Tips & Tools : prequalified

Top 10 Home Buying Mistakes

RE.com Tips & Tools — Wed, 11 Jul 2007 18:37:00 GMT

Use our list of common house-buying mistakes to avoid costly regrets.

1. Doing it alone. Buying a house is a complex transaction. Even if you don’t use an agent, you’ll need a complete, dependable team: lender, lawyer, inspector, insurer, as well as referrals and advice from friends and family. Enlist the help of these individuals early in the buying process.

2. Buying at first sight. You may be in love with the place, but does it fit your family’s needs and budget? Make a list of your needs and wants and make sure the house fits your requirements. Check out the neighborhood and the community before you buy by visiting at different times of the day and week to learn about noise and traffic patterns. Even if you don’t have kids, check out the local schools to make sure your resale value will be good.

3. Not getting pre-qualified and pre-approved. Being pre-qualified gives you a general idea of how much you can afford to borrow. Being pre-approved means a lender has verified your information and credit rating and agreed to provide you with a specific amount of money. You are in a better position to go house hunting knowing exactly how much you can afford and that you have financing.

4. Overbuying. You may qualify to borrow more, but can you afford to? Analyze your monthly costs: debt, food, transportation, entertainment, and savings. As a general rule, your total monthly debts, including your mortgage, should not exceed 36 percent of your income before taxes. Be sure to budget enough to cover closing costs (often two to five percent of the home’s purchase price), plus moving, redecorating and maintenance. Allow for increases in ongoing expenses such as utilities and taxes.

5. Misplacing your trust. No matter how much you like the agent, sellers, inspector, or the guy down the block who vouches for them, remember this is a business transaction. Your decision is binding. Do your own research and know your support team’s roles and responsibilities.

6. Relying on oral agreements. Get it right and get it in writing. Written agreements almost always trump oral ones when it comes to contracts. If the offer says the lawnmower is negotiable, but the agent says it’s included, get it in writing.

7. Skipping the fine print. You need to understand what you’re signing before you pick up a pen. Ask for documents in advance, make time to read them and ask questions. Get copies of your mortgage papers a few days ahead of closing.

8. Forgetting or betting on resale. Avoid buying a home that costs 50 percent more than neighboring homes and think before buying the most expensive home on the block. Your neighbors’ lower home values will weaken yours. Remember, markets change. If you buy intending to flip your investment and the market falls and you have to sell, your selling price may not be enough to even cover your mortgage.

9. Making an unconditional offer. Protect yourself with at least two of these contingencies in your offer:

Mortgage financing -- You’re pre-approved, but is the house? Before a bank will lend you money, it will want a formal appraisal of the property to confirm that there is sufficient equity in it to warrant the loan. If the house appraises lower than the sales price, the loan may be declined.
Inspection -- never buy an existing or new home without a thorough home inspection. Walk through the home with the inspector to learn more about the house and any concerns he or she may have.
Insurance -- confirm you can get adequate coverage. In some areas, it’s difficult to get hazard insurance.

10. Having buyer’s remorse. No place is perfect. There will always be surprises. Don’t let a few initial blips spoil the whole ride. And don’t miss a great house waiting for the perfect one!

5 Ways to Help Your REALTOR®

RE.com Tips & Tools — Thu, 08 Mar 2007 20:14:00 GMT

Ready, willing and able home buyers get the most time and attention.

A REALTOR® can be a home buyer’s best friend. But some buyers behave in ways that are counterproductive to the REALTOR’s® efforts. Here are five ways you can help your REALTOR® help you achieve your home-buying objectives:

1. Identify your must-haves. Savvy home buyers have a clear vision of what they want and are able to differentiate between needs, which are must-have criteria, and preferences, which are desirable but not absolutely necessary. The better you define your must-haves and preferences, the better the REALTOR® will be able to locate a home that will match what you really want.

2. Disclose your top dollar. No one wants to overpay for a home, but if the REALTOR® doesn’t know how much you can afford to spend, you may waste a lot of time looking at homes you won’t want to buy. It’s okay to state that you’d prefer to spend less than your top-dollar, but don’t artificially limit your choices to a lower price range if you’re willing and able to spend more.

3. Get pre-qualified. A loan pre-qualification letter can help you demonstrate to the REALTOR® and the seller of the home you want to buy that you’re financially qualified and able to purchase the home. Even better is a pre-approval letter that says your financing is subject only to an appraisal and title report.

4. Get set. REALTORS® typically devote the most time and attention to buyers who are ready to transact. If you need to sell your current home before you purchase a new one, you can demonstrate your readiness by putting your current home on the market. If you’re a renter, be sure you have a month-to-month tenancy or be prepared to break your lease agreement. And if you’re not planning to move within the next few months, tell the REALTOR® when you expect to be ready.

5. Be honest. Giving frank feedback about homes you’ve seen on the market can help the REALTOR® understand your preferences and perhaps negotiate changes to a home to mitigate characteristics that you don’t like. For example, if you want to buy a home that has tattered carpets or an unusual paint job, the seller may be willing to update those items if you stipulate those conditions in your contract.

Top 10 Tips for Building a Home

RE.com Tips & Tools — Thu, 15 Feb 2007 18:57:00 GMT

Planning to build the home of your dreams? Here's expert advice for every step of the process.

Building your own home can be exciting, but it can also be challenging. The following ten tips can help make sure it goes smoothly:

1. Get pre-qualified for a mortgage
Whether building a new home or buying an existing home, this first step is the same. By contacting a lender and providing them with some basic information regarding your debt, income and assets, you can find out the size of mortgage for which you are likely to qualify. Then, before that first shovel of earth is turned, you should make sure you get final mortgage pre-approval. This involves filling out a mortgage application and supplying a lender with the necessary documentation to check your financial background and credit rating so you will know exactly how much you can afford to spend.

2. Check the reputation of your builder

Many builders are out there, but not all are created equal. Do a little research to find out which builders have the best reputation. Whether you search for information online or get recommendations from your friends, find out whether a builder is respected for doing quality work as well as being punctual.

3. Be selective about location
The most important thing to decide when building a new home is where to build. What makes the community that you are interested in stand out? Often, new building developments are located on the outskirts of a city or suburban area. It’s therefore important to check if the area you are considering is close enough to transportation routes, shopping and schools. Also, find out if the developer is planning to add amenities that will enhance your lifestyle such as walking trails and ponds.

4. Watch your budget
New home communities list a base price for the homes that they offer. However, this is rarely the actual final cost when building a new home. Be aware that you can add thousands of dollars to the base price of a home very quickly if you get carried away upgrading the standard flooring, cabinetry or lighting. It’s important to know exactly how much you can afford and to budget accordingly.

5. Build with resale in mind
No matter how much you love the house that you are building, it’s unlikely that it will be the last home you will ever own. Knowing that, you should be mindful of its potential resale value. Don’t add so many upgrades that you overprice your home for the neighborhood. And don’t choose anything too out of the ordinary. Ask yourself if the features you’re considering installing are likely going to appeal to others.

6. Know your timeline
Building a new home usually takes many months and lots must be coordinated during this timeframe. If you are already a homeowner, your current home must be sold, you must make decisions regarding your new home and you must arrange a new mortgage. Get an estimate of when the building of your new home will be completed and plan accordingly.

7. Be prepared for delays
No matter what timeframe a builder gives you, there is always the possibility of delays. Inclement weather, shortages of supplies and labor problems can all factor into delaying the completion of your home. Be aware of this going into the building process and be prepared to be somewhat flexible.

8. Keep a close watch on progress
One way to help prevent delays and mix-ups is to stay involved in the building process. If possible, drive by the construction site to keep track of the progress that is being made. And keep in touch with your builder on a regular basis.

9. Avoid making changes
Try to avoid making changes to your designs once all of the plans have been completed. It will delay the completion of your new home and may add considerably to the final cost.

10. Arrange temporary housing
Chances are there may be a delay between the time you sell your existing home (or the lease expires on your current rental unit) and the time you move into your new home. If this is the case, you will need to arrange some temporary housing. Realize that you may be living there for several months so make sure it will be both affordable and able to meet your needs.

Finding a home: What to look for

RE.com Tips & Tools — Fri, 12 Jan 2007 18:07:00 GMT

There are steps to follow for finding a home.

Finding a home is an exciting time. With a little preparation you can make it a rewarding experience. Following are steps that you can take when finding a home.

Determine which housing type best suits your needs

When finding a home, it is important to understand the different housing types that are available to you. The basic choices are condominium, townhouse, and single family home. What suits you best depends on your lifestyle and life situation. If you are single or a young couple without the time or desire for much home maintenance, then a condominium may be your best choice. A townhouse may provide a bit more space and a little more privacy, since usually no one will be living above or below you. If you have a family or prefer a home with a yard, a single family home may be preferable.

Know what you can afford

It helps to know how much house you can afford when finding a home. A very easy way to do this is through getting prequalified with a lender. By contacting a lender and providing some financial information, the lender can let you know how much of a mortgage loan for which you can qualify, which gives you a price range to begin your search. You can get prequalified for a mortgage through LendingTree®.

Understand what is important to you

Do you want to live close to work? Would you like to be within walking distance of schools? Is accessibility to public transportation important to you? When finding a home, you need to decide what you want to have in close proximity. Do you want to be near restaurants and shopping, or would you prefer a home with more solitude? Evaluate your personal preferences and your needs. Look for neighborhoods that meet those criteria.

Find a good REALTOR®

A REALTOR® can be a great asset when finding a home. They help you in your search and represent you during the actual home purchase. By using a friend’s recommendation or a program such as LendingTree Find A REALTOR®, you can partner with someone who can be a great resource in finding a home.

Think of your future

Be sure to keep in mind your future needs when finding a home. Perhaps you are a young couple that plans to have kids soon. The home that you seek should be large enough for that. Something as simple as an additional pet can be a factor in finding a home for you. Whether your family plans to grow larger or you are about to become empty nesters, the home that you find should suit you.

By taking time to prepare before your search, you can have a successful experience in finding a home.