Quick Tips That Could Save You Thousands (Cont.)

You can use this list as a scorecard to rate each property you see. The one with the biggest score wins! This helps avoid confusion and keeps things in perspective when you’re comparing dozens of homes.

When house hunting, keep in mind the difference between skin and bones. The bones are things that cannot be changed such as the location, view, size of lot, noise in the area, school district, and floor plan. The skin represents easily changed surface finishes like carpet, wallpaper, color, and window coverings. Buy the house with good bones, because the skin can always be changed to match your tastes. I always recommend that you imagine each house as if it were vacant. Consider each house on its underlying merits, not the seller’s decorating skills.

4. Don’t Be Pushed Into Any House.

Your agent should show you everything available that meets your requirements. Don’t make a decision on a house until you feel that you’ve seen enough to pick the best one. Review the Multiple Listing printout with your agent to make sure that you are getting a COMPLETE list.

In the late 1980s, homes were selling quickly, usually a few days after listing. In that kind of market, agents advised their clients to make an offer ON THE SPOT if they liked the house. That was good advice at the time. Today there isn’t always this urgency, unless a home is drastically under-priced, and you’ll know if it is.

Quick Tips That Could Save You Thousands…

1. Don’t Get Pre-Qualified.

Get pre-approved.

Do you want to get the best house you can for the least amount of money? Then make sure you’re in the strongest negotiating position possible. Price is only one bargaining chip in the negotiations, and not necessarily the most important one.

Often other terms, such as the strength of the buyer or the length of escrow, are critical to a seller. This process takes anywhere from a few days to a few weeks depending on your situation. It’s VERY POWERFUL and a weapon we recommend all of our clients have in their negotiating arsenal.

2. Sell First, Then Buy.

If you have a house to sell, sell it before selecting a house to buy!

Let’s pretend that we go out looking for the perfect house for you. We find it and you love it! Now you have to make an offer to the seller. You want the seller to reduce the price and wait until you sell your house.

The seller figures that’s a risky deal, since he might pass up a buyer who DOESN’T have to sell a house while he’s waiting for you.

So he says OK, he’ll do the contingency but it has to be a full-price offer. So you see, you paid more for the house than you could have because of the contingency. Now you have to sell your existing house, and in a hurry, otherwise you lose the dream house. So, to sell quickly you might take an offer that’s lower than if you had more time.

3. Play the Game of Nines.

Before house hunting, make a list of nine things you want in the new place. Then make a list of the nine things you don’t want. We call this Nine of This and None of That.

How To Avoid Five Of The Most Expensive Mistakes Homebuyers Make...

Mistake #1: Not knowing how much they can afford before they make an offer.

The easiest way to avoid this mistake is to get pre-approved for a mortgage by a Lender so you know in advance exactly how much you can afford.

Most pre-approvals are free and it will give you a basis to make a more informed purchasing decision when you find the house you like.

Mistake #2: Not realizing that the wrong mortgage can cost thousands of dollars in needless interest and taxes.

Check with your accountant before you make your final decision on which mortgage you’re going to choose. Your CPA can tell you what the long-term effects will be on your income, your taxes, and the equity you build in your home over time.

Most people aren't aware that with a standard 30-year mortgage they’ll be paying two-and-a-half times the amount of the mortgage in payments.

With some advance planning and a simple strategy, they can cut the amount of interest they pay dramatically and own their homes sooner.

Mistake #3: Not realizing in advance whom the real estate consultant represents.

Most people think that the agent they’re working with is working for them. But unless they’re working as your buyer representative, they represent the seller. There are different types of agency relationships you can have with a Realtor, so make sure you’re clear on your options.

Mistake #4: Not discovering hidden defects before they buy a home.

One of the most expensive mistakes is also one of the easiest to avoid, by having a professional pre-purchase home inspection. Don't get stuck with a money pit.

The cost of a professional home inspection is usually a few hundred dollars, but the peace of mind it can give you and the expense you can avoid are worth thousands of dollars.

Mistake #5: Not knowing how much their credit can affect their ability to buy or refinance a home.

Before you buy a home, many of the clouds on your credit history can be cleared up or even eliminated. Your mortgage professional can help you review and prepare your credit file in advance.

Get The Home YOU Want!

When building or buying a home, it helps to decide just exactly what you NEED and what you WANT. Once you have a price in mind, THEN start looking. If you do it the other way around, you’ll fall in love with a home that you can’t afford and none in your price range will ever measure up to it.

Location, location, location! Don’t you wonder why people always ask about location first? Well, it’s the hardest thing to change about a home once you buy it. However, there are things besides the neighborhood that you need to consider. Things like size of the lot – do you really want to mow those five acres or is it worth it to be that far from those nosy neighbors?

Dinner Anyone?

Think about your lifestyle in relationship to the kitchen and dining room.
Do you actually cook? Do you need that full gourmet kitchen with stainless steel appliances and lots of cabinet space? Do you need room in the kitchen for eating in – or will you always use the dining room?

What’s on TV Tonight?

Do you need separate living and family rooms? In some states, like Florida and California, lifestyles are pretty relaxed all around and rarely do we find that we need a formal living room. Many family rooms need to be large enough to accommodate computer stations as well as the entertainment center, complete with video games and surround sound.

Nite Nite, Sleep Tight…

The thing that really draws the attention of a home buyer is the master suite. Think about the size of your furniture; do you need extra room for a crib? Do you need a sitting area or study? Separate walk-in closets for you and your spouse?

Where’s MY Room?

Do you need more bedrooms? One for each kid or guest? Do they each need their own bathroom or can they share? Where are these rooms in relation to the master suite? Is there a room dedicated as an office or a gym?

Having gone through this list – you’re well on your way to finding your new dream home

The Three Things That Scare You Most About Buying a Home

Buying a home must up there with public speaking and the remake of The Exorcist for frightful experiences, but many of us will buy a home, speak publicly and watch that movie again and again in our lifetimes.

By giving you a few of the “behind-the-scenes” secrets, we hope to help you deal with the three things that scare you most about buying a home.

The Cost

The greatest fear that people have about buying a home is being able to afford it. This is what keeps us awake at night – calculating and recalculating how many lunches we have to pack instead of going out with the gang, to be able to make the mortgage payment.

The behind-the-scenes secret to dealing with this fear is working with a great Lender and getting pre-approved BEFORE you start looking at homes, and being realistic about what you’re willing and able to spend.

The Lender will give you a range of loan options available and if asked, will give you a realistic projection of what you can REALLY afford, considering your budget and lifestyle.

The Commitment

Women like to stereotype men as having a fear of commitment – but when it comes to buying a home, we’re all susceptible. Buying a home usually means committing money and time (at least a year – usually more like five years) to being in one spot.

If you’re just finishing a degree or training, or you’re not sure that you’ll be in the same position for awhile, you may consider waiting until your life is a little more stable.

The behind-the-scenes secret to dealing with the fear of commitment is in buying a home that will resell easily – that has features that other people will want. In addition, you can get a two-step mortgage that allows you to pay a fixed rate for a certain period of time, and a flexible rate later on – so you can get out of the loan easily after the first step.

The People

Who can you trust in this home-buying process? This is a big investment we’re talking about. And it seems that everyone is out to make as much money as possible OFF of you! There are sellers, real estate consultants, lenders, builders, movers, and attorneys, all of whom may be

strangers, and have a vested interest when you buy a home. It’s easy to be afraid they’ll take you to the cleaners.

The behind-the-scenes secret is to check their references. Really. Many lenders and real estate consultants operate on a “By Referral Only” basis – in which they ask clients to refer them to others they know are buying a home. Those who offer “lifetime relationships” and other services (like free reports and seminars on buying or selling homes) are already striving to meet your needs.

In reality, they are NOT all out to get you – because in the long run, the BEST business strategy is to make sure that you get what you need and want in a home.

Here’s A Way You Can Save Thousands of Dollars In Interest and Pay Your Mortgage Off Years Sooner!

Most people think when you get a mortgage you’re stuck with it for 30 years. What they don’t realize is that using a couple of easy and painless ways to make some extra principal payments can cut years off the life of your mortgage and save thousands of dollars in needless interest costs.

Here are a few easy strategies you can use:

Round Up To the Nearest Hundred.

This is an easy strategy to take advantage of, and the results are dramatic!

Let’s say you have a mortgage of $100,000 over 30 years at 8% interest. The monthly payments would be about $734 a month.

Now, let’s see what would happen if you rounded that payment to the next $100 by increasing your payment by $66 extra each month.

By paying $800 a month you’ll shorten the length of your mortgage by 7½ years. Just this one simple strategy will save you over $48,000 in interest payments over the life of your mortgage!

Use Your Income Tax Refund to Make a One-Time Pre-Payment.

Let’s say you have that same $100,000 mortgage, and you have a $1,000 tax refund this year. (Very possible with your new homeowner deductions.)
If you take that $1,000 and apply it to your mortgage, you’ll save over $8,600 and shorten your mortgage by one year and one month! Not bad for a simple one-time pre-payment.

Start Out With a 15-Year Mortgage.

One of the best things you can do – if you can afford it – is to start out with a 15-year mortgage instead of 30. It’s actually not that much more expensive, and the interest you save is incredible.
With the same $100,000 mortgage at 8% over 15 years, your payment would be about $200 more ($955) and you’d be paying $72,017 in interest over the life of your mortgage instead of $164,160!

By rounding up, using your tax refund, and taking a shorter mortgage, you can save thousands and be free of your mortgage years sooner.

That’s worth considering.

I’m The One Buying A Home - Just Who Are All These Other People?

Many people are involved in the home buying process. These professionals have based their careers on helping you find and purchase the home of your dreams. But do you really know just what they do for you?

Real Estate Consultant

The first person you’ll probably become involved with when you begin your search for a home is the real estate consultant. This term includes real estate agents, salespersons, brokers, Realtors, listing agents, and buyer’s agents, all of whom must be licensed to serve you. The agents and salespersons work for a broker.

Those licensed to sell may represent either buyers or sellers. However, listing agents typically represent only sellers, and buyer’s agents represent only the buyers – so as to avoid potential conflicts of interest.

Only those who are members of the National Association of Realtors may use the designation “Realtor.”

Lender

The person you work with to get your loan is generically called a Lender. This person may also be a mortgage loan officer, banker, or broker. The job of the Lender is to take your application for a loan, and verify your income, employment and credit history.

Title Company

The title company can act as the escrow agent (and hold your deposit), examine the title, insure the title, and issue a title report – verifying that you can become the rightful owner of the property.

Appraiser

The appraiser, who is usually state certified, is frequently involved in the pricing of the home before you even begin your search. They examine the appearance, condition, size, and quality of the home – then estimate the home’s value based on other sales in the neighborhood or area.

Surveyor

The surveyor checks the boundaries of the property to ensure that the home is on ONLY its property – and the ONLY home on its property.

Home Inspector

The home inspector checks the working condition of electrical, mechanical, structural, and plumbing systems in the home.

Pest Control Operator

Lenders require that you have the home checked for wood-destroying pests – termites and ants are the typical villains. These professionals poke around the attic, basement, walls, and grounds to ensure that these pests aren’t squatters in your dream home.