8 KEYS TO YOUR NEXT HOME PURCHASE

Here is a quick check list of items that can help you navigate your next home purchase.  If you are a first-time home buyer these 8 keys will assist you in smoothing out any bumps along the road.

1. First things first - Before you get too far down the road in your home buying experience the first place you need to visit is a mortgage lender to discuss your financing options.  Just because you see "the house" does not mean you can afford it. 

2. Use a proven lender - The mortgage industry has its fake and unreliable lenders.  Some sellers reject offers because of the buyer's lender.  Make sure your financing is rock-solid.   Interview more than one lender to compare rates and terms.  Check all the potential lenders rating with the Better Business Bureau.  

3. Get a pre-approval letter - Obtain a pre-approval letter from your lender.  It is their commitment for financing your loan up to a certain amount and be sure it is good for up to 90-120 days.  Sellers want to be certain that your letter of approval is included with your offer and that the lender is reliable.

4. Shop in your price range - Stick to your budget!  Resist the temptation to stretch beyond your means and attempt to purchase a house outside your price range.  

5. Making a lowball offer in a seller's market - You need to work with your real estate agent to determine if the house you are interested in has a fair listing price.  When a home is price right often paying full price make sense. 

6. Write a thoughtful letter to the seller - Writing a personal letter to the seller is one way to help support your offer for the house.  Stick to the facts and tell the seller why you love the house and the neighborhood.  Remember, buying and selling a home has emotional strings attach to it.

7. Do not make any big purchases while in escrow - Avoid the urge to get large ticket items for your "new" house that may affect your credit status.  Opening a new credit account will not go unnoticed by your mortgage lenders underwrite and may impact whether you are still able to qualify for the loan.

8. Budget for closing costs - If you do not have enough cash to cover closing costs, you will not make it to settlement and you could lose your earnest money deposit.  Make sure your lender gives an estimate of your closing cost.  Go over the figures with your real estate agent to double check the figures. 

Closing costs vary by location, but they typically total 2% - 7% of the home's purchase price. 

By following these 8 Keys you can avoid delays and hurdles along the way and make your next home buying experience your best.

WE ARE MOVING!

 GREAT NEWS!  WE HAVE JUST FOUND A NEW HOME ON WEDNESDAY AND WE WOULD LOVE FOR YOU TO COME AND VISIT US THEN.

BUILDING YOU OWN HOME

 Looking for the house, not just any house, but THE house is a challenge.  You find so many little things here and there that are not quite what you wanted.  "If only they had...", becomes the catch phrase of all your efforts.  You curl up on the couch and mutter, "Why don't we build our own house the way we want it."  Well, why don't you!

Well, before you do, you may want to rent a copy of Mr. Blandings Builds His Dream House to see if you are up to the challenge.  But once you convince yourself that building is the way to go, let's sit down and check out all that you have just committed yourself (and your family) to endure.

Here are 6 considerations to ponder when building your "dream house".

1. Materials - To paraphrase a friend, "What is there to putting up a few walls?" Material selection is important.  If you are operating on a shoestring budget, you count every nail.  If your budget is unlimited, well anything goes when it comes to material selection - solid gold fixtures in all the bathrooms, why not!

2. Time Frame - Just how long does it take to build a house depends on the house design, the weather, the availability of materials, and available skilled labor.  Where will you live till your "dream" is a reality.  Custom builds can take up to six months to complete.

3. Warranties - Hiring a licensed general contractor may give you a sense of security that the construction is done to local code and design specifications, but after you take ownership who will be there to repair flaws?  Mike Holmes has made a career out of "Making It Right" when homeowners deal with design flaws.

4. Selecting Upgrades - A solid gold shower head certainly looks out of place in a rustic log cabin.  It is important to select upgrades that will optimize the design of your home as well as be within budget.

5. Managing Negotiations - Ah, here is where we get to the heart of the matter.  Getting bids from sub-contractors, reviewing them, and finalizing terms for work to be completed all while holding down your 9-5 job that is paying for all this work.  

6. Dealing with roadblocks - Even before the shovel turns up the first patch of soil there are the hurdles and hoops you will have to jump over and through just to get your designed approved by the local building department.  Then once construction begins there are the scheduled inspections, scheduling conflicts and dealing with delays from suppliers and contractors.

You may think I am painting a negative picture here for those who want to build their own house, I am not.  I am reminded of the line uttered by George Blandings in the above-mentioned movie: Despite all the delays, cost overrides and difficulties, when all was said and done - "it is all mine!"  And will be all yours too.

20% DOWN PAYMENT BLUES

You are eager to buy your first home or must relocate to a new town and you are struggling to come up with the 20% down payment for your new home.  There is good news for you.  Today's average down payment is less than the "traditional" 20%.  

The National Association of Realtors has been tracking the average down payments for several years and evidence supports the claim that 20% is no longer necessary to obtain a home loan.

The average down payment over the last few years has been 12% and 7% for first time home buyers.  

There is one caveat to the less than 20% down payment story.  When buyers put down less than 20% on a mortgage loan, they are usually required to pay for mortgage insurance.  The purpose of mortgage insurance is to protect the lender in the event you default on your loan.  The upside of mortgage insurance is you are not stuck paying forever.  Mortgage insurance goes away once you reach 20% equity. 

Is it better to put 20% down?  Here are several reasons to support the 20% down claim.

 1. You will not pay for mortgage insurance.

 2. Your monthly payment will be lower.

 3. You will likely have a lower mortgage interest rate.

 4. Lenders are more likely to compete for your business.

How much should you put down?  Good question, however, there is no single right answer. Factors that may influence your down payment are:

 1. How long you plan to live in the home.

 2. The housing market in your area.

 3. How much you will need for closing costs, homeowner's insurance, and property taxes.

 4. Additional expenses related to setting up a new household.

All good points to consider when planning to purchase your next home.