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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