Buyers Properties
What is the first step to buying a home?
What about appraised value and market value?
What does homeowners' insurance cover?
Should I hire a home inspector?
What is a lease option?

What are closing costs?
Why do I need an agent if I can find a home by myself on the Internet?

Sellers Properties
Do I really need an agent?
Are there standard ways to determine how much a home is worth?
What is the difference between list price and sales price?
How do you determine how much a home is worth?

Financing
How do I find out what my credit report says?
Are there no-down payment home loans?
What about splitting my mortgage in two and paying bi-weekly?


 

Buyers Properties

What is the first step to buying a home?
Make sure you are ready - psychologically and financially. Ask yourself the following questions: Do I have steady income? Is my debt lower than my total income? Do I have enough money to pay for the down payment and closing costs? Am I working hard enough to improve bad credit? A house needs constant care and attention. Also ask yourself if your budget will allow for unexpected repairs and upkeep. Once you can honestly answer "yes" to these questions, you are several steps ahead of the game and that much closer to becoming a homeowner.

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What about appraised value and market value?
A certified appraiser who is trained to provide the estimated value of a home determines its appraised value. The appraised value is based on comparable sales, the condition of the property, and several other factors. Market value is the price the house will bring at a given point in time, once the buyer and seller establish a "meeting of the minds" on price.

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What does homeowners' insurance cover?
It protects against disasters - whether natural, manmade or mechanical. A standard policy insures the home, as well as your possessions. Because this insurance is packaged, it covers liability for any harm, loss, and property damage that you or your family members cause others. And it includes additional living expenses in case you are temporarily displaced because of damage from a fire or other insured disaster. While you are not legally required to have homeowners' insurance, mortgage lenders stipulate that you do. It protects their investment in the home in case of a natural disaster or catastrophic event. If your mortgage is paid up - or you never had one - it is still a good idea to have homeowners' insurance to protect your home and your belongings.

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Should I hire a home inspector?
By all means. Buying a home without getting expert advice is risky. Once a home inspector uncovers major plumbing and electrical problems, for example, you may decide you do not want to spend several thousand dollars on repairs. Always include an inspection clause in your written offer. This clause gives you an "out" from buying if serious problems are detected. It also gives you another chance to negotiate the purchase price if repairs are needed. The clause can even specify that the sellers fix any problem that is uncovered before you settle, or close, on the home. You also may want to consider hiring experts to inspect the home for a number of health-related risks like radon gas, asbestos, or possible problems with the water or waste disposal system.

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What is a lease option?
It is an agreement between a renter and a landlord in which the renter signs a lease with an option to purchase the property. The option only binds the seller; the tenant has a choice to make a purchase or not. Lease options are common among buyers who would like to own a home but do not have enough money for the down payment and closing costs. A lease option may also be attractive to tenants who are working to improve bad credit before approaching a lender for a home loan.

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What are closing costs?
Closing, or settlement, costs are expenses over and above the price of the property. Both the buyer and seller incur some of these expenses when transferring ownership of a property. Who actually pays, however, often depends on local custom and what the buyer or seller negotiates. Closing costs normally include title insurance, loan points, escrow or closing day charges, property taxes, and document fees. The lender provides an estimate of closing costs for prospective homebuyers.

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Why do I need an agent if I can find a home by myself on the Internet?
While more buyers now use the Internet to gain access to listings, or available properties for sale, it is still a good idea to use an agent. The agent brings value to the entire process: he or she is available to analyze data, answer questions, share their professional expertise, and handle all the paperwork and legwork that is involved in the real estate transaction.

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Sellers Properties


Do I really need an agent?
Most home sellers hire real estate agents to list and sell their homes. Most of those who do not are known as For Sale By Owners, or FSBOs. They market and sell their homes themselves. However, a small number of people sell without marketing their homes. They include homeowners who transfer property to family members or landlords who directly offer tenants the first right to purchase property before they place it for sale on the market. In the end, most FSBOs eventually hire an agent because the agent will handle all the details of a successful home sale - including the contract, forms, and disclosure statements - and expose the home to the widest range of prospective buyers through the local Multiple Listing Service (MLS).

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Are there standard ways to determine how much a home is worth?
Yes. A comparative market analysis and an appraisal are the two most common and reliable ways to determine a home's value. Your real estate agent can provide a comparative market analysis, an informal estimate of value based on the recent selling price of similar neighborhood properties. Reviewing comparable homes that have sold within the past year along with the listing, or asking, price on current homes for sale should prevent you from overpricing your home or underestimating its value. A certified appraiser can provide an appraisal of a home. After visiting the home to check such things as the number of rooms, improvements, size and square footage, construction quality, and the condition of the neighborhood, the appraiser then reviews recent comparable sales to determine the estimated value of the home. You also can check recent sales in public records, through private firms, and on the Internet to help you determine a home's potential worth.

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What is the difference between list price and sales price?
The list price is your advertised price, or asking price, for a home. It is a rough estimate of what you want to complete a home sale. A good way to determine if the list price is a fair one is to look at the sales prices of similar homes that have recently sold in the area. The sales price is the actual amount the home sells for.

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How do you determine how much a home is worth?
The short answer: a home is ultimately worth what is paid for it. Everything else is really an estimate of value. Take, for example, a hot seller's market when demand for housing is high but the inventory of available homes for sale is low. During this time, homes can sell above and beyond the asking price as buyers bid up the price. The fair market value, or worth, is established when "a meeting of the minds" between you and the buyer takes place.

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Financing

How do I find out what my credit report says?
Finding out your credit score is an important first step in the home buying process. You can obtain a copy of your credit report by calling one of the three national credit reporting agencies: Equifax: 800-685-1111 Experian: 800-311-4769 Trans Union: 312-408-1050

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Are there no-down payment home loans?
Yes. Some home buyers may have the option to purchase a home with nothing down. In instances of slow-moving projects or properties that have been difficult to sell, builders and sellers occasionally offer no-down payment loans or sometimes to finance the down payment.

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What about splitting my mortgage in two and paying bi-weekly?
This option can help you pay off your home loan early and reduce interest charges. Essentially your monthly payments are divided in half, and paid every two weeks. This results in more payments per year (26 half payments, or 13 full payments) which helps pay off your loan earlier and saves in interest charges.

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