Provided By Realty Times
Homeownership has been part of the American Dream for centuries, and it's no wonder why. It rocks.
First, owning a home is an investment. No, it's not a sure-fire way to get rich-quick. It is a long-term investment. Over the course of many years, even through times of economic upheaval, you can build wealth over time.
An average appreciation rate during normal times is around 6.5 percent a year. That means if you buy a home for $100,000, in just ten years you will have a home that could feasibly sell for around $174,000.
During that time you build equity, as well. Equity is the value of your property minus what you owe. So even if you still owe $60,000 on your home after 10 years, you will now have $114,000 in equity. Many homeowners use this equity to take out loans to use for home improvement projects, such as adding on new additions.
Owning a home also comes with less tangible benefits. Studies have shown that it creates a sense of community, motivating community involvement. And family stability is manifested through higher graduation rates and lower crime rates.
When you own a home, you take control of the creation of your surroundings. You can paint, make updates, and style the home to your liking -- all things not possible with most rentals.
You have even further stability when you have a fixed-rate mortgage. A fixed-rate means your rate will never increase. This means you will know the cost of your mortgage for the life of the loan. There won't be any surprises, which is what caught many homeowners off guard during the sub-prime mess. And there aren't any worries about the cost of rent going up each year. You can budget for life!
Don't forget about those great tax breaks, such as deducting your mortgage interest, and tax credits, such as money back for making energy efficient upgrades!
And of course, just think of all the fun times you can have with your family and friends. Memories will be made that will last a lifetime!
Would you like to know more reasons why owning a home in Rockwall ROCKS! Call us at 972.772.7000 or email us at frontdesk552@kw.com.
Showing posts with label advice for buyers. Show all posts
Showing posts with label advice for buyers. Show all posts
Monday, April 4, 2011
Monday, January 17, 2011
Buying Your First Home
Finding the right first home starts with a price range and a short list of desirable neighborhoods. But there are many other factors you'll need to consider before investing in what may be your biggest asset.
Provided By Yahoo! Real Estate
Before You Start:
•Grab your current household budget so you can consider your financial situation and your ability to make mortgage payments.
•Ask family and friends if they can recommend experts, like a lawyer and an inspector, who can help with the home buying process.
•Think about your lifestyle and how it might affect your choice of home and neighborhood.
•Do a little research on current home prices in the neighborhoods you plan to target.
Buying Your First Home
Home ownership is the cornerstone of the American Dream. But before you start looking, there are a number of things you need to consider. First, you should determine what your needs are and whether owning your own home will meet those needs. Do you picture yourself mowing the lawn on Saturday, or leaving your urban condo for the beach? The best advice is to look at buying a home as a lifestyle investment, and only secondly as a financial investment.
Even if housing prices don't continue to increase at the torrid pace seen in recent years in many areas, buying a home can be a good financial investment. Making mortgage payments forces you to save, and after 15 to 30 years you will own a substantial asset that can be converted into cash to help fund retirement or a child's education. There are also tax benefits.
Like many other investments, however, real estate prices can fluctuate considerably. If you aren't ready to settle down in one spot for a few years, you probably should defer buying a home until you are. If you are ready to take the plunge, you'll need to determine how much you can spend and where you want to live.
How Much Mortgage Can You Afford?
Many mortgages today are being resold in the secondary markets. The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Mortgages that conform to Fannie Mae's standards may carry lower interest rates or smaller down payments. To qualify, the mortgage borrower needs to meet two ratio requirements that are industry standards.
The housing expense ratio compares basic monthly housing costs to the buyer's gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, your monthly housing cost should not exceed 28 percent of your monthly gross income.
The total obligations to income ratio is the percentage of all income required to service your total monthly payments. Monthly payments on student loans, installment loans, and credit card balances older than 10 months are added to basic housing costs and then divided by gross income. Your total monthly debt payments, including basic housing costs, should not exceed 36 percent.
Many home buyers choose to arrange financing before shopping for a home and most lenders will "pre-qualify" you for a certain amount. Prequalification helps you focus on homes you can afford. It also makes you a more attractive buyer and can help you negotiate a lower purchase price. Nothing is more disheartening for buyers or sellers than a deal that falls through due to a lack of financing.
In addition to qualifying for a mortgage, you will probably need a down payment. The 28 percent to 36 percent debt ratios assume a 10 percent down payment. In practice, down payment requirements vary from more than 20 percent to as low as 0 percent for some Veterans Administration (VA) loans. Down payments greater than 20 percent generally buy a better rate. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.
How Much Home Can You Afford?
Bob and Janet's combined income is $50,000 a year, or $4,166 a month. Their housing expense ratio of 28 percent yields a monthly maximum of $1,166 for mortgage, insurance, and taxes ($4,166 x 0.28 = $1,166).
Their total debt ceiling of 36 percent is $1,583 (4,166 x 0.36 = $1,500). Their monthly debt payments include a $200 car payment, credit card payments of $100, and student loan payments of $200. Subtracting this total of $500 from the $1,500 permitted leaves $1,000 in monthly housing payments.
Costs of Buying a Home
Many home buyers are surprised (shocked might be a better word) to find that a down payment is not the only cash requirement. A home inspection can cost $200 or more. Closing costs may include loan origination fees, up-front "points" (prepaid interest), application fees, appraisal fee, survey, title search and title insurance, first month's homeowners insurance, recording fees and attorney's fees. In many locales, transfer taxes are assessed. Finally, adjustments for heating oil or property taxes already paid by the sellers will be included in your final costs. All this will probably add up to be between 3 percent and 8 percent of your purchase price.
Ongoing Costs
In addition to mortgage payments, there are other costs associated with home ownership. Utilities, heat, property taxes, repairs, insurance, services such as trash or snow removal, landscaping, assessments, and replacement of appliances are the major costs incurred. Make sure you understand how much you are willing and able to spend on such items.
Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.
Choosing a Neighborhood
Before you start looking at homes, look at neighborhoods. Schools and other services play a large part in making a neighborhood attractive. Even if you don't have children, your future buyer may. Crime rates, taxes, transportation, and town services are other things to look at. Finally, learn the local zoning laws. A new pizza shop next door might alter your property's future value. On the other hand, you may want to run a business out of your home.
Look for a neighborhood where prices are increasing. As the prices of the better homes increase, values of the lesser homes may rise as well. If you find a less expensive home in a good neighborhood, make sure you factor in the cost of repairs or upgrades that such a house may need.
Finding a Broker
If you are a first-time home buyer, you will probably want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, but remember that most brokers are working for the seller, and in the end, their primary obligation is to the seller and not to you. An alternative is a so-called buyer's broker. This individual does work for you, and therefore is paid by you. Seller's brokers are paid by the seller.
Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5 percent to 7 percent and are split between the listing broker and the broker that eventually sells the home. Don't be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.
Home Buying Costs
Down Payment 0% - 20% of purchase price
Home Inspection $200 - $500
Points $1,000 and up for 1% - 3%
Adjustments 3% - 8% of purchase price
Once you've determined a price range and location, you're ready to look at individual homes. Remember that much of a home's value is derived from the values of those surrounding it. Since the average residency in a house is seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.
Although it can be difficult, try to remember that you will probably want to sell this home someday. The more research you do today, the better your decision will look in the years to come.
Summary:
•Buying a home can mean building significant value through the years.
•Think carefully about how much you can afford to spend and consider borrowing guidelines like those used by Fannie Mae.
•Pre-qualifying with your lender is a good way to determine how much house you can afford.
•You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.
•In addition to your mortgage payments, you will also need to consider the other costs of home ownership.
•Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
•Brokers usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.
•Remember to consider resale value when buying your home.
If you are ready to buy your first home, give us a call at 972-772-7000 or email us at rockwall@kw.com.
Provided By Yahoo! Real Estate
Before You Start:
•Grab your current household budget so you can consider your financial situation and your ability to make mortgage payments.
•Ask family and friends if they can recommend experts, like a lawyer and an inspector, who can help with the home buying process.
•Think about your lifestyle and how it might affect your choice of home and neighborhood.
•Do a little research on current home prices in the neighborhoods you plan to target.
Buying Your First Home
Home ownership is the cornerstone of the American Dream. But before you start looking, there are a number of things you need to consider. First, you should determine what your needs are and whether owning your own home will meet those needs. Do you picture yourself mowing the lawn on Saturday, or leaving your urban condo for the beach? The best advice is to look at buying a home as a lifestyle investment, and only secondly as a financial investment.
Even if housing prices don't continue to increase at the torrid pace seen in recent years in many areas, buying a home can be a good financial investment. Making mortgage payments forces you to save, and after 15 to 30 years you will own a substantial asset that can be converted into cash to help fund retirement or a child's education. There are also tax benefits.
Like many other investments, however, real estate prices can fluctuate considerably. If you aren't ready to settle down in one spot for a few years, you probably should defer buying a home until you are. If you are ready to take the plunge, you'll need to determine how much you can spend and where you want to live.
How Much Mortgage Can You Afford?
Many mortgages today are being resold in the secondary markets. The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Mortgages that conform to Fannie Mae's standards may carry lower interest rates or smaller down payments. To qualify, the mortgage borrower needs to meet two ratio requirements that are industry standards.
The housing expense ratio compares basic monthly housing costs to the buyer's gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, your monthly housing cost should not exceed 28 percent of your monthly gross income.
The total obligations to income ratio is the percentage of all income required to service your total monthly payments. Monthly payments on student loans, installment loans, and credit card balances older than 10 months are added to basic housing costs and then divided by gross income. Your total monthly debt payments, including basic housing costs, should not exceed 36 percent.
Many home buyers choose to arrange financing before shopping for a home and most lenders will "pre-qualify" you for a certain amount. Prequalification helps you focus on homes you can afford. It also makes you a more attractive buyer and can help you negotiate a lower purchase price. Nothing is more disheartening for buyers or sellers than a deal that falls through due to a lack of financing.
In addition to qualifying for a mortgage, you will probably need a down payment. The 28 percent to 36 percent debt ratios assume a 10 percent down payment. In practice, down payment requirements vary from more than 20 percent to as low as 0 percent for some Veterans Administration (VA) loans. Down payments greater than 20 percent generally buy a better rate. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.
How Much Home Can You Afford?
Bob and Janet's combined income is $50,000 a year, or $4,166 a month. Their housing expense ratio of 28 percent yields a monthly maximum of $1,166 for mortgage, insurance, and taxes ($4,166 x 0.28 = $1,166).
Their total debt ceiling of 36 percent is $1,583 (4,166 x 0.36 = $1,500). Their monthly debt payments include a $200 car payment, credit card payments of $100, and student loan payments of $200. Subtracting this total of $500 from the $1,500 permitted leaves $1,000 in monthly housing payments.
Costs of Buying a Home
Many home buyers are surprised (shocked might be a better word) to find that a down payment is not the only cash requirement. A home inspection can cost $200 or more. Closing costs may include loan origination fees, up-front "points" (prepaid interest), application fees, appraisal fee, survey, title search and title insurance, first month's homeowners insurance, recording fees and attorney's fees. In many locales, transfer taxes are assessed. Finally, adjustments for heating oil or property taxes already paid by the sellers will be included in your final costs. All this will probably add up to be between 3 percent and 8 percent of your purchase price.
Ongoing Costs
In addition to mortgage payments, there are other costs associated with home ownership. Utilities, heat, property taxes, repairs, insurance, services such as trash or snow removal, landscaping, assessments, and replacement of appliances are the major costs incurred. Make sure you understand how much you are willing and able to spend on such items.
Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.
Choosing a Neighborhood
Before you start looking at homes, look at neighborhoods. Schools and other services play a large part in making a neighborhood attractive. Even if you don't have children, your future buyer may. Crime rates, taxes, transportation, and town services are other things to look at. Finally, learn the local zoning laws. A new pizza shop next door might alter your property's future value. On the other hand, you may want to run a business out of your home.
Look for a neighborhood where prices are increasing. As the prices of the better homes increase, values of the lesser homes may rise as well. If you find a less expensive home in a good neighborhood, make sure you factor in the cost of repairs or upgrades that such a house may need.
Finding a Broker
If you are a first-time home buyer, you will probably want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, but remember that most brokers are working for the seller, and in the end, their primary obligation is to the seller and not to you. An alternative is a so-called buyer's broker. This individual does work for you, and therefore is paid by you. Seller's brokers are paid by the seller.
Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5 percent to 7 percent and are split between the listing broker and the broker that eventually sells the home. Don't be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.
Home Buying Costs
Down Payment 0% - 20% of purchase price
Home Inspection $200 - $500
Points $1,000 and up for 1% - 3%
Adjustments 3% - 8% of purchase price
Once you've determined a price range and location, you're ready to look at individual homes. Remember that much of a home's value is derived from the values of those surrounding it. Since the average residency in a house is seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.
Although it can be difficult, try to remember that you will probably want to sell this home someday. The more research you do today, the better your decision will look in the years to come.
Summary:
•Buying a home can mean building significant value through the years.
•Think carefully about how much you can afford to spend and consider borrowing guidelines like those used by Fannie Mae.
•Pre-qualifying with your lender is a good way to determine how much house you can afford.
•You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.
•In addition to your mortgage payments, you will also need to consider the other costs of home ownership.
•Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
•Brokers usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.
•Remember to consider resale value when buying your home.
If you are ready to buy your first home, give us a call at 972-772-7000 or email us at rockwall@kw.com.
Monday, January 10, 2011
Best Times to Buy
Provided By Yahoo! Real Estate
A Conventional wisdom says that you need to stay in a home a minimum of five years to ensure that you recoup your purchasing costs. But with some markets soaring, this advice doesn't always apply.
It's All About the Market
Market conditions play a huge part in any decision about when to buy. Housing market values have varied widely from region to region in recent years. While the Florida market has seen meteoric rises in home values, Ohio has seen its real estate prices go into negative territory in the last year.
Do not buy high and sell low - if your market is softening or has hit its peak and is heading south, you may want to wait on your purchase.
The magazine Smart Money has created a worksheet to compare the costs of renting vs. buying using market appreciation calculations to determine at what point you come out ahead. Plugging in the price, down payment, your income bracket, interest rate, and current market appreciation rates, the worksheet will break out what you will gain.
For example, say you were to buy a $400,000 house in Boulder, Colorado and you estimate the market will soften from the current 11% appreciation to about 9 percent annually. If you stayed in the house three years, you would recover $88,750 in equity at the end of that period; if you stayed five years, you'd realize
$120,360.
It's All About You
The top three reasons people file for bankruptcy are change of job status, divorce, and unforeseen health expenses. If you face any of these challenges and don't have a financial cushion, this may negatively impact your ability to pay a mortgage. Big life events dictate your readiness to buy now or to wait for a little more stability.
Signs you should not buy right now:
•Will you be moving within the next five years?
•Will you be having kids soon?
•Will you be making a job change?
•Have you recently filed for bankruptcy or is your credit score below 630?
If you answered yes to any of these questions, or you are experiencing other life-changing events like illness, marriage, divorce, or breakup, you may want to wait.
Your Financial Future
Aside from life events contributing to your decision, getting your financial house in order before you begin your home search is key. Even with all the programs available for buyers with a low-or-no down payment, if your debts are growing steadily and you don't foresee an increase in your income, you are putting yourself in greater financial risk by taking on a mortgage.
With only a few exceptions, many loans for people who are still repairing their credit or recovering from bankruptcy carry higher rates than those available once your credit is in better shape. So the question comes down to this: Do you buy now, before prices appreciate higher than you can afford, but do so with an expensive loan? Or do you wait and repair your credit, then get a favorable loan, and pay more for your home?
That's the sort of analysis you need to go over with a financial counselor or mortgage broker before you start hitting open houses.
Ways to Cushion the Blow
On the other hand, if you are willing to buy a home that needs a bit of work and, over time, you can afford to get it done, your home could appreciate faster, strengthening your financial position. If you are willing to take on a roommate or renter, you can also soften the expense of a mortgage, which almost always costs more than rent. Buying a home is a risk, and it's worth asking yourself hard questions about what you're willing to do to protect yourself from getting in over your head.
If you answered "no" the life-change questions, and have the down payment or equity from your current home, you still need to look at interest rates and at how buying affects your taxes. You can't time the stock market, but you can time interest rate hikes, as they are a little easier to predict. If they are going up fast, you can jump in before they rise too far; if they are already high, you will have to calculate how refinancing in the future affects your budget.
What to Do First
If you are anxious to get moving, be patient. You have a few things to do first:
1.Go to open houses - get the lay of the land
2.Talk to a mortgage broker to get pre-approved
3.Interview agents (You may want to find an agent at the same time as you look for a mortgage broker - a good agent can recommend reputable brokers and help you make sense of the terms of the loan)
4.Review credit report and scores with mortgage broker to determine if any repairs are needed
If you are ready to purchase a home and need an experienced real estate agent, give us a call at 972-772-7000 or email us at rockwall@kw.com.
A Conventional wisdom says that you need to stay in a home a minimum of five years to ensure that you recoup your purchasing costs. But with some markets soaring, this advice doesn't always apply.
It's All About the Market
Market conditions play a huge part in any decision about when to buy. Housing market values have varied widely from region to region in recent years. While the Florida market has seen meteoric rises in home values, Ohio has seen its real estate prices go into negative territory in the last year.
Do not buy high and sell low - if your market is softening or has hit its peak and is heading south, you may want to wait on your purchase.
The magazine Smart Money has created a worksheet to compare the costs of renting vs. buying using market appreciation calculations to determine at what point you come out ahead. Plugging in the price, down payment, your income bracket, interest rate, and current market appreciation rates, the worksheet will break out what you will gain.
For example, say you were to buy a $400,000 house in Boulder, Colorado and you estimate the market will soften from the current 11% appreciation to about 9 percent annually. If you stayed in the house three years, you would recover $88,750 in equity at the end of that period; if you stayed five years, you'd realize
$120,360.
It's All About You
The top three reasons people file for bankruptcy are change of job status, divorce, and unforeseen health expenses. If you face any of these challenges and don't have a financial cushion, this may negatively impact your ability to pay a mortgage. Big life events dictate your readiness to buy now or to wait for a little more stability.
Signs you should not buy right now:
•Will you be moving within the next five years?
•Will you be having kids soon?
•Will you be making a job change?
•Have you recently filed for bankruptcy or is your credit score below 630?
If you answered yes to any of these questions, or you are experiencing other life-changing events like illness, marriage, divorce, or breakup, you may want to wait.
Your Financial Future
Aside from life events contributing to your decision, getting your financial house in order before you begin your home search is key. Even with all the programs available for buyers with a low-or-no down payment, if your debts are growing steadily and you don't foresee an increase in your income, you are putting yourself in greater financial risk by taking on a mortgage.
With only a few exceptions, many loans for people who are still repairing their credit or recovering from bankruptcy carry higher rates than those available once your credit is in better shape. So the question comes down to this: Do you buy now, before prices appreciate higher than you can afford, but do so with an expensive loan? Or do you wait and repair your credit, then get a favorable loan, and pay more for your home?
That's the sort of analysis you need to go over with a financial counselor or mortgage broker before you start hitting open houses.
Ways to Cushion the Blow
On the other hand, if you are willing to buy a home that needs a bit of work and, over time, you can afford to get it done, your home could appreciate faster, strengthening your financial position. If you are willing to take on a roommate or renter, you can also soften the expense of a mortgage, which almost always costs more than rent. Buying a home is a risk, and it's worth asking yourself hard questions about what you're willing to do to protect yourself from getting in over your head.
If you answered "no" the life-change questions, and have the down payment or equity from your current home, you still need to look at interest rates and at how buying affects your taxes. You can't time the stock market, but you can time interest rate hikes, as they are a little easier to predict. If they are going up fast, you can jump in before they rise too far; if they are already high, you will have to calculate how refinancing in the future affects your budget.
What to Do First
If you are anxious to get moving, be patient. You have a few things to do first:
1.Go to open houses - get the lay of the land
2.Talk to a mortgage broker to get pre-approved
3.Interview agents (You may want to find an agent at the same time as you look for a mortgage broker - a good agent can recommend reputable brokers and help you make sense of the terms of the loan)
4.Review credit report and scores with mortgage broker to determine if any repairs are needed
If you are ready to purchase a home and need an experienced real estate agent, give us a call at 972-772-7000 or email us at rockwall@kw.com.
Friday, November 26, 2010
10 Tips For New Buyers
By Carla Hill
Source Realty Times
It is a great time to buy for many would-be homeowners. The market offers historically low interest rates, as well as affordable home prices.
Here are 10 steps that buyers can take to make home dreams a reality!
1. Savings. You may already know how much monthly payment you can support (experts recommend no more than 1/3 your monthly income), but the buying process will also include upfront costs, such as a downpayment and closing costs.
2. Downpayment options. Do you qualify for downpayment assistance programs? Will you be able to get an FHA loan and pay 3.5 percent down? Do you have a relative that would like to make a downpayment gift? Many financial experts recommend a downpayment of 20 percent, so be sure to explore your options!
3. Check Credit Report. Your credit report says a lot about you. Lenders use it to evaluate your risk potential and to inform themselves on how responsible of a borrower you are. They use this report and subsequent score to figure your interest rate. The more stellar your report, the better your score and thus lower your rate. Be sure to check your report for accuracy, and report any errors to the credit reporting agencies.
4. Get Prequalified. It's time to talk to a lender! Pre-qualification will give you a ballpark figure of how much the bank would be willing to lend you. Are you looking for a $100,000 house or a $300,000?
5. Get Preapproved. This is the official letter from the lender that says they will be willing to lend you money. Many sellers look for buyers who are preapproved.
6. Affordability. The bank may tell you that you can afford a home worth $300,000. This does not mean you want to borrow to your max. A more modest home may fit better in your financial plans.
7. Housing Criteria. You have a budget, now develop a list of what you need and want. This can include anything from "must have 3 bedrooms" to "hardwoods" or "granite".
8. Neighborhood choice. Location strongly affects prices. A 3,000 square foot home in rural Kansas costs a fraction of one in New York City. Decide what neighborhoods and areas are the best fit for you. This will help narrow your home search.
9. Hire an agent. An agent can help you navigate the entire process from searching, putting in offers, to where to hire an inspector or general contractors.
10. Start the search! The MLS is a wonderful place to begin your search. Eighty-four percent of buyers now start their search online, so you'll be in good company.
Do you have questions about buying your first home? We have the answers! Call us at 972-772-7000 or email us at rockwall@kw.com.
Source Realty Times
It is a great time to buy for many would-be homeowners. The market offers historically low interest rates, as well as affordable home prices.
Here are 10 steps that buyers can take to make home dreams a reality!
1. Savings. You may already know how much monthly payment you can support (experts recommend no more than 1/3 your monthly income), but the buying process will also include upfront costs, such as a downpayment and closing costs.
2. Downpayment options. Do you qualify for downpayment assistance programs? Will you be able to get an FHA loan and pay 3.5 percent down? Do you have a relative that would like to make a downpayment gift? Many financial experts recommend a downpayment of 20 percent, so be sure to explore your options!
3. Check Credit Report. Your credit report says a lot about you. Lenders use it to evaluate your risk potential and to inform themselves on how responsible of a borrower you are. They use this report and subsequent score to figure your interest rate. The more stellar your report, the better your score and thus lower your rate. Be sure to check your report for accuracy, and report any errors to the credit reporting agencies.
4. Get Prequalified. It's time to talk to a lender! Pre-qualification will give you a ballpark figure of how much the bank would be willing to lend you. Are you looking for a $100,000 house or a $300,000?
5. Get Preapproved. This is the official letter from the lender that says they will be willing to lend you money. Many sellers look for buyers who are preapproved.
6. Affordability. The bank may tell you that you can afford a home worth $300,000. This does not mean you want to borrow to your max. A more modest home may fit better in your financial plans.
7. Housing Criteria. You have a budget, now develop a list of what you need and want. This can include anything from "must have 3 bedrooms" to "hardwoods" or "granite".
8. Neighborhood choice. Location strongly affects prices. A 3,000 square foot home in rural Kansas costs a fraction of one in New York City. Decide what neighborhoods and areas are the best fit for you. This will help narrow your home search.
9. Hire an agent. An agent can help you navigate the entire process from searching, putting in offers, to where to hire an inspector or general contractors.
10. Start the search! The MLS is a wonderful place to begin your search. Eighty-four percent of buyers now start their search online, so you'll be in good company.
Do you have questions about buying your first home? We have the answers! Call us at 972-772-7000 or email us at rockwall@kw.com.
Monday, November 22, 2010
Buying In Neighborhoods Where Home Prices Don't Fall
By Michele Lerner
Source: http://www.bankrate.com/
Provided By Shelley Dudley
In a world of imploding home prices, can homebuyers find neighborhoods where values will not fall?
Certain characteristics make some neighborhoods more desirable than others. Real estate industry experts say these neighborhoods are more likely to experience stable or rising home prices.
Many buyers today are fixated on price. But such tunnel vision can be shortsighted.
"You may get a good deal on a home in an area where prices fell deeply, but it will take longer for prices to recover," says Pat Kline, a broker with Avery-Hess Realtors in Springfield, Va.
Instead, look beyond price to qualities that keep neighborhoods attractive to buyers over the long haul. Try to match your own lifestyle priorities with a solid choice of community.
"It's important most of all for people to look for a neighborhood they love and will enjoy for the long term, because that's the best way to make sure you get value from your home," Kline says.
When looking for good neighborhoods, keep the following in mind:
Search healthy 'move up' neighborhoods
"The most desirable areas tend to be close to a city and are often well-established neighborhoods," says Ben Hoefer, a real estate agent with John L. Scott Real Estate in Seattle.
In the Seattle market, neighborhoods with slightly above-median prices that appeal to buyers on their second or third home purchase have held onto their value during the housing downturn, Hoefer says.
"Buyers should avoid areas with a lot of foreclosures because it may take longer for those homes to regain their value," Hoefer says. "Areas with a lot of first-time buyers were hard-hit because they did not have a lot of equity in their home and were faster to default. It's better, if you can afford it, to buy into a 'move-up' area, although not necessarily a super-expensive neighborhood."
Liz Sidorowicz, a broker with Re/Max Signature in Chicago, says areas with long-term residents -- where many owners have lived for 15 years or more -- are likely to be more stable and see fewer foreclosures.
Consider commute times and public transportation
Not every buyer wants to live close to a city. But some suburban neighborhoods can be more vulnerable to price drops.
Kline says prices dropped dramatically in distant suburbs of Washington, D.C., in part because the long commute times made these homes less desirable.
"A Realtor can show you statistics for different neighborhoods, so you can see which ones fared better than others," he says.
Sidorowicz also says that proximity to public transportation is valuable.
"Anything close to a train or metro line, whether you are in the suburbs or in the city, will keep its value," says Sidorowicz. "Also, look for communities that are convenient to major employment centers because there will always be a larger pool of buyers looking in that area."
Investigate neighborhood amenities
Look for communities that have a lot of amenities.
"The more varied amenities you can find in a community, the better it is," Kline says. Communities that offer tennis and basketball courts have a stronger value than places where you have to drive 20 minutes to get to anything.
"People want to live close to things like parks, libraries and shops, and they would prefer to walk there rather than drive if they can," Kline says.
Check out the schools
Homebuyers should look for a neighborhood within a good school district, even if they don't have children. Families always want to purchase homes in such neighborhoods.
Due to Fair Housing laws, real estate agents cannot discuss whether schools are good or bad. However, consumers can find test scores and other statistics on school district websites and school reviews on the Internet.
Know the local crime rate
Crime rates also influence neighborhood values. Look at police district websites or call the local police substation to ask about crime statistics for individual neighborhoods, Sidorowicz says.
Hoefer says it's important to look at crime trends: "You do not want to buy in an area where crimes of any kind are increasing."
In areas with improving crime rates, it may take time for perception to catch up to reality, Hoefer says.
"Buyers need to realize that the stigma of a high crime rate can last a long time and hurt property values, even after crime has dropped," he says.
Gauge the neighborhood's curb appeal
The physical appearance of a community can be a strong indicator of its stability.
"If there are too many places in disrepair, that can be an indication of a lack of pride in a community," Kline says. "Places that are well-kept and have some landscaping and fresh paint indicate an area where people will work hard to maintain the value of their property."
Find out about future development plans
Learn about future development plans that could have a negative or a positive impact on property values. Talk to real estate agents and research government websites to track down such information.
"There may be a little risk in relying on a revitalization project to improve home prices, but this can be a way to get in on the ground floor of an improving area," Kline says.
Are you interested in buying a home? Call us at 972-772-7000 or email us at rockwall@kw.com. We want to help you find your perfect home!
Source: http://www.bankrate.com/
Provided By Shelley Dudley
In a world of imploding home prices, can homebuyers find neighborhoods where values will not fall?
Certain characteristics make some neighborhoods more desirable than others. Real estate industry experts say these neighborhoods are more likely to experience stable or rising home prices.
Many buyers today are fixated on price. But such tunnel vision can be shortsighted.
"You may get a good deal on a home in an area where prices fell deeply, but it will take longer for prices to recover," says Pat Kline, a broker with Avery-Hess Realtors in Springfield, Va.
Instead, look beyond price to qualities that keep neighborhoods attractive to buyers over the long haul. Try to match your own lifestyle priorities with a solid choice of community.
"It's important most of all for people to look for a neighborhood they love and will enjoy for the long term, because that's the best way to make sure you get value from your home," Kline says.
When looking for good neighborhoods, keep the following in mind:
Search healthy 'move up' neighborhoods
"The most desirable areas tend to be close to a city and are often well-established neighborhoods," says Ben Hoefer, a real estate agent with John L. Scott Real Estate in Seattle.
In the Seattle market, neighborhoods with slightly above-median prices that appeal to buyers on their second or third home purchase have held onto their value during the housing downturn, Hoefer says.
"Buyers should avoid areas with a lot of foreclosures because it may take longer for those homes to regain their value," Hoefer says. "Areas with a lot of first-time buyers were hard-hit because they did not have a lot of equity in their home and were faster to default. It's better, if you can afford it, to buy into a 'move-up' area, although not necessarily a super-expensive neighborhood."
Liz Sidorowicz, a broker with Re/Max Signature in Chicago, says areas with long-term residents -- where many owners have lived for 15 years or more -- are likely to be more stable and see fewer foreclosures.
Consider commute times and public transportation
Not every buyer wants to live close to a city. But some suburban neighborhoods can be more vulnerable to price drops.
Kline says prices dropped dramatically in distant suburbs of Washington, D.C., in part because the long commute times made these homes less desirable.
"A Realtor can show you statistics for different neighborhoods, so you can see which ones fared better than others," he says.
Sidorowicz also says that proximity to public transportation is valuable.
"Anything close to a train or metro line, whether you are in the suburbs or in the city, will keep its value," says Sidorowicz. "Also, look for communities that are convenient to major employment centers because there will always be a larger pool of buyers looking in that area."
Investigate neighborhood amenities
Look for communities that have a lot of amenities.
"The more varied amenities you can find in a community, the better it is," Kline says. Communities that offer tennis and basketball courts have a stronger value than places where you have to drive 20 minutes to get to anything.
"People want to live close to things like parks, libraries and shops, and they would prefer to walk there rather than drive if they can," Kline says.
Check out the schools
Homebuyers should look for a neighborhood within a good school district, even if they don't have children. Families always want to purchase homes in such neighborhoods.
Due to Fair Housing laws, real estate agents cannot discuss whether schools are good or bad. However, consumers can find test scores and other statistics on school district websites and school reviews on the Internet.
Know the local crime rate
Crime rates also influence neighborhood values. Look at police district websites or call the local police substation to ask about crime statistics for individual neighborhoods, Sidorowicz says.
Hoefer says it's important to look at crime trends: "You do not want to buy in an area where crimes of any kind are increasing."
In areas with improving crime rates, it may take time for perception to catch up to reality, Hoefer says.
"Buyers need to realize that the stigma of a high crime rate can last a long time and hurt property values, even after crime has dropped," he says.
Gauge the neighborhood's curb appeal
The physical appearance of a community can be a strong indicator of its stability.
"If there are too many places in disrepair, that can be an indication of a lack of pride in a community," Kline says. "Places that are well-kept and have some landscaping and fresh paint indicate an area where people will work hard to maintain the value of their property."
Find out about future development plans
Learn about future development plans that could have a negative or a positive impact on property values. Talk to real estate agents and research government websites to track down such information.
"There may be a little risk in relying on a revitalization project to improve home prices, but this can be a way to get in on the ground floor of an improving area," Kline says.
Are you interested in buying a home? Call us at 972-772-7000 or email us at rockwall@kw.com. We want to help you find your perfect home!
Monday, October 11, 2010
How to Recognize a Buyers Market
Provided By Realty Times
Are you on the search for a new home? Are you a first-time home buyer ready to enter the market? Then a buyers market is right where you want to be!
Recent years have turned many real estate markets on their heads. One-time hotbeds for rapid appreciation and booming sales have turned into areas rampant with dropping prices and foreclosures. Making matters even more complicated, is the realization that every market is different. Even neighborhoods within cities have varying markets.
How can you tell if you are living in an area experiencing a buyers market?
Key Indicators:
•More than six month's worth of inventory on the market
•Median sales price is down
•Fewer buyers on the market
•Relative large supply of homes and relative low prices
As a buyer, how can you maneuver yourself to take full advantage of a market which is stacked in your favor?
All of the market indicators translate into more choice for buyers. Prices become more negotiable. You have more homes to choose from.
One of your first steps is to hire a real estate agent. An agent can supply you with market statistics, including days on market, pricing, and neighborhood comparables. They can also direct you to home listings on the MLS.
With such economic uncertainty today, buyers are scared to venture into the market. They fear prices may drop after they buy, leaving them upside down in a home. They fear the market will not pick up for years, leaving them stuck in a home. That fear works in your favor, should you choose to buy. Interest rates are at historic lows. And buyer fear actually translates into more homes for you to choose from. It means sellers may be more willing to drop their price to make a sale.
In negotiating, foreclosures wreak havoc on a neighborhood. Foreclosures can lower values on an entire street. If a home has been sitting on the market for months, the likelihood that the seller will make concessions increases.
And even when a price won't budge, you can always discuss who will pay closing costs.
Deciding when to buy can be a big decision, but buying during a buyers market can give you many advantages over other markets.
Looking for an experienced agent? Call us at 972-772-7000 or email us at rockwall@kw.com.
Are you on the search for a new home? Are you a first-time home buyer ready to enter the market? Then a buyers market is right where you want to be!
Recent years have turned many real estate markets on their heads. One-time hotbeds for rapid appreciation and booming sales have turned into areas rampant with dropping prices and foreclosures. Making matters even more complicated, is the realization that every market is different. Even neighborhoods within cities have varying markets.
How can you tell if you are living in an area experiencing a buyers market?
Key Indicators:
•More than six month's worth of inventory on the market
•Median sales price is down
•Fewer buyers on the market
•Relative large supply of homes and relative low prices
As a buyer, how can you maneuver yourself to take full advantage of a market which is stacked in your favor?
All of the market indicators translate into more choice for buyers. Prices become more negotiable. You have more homes to choose from.
One of your first steps is to hire a real estate agent. An agent can supply you with market statistics, including days on market, pricing, and neighborhood comparables. They can also direct you to home listings on the MLS.
With such economic uncertainty today, buyers are scared to venture into the market. They fear prices may drop after they buy, leaving them upside down in a home. They fear the market will not pick up for years, leaving them stuck in a home. That fear works in your favor, should you choose to buy. Interest rates are at historic lows. And buyer fear actually translates into more homes for you to choose from. It means sellers may be more willing to drop their price to make a sale.
In negotiating, foreclosures wreak havoc on a neighborhood. Foreclosures can lower values on an entire street. If a home has been sitting on the market for months, the likelihood that the seller will make concessions increases.
And even when a price won't budge, you can always discuss who will pay closing costs.
Deciding when to buy can be a big decision, but buying during a buyers market can give you many advantages over other markets.
Looking for an experienced agent? Call us at 972-772-7000 or email us at rockwall@kw.com.
Tuesday, March 9, 2010
Tax Credit Ends Soon!
Don't miss out on taking advantage of the tax credits being offered.
Call our office today to start working with an agent today!
Call our office today to start working with an agent today!
Wednesday, February 18, 2009
Buyer Advice for Purchasing a Home
There's a lot of doom and gloom being spread in the media about the housing market and overall turbulent economy. But, if you're in a position to take advantage of falling housing prices, getting a loan and moving forward with a real estate purchase could, in the long run, add strength to your financial portfolio.
However, the rules for getting a loan have changed. Being aware of how this affects you before you find the home that you love, can help you ensure that you're able to buy it. Even though bidding wars aren't as prevalent as they once were, timing and being ready to initiate a well-planned offer are important to the successful closing of a home.
I spoke with New York real estate attorney, Edward Mermelstein, who specializes in connecting clients to real estate opportunities in the US, Russia, Ukraine, and other emerging markets about buyer advice for qualifying for a loan and how not to end up with a property that's likely to be upside down.
Appraisal is a must. "First and foremost, make sure that the property appraises properly," says Mermelstein. The appraisal determines the true market value of the home. It also shows discrepancies such as if the seller lists an erroneous square footage, the appraisal should reflect the correct figure (which in some cases is less than advertised). Banks, especially these days, use the appraisal to make sure the home appraises at or higher than the requested loan thereby lowering the bank's risk if you default on the loan.
Save, save, save for that down payment. Everyone knows that tighter restrictions are being called for in the real estate lending market, but what that means for each person is different. "The reality of what was taking place about a year ago is totally different from what it is today," he says.
Mermelstein says understanding the bank requirements is vital. Buyers need to know that shopping for a home needs to fit their budget, rather than finding a wonderful place they'd like to live in and then attempting to leverage beyond their means. "Pretty much no income verification doesn't exist anymore. You can't expect to get a 95 percent or 100 percent mortgage on your property -- that's also gone," says Mermelstein.
Check your credit score. "If you don't have a very good credit score, it's going to be difficult in terms of borrowing. Be prepared to give enough information to document your employment and taxes," says Mermelstein. He adds, "Tax returns are seldom, these days, taken from the borrower; the banks will generally request the tax return themselves."
Set contingencies. Making sure that the appraisal comes in at the right price and making sure that you can get financing are two critical aspects of buying a home. Even with a loan approval, there are other factors that can lead to the denial/approval of a loan. Contingencies help to make sure that you don't get locked into a legally-binding contract to purchase a home that you can't get financing for or that doesn't meet the expected appraisal. There are numerous other contingencies that can be set; be sure to discuss them with your real estate agent.
Prepare for worst case scenario. Many people use mortgage brokers to arrange their loans but some buyers are going straight to the bank. Mermelstein says if you do that, be sure to stick with the more solid banks "because later on if they do get taken over by somebody or do have financial issues, your loan may become difficult to work on."
He says if you end up in a situation where you need to renegotiate your loan, having your loan with a less-known bank could equate to trouble. "It's much easier to negotiate a loan if your lender still owns the loan. Once it goes into a pool of other loans it becomes close to impossible to negotiate," says Mermelstein.
Always go into the real estate market with the desire to learn as much as you can. Even those who have bought and sold multiple properties frequently discover some aspect of the transaction that causes them to research, talk to experts, and grow their knowledge.
However, the rules for getting a loan have changed. Being aware of how this affects you before you find the home that you love, can help you ensure that you're able to buy it. Even though bidding wars aren't as prevalent as they once were, timing and being ready to initiate a well-planned offer are important to the successful closing of a home.
I spoke with New York real estate attorney, Edward Mermelstein, who specializes in connecting clients to real estate opportunities in the US, Russia, Ukraine, and other emerging markets about buyer advice for qualifying for a loan and how not to end up with a property that's likely to be upside down.
Appraisal is a must. "First and foremost, make sure that the property appraises properly," says Mermelstein. The appraisal determines the true market value of the home. It also shows discrepancies such as if the seller lists an erroneous square footage, the appraisal should reflect the correct figure (which in some cases is less than advertised). Banks, especially these days, use the appraisal to make sure the home appraises at or higher than the requested loan thereby lowering the bank's risk if you default on the loan.
Save, save, save for that down payment. Everyone knows that tighter restrictions are being called for in the real estate lending market, but what that means for each person is different. "The reality of what was taking place about a year ago is totally different from what it is today," he says.
Mermelstein says understanding the bank requirements is vital. Buyers need to know that shopping for a home needs to fit their budget, rather than finding a wonderful place they'd like to live in and then attempting to leverage beyond their means. "Pretty much no income verification doesn't exist anymore. You can't expect to get a 95 percent or 100 percent mortgage on your property -- that's also gone," says Mermelstein.
Check your credit score. "If you don't have a very good credit score, it's going to be difficult in terms of borrowing. Be prepared to give enough information to document your employment and taxes," says Mermelstein. He adds, "Tax returns are seldom, these days, taken from the borrower; the banks will generally request the tax return themselves."
Set contingencies. Making sure that the appraisal comes in at the right price and making sure that you can get financing are two critical aspects of buying a home. Even with a loan approval, there are other factors that can lead to the denial/approval of a loan. Contingencies help to make sure that you don't get locked into a legally-binding contract to purchase a home that you can't get financing for or that doesn't meet the expected appraisal. There are numerous other contingencies that can be set; be sure to discuss them with your real estate agent.
Prepare for worst case scenario. Many people use mortgage brokers to arrange their loans but some buyers are going straight to the bank. Mermelstein says if you do that, be sure to stick with the more solid banks "because later on if they do get taken over by somebody or do have financial issues, your loan may become difficult to work on."
He says if you end up in a situation where you need to renegotiate your loan, having your loan with a less-known bank could equate to trouble. "It's much easier to negotiate a loan if your lender still owns the loan. Once it goes into a pool of other loans it becomes close to impossible to negotiate," says Mermelstein.
Always go into the real estate market with the desire to learn as much as you can. Even those who have bought and sold multiple properties frequently discover some aspect of the transaction that causes them to research, talk to experts, and grow their knowledge.
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