A home inspection is a critical part of the home buying process. Not only will it uncover any deficiencies your home may have it will also highlight important on-going maintenance requirements.
The first step is the selection of a licensed inspector. The most widely used method of selection is through personal referrals from friends, family or your Realtor.
Once you have selected an inspector you will need to schedule between two and four hours for completion of the inspection. This amount of time is required to thoroughly inspect your home from the ground up.
It is advisable that you attend the inspection in order to have first hand knowledge of the inspector’s findings.
Once the inspector has finished the inspection, a complete report of his finding will be created. The inspector will review the report with you.
Any safety or structural concerns will be the first priority, followed by cosmetic concerns and important features of your home such as the main water shut off valve.
Safety and structural concerns may require you to request repairs and or replacements from the Seller. You may also consider voiding the contract if the issues are serious enough. Your Realtor can assist you in making these decisions.
You will be left with a copy of your inspection for future reference.
The results of your inspection will have to, in most cases, be disclosed to future buyers. Again, your Realtor can advise you in regard to prevailing disclosure requirements.
Don't miss this important step!
Monday, September 11, 2006
Thursday, May 04, 2006
Home Ownership Benefits You Might Not Realize
The National association of Realtors has found, through a systematic review of research, that home ownership is an unbeatable way to provide the kind of stable housing that leads to a wide variety of household benefits for the community.
Some of these are:
Higher educational performance and better behavior of children
Lower community crime rates
Lessened wlfare dependancy amoung households
More hosuehold participation in civic affairs
Better household health
Some of these are:
Higher educational performance and better behavior of children
Lower community crime rates
Lessened wlfare dependancy amoung households
More hosuehold participation in civic affairs
Better household health
Your Credit Score and Mortgages
Your credit score is a very important part of successfully obtaining a mortgage.
Lenders each have their own parameters for extending a mortgage to home buyers. The credit score is the single most important parameter second only to income.
Credit scores can range from 300 to 850. They indicate to a lender the amout of risk you present. A score of 660 is considered to be below average risk with anything over 750 being considered almost no risk.
Your credit history is tracked by any or all of these credit reporting firms;
Beacon at Equifax
FICO Risk Score at Transunion
Experian/Fair Issac at Experian
It is a good practice to sign up for, usually free, credit reports to not only check your score but assure yourself that you aren't experiencing identity theft.
Lenders each have their own parameters for extending a mortgage to home buyers. The credit score is the single most important parameter second only to income.
Credit scores can range from 300 to 850. They indicate to a lender the amout of risk you present. A score of 660 is considered to be below average risk with anything over 750 being considered almost no risk.
Your credit history is tracked by any or all of these credit reporting firms;
Beacon at Equifax
FICO Risk Score at Transunion
Experian/Fair Issac at Experian
It is a good practice to sign up for, usually free, credit reports to not only check your score but assure yourself that you aren't experiencing identity theft.
Thursday, April 06, 2006
Sales and Mortgage Process from Start to Finish
Purchaser applies for pre-approval as soon as possible after meeting with Realtor.
Purchaser makes an offer with an initial deposit.
When the offer is accepted, it becomes a binding contract.
Home inspection is done, if called for in the contract, and purchaser releases inspection contingency if no major problems are found.
Seller and seller’s agent provides lender with current lien holder’s name, address, account numbers and a copy of the deed.
Lender order’s appraisal.
Appraiser calls seller and seller’s agent to set appraisal appointment.
Once processor and originator receive and review documentation and establish that it is complete and correct, the loan is packaged and sent to underwriting.
Underwriting approves the loan request (with or without conditions) , rejects or sends for further information.
Once all additional requirements are satisfied, then the loan is approved and all parties are notified.
Insurance, necessary inspections, repairs, survey, title, etc., are ordered.
Closing is scheduled by lender and all parties are notified.
Closing takes place and title is transferred from the seller to purchaser. The new deed and mortgage are recorded amd made part of the public record at the County Clerk’s office.
Purchaser makes an offer with an initial deposit.
When the offer is accepted, it becomes a binding contract.
Home inspection is done, if called for in the contract, and purchaser releases inspection contingency if no major problems are found.
Seller and seller’s agent provides lender with current lien holder’s name, address, account numbers and a copy of the deed.
Lender order’s appraisal.
Appraiser calls seller and seller’s agent to set appraisal appointment.
Once processor and originator receive and review documentation and establish that it is complete and correct, the loan is packaged and sent to underwriting.
Underwriting approves the loan request (with or without conditions) , rejects or sends for further information.
Once all additional requirements are satisfied, then the loan is approved and all parties are notified.
Insurance, necessary inspections, repairs, survey, title, etc., are ordered.
Closing is scheduled by lender and all parties are notified.
Closing takes place and title is transferred from the seller to purchaser. The new deed and mortgage are recorded amd made part of the public record at the County Clerk’s office.
Housing As an Investment
Housing is a key driver of the economy and continues to be a solid investment for the majority of American households. Housing provides steady returns largely unaffected by volatile movements in the stock market.
Housing wealth has a more immediate impact on consumer spending than stock wealth and has sustained the U.S. economy since the beginning of this decade.
Homeownership is the traditional starting point for American families to accumulate wealth, according studies by the National Association of Realtors®, America’s leading advocate for homeownership.
NAR reports that the national median existing-home price increased 9.3 percent in 2004 and is projected to rise 5.6 percent this year. Since record keeping began in 1968, the national median home price has risen every year, even during recessions and periods of sales decline. Typically, home values rise at the general rate of inflation, plus one-to-two percentage points.
Buying a home should be approached as a long-term investment, providing both equity accumulation and tax benefits over time. Despite some high profile media reports, it’s important to note that most of the country has never experienced even a temporary downturn in home prices since modern recordkeeping began.
Low mortgage interest rates, a growing number of households, economic growth and an improved labor market have been driving Americans in record numbers to purchase a home. In addition, over the last few years, Americans have shown a readiness to pull their money out of stocks and put it into real estate, often as a second home – a wise and practical move that provides safer returns in a tangible asset. In fact, 36 percent of home sales in 2004 were second homes, including 23 percent for investment purposes.
The sharp changes in the financial markets over the last few years underscore the stability of residential real estate as a safe choice for consumers. Although it’s possible for local housing markets to experience temporary price corrections, most of the peaks and valleys in home prices that deviate from a normal, gradual increase tend to smooth themselves out during the typical period of homeownership.
Dollar for dollar, the rate of return on an individual’s cash downpayment on a house is substantial. Homebuyers typically use their own money to cover only a small portion of the purchase price, yet the home appreciation they realize is based on the total value of the property.
First-time home buyers make a median downpayment of 3 percent, while repeat buyers put 22 percent down – thanks to the equity they’ve build in their previous home.
According to Harvard University’s Joint Center for Housing Studies, there is a dramatic increase in the rate of return on housing the longer it is held. For instance, the typical homeowner who experiences an annual home appreciation rate of 5 percent and who made a cash downpayment of 10 percent will generally receive a 94 percent return on that cash after owning the home only three years. After owning for five years, a homeowner can expect a rate of return on the downpayment to increase to 225 percent; after 10 years, the rate of return jumps to 623 percent.
The stock market has experienced wide swings in value over the past 20 years. During that time, overall home values have continued to rise steadily and contribute significantly to household wealth and spending patterns.
Housing is not a quick-in, quick-out investment. When purchased for the long term, housing is one of the safest investments a consumer can make. In addition to the savings accumulated through a buildup of equity and tax advantages, a home provides shelter. No paper investment provides this benefit.
Homeowners accumulate significantly more wealth than renters. Clearly, owning a home is the best way for most families to build a nest egg.
Homeowners use their home equity to get cash for emergencies as well as for the purchase of big-ticket items, and have more confidence in housing wealth gains than stock gains that could prove to be unsustainable. In addition, the capital gain people realize from the sale of their home is a significant source of downpayment funds for most repeat buyers; those funds are also used for other purposes that stimulate the economy through consumer spending.
Housing wealth has a more immediate impact on consumer spending than stock wealth and has sustained the U.S. economy since the beginning of this decade.
Homeownership is the traditional starting point for American families to accumulate wealth, according studies by the National Association of Realtors®, America’s leading advocate for homeownership.
NAR reports that the national median existing-home price increased 9.3 percent in 2004 and is projected to rise 5.6 percent this year. Since record keeping began in 1968, the national median home price has risen every year, even during recessions and periods of sales decline. Typically, home values rise at the general rate of inflation, plus one-to-two percentage points.
Buying a home should be approached as a long-term investment, providing both equity accumulation and tax benefits over time. Despite some high profile media reports, it’s important to note that most of the country has never experienced even a temporary downturn in home prices since modern recordkeeping began.
Low mortgage interest rates, a growing number of households, economic growth and an improved labor market have been driving Americans in record numbers to purchase a home. In addition, over the last few years, Americans have shown a readiness to pull their money out of stocks and put it into real estate, often as a second home – a wise and practical move that provides safer returns in a tangible asset. In fact, 36 percent of home sales in 2004 were second homes, including 23 percent for investment purposes.
The sharp changes in the financial markets over the last few years underscore the stability of residential real estate as a safe choice for consumers. Although it’s possible for local housing markets to experience temporary price corrections, most of the peaks and valleys in home prices that deviate from a normal, gradual increase tend to smooth themselves out during the typical period of homeownership.
Dollar for dollar, the rate of return on an individual’s cash downpayment on a house is substantial. Homebuyers typically use their own money to cover only a small portion of the purchase price, yet the home appreciation they realize is based on the total value of the property.
First-time home buyers make a median downpayment of 3 percent, while repeat buyers put 22 percent down – thanks to the equity they’ve build in their previous home.
According to Harvard University’s Joint Center for Housing Studies, there is a dramatic increase in the rate of return on housing the longer it is held. For instance, the typical homeowner who experiences an annual home appreciation rate of 5 percent and who made a cash downpayment of 10 percent will generally receive a 94 percent return on that cash after owning the home only three years. After owning for five years, a homeowner can expect a rate of return on the downpayment to increase to 225 percent; after 10 years, the rate of return jumps to 623 percent.
The stock market has experienced wide swings in value over the past 20 years. During that time, overall home values have continued to rise steadily and contribute significantly to household wealth and spending patterns.
Housing is not a quick-in, quick-out investment. When purchased for the long term, housing is one of the safest investments a consumer can make. In addition to the savings accumulated through a buildup of equity and tax advantages, a home provides shelter. No paper investment provides this benefit.
Homeowners accumulate significantly more wealth than renters. Clearly, owning a home is the best way for most families to build a nest egg.
Homeowners use their home equity to get cash for emergencies as well as for the purchase of big-ticket items, and have more confidence in housing wealth gains than stock gains that could prove to be unsustainable. In addition, the capital gain people realize from the sale of their home is a significant source of downpayment funds for most repeat buyers; those funds are also used for other purposes that stimulate the economy through consumer spending.
Home Buying Myths
Myth: I had some debt when I was young and I ruined my credit. I’ll never get a mortgage.
Reality: You don’t know what your credit history shows until you look. And if you do have blemishes from the past – even a bankruptcy - many lenders will overlook problems if the past two years show good credit practice on your part.
Myth: I heard you need to put 25% down to buy a home. But my friend says that you can get a mortgage with no down payment at all!
Reality: Both scenarios are uncommon. Although there are a variety offinancing programs available, most require you to put at least 3%-10% down, butrarely would you need 25%.
Myth: If I have several agents looking for homes on my behalf, I’ll find a house more quickly.
Reality: Like most relationships, this one thrives on communication, loyalty and trust. By working exclusively with one agent you will improve both the process and the results.
Myth: If I want an agent to represent me as a buyer. I’ll have to pay them myself.
Reality: Buyer representation means that the sales associate you select works with your best interests in mind. In most cases, however, they receive a portion of the commission paid by the Seller.
Myth: I should find a new home first before I sell the one I now own.
Reality: If you find a buyer for your home first, you’ll have more negotiatingpower in both the sale of your current home and the purchase of a new one.
Myth: I just made an offer on a home I love, but so did several other people. I’m worried that someone else will outbid and get it.
Reality: Different sellers are motivated by different things. In addition to price, a seller will look at the other terms of the offer – contingencies, closing date, required repairs. Many times a “clean” offer from a pre-approved buyer will be more attractive, even if the price is slightly lower.
Reality: You don’t know what your credit history shows until you look. And if you do have blemishes from the past – even a bankruptcy - many lenders will overlook problems if the past two years show good credit practice on your part.
Myth: I heard you need to put 25% down to buy a home. But my friend says that you can get a mortgage with no down payment at all!
Reality: Both scenarios are uncommon. Although there are a variety offinancing programs available, most require you to put at least 3%-10% down, butrarely would you need 25%.
Myth: If I have several agents looking for homes on my behalf, I’ll find a house more quickly.
Reality: Like most relationships, this one thrives on communication, loyalty and trust. By working exclusively with one agent you will improve both the process and the results.
Myth: If I want an agent to represent me as a buyer. I’ll have to pay them myself.
Reality: Buyer representation means that the sales associate you select works with your best interests in mind. In most cases, however, they receive a portion of the commission paid by the Seller.
Myth: I should find a new home first before I sell the one I now own.
Reality: If you find a buyer for your home first, you’ll have more negotiatingpower in both the sale of your current home and the purchase of a new one.
Myth: I just made an offer on a home I love, but so did several other people. I’m worried that someone else will outbid and get it.
Reality: Different sellers are motivated by different things. In addition to price, a seller will look at the other terms of the offer – contingencies, closing date, required repairs. Many times a “clean” offer from a pre-approved buyer will be more attractive, even if the price is slightly lower.
Home Buyer Realities
Choose a Realtor that fits your personallity.
There is no "right" time to buy any more than there is a "right" time to sell. If you find the right home don't worry about small changes in interest rate. Changes usually don't chank that fast and a good home doesn't stay on the market very long.
Don't ask for too many opinions. It's fine to ask for advice but the too much input can make your decision much harded.
Accept that no home is perfect. Focus on the things that are important to you and let the minor ones go.
Don't try to be a killer negoitiator. Trying to "win" in a negotiation could cost your the home you love.
Remember that you home doesn't exist in a vacumn. Don't get so caught up with the physical features of the home at the expense of ammenities and noise levels that have a big impact on the value of your home.
Don't wait until you find the right home to get approved for a mortgage. Presenting an offer contingent on getting approved will reduce your negotiating power.
Factor maintenance and repair costs. Don't leave your self short and let your home deteriorate.
Accept that some buyer's remorse is inevitable for first time home buyers.
Choose your home first because you love it and secondly think about appreciation. Homes in the Louisville market consitenty raise from 3%-5% annually.
There is no "right" time to buy any more than there is a "right" time to sell. If you find the right home don't worry about small changes in interest rate. Changes usually don't chank that fast and a good home doesn't stay on the market very long.
Don't ask for too many opinions. It's fine to ask for advice but the too much input can make your decision much harded.
Accept that no home is perfect. Focus on the things that are important to you and let the minor ones go.
Don't try to be a killer negoitiator. Trying to "win" in a negotiation could cost your the home you love.
Remember that you home doesn't exist in a vacumn. Don't get so caught up with the physical features of the home at the expense of ammenities and noise levels that have a big impact on the value of your home.
Don't wait until you find the right home to get approved for a mortgage. Presenting an offer contingent on getting approved will reduce your negotiating power.
Factor maintenance and repair costs. Don't leave your self short and let your home deteriorate.
Accept that some buyer's remorse is inevitable for first time home buyers.
Choose your home first because you love it and secondly think about appreciation. Homes in the Louisville market consitenty raise from 3%-5% annually.
Preparing for Home Ownership
Deceide how much home you can afford. Generally, you can afford a home equal in value to 2 and 3 times your gross salary.
Develop a wish list of what you'd likeyour home to have and then prioritize the features.
Select three or four neighborhoods you'd like to live in. Considering schools, safety and expansion plans.
Determine if you have enough saved to cover your downpayment and closing costs.
Get your credit in order. Obtain a copy of your credit report.
Determine how large a mortgage you can qualify for.
Organize all the documentation a lender will need to preapprove you.
Do research to determine if you qualify for any special mortgage or downpayment assistance programs.
Calculate the costs of homeownership, including property taxes, insurance, maintenance and any association fees.
Find an experienced Realtor who can help you thgough the process.
Develop a wish list of what you'd likeyour home to have and then prioritize the features.
Select three or four neighborhoods you'd like to live in. Considering schools, safety and expansion plans.
Determine if you have enough saved to cover your downpayment and closing costs.
Get your credit in order. Obtain a copy of your credit report.
Determine how large a mortgage you can qualify for.
Organize all the documentation a lender will need to preapprove you.
Do research to determine if you qualify for any special mortgage or downpayment assistance programs.
Calculate the costs of homeownership, including property taxes, insurance, maintenance and any association fees.
Find an experienced Realtor who can help you thgough the process.
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