homeowners will always be happy to tell you about upgrades that have been made to the home, but you may want to pay attention to what isn’t mentioned. It is important to ask because you will be able to tell if a kitchen or bathroom was remodeled after viewing the home or consulting the disclosure document, but you might miss some smaller issues that could impact the details of your offer.
To further protect yourself against surprise renovation costs in a new home, you may want to verify the age and working condition of all major appliances. If possible, check the service records of important appliances (furnaces, water heaters, etc.) as these often serve as markers of a home’s overall upkeep. You can also try securing a monthly estimate of utility costs; these statistics will not only help you estimate future costs but could potentially highlight unhealthy energy consumption within the home’s infrastructure.
Lastly, regarding the surrounding neighborhood, try to open the conversation about the area by asking:
What can you tell me about the neighborhood?
Allow the seller to tell you the good and the bad. By asking the seller for their overall impressions of the neighborhood, you will probably learn things about the area that a more specific question might not have yielded. Follow up the seller’s initial response with questions that are important to you and your family. Based on your needs, you could ask questions like the following: Is there any new construction planned in the neighborhood? What are your thoughts about the nearest schools? Are any businesses or schools scheduled to close? How would you describe the neighbors?
The research you conduct with your agent prior to making an offer is one of the best ways to ensure that your family finds the right home for the right price. As you approach the offer stage, remember that you are not alone and can work closely with your agent to learn as much as possible about the property and the details of the buying process. Furthermore, you shouldn’t be afraid to ask for help if you have questions or concerns about a potential offer. Though the process of making an offer on a property may seem stressful, your diligence will pay off when you finally find a house to call home.
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After you have filed your loan application and placed a deposit on the home, your mortgage lender will provide you with an estimate of closing costs. As the amount provided by the mortgage lender is merely an estimate and can change prior to closing, you are allowed to inspect all the loan documents the day before closing. Once you have confirmed the amount, including the remainder of the down payment, you will need to obtain a certified or cashier’s check. In most cases, personal checks are not acceptable for payment of closing costs, so work with your agent if you have concerns about the proper methods of payment.
Most real estate professionals recommend performing a final walk-through inspection of the home before finalizing the sale. In most cases, the contract between both parties will include a clause allowing the buyer to inspect the property within the 24 hours prior to closing. At this time, the buyer should make sure the home is vacated, all appliances that the seller agreed to leave in the home are intact and any repairs included in the terms of the sale have been completed. If needed, you can also request that the seller perform a walkthrough with you to explain all of the home’s details.
For the most part, this final walkthrough is the buyer’s last opportunity to ensure the terms of the contract are met. If any problems are uncovered during the inspection, you can work with your agent to obtain funds from the seller for repairs or postpone the closing until all repairs are made.
Another requirement of the closing process is the purchase of homeowner’s insurance. Required by nearly all mortgage lenders, this insurance protects both homeowner and lender against loss in case of damage to the home. Most homeowner’s insurance policies will include personal liability for the buyer – protecting the homeowner in the event of accident or injury on the property – and a combination of coverage against theft, fire, flood and region-specific weather concerns. By working with your real estate agent and mortgage lender, you should be able to find an acceptable policy that meets the requirements of the loan. At the time of closing, you will need to provide proof of insurance to the mortgage lender before finalizing the sale.
In some cases, title insurance may also be required by your mortgage lender. This simple policy protects both the buyer and lender in the event that problems with the title are uncovered after the sale is finalized. If required, both the lender and homeowner need individual title insurance policies, yet these are usually combined into a joint policy to be financed by the buyer.
Prior to the closing date, the buyer should also transfer all utility accounts from the seller. Besides being a required part of many closing proceedings, this small step will ensure that your new home is ready for move-in after the sale is completed.
On closing day, you can expect to sit down with your legal representation to finalize the sale. If you have completed the steps outlined here and arrive with proper documentation, you can expect a smooth closing. In fact, if you follow your checklist prior to closing day, you can begin focusing on life in your new home as soon as you like.
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» Buying a Home in a Buyer's Market
» 10 Questions to Ask Your Lender
» Your Guide to Buying Your Vacation Home
» Questions to Ask a Seller When Considering an Offer
» How to Prepare for Closing
Buying Your New Home
You've decided to start fresh and purchase a new home. This is a very exciting time for you and we look forward to guiding you smoothly through this process, helping you to efficiently find the home of your dreams.As you will see, there are several steps you need to take before you move into your new home. The Coldwell Banker® HomeBuyer Guide is designed to inform you of your rights as a homebuyer and to introduce you to the world of real estate.
How Much Can You Afford?
Before you can begin to search for a new home, you need to determine your budget and estimate how much you can afford. One of the most important factors in figuring out your financial budget is getting pre approved for a mortgage.
What is a Mortgage?
The first step towards financing a new home is getting pre-approved for a mortgage. A mortgage is an advance of money from your lender that will cover the finances of your new property. Over an extended period of time, you (the mortgagee) must pay the bank back each month a percentage of the money they lent you plus interest, until the total sum is paid in full. This is how most homes are financed.
Documents Needed
When you apply for a mortgage, you will need to furnish information regarding your income, expenses and obligations. To save time, have the following items available for each borrower:
- Two most recent pay stubs
- W-2s for the last two years
- Federal tax returns for the last two years
- Last two months' bank statements
- Long-term debt information (credit cards, child support, auto loans, installment debt, etc.)
Repairing Credit Problems And Establishing Good Credit
At one time or another, most people have put blemishes on their credit reports. If your credit report is tarnished, here are a few suggestions you can do to repair the damage.
Examine the credit report thoroughly and make sure it's accurate. If there are mistakes on the report, contact the credit report agency and ask them to remove the mistakes immediately. Here are some other helpful tips:
- Begin to pay your bills on time and in full Only use two to four credit cards so that you can keep track of them and do not spend more than your budget
- Keep a separate checking and savings account
- Keep the same job for a few years, the longer you stay put, the better Now that you've examined your credit report and are confident that you're in good shape, you're ready to choose between getting pre-approved for a mortgage or pre-qualified for a mortgage. Here's the difference:
Pre-approval uses basic information as well as electronic credit reporting to determine whether a lender will loan you money. If you are pre-approved for a mortgage, the lender has given you a commitment to support your new purchase.
Pre-qualification is not a mortgage approval but simply an estimate of what you can afford. When you pre-qualify for a mortgage, the lender also collects basic information regarding your income, monthly debts, credit history and assets, and then uses this information to calculate an estimated mortgage amount. The lender has not yet committed to supporting your financial needs and, therefore, you have not received an actual guarantee of funds.
People who are pre-approved for a mortgage are more attractive candidates to the seller and have a better chance of getting the property when they make an offer. Of course, a lender will only lend you money if they're sure your credit is strong and they're confident you have the ability to pay them back. A bank checks your credit by studying your financial history, income, federal tax returns, pay stubs, and long-term debt information (such as credit cards, auto loans, child support, etc.) to determine if you are a good candidate for a loan. If your credit report is good, then you have an excellent chance of obtaining a mortgage. If not, then you must take the appropriate steps to improve your credit rating.
Getting Approved Deciding Of course, a lender will only lend you money if they're sure your credit is strong and they're confident you have the ability to pay them back. A bank checks your credit by studying your financial history, income, federal tax returns, pay stubs, and long-term debt information (such as credit cards, auto loans, child support, etc.) to determine if you are a good candidate for a loan. If your credit report is good, then you have an excellent chance of obtaining a mortgage. If not, then you must take the appropriate steps to improve your credit rating.
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Buying a Home in a Buyer's Market
When is the best time to buy a house? With many markets reporting an abundance of homes for sale, and interest rates remaining at near historic lows, now might be one of the best times in recent memory. While today’s real estate market does offer advantages to buyers, consumers still need to be savvy in order to get the best deal they can.Following are some things that every homebuyer should keep in mind:
Don’t Try to Time the Market When home prices are lower, it is very tempting for potential buyers to try to wait as long as possible in the hopes that prices will decline even further. This strategy can be detrimental because when there is high inventory, smart sellers price their homes properly - not according to past sales but according to current conditions - so their homes will sell in a timely fashion. Once a home is priced to what the current market will bear, buyers will make offers.
Shop Around. But Don’t Wait Too Long. The National Association of REALTORS reports that, on average, homes stay on the market for 7.5 months. The increased inventory gives homebuyers a great opportunity to compare homes that meet their needs. However, this does not mean that homebuyers should procrastinate. If you find a house you love, put in your bid and negotiate. Don’t provide an opportunity for another buyer to make an offer.
Watch Mortgage Rates Studies such as the 2006 Coldwell Banker® Homeownership in America Index revealed that that majority of people move based on lifestyle changes such as new job, marriage, divorce or family expansion. Pay attention to the mortgage rates and recognize that buying a new house will likely result in a change in mortgage rates. How much? A monthly payment of a 30-year fixed 5.875 mortgage rate on a 300,000 loan is $1,774.61. The monthly payment at today’s 6.381 rate is $1,872.79, representing a $98.18 increase.
Negotiate on the Incentives Sellers eager to move their homes may offer you a variety of incentives such as cars, trips, and even credit card bill payment. If you accept an incentive, make sure it makes sense for you. Instead of having your bills paid, you may opt to have the seller renovate the master bathroom or install new flooring. Of course, you can always ask the seller to simply deduct the amount in question from the list price.
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10 Questions to Ask Your Lender
Be sure you find a loan that fits your needs with these comprehensive questions.- What are the most popular mortgage loans you make? Why?
- Which type of mortgage plan do you think would best for us? Why?
- Are your rates, terms, fees, and closing costs negotiable?
- Will I have to buy private mortgage insurance? If so how much will it cost and how long will it be required? NOTE: Private mortgage insurance is usually required if you make less than a 20-percent downpayment, but most lenders will let you discontinue the policy when you’ve acquired a certain amount of equity by paying down the loan.
- Who will service the loan? Your bank or another company?
- What escrow requirements do you have?
- How long is your loan lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if they drop during this period?
- How long will the loan approval process take?
- How long will it take to close the loan?
- Are there any charges or penalties for prepaying the loan?
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Your Guide to Buying Your Vacation Home
Research regarding the vacation home market indicates the secondary home market is strong and thriving. And it's easy to understand why. In our hectic and stressful lives we all dream of a place where we can go and"escape" from it all. We'll help make your dreams come true.Throughout this guide, I will attempt to answer some of the most common questions buyers tend to ask. For additional information, contact me at brad@bradbeacham.com.
Can I afford to buy and maintain a second home?
Second-home ownership is surprisingly affordable. According to the National Association of Realtors, the typical second-home owner earned a household income of $85,900 in 2003. Of course, your own personal finances will determine the purchase price you can afford. You should also keep in mind that, in addition to your mortgage payments, taxes and insurance, there would also be maintenance and travel costs to and from your primary residence. To offset some of these expenditures, you may want to consider renting your property or even investing in a vacant lot now and building later.
What type of property is best for me?
Single-family detached - From a rustic cabin to a waterfront mansion, the selection is endless. Single-family properties usually offer more privacy and fewer use restrictions than attached housing or planned-unit communities. Single-family, detached properties are generally more expensive than attached dwellings of similar size. And the single-family homeowner is responsible for exterior maintenance and landscaping.
Attached housing - From a studio condominium to a luxury townhouse, the choices vary here too. With an attached property, you typically own your particular unit and share ownership of the common-area amenities with other homeowners in the development.
However, you may or may not be able to own the land under your dwelling. An association normally governs attached properties through written protective Covenants, Conditions and Restrictions. Always read these carefully before your final decision to purchase, since all property owners in a development must comply with these terms and conditions.
Keep in mind monthly association dues are customary to cover the cost of exterior maintenance, taxes, fire insurance and reserves for future repairs. In some developments, portions of your utilities may also be included in association dues.
Let your interests guide you when deciding which type of property to buy.
What are my financing alternatives?
Financing a second home is similar to financing your primary residence. A lender will evaluate your credit history and rating, debt-to-income ratios, verify your employment and bank deposits.
While most lenders require a minimum down payment of 20%, some may require less - others more. But all require the borrower to have a source of income that covers repayment of the debt and allows adequate funds for expenses relating to the use of the property.
There's also certain guidelines most second-home lenders take into consideration:
- The property should be remote in distance or time of travel from your primary residence, but at a reasonable enought distance to function as a second home.
- The property must be located in a resort area that would generally appeal to vacationers.
- The mortgagor (you) can rent out the property, but the property cannot be subject to an agreement that gives a management firm total control over the occupancy.
The lender will also evaluate the appraised value of the property, its suitability for year-round occupancy and its conformity with local zoning regulations. As an option, you may also want to consider refinancing your primary residence as a down payment source.
As financing terms change frequently, keep in toucn with your sales associate for the most up-to-date programs. Coldwell Banker Seaside Realty offers an in-house mortgage company for your convenience. Visit www.midatlanticmtg.net for more information.
Who will take care of the property when I am not there?
Since you won't occupy your vacation home on a year-round basis, you should consider ways to maintain your investment when you're not there. Property management is available to homeowners in most resort areas on a fee basis with services ranging from maintenance to housekeeping.
If you plan to rent your property, using a professional property manager is highly recommended. They offer a variety of services including renter relations, security deposits and rent collection. And most important, they'll ensure you piece-of-mind while you're away.
If you are interested in putting your home in a vacation rental program, please visit our sister company, Seaside Vacations, at www.outerbanksvacations.com.
Is buying a second home a good investment?
Although it is not possible to accurately predict future investment potential for resort properties, certain trends indicate a promising future.
According to a recent survey by the National Association of Realtors, the aging of the baby boom generation and the historically strong performance of real estate as an investment are driving up demand for second homes.
Mortgage interest rates also play an important role when it comes to buying a second home. They increase affordability by lowering the monthly payment, often allowing homeowners to purchase a more expensive home.
Appreciation in home values also is helping boost second home sales. In the past five years, homes in the United States have appreciated an average of 37 percent in value. As a result, homeowners may be able to tap into the equity in their primary residence to make a down payment on a second home.
Coupling these factors together indicates that long-term investment potential in second-home ownership looks optimistic.
What tax benefits may be available to me?
Second-home ownership may offer certain tax advantages depending on the use of the property. In the United States, interest and property taxes on second homes are generally tax-deductible on your Federal income tax, and certain other rental expenses may also be deductible. Outside the U.S., other tax policies apply. Tax rules and regulations change frequently, so you should consult with your tax advisor prior to purchasing your second home.
What factors may affect the value of my home?
- A property located in driving proximity of a metroplitan area will have greater sales potential when it's time to sell.
- A property convenient to shopping, restaurants and local attractions will be more desirable than a more remote location.
- An area that offers recreational activities during more than one season will appeal to a wider selection of potential buyers.
- An attractive, well-maintained property is always easier to sell.
- A property with a good rental history will be more desirable to a buyer with investment potential in mind.
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Questions to Ask a Seller When Considering an Offer
The process leading up to making an offer on a home can be a daunting. After you’ve found the right home, you will still need to assess various factors that can impact both the details of your offer and the seller’s willingness to work with you. If you are considering making an offer on a home, you may want to start by getting some information about the seller and their history with the home. The first question to consider is:Why are you selling?
In some sense, what you are really asking is: "how motivated are you to sell your home?" Assessing the type of answer you receive to the initial question may help you structure a potential offer. For instance, if the homeowner has already purchased another property or the family is trying to relocate, you might be dealing with a flexible seller. Gaining some insight into the seller’s motivation will help you determine not only how motivated they are to sell but also how they might assess your offer.
Another question that can help you understand how the seller might view your offer is:
How much did you pay for your home?
Though this might seem like privileged information, such statistics are actually public record. Generally speaking, the seller who purchased their home for a low price and built up equity in the property over several years may be more flexible when approached with offers. On the other hand, homeowners who haven’t seen such an increase in their home’s value might be more reluctant to lower their asking price.
After gaining an understanding of how the seller might treat a potential offer, you may want to ask questions about the upkeep of the home and the quality of the surrounding neighborhood. Beginning with the quality of the property itself, you will certainly want to inquire:
What types of repairs have been done recently?
You may want to start by asking the homeowner about your specific concerns. Homeowners will always be happy to tell you about upgrades that have been made to the home, but you may want to pay attention to what isn’t mentioned. It is important to ask because you will be able to tell if a kitchen or bathroom was remodeled after viewing the home or consulting the disclosure document, but you might miss some smaller issues that could impact the details of your offer.
To further protect yourself against surprise renovation costs in a new home, you may want to verify the age and working condition of all major appliances. If possible, check the service records of important appliances (furnaces, water heaters, etc.) as these often serve as markers of a home’s overall upkeep. You can also try securing a monthly estimate of utility costs; these statistics will not only help you estimate future costs but could potentially highlight unhealthy energy consumption within the home’s infrastructure.
Lastly, regarding the surrounding neighborhood, try to open the conversation about the area by asking:
What can you tell me about the neighborhood?
Allow the seller to tell you the good and the bad. By asking the seller for their overall impressions of the neighborhood, you will probably learn things about the area that a more specific question might not have yielded. Follow up the seller’s initial response with questions that are important to you and your family. Based on your needs, you could ask questions like the following: Is there any new construction planned in the neighborhood? What are your thoughts about the nearest schools? Are any businesses or schools scheduled to close? How would you describe the neighbors?
The research you conduct with your agent prior to making an offer is one of the best ways to ensure that your family finds the right home for the right price. As you approach the offer stage, remember that you are not alone and can work closely with your agent to learn as much as possible about the property and the details of the buying process. Furthermore, you shouldn’t be afraid to ask for help if you have questions or concerns about a potential offer. Though the process of making an offer on a property may seem stressful, your diligence will pay off when you finally find a house to call home.
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How to Prepare for Closing
After making the decision to buy a home, many buyers are surprised by the amount of work required for a successful closing. To ensure that you are prepared to close on the home, you may want to develop a checklist of necessary steps with your real estate agent. As you prepare to complete the sale and move into your new home, consider the tips offered here concerning the most important tasks facing homebuyers.After you have filed your loan application and placed a deposit on the home, your mortgage lender will provide you with an estimate of closing costs. As the amount provided by the mortgage lender is merely an estimate and can change prior to closing, you are allowed to inspect all the loan documents the day before closing. Once you have confirmed the amount, including the remainder of the down payment, you will need to obtain a certified or cashier’s check. In most cases, personal checks are not acceptable for payment of closing costs, so work with your agent if you have concerns about the proper methods of payment.
Most real estate professionals recommend performing a final walk-through inspection of the home before finalizing the sale. In most cases, the contract between both parties will include a clause allowing the buyer to inspect the property within the 24 hours prior to closing. At this time, the buyer should make sure the home is vacated, all appliances that the seller agreed to leave in the home are intact and any repairs included in the terms of the sale have been completed. If needed, you can also request that the seller perform a walkthrough with you to explain all of the home’s details.
For the most part, this final walkthrough is the buyer’s last opportunity to ensure the terms of the contract are met. If any problems are uncovered during the inspection, you can work with your agent to obtain funds from the seller for repairs or postpone the closing until all repairs are made.
Another requirement of the closing process is the purchase of homeowner’s insurance. Required by nearly all mortgage lenders, this insurance protects both homeowner and lender against loss in case of damage to the home. Most homeowner’s insurance policies will include personal liability for the buyer – protecting the homeowner in the event of accident or injury on the property – and a combination of coverage against theft, fire, flood and region-specific weather concerns. By working with your real estate agent and mortgage lender, you should be able to find an acceptable policy that meets the requirements of the loan. At the time of closing, you will need to provide proof of insurance to the mortgage lender before finalizing the sale.
In some cases, title insurance may also be required by your mortgage lender. This simple policy protects both the buyer and lender in the event that problems with the title are uncovered after the sale is finalized. If required, both the lender and homeowner need individual title insurance policies, yet these are usually combined into a joint policy to be financed by the buyer.
Prior to the closing date, the buyer should also transfer all utility accounts from the seller. Besides being a required part of many closing proceedings, this small step will ensure that your new home is ready for move-in after the sale is completed.
On closing day, you can expect to sit down with your legal representation to finalize the sale. If you have completed the steps outlined here and arrive with proper documentation, you can expect a smooth closing. In fact, if you follow your checklist prior to closing day, you can begin focusing on life in your new home as soon as you like.
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