Needs vs. Wants
The most important step you can take before actually going out to look at Fox Valley real estate is to establish a clear understanding between yourself (and your partner) and your Fox Valley real estate agent as to what you will need in a home, and what you want in a home. The following guide is designed to help you think through the critical features that could be important to you in looking for the right home. Please fill in the blanks and identify each item as a need or a want. If you anticipate looking at several houses, rate each category as to its importance relative to other responses. Your answers will help you, your partner, and your agent to create a rating sheet that can be filled out as you inspect potential properties. Keeping track of each property by assigning ratings to the features that matter most will help you to organize each property in your mind. This becomes very useful as the list of properties grows! With perseverance and a little luck, you should be able to locate a property in the Fox Valley that meets your needs and satisfies many of your wants.
Location:
Need - Want - Neighborhood type - Neighborhood size - Type of community (family, retirement, mixed)
Proximity:
To schools - To shopping - To Public services (libraries, parks, police, hospitals, etc.) - To Workplace (via roads and/or public transportation)
Physical appearance and design:
Number of levels (single, split, double) - Detached or townhome - Traditional vs. contemporary style - Exterior (brick, wood, other) - New versus re-sale - Condition (anywhere from immaculate to needs renovation)
Layout/size:
Necessary square footage, inside - Number of bedrooms - Number of bathrooms - Kitchen size, functionality - Formal dining room - Formal living room - Family room - Office or study - Other rooms - Basement - Attic or extra storage - Garage size (attached? How may cars?)
Features:
Kitchen (appliances, layout, eat-in area) - Bath amenities (Jacuzzi?, separate shower? Double sinks?) - Master Bedroom amenities (walk in closet, sitting area, etc.) - Additional bedrooms (required space, closets) - Laundry room (on what floor of house? Which appliances come with?) - Fireplaces (where and how many) - Décor (must it fit your taste, or are you willing/intending to re-decorate?) - Wiring, phone connections (what are your energy and phone system needs) - Utilities (do you prefer gas, electric, oil? Air conditioning?)
Land and Lot:
Size of lot - Type of land (flat, contoured) - Perimeter (fenced? Screened from neighbors?) - Vegetation (mature plants? Lots of trees? Undeveloped?) - Landscaping (designer touch? Jungle look?) - Orientation (comes with a view? Private and hidden from street?) - Outdoor areas (pool? Patio? Deck? Play areas?)
April 10, 2005
April 6, 2005
Avoiding the Pitfalls When Buying a Home
Avoiding the Pitfalls When Buying a Home
Unfortunately, even the best planning can fail to protect you from the many surprises and obstacles that can materialize in the course of the home buying process. Often the difficulties that complicate the process are a direct result of the human element brought to the table by the buyers and the sellers. Other problems occur because of the failures or mistakes made by the lenders or other service providers involved in the real estate transaction. And finally, there are those acts of nature that are unexpected and usually unavoidable, such as severe storms, fire, and earthquakes which can foil any good plan.
The Human Factor:
Many times, the most difficult problems originate from the people involved in the actual sale of the house because home buying and selling is so often laced with emotions. There is frequently tension between the buyer and seller from the outset of the transaction, prompted in part because each enters the negotiations fearing that the other side will get the better part of the deal. There is also the opportunity for unbridled dissension to grow within the parties who are either buying or selling (especially when spouses and children enter the picture) as they attempt to agree on the endless decisions that accompany the purchase or sale of their home.
Short of hiring a personal psychologist (or a bodyguard) to guide you through the process, having an exclusive buyer's agent working just for you will make the proccess much less stressful. Here are some situations you can guard against given the right attitude and planning:
1. Emotional Sellers: Unless you are dealing with a third party seller, meaning the party has been hired to act on the seller's behalf, expect that the seller will have some level of attachment to the property, probably at an emotional and very personal level. Be sensitive when you walk through the property with the seller in tow. This is not the appropriate time to critique the color of the furniture or comment on how much better the property will look once in your loving hands. Talk of extensive remodeling ("Once we rip out the kitchen, relocate the family room, and put wall-to-wall carpet over the hardwood floors we can begin to call this 'home') can make even the most committed sellers reconsider.
Rule: Insist that you be allowed to preview the property without the seller in attendance. That should give you room to visually remodel without offending the seller.
2. Emotional Buyers: Keep an eye out for the other emotional party to the sale...you! No matter how logical and analytical you try to be in purchasing a home, it is likely that by the time you make your first offer, you and whoever you might have as a partner, will have begun to make an emotional investment in the property. The furniture will begin to fit in all the right places, your children will be moving their swing set under the big oak in the back yard, the basement will be on its way to being the workshop, and most importantly, you will know that the search is over. As the dates for the closing are finalized, so is your commitment to making this work no matter what. In this weakened condition, you are vulnerable to making mistakes that could cost you dearly in the long run.
Rule: Try to remember that you can walk away if the terms are not right for you. There are plenty of homes out there, even if none seem so special at the moment as this one.
3. Shopping for Bargains: It is easy to become something of an expert on accurate home pricing if you look at enough properties. Once you have developed a feel for the market, you will be able to spot a bargain as well as an overpriced listing. If you find a bargain, assume you are not the only one with such incredible insight and act quickly! This is not the time to negotiate for the last penny or construct an offer that is laden with conditions. If the seller has priced the property to sell quickly, then you can trust that you will not be the only one to line up with an offer. Some sellers know as much about pricing as you do and will only accept an offer that is within a narrow range. Heartbreak often follows those who enter into negotiations on an aggressively priced property, and then try to take advantage of the seller's apparent eagerness to sell by trying to push a little too far.
Rule: If you find a "bargain" property, respond with a worthy offer unless you can afford to lose the property to another bidder.
4. Dealing with Over-Priced Listings: That same expertise that qualifies you to jump on the bargains will also lead you to identify the properties that are grossly overpriced. Why are listings overpriced? Usually, the seller is simply unwilling to consider a value for their property that is below their self-imposed range. Most buyers will avoid these properties like the plague, since the apparent message being sent by the seller is that they are unreasonable people. (Why else would someone allow their property sit idle on the market months longer than similar properties without a single offer or price reduction?) And yet, in spite of your best efforts you could find yourself falling in love with an over-priced listing.
There is nothing more frustrating than finding the home of your dreams grossly overpriced, and being unable to coax the sellers into considering a more reasonable price structure! If you do locate such a property, be prepared to negotiate artfully and aggressively to bring the price into line.
This is a situation where an accomplished Buyer's Agent can be of great value, since it is likely that a successful negotiation will come only at the expense of the seller finally admitting that their initial price was out of line. A third party negotiator helps keep the emotions of the buyer separated from the ego of the seller. Even with the aid of a third party negotiator, it is likely that there will be several rounds of negotiations encompassing many days (even weeks) of offers, discussions, and counter offers. Over-priced listings require patience and perseverance.
Rule: If you must present an offer on an over-priced listing, do so through a third party, or be willing to wait patiently while the seller slowly adjusts to a more reasonable pricing level.
5. Buying With Urgency: Having time on your side is one of the best methods for assuring that you will be satisfied with your eventual home purchase. Unfortunately, many buyers find themselves forced into deciding to buy a property primarily because they are out of time. Perhaps their spouse is arriving with the kids in three weeks, or they have to be settled to begin a new job, or they have to move out of the house they are selling and don't want to live in interim housing. The most common urgency situation is created when the buyer is relocating and plans the single trip to the new area to locate the property. Within the weekend, the house must be found, put under contract, and financing must be applied for. The situations that create urgency are too many to count, and the end result is often the same. The buyer has to act aggressively in order to secure a property, which ultimately means that the buyer is likely to pay too much.
Rule: If price is important to you, try to arrange your circumstances so that you are not buying with urgency. Set aside ample time to look at houses and make your decision. You will find that you are in a far better negotiating situation when you do find the perfect house.
The preceding tips will help guide you to a more comfortable and painless purchase process. By anticipating what could go wrong and being prepared to cope with surprises with a positive attitude, you will have a far better chance of reaching your end goal of buying the home.
Unfortunately, even the best planning can fail to protect you from the many surprises and obstacles that can materialize in the course of the home buying process. Often the difficulties that complicate the process are a direct result of the human element brought to the table by the buyers and the sellers. Other problems occur because of the failures or mistakes made by the lenders or other service providers involved in the real estate transaction. And finally, there are those acts of nature that are unexpected and usually unavoidable, such as severe storms, fire, and earthquakes which can foil any good plan.
The Human Factor:
Many times, the most difficult problems originate from the people involved in the actual sale of the house because home buying and selling is so often laced with emotions. There is frequently tension between the buyer and seller from the outset of the transaction, prompted in part because each enters the negotiations fearing that the other side will get the better part of the deal. There is also the opportunity for unbridled dissension to grow within the parties who are either buying or selling (especially when spouses and children enter the picture) as they attempt to agree on the endless decisions that accompany the purchase or sale of their home.
Short of hiring a personal psychologist (or a bodyguard) to guide you through the process, having an exclusive buyer's agent working just for you will make the proccess much less stressful. Here are some situations you can guard against given the right attitude and planning:
1. Emotional Sellers: Unless you are dealing with a third party seller, meaning the party has been hired to act on the seller's behalf, expect that the seller will have some level of attachment to the property, probably at an emotional and very personal level. Be sensitive when you walk through the property with the seller in tow. This is not the appropriate time to critique the color of the furniture or comment on how much better the property will look once in your loving hands. Talk of extensive remodeling ("Once we rip out the kitchen, relocate the family room, and put wall-to-wall carpet over the hardwood floors we can begin to call this 'home') can make even the most committed sellers reconsider.
Rule: Insist that you be allowed to preview the property without the seller in attendance. That should give you room to visually remodel without offending the seller.
2. Emotional Buyers: Keep an eye out for the other emotional party to the sale...you! No matter how logical and analytical you try to be in purchasing a home, it is likely that by the time you make your first offer, you and whoever you might have as a partner, will have begun to make an emotional investment in the property. The furniture will begin to fit in all the right places, your children will be moving their swing set under the big oak in the back yard, the basement will be on its way to being the workshop, and most importantly, you will know that the search is over. As the dates for the closing are finalized, so is your commitment to making this work no matter what. In this weakened condition, you are vulnerable to making mistakes that could cost you dearly in the long run.
Rule: Try to remember that you can walk away if the terms are not right for you. There are plenty of homes out there, even if none seem so special at the moment as this one.
3. Shopping for Bargains: It is easy to become something of an expert on accurate home pricing if you look at enough properties. Once you have developed a feel for the market, you will be able to spot a bargain as well as an overpriced listing. If you find a bargain, assume you are not the only one with such incredible insight and act quickly! This is not the time to negotiate for the last penny or construct an offer that is laden with conditions. If the seller has priced the property to sell quickly, then you can trust that you will not be the only one to line up with an offer. Some sellers know as much about pricing as you do and will only accept an offer that is within a narrow range. Heartbreak often follows those who enter into negotiations on an aggressively priced property, and then try to take advantage of the seller's apparent eagerness to sell by trying to push a little too far.
Rule: If you find a "bargain" property, respond with a worthy offer unless you can afford to lose the property to another bidder.
4. Dealing with Over-Priced Listings: That same expertise that qualifies you to jump on the bargains will also lead you to identify the properties that are grossly overpriced. Why are listings overpriced? Usually, the seller is simply unwilling to consider a value for their property that is below their self-imposed range. Most buyers will avoid these properties like the plague, since the apparent message being sent by the seller is that they are unreasonable people. (Why else would someone allow their property sit idle on the market months longer than similar properties without a single offer or price reduction?) And yet, in spite of your best efforts you could find yourself falling in love with an over-priced listing.
There is nothing more frustrating than finding the home of your dreams grossly overpriced, and being unable to coax the sellers into considering a more reasonable price structure! If you do locate such a property, be prepared to negotiate artfully and aggressively to bring the price into line.
This is a situation where an accomplished Buyer's Agent can be of great value, since it is likely that a successful negotiation will come only at the expense of the seller finally admitting that their initial price was out of line. A third party negotiator helps keep the emotions of the buyer separated from the ego of the seller. Even with the aid of a third party negotiator, it is likely that there will be several rounds of negotiations encompassing many days (even weeks) of offers, discussions, and counter offers. Over-priced listings require patience and perseverance.
Rule: If you must present an offer on an over-priced listing, do so through a third party, or be willing to wait patiently while the seller slowly adjusts to a more reasonable pricing level.
5. Buying With Urgency: Having time on your side is one of the best methods for assuring that you will be satisfied with your eventual home purchase. Unfortunately, many buyers find themselves forced into deciding to buy a property primarily because they are out of time. Perhaps their spouse is arriving with the kids in three weeks, or they have to be settled to begin a new job, or they have to move out of the house they are selling and don't want to live in interim housing. The most common urgency situation is created when the buyer is relocating and plans the single trip to the new area to locate the property. Within the weekend, the house must be found, put under contract, and financing must be applied for. The situations that create urgency are too many to count, and the end result is often the same. The buyer has to act aggressively in order to secure a property, which ultimately means that the buyer is likely to pay too much.
Rule: If price is important to you, try to arrange your circumstances so that you are not buying with urgency. Set aside ample time to look at houses and make your decision. You will find that you are in a far better negotiating situation when you do find the perfect house.
The preceding tips will help guide you to a more comfortable and painless purchase process. By anticipating what could go wrong and being prepared to cope with surprises with a positive attitude, you will have a far better chance of reaching your end goal of buying the home.
March 25, 2005
Tips for Packing Like a Pro
Tips for Packing Like a Pro When Moving In Or Out Of The Fox Valley
1. Develop a master "to do" list so you won't forget something critical.
2. Sort and get rid of things you no longer want or need. Have a garage sale, donate to a charity, or recycle.
3. Don't throw out everything. If your inclination is to just toss it, ask yourself how frequently you use an item and how you'd feel if you no longer had it.
4. Pack like items together. Put toys with toys, kitchen utensils with kitchen utensils.
5. Decide what if anything you plan to move yourself. Precious items such as family photos, valuable breakables, or must-haves during the move should probably stay with you.
6. Use the right box for the item. Loose items encourage breakage.
7. Put heavy items in small boxes so they're easier to lift. Keep weight under 50 lbs. if possible.
8. Don't over-pack boxes and increase the chances they will break.
9. Wrap every fragile item separately and pad bottom and sides of boxes.
10. Label every box on all sides. You never know how they'll be stacked and you don't want to have to move other boxes aside to find out what's there.
11. Use color-coded labels to indicate which room each item should go in. Color-code a floor plan for your new house to help movers.
12. Keep your moving documents together, including phone numbers, driver's name and van number. Also keep your address book handy.
13. Back up your computer files before moving your computer.
14. Inspect each box and all furniture for damage as soon as it arrives.
15. Remember, most movers won't take plants.
courtesy of REALTOR.com
1. Develop a master "to do" list so you won't forget something critical.
2. Sort and get rid of things you no longer want or need. Have a garage sale, donate to a charity, or recycle.
3. Don't throw out everything. If your inclination is to just toss it, ask yourself how frequently you use an item and how you'd feel if you no longer had it.
4. Pack like items together. Put toys with toys, kitchen utensils with kitchen utensils.
5. Decide what if anything you plan to move yourself. Precious items such as family photos, valuable breakables, or must-haves during the move should probably stay with you.
6. Use the right box for the item. Loose items encourage breakage.
7. Put heavy items in small boxes so they're easier to lift. Keep weight under 50 lbs. if possible.
8. Don't over-pack boxes and increase the chances they will break.
9. Wrap every fragile item separately and pad bottom and sides of boxes.
10. Label every box on all sides. You never know how they'll be stacked and you don't want to have to move other boxes aside to find out what's there.
11. Use color-coded labels to indicate which room each item should go in. Color-code a floor plan for your new house to help movers.
12. Keep your moving documents together, including phone numbers, driver's name and van number. Also keep your address book handy.
13. Back up your computer files before moving your computer.
14. Inspect each box and all furniture for damage as soon as it arrives.
15. Remember, most movers won't take plants.
courtesy of REALTOR.com
What Not to Overlook on a Final Walk-Through
Be sure that:
repairs you've requested have been made. Obtain copies of paid bills and any related warranties.
all items that were included in the sale price—draperies, lighting fixtures — are still there.
screens and storm windows are in place or stored.
all appliances are operating.
intercom, doorbell, and alarm are operational.
hot water heater is working.
HVAC is working.
no plants or shrubs have been removed from the yard.
garage door opener and other remotes are available.
instruction books and warranties on appliances and fixtures are there.
all personal items of the sellers and all debris have been removed.
repairs you've requested have been made. Obtain copies of paid bills and any related warranties.
all items that were included in the sale price—draperies, lighting fixtures — are still there.
screens and storm windows are in place or stored.
all appliances are operating.
intercom, doorbell, and alarm are operational.
hot water heater is working.
HVAC is working.
no plants or shrubs have been removed from the yard.
garage door opener and other remotes are available.
instruction books and warranties on appliances and fixtures are there.
all personal items of the sellers and all debris have been removed.
5 Things to Understand About Title Insurance
1. It protects your ownership right to your home both from fraudulent claims against your ownership and from mistakes made in earlier sales, such a mistake in the spelling of a person's name or an inaccurate description of the property.
2. It's a one-time cost usually based on the price of the property.
3. It's usually paid for by the sellers.
4. There are both lender title policies, which protect the lender, and owner title policies, which protect you. The lender will probably require a lender policy.
5. Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available.
2. It's a one-time cost usually based on the price of the property.
3. It's usually paid for by the sellers.
4. There are both lender title policies, which protect the lender, and owner title policies, which protect you. The lender will probably require a lender policy.
5. Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available.
10 Ways to Lower Your Homeowners Insurance Costs
Ways to Lower Your Homeowners Insurance Costs
1. Raise your deductible. If you can afford to pay more toward a loss that
occurs, your premiums will be lower.
2. Buy your homeowners and auto policies from the same company and you'll usually qualify for a discount. But make sure that the savings really yields the lowest price.
3. Make your home less susceptible to damage. Keep roofs and drains in good repair. Retrofit your house to protect against natural disasters common to your area.
4. Keep your home safer. Install smoke detectors, burglar alarms, and dead-bolt locks. All of these will usually qualify for a discount.
5. Be sure you insure your house for the correct amount. Remember, you're covering replacement cost, not market value.
6. Ask about other discounts. For example, retirees who are home more than working people may qualify for a discount on theft insurance.
7. Stay with the same insurer. Especially in today's tight insurance market, your current vendor is more likely to give you a good price.
8. See if you belong to any groups—associations, alumni groups—that offer lower insurance rates.
9. Review your policy limits and the value of your home and possessions annually. Some items depreciate and may not need as much coverage.
10. See if there's a government-backed insurance plan. In some high-risk areas, such as coasts, federal or state government may back plans to lower rates. Ask your agent.
1. Raise your deductible. If you can afford to pay more toward a loss that
occurs, your premiums will be lower.
2. Buy your homeowners and auto policies from the same company and you'll usually qualify for a discount. But make sure that the savings really yields the lowest price.
3. Make your home less susceptible to damage. Keep roofs and drains in good repair. Retrofit your house to protect against natural disasters common to your area.
4. Keep your home safer. Install smoke detectors, burglar alarms, and dead-bolt locks. All of these will usually qualify for a discount.
5. Be sure you insure your house for the correct amount. Remember, you're covering replacement cost, not market value.
6. Ask about other discounts. For example, retirees who are home more than working people may qualify for a discount on theft insurance.
7. Stay with the same insurer. Especially in today's tight insurance market, your current vendor is more likely to give you a good price.
8. See if you belong to any groups—associations, alumni groups—that offer lower insurance rates.
9. Review your policy limits and the value of your home and possessions annually. Some items depreciate and may not need as much coverage.
10. See if there's a government-backed insurance plan. In some high-risk areas, such as coasts, federal or state government may back plans to lower rates. Ask your agent.
5 Things to Understand about Homeowners Insurance
1. Look for exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These coverages must be bought separately.
2. Look for dollar limitations on claims. Even if you are covered for a risk, there may a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
3. Understand replacement cost. If your home is destroyed you'll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you'll only receive $150,000.
4. Understand actual cash value. If you chose not to replace your home when it's destroyed, you'll receive replacement cost, less depreciation. This is called actual cash value.
5. Understand liability. Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it's sufficient if you have significant assets.
2. Look for dollar limitations on claims. Even if you are covered for a risk, there may a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
3. Understand replacement cost. If your home is destroyed you'll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you'll only receive $150,000.
4. Understand actual cash value. If you chose not to replace your home when it's destroyed, you'll receive replacement cost, less depreciation. This is called actual cash value.
5. Understand liability. Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it's sufficient if you have significant assets.
Choices That Will Affect Your Loan:
Mortgage term. Mortgages are generally available at 15-, 20-, or 30-year terms. The longer the term, the lower the monthly payment if the same amount is borrowed. However, you pay more interest overall if you borrow for a longer term.
Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate for as long as you hold the mortgage and is usually a good choice if interest rates are low. An adjustable-rate mortgage is designed so that interest rates will rise as interest rates increase; however they usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. ARMs are a good choice when interest rates are high or when you expect your income to grow significantly in the coming years.
Balloon mortgages offer very low interest rates for a short period of time—often three to seven years. Payments usually cover only the interest, so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.
Government-backed loans, sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the Department of Veterans Affairs (www.va.gov), offer special terms, including lower downpayments or reduced interest rates—to qualified buyers.
Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment.
For help in determining how much your monthly payment will be for various loan amounts, use Fannie Mae's online mortgage calculators.
Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate for as long as you hold the mortgage and is usually a good choice if interest rates are low. An adjustable-rate mortgage is designed so that interest rates will rise as interest rates increase; however they usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. ARMs are a good choice when interest rates are high or when you expect your income to grow significantly in the coming years.
Balloon mortgages offer very low interest rates for a short period of time—often three to seven years. Payments usually cover only the interest, so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.
Government-backed loans, sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the Department of Veterans Affairs (www.va.gov), offer special terms, including lower downpayments or reduced interest rates—to qualified buyers.
Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment.
For help in determining how much your monthly payment will be for various loan amounts, use Fannie Mae's online mortgage calculators.
10 Things a Lender Needs From You
1. W-2 forms or business tax return forms if you're self-employed for the last two or three years for every person signing the loan.
2. Copies of at least one pay stub for every person signing the loan.
3. Copies of two to four months of bank or credit union statements for both checking and savings accounts.
4. Copies of personal tax forms for the last two to three years.
5. Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, e.g., a boat, RV, or stocks or bonds not held in a brokerage account.
6. Copies of your most recent 401(k) or other retirement account statement.
7. Documentation to verify additional income, such as child support or a pension.
8. Account numbers of all your credit cards and the amounts of any outstanding balances.
9. Lender, loan number, and amount owed on other installment loans, such as student loans and car loans.
10. Addresses where you have lived for the last five to seven years, with names of landlords if appropriate.
2. Copies of at least one pay stub for every person signing the loan.
3. Copies of two to four months of bank or credit union statements for both checking and savings accounts.
4. Copies of personal tax forms for the last two to three years.
5. Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, e.g., a boat, RV, or stocks or bonds not held in a brokerage account.
6. Copies of your most recent 401(k) or other retirement account statement.
7. Documentation to verify additional income, such as child support or a pension.
8. Account numbers of all your credit cards and the amounts of any outstanding balances.
9. Lender, loan number, and amount owed on other installment loans, such as student loans and car loans.
10. Addresses where you have lived for the last five to seven years, with names of landlords if appropriate.
6 Creative Ways to Afford a Home
If your income and savings are making homebuying a challenge, consider these options.
1. Investigate local, state, and national downpayment assistance programs. These programs give loans or grants to cover all or part of your required downpayment. National programs include the Nehemiah program,http://www.getdownpayment.com, and the American Dream downpayment fund from the Department of Housing and Urban Development. http://www.hud.gov/news/release.cfm?content=pr02-014.cfm
2. Get the seller to provide financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you do with a mortgage.
3. Consider a shared-appreciation, or shared equity, arrangement. Under this arrangement, your family, friends, or even an third-party may buy a portion of the home and thus share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs, but all the investors' names are usually on the mortgage. There are companies that can help you find such an investor if your family can't participate.
4. Get help from your family. Perhaps a family member will loan you money for the downpayment and/or act as a cosigner for the mortgage. Lenders often like to have a cosigner if you have little credit history.
5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your downpayment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.
6. See if you can qualify for a short-term second mortgage to give you the money to make a higher downpayment. This may be possible if you have a good income and little other debt.
1. Investigate local, state, and national downpayment assistance programs. These programs give loans or grants to cover all or part of your required downpayment. National programs include the Nehemiah program,http://www.getdownpayment.com, and the American Dream downpayment fund from the Department of Housing and Urban Development. http://www.hud.gov/news/release.cfm?content=pr02-014.cfm
2. Get the seller to provide financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you do with a mortgage.
3. Consider a shared-appreciation, or shared equity, arrangement. Under this arrangement, your family, friends, or even an third-party may buy a portion of the home and thus share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs, but all the investors' names are usually on the mortgage. There are companies that can help you find such an investor if your family can't participate.
4. Get help from your family. Perhaps a family member will loan you money for the downpayment and/or act as a cosigner for the mortgage. Lenders often like to have a cosigner if you have little credit history.
5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your downpayment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.
6. See if you can qualify for a short-term second mortgage to give you the money to make a higher downpayment. This may be possible if you have a good income and little other debt.
10 Questions to Ask Your Lender
10 Questions to Ask Your Lender
Be sure you find a loan that fits your needs with these comprehensive questions.
1. What are the most popular mortgage loans you make? Why?
2. Which type of mortgage plan do you think would best for us? Why?
3. Are your rates, terms, fees, and closing costs negotiable?
4. Will I have to buy private mortgage insurance? If so how much will it cost and how long will it be required? NOTE: Private mortgage insurance is usually required if you make less than a 20-percent downpayment, but most lenders will let you discontinue the policy when you've acquired a certain amount of equity by paying down the loan.
5. Who will service the loan? Your bank or another company?
6. What escrow requirements do you have?
7. How long is your loan lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if they drop during this period?
8. How long will the loan approval process take?
9. How long will it take to close the loan?
10. Are there any charges or penalties for prepaying the loan?
Used with permission from Real Estate Checklists & Systems, www.realestatechecklists.com.
Be sure you find a loan that fits your needs with these comprehensive questions.
1. What are the most popular mortgage loans you make? Why?
2. Which type of mortgage plan do you think would best for us? Why?
3. Are your rates, terms, fees, and closing costs negotiable?
4. Will I have to buy private mortgage insurance? If so how much will it cost and how long will it be required? NOTE: Private mortgage insurance is usually required if you make less than a 20-percent downpayment, but most lenders will let you discontinue the policy when you've acquired a certain amount of equity by paying down the loan.
5. Who will service the loan? Your bank or another company?
6. What escrow requirements do you have?
7. How long is your loan lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if they drop during this period?
8. How long will the loan approval process take?
9. How long will it take to close the loan?
10. Are there any charges or penalties for prepaying the loan?
Used with permission from Real Estate Checklists & Systems, www.realestatechecklists.com.
10 Questions to Ask Your Condo Board
Before you buy, contact the condo board with the following questions. In the process, you'll learn how responsive—and organized—its members are.
1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.
2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can't rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.
3. How much does the association keep in reserve? How is that money being invested?
4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.
5. What does and doesn't the assessment cover—common area maintenance, recreational facilities, trash collection, snow removal?
6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board's fiscal policy.
7. How much turnover occurs in the building?
8. Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.
9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer's report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren't in good repair, they become your problem once you buy.
10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you're buying, may require separate assessments.
1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.
2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can't rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.
3. How much does the association keep in reserve? How is that money being invested?
4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.
5. What does and doesn't the assessment cover—common area maintenance, recreational facilities, trash collection, snow removal?
6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board's fiscal policy.
7. How much turnover occurs in the building?
8. Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.
9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer's report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren't in good repair, they become your problem once you buy.
10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you're buying, may require separate assessments.
5 Property Tax Questions You Need to Ask
What is the assessed value of the property? Note that assessed value is generally less than market value. Ask to see a recent copy of the seller's tax bill to help you determine this information.
How often are properties reassessed and when was the last reassessment done? Generally taxes jump most significantly when a property is reassessed.
Will the sale of the property trigger a tax increase? Often the assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.
Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate?
Does the current tax bill reflect any special exemptions that you might not qualify for? For example, many tax districts offer reductions to those 65 or over.
How often are properties reassessed and when was the last reassessment done? Generally taxes jump most significantly when a property is reassessed.
Will the sale of the property trigger a tax increase? Often the assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.
Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate?
Does the current tax bill reflect any special exemptions that you might not qualify for? For example, many tax districts offer reductions to those 65 or over.
How Comprehensive Is Your Home Warranty?
Check your home warranty policy to see which of the following items are covered. Also check to see if the policy covers the full replacement cost of an item.
Plumbing
Electrical Systems
Water Heater
Furnace
Heating Ducts
Water Pump
Dishwasher
Stove/Cooktop/Ovens
Microwave
Refrigerator
Washer/Dryer
Swimming Pool (may be optional)
Plumbing
Electrical Systems
Water Heater
Furnace
Heating Ducts
Water Pump
Dishwasher
Stove/Cooktop/Ovens
Microwave
Refrigerator
Washer/Dryer
Swimming Pool (may be optional)
What Your Home Inspection Should Cover
Siding: Look for dents or buckling
Foundations: Look for cracks or water seepage
Exterior Brick: Look for cracked bricks or mortar pulling away from bricks
Insulation: Look for condition, adequate rating for climate (the higher the R value, the more effective the insulation is)
Doors and Windows: Look for loose or tight fits, condition of locks, condition of weatherstripping
Roof: Look for age, conditions of flashing, pooling water, buckled shingles, or loose gutters and downspouts
Ceilings, walls, and moldings: Look for loose pieces, dry wall that is pulling away.
Porch/Deck: Loose railings or step, rot
Electrical: Look for condition of fuse box/circuit breakers, number of outlets in each room
Plumbing: Look for poor water pressure, banging pipes, rust spots or corrosion that indicate leaks, sufficient insulation
Water Heater: Look for age, size adequate for house, speed of recovery, energy rating.
Furnace/Air Conditioning: Look for age, energy rating. Furnaces are rated by annual fuel utilization efficiency; the higher the rating, the lower your fuel costs. However, other factors such as payback period and other operating costs, such as electricity to operate motors.
Garage: Look for exterior in good repair; condition of floor—cracks, stains, etc.; condition of door mechanism.
Basement: Look for water leakage, musty smell.
Attic: Look for adequate ventilation, water leaks from roof.
Septic Tanks (if applicable): Adequate absorption field capacity for the percolation rate in your area and the size of your family.
Driveways/Sidewalks: Look for cracks, heaving pavement, crumbling near edges, stains.
Foundations: Look for cracks or water seepage
Exterior Brick: Look for cracked bricks or mortar pulling away from bricks
Insulation: Look for condition, adequate rating for climate (the higher the R value, the more effective the insulation is)
Doors and Windows: Look for loose or tight fits, condition of locks, condition of weatherstripping
Roof: Look for age, conditions of flashing, pooling water, buckled shingles, or loose gutters and downspouts
Ceilings, walls, and moldings: Look for loose pieces, dry wall that is pulling away.
Porch/Deck: Loose railings or step, rot
Electrical: Look for condition of fuse box/circuit breakers, number of outlets in each room
Plumbing: Look for poor water pressure, banging pipes, rust spots or corrosion that indicate leaks, sufficient insulation
Water Heater: Look for age, size adequate for house, speed of recovery, energy rating.
Furnace/Air Conditioning: Look for age, energy rating. Furnaces are rated by annual fuel utilization efficiency; the higher the rating, the lower your fuel costs. However, other factors such as payback period and other operating costs, such as electricity to operate motors.
Garage: Look for exterior in good repair; condition of floor—cracks, stains, etc.; condition of door mechanism.
Basement: Look for water leakage, musty smell.
Attic: Look for adequate ventilation, water leaks from roof.
Septic Tanks (if applicable): Adequate absorption field capacity for the percolation rate in your area and the size of your family.
Driveways/Sidewalks: Look for cracks, heaving pavement, crumbling near edges, stains.
10 Questions to Ask a Home Inspector
1. What are your qualifications? Are you a member of the American Society of Home Inspectors or National Associaton of Home Inspectors?
2. Do you have a current license? Inspectors are not required to be licensed in every state.
3. How many inspections of properties such as this do you do each year?
4. Do you have a list of past clients I can contact?
5. Do you carry professional errors and omission insurance? May I have a copy of the policy?
6. Do you provide any guarantees of your work?
7. What specifically will the inspection cover?
8. What type of report will I receive after the inspection?
9. How long will the inspection take and how long will it take to receive the report?
10. How much will the inspection cost?
Portions adapted from Real Estate Checklists and Systems and used with permission. www.realestatechecklists.com
2. Do you have a current license? Inspectors are not required to be licensed in every state.
3. How many inspections of properties such as this do you do each year?
4. Do you have a list of past clients I can contact?
5. Do you carry professional errors and omission insurance? May I have a copy of the policy?
6. Do you provide any guarantees of your work?
7. What specifically will the inspection cover?
8. What type of report will I receive after the inspection?
9. How long will the inspection take and how long will it take to receive the report?
10. How much will the inspection cost?
Portions adapted from Real Estate Checklists and Systems and used with permission. www.realestatechecklists.com
March 23, 2005
10 Things to Take the Trauma Out of Homebuying
1. Find a real estate agent that's simpatico. Homebuying is not only a big financial commitment, but also an emotional one. It's critical that the agent you chose is both skilled and a good fit with your personality.
2. Remember, there's no "right" time to buy, any more than there's a right time to sell. If you find a home now, don't try to second-guess the interest rates or the housing market by waiting. Changes don't usually occur fast enough to make that much difference in price, and a good home won't stay on the market long.
3. Don't ask for too many opinions. It's natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.
4. Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.
5. Don't try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to "win" by getting an extra-low price may lose you the home you love.
6. Remember your home doesn't exist in a vacuum. Don't get so caught up in the physical aspects of the house itself--room size, kitchen--that you forget such issues as amenities, noise level, etc., that have a big impact on what it's like to live in your new home.
7. Don't wait until you've found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be some costs. Don't leave yourself short and let your home deteriorate.
9. Accept that a little buyer's remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.
10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home's most important role is as a comfortable, safe place to live.
2. Remember, there's no "right" time to buy, any more than there's a right time to sell. If you find a home now, don't try to second-guess the interest rates or the housing market by waiting. Changes don't usually occur fast enough to make that much difference in price, and a good home won't stay on the market long.
3. Don't ask for too many opinions. It's natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.
4. Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.
5. Don't try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to "win" by getting an extra-low price may lose you the home you love.
6. Remember your home doesn't exist in a vacuum. Don't get so caught up in the physical aspects of the house itself--room size, kitchen--that you forget such issues as amenities, noise level, etc., that have a big impact on what it's like to live in your new home.
7. Don't wait until you've found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be some costs. Don't leave yourself short and let your home deteriorate.
9. Accept that a little buyer's remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.
10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home's most important role is as a comfortable, safe place to live.
Buying a House? Get a Warranty.
"All veteran homeowners know that when you buy a house, you're buying a set of potential problems. The furnace might refuse to heat. The water heater could fail. Face it, any number of things can go wrong after closing, costing you thousands of dollars. Fortunately, there's a way to make a balky air conditioner or a leaky roof seem like a mere nuisance rather than a calamity: buy a home warranty.
The term 'home warranty' applies to two forms of protection: insurance plans for new homes and service agreements for existing homes. Each has value, and each has limitations. State laws and typical building practices provide for four forms of new-home protection."
Read the entire article at Home Depot Moving
The term 'home warranty' applies to two forms of protection: insurance plans for new homes and service agreements for existing homes. Each has value, and each has limitations. State laws and typical building practices provide for four forms of new-home protection."
Read the entire article at Home Depot Moving
March 20, 2005
10 top mistakes for seniors buying or selling homes
By Steve McLinden - Bankrate.com
Buying or selling a home is complicated for anyone, but seniors have many added issues.
Here are the top 10 home-selling and home-buying pitfalls for seniors and how to avoid them:
Selling mistakes
Not opting for a senior-oriented real estate agent. The issues facing senior citizens when selling their homes are much different than for younger people. And most real estate agents have little idea how to resolve them. A mistake can be very costly and for that reason, any senior should consult with a specialist -- most notably an agent designated as a Senior Real Estate Specialist to help sell their home. A state-by-state listing of Senior Real Estate Specialists can be obtained from the Senior Advantage Real Estate Council. If no Senior Real Estate Specialist is available, ask agencies for the names of agents who are most comfortable with senior clients.
Not getting a market analysis and financial evaluation. Ideally, a "sell" decision should surround market realities plus address investment and tax objectives, as well as lifestyle and emotional needs.
Assuming you have to sell. A reverse mortgage or other financing may help keep you in the comfy confines of your family home and facilitate home modifications.
Conveying that lived-in look: Too much clutter can kill a sale. Divest your home of some furnishings, collections and heirlooms, by either placing them in temporary storage or more permanently with family members or friends who will appreciate them. This is an ideal time to take those treasures of a lifetime and start sharing them with the family.
Committing to a "vacate date" before securing a new home. Moving is stressful enough. Don't be uprooted twice before you settle into the new home. The home-buying process is sometimes rushed because of a pending date to vacate.
Home-buying mistakes
Disregarding future transportation needs: Changing health conditions may prevent driving. Carefully consider ease of access to public transportation, stores, work, businesses, health care facilities, loved ones and favorite haunts.
Missing steps in the process: Stairs and seniors don't mix. Seek single-floor layouts, step-less entries and level driveways. Non-slip floors, bathroom grab bars and levered door handles will likely make life easier as well, either now or down the road.
Poor reconnaissance: Minimal time spent scoping out the new community can spell disappointment. Explore many potential options for relocation and then revisit your favorites at different times of the year -- and even different times of the day -- before you move.
Moving too far from kids and grandkids: Warmth is where the heart is. Many a new Floridian has backtracked to home base to live near family.
Using an agent who may not best represent your interests. Calling a number off a yard sign will hook you up with the seller's agent who may not represent your best buying interests. Conversely, a buyer's agent may bring a seller a qualified buyer, but not truly dedicated representation. Your agent should be your agent.
Buying or selling a home is complicated for anyone, but seniors have many added issues.
Here are the top 10 home-selling and home-buying pitfalls for seniors and how to avoid them:
Selling mistakes
Not opting for a senior-oriented real estate agent. The issues facing senior citizens when selling their homes are much different than for younger people. And most real estate agents have little idea how to resolve them. A mistake can be very costly and for that reason, any senior should consult with a specialist -- most notably an agent designated as a Senior Real Estate Specialist to help sell their home. A state-by-state listing of Senior Real Estate Specialists can be obtained from the Senior Advantage Real Estate Council. If no Senior Real Estate Specialist is available, ask agencies for the names of agents who are most comfortable with senior clients.
Not getting a market analysis and financial evaluation. Ideally, a "sell" decision should surround market realities plus address investment and tax objectives, as well as lifestyle and emotional needs.
Assuming you have to sell. A reverse mortgage or other financing may help keep you in the comfy confines of your family home and facilitate home modifications.
Conveying that lived-in look: Too much clutter can kill a sale. Divest your home of some furnishings, collections and heirlooms, by either placing them in temporary storage or more permanently with family members or friends who will appreciate them. This is an ideal time to take those treasures of a lifetime and start sharing them with the family.
Committing to a "vacate date" before securing a new home. Moving is stressful enough. Don't be uprooted twice before you settle into the new home. The home-buying process is sometimes rushed because of a pending date to vacate.
Home-buying mistakes
Disregarding future transportation needs: Changing health conditions may prevent driving. Carefully consider ease of access to public transportation, stores, work, businesses, health care facilities, loved ones and favorite haunts.
Missing steps in the process: Stairs and seniors don't mix. Seek single-floor layouts, step-less entries and level driveways. Non-slip floors, bathroom grab bars and levered door handles will likely make life easier as well, either now or down the road.
Poor reconnaissance: Minimal time spent scoping out the new community can spell disappointment. Explore many potential options for relocation and then revisit your favorites at different times of the year -- and even different times of the day -- before you move.
Moving too far from kids and grandkids: Warmth is where the heart is. Many a new Floridian has backtracked to home base to live near family.
Using an agent who may not best represent your interests. Calling a number off a yard sign will hook you up with the seller's agent who may not represent your best buying interests. Conversely, a buyer's agent may bring a seller a qualified buyer, but not truly dedicated representation. Your agent should be your agent.
March 17, 2005
What to Keep from Your Closing
The Real Estate Settlement Procedures Act (RESPA) statement. This form, sometimes called a HUD 1 statement, itemizes all the costs associated with the closing. You'll need for income tax purposes and when you sell the home.
- The Truth in Lending Statement summarizes the terms of your mortgage loan.
- The mortgage and the note (two pieces of paper) spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.
- The deed transfers ownership of the property to you.
- Affidavits swearing to various statements by either party. For example, the sellers will often sign an affidavit stating that they have not incurred any liens on the property.
- Riders are amendments to the sales contract that affect your rights. For example, if you buy a condominium, you may have a rider outline the condo association's rules and restrictions.
- Insurance policies provide a record and proof of your coverage.
Common Closing Costs for Buyers
The lender must disclose a good faith estimate of all settlement costs. A check to cover your closing costs will probably have to be a cashier's check. The title company or other entity conducting the closing will tell you the required amount for:
A Note About Prorations. Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first 5 days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.
- Downpayment
- Loan origination fees
- Points, or loan discount fees you pay to receive a lower interest rate
- Appraisal fee
- Credit report
- Private mortgage insurance premium
- Insurance escrow for homeowners insurance, if being paid as part of the mortgage
- Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
- Deed recording fees
- Title insurance policy premiums
- Survey
- Inspection fees, building inspection, termites, etc.
- Notary fees
- Prorations for your share of costs such as utility bills and property taxes.
A Note About Prorations. Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first 5 days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.
Benefits of Ownership
Owning a home can bring financial rewards as well as the personal satisfaction that comes with knowing that you have a piece of the American dream. The financial benefits of homeownership range from the tax breaks that the owner can enjoy by writing off interest to the possible appreciation in the equity of the home over time. To understand the full extent of possible tax benefits, it is strongly suggested that you contact your local IRS or speak with an accountant about your particular situation. Some of the financial benefits include:
1. Appreciation - Real estate values generally rise over a period of years.
2. Tax advantages - Homeowners may deduct mortgage interest and property taxes as an expense against income, while residential investors may write off cost recovery or depreciation.
3. Being a tangible asset - real estate is seen by lenders as low risk, durable and marketable. Therefore, lenders are more willing to loan a high percentage of value. This allows owners to benefit by having control over an entire high-value asset with a low initial investment or down payment.
4. Real estate is marketable - it can be sold at a predicable price to a dependable group of available buyers, provided enough time is allowed to expose the property to those buyers.
5. Real estate provides its owner with valuable control and management of its value. Insert the page that is already on-line. It deals exclusively with financial benefits:
6. Personal Benefits
The personal benefits are less easy to translate into a specific list, but are in many cases equally compelling as a reason to buy. The following is a list of common motivations that inspire people to own their own homes. Place a check mark (by those comments that appeal to your situation:
Usually the question is whether a person should rent or buy. There are many factors that influence this decision such as how long a person intends to stay at one certain address. If there is a possibility that occupancy will last only a year or two, then it is probably advisable to rent unless you are willing to lease the property out as a rental once you move on. The only time it makes sense to buy with the intention of a quick turn around is if the property purchased was under-valued or if the real estate market is appreciating so rapidly that the increase in equity will exceed the cost of selling the property.
Another approach is to buy the property and lease it to tenants when it comes time for you to move on. This makes sense only if you can rent the property at a level that will cover your mortgage payment. You must also be certain that you will have the time and patience to act as a landlord. And finally, be sure to assess what the impact of holding onto the property will be on your financial statement. It is possible that by holding onto the first property to rent, you will not qualify to take a mortgage on a second property.
The decision to buy has as much to do with your personal needs as it does with the financial reasons that can motivate a buyer. Do the math to understand the monetary ramifications. Take time to understand your own motivations before you rush into this decision. Homeownership has its definite rewards. Pursue them with wisdom!
1. Appreciation - Real estate values generally rise over a period of years.
2. Tax advantages - Homeowners may deduct mortgage interest and property taxes as an expense against income, while residential investors may write off cost recovery or depreciation.
3. Being a tangible asset - real estate is seen by lenders as low risk, durable and marketable. Therefore, lenders are more willing to loan a high percentage of value. This allows owners to benefit by having control over an entire high-value asset with a low initial investment or down payment.
4. Real estate is marketable - it can be sold at a predicable price to a dependable group of available buyers, provided enough time is allowed to expose the property to those buyers.
5. Real estate provides its owner with valuable control and management of its value. Insert the page that is already on-line. It deals exclusively with financial benefits:
6. Personal Benefits
The personal benefits are less easy to translate into a specific list, but are in many cases equally compelling as a reason to buy. The following is a list of common motivations that inspire people to own their own homes. Place a check mark (by those comments that appeal to your situation:
- Owning my own home provides me with a deep sense of security. I need to own in order to feel that I have roots and really belong to my community.
- I can make my own decisions about design and decor.
- I can invest in upgrades that will not only bring me pleasure but can also add to the value of the property over time.
- I have control over the piece of property. I am not answering to a landlord.
Usually the question is whether a person should rent or buy. There are many factors that influence this decision such as how long a person intends to stay at one certain address. If there is a possibility that occupancy will last only a year or two, then it is probably advisable to rent unless you are willing to lease the property out as a rental once you move on. The only time it makes sense to buy with the intention of a quick turn around is if the property purchased was under-valued or if the real estate market is appreciating so rapidly that the increase in equity will exceed the cost of selling the property.
Another approach is to buy the property and lease it to tenants when it comes time for you to move on. This makes sense only if you can rent the property at a level that will cover your mortgage payment. You must also be certain that you will have the time and patience to act as a landlord. And finally, be sure to assess what the impact of holding onto the property will be on your financial statement. It is possible that by holding onto the first property to rent, you will not qualify to take a mortgage on a second property.
The decision to buy has as much to do with your personal needs as it does with the financial reasons that can motivate a buyer. Do the math to understand the monetary ramifications. Take time to understand your own motivations before you rush into this decision. Homeownership has its definite rewards. Pursue them with wisdom!
Glossary of Real Estate Terms
Agent - An individual who represents a seller, a buyer or both in the purchase or sale of real estate.
Amortization - The schedule of loan payments that establishes the amount of payment to be applied to the principal and the amount to be applied to interest, usually on a monthly basis, for the full term of the loan.
Annual Percentage Rate (APR) - The TOTAL interest rate of a mortgage, including the stated loan interest as well as any upfront interest paid in securing the loan. The APR will invariably differ from the mortgage rate quoted due to the inclusion of these items.
Appraisal - An estimate of value of a Real Estate property by a professional third party. Virtually all non-owner financed mortgages will require an appraisal and is generally paid for by the buyer.
Adjustable Rate Mortgage (ARM) - A mortgage in which the Interest rate is adjustable, meaning that the rate can go up or down according to prevailing financial market conditions.
Assessment - The value of a property as determined by the local tax jurisdiction which is used to determine the amount of your property taxes.
Buyer's Agent - A Real Estate Agent that has made an agreement to represent the buyer exclusively, rather than the seller.
Comparable Market Analysis (CMA) - A comparison of the prices of similar houses in the same general geographic area. A CMA is used to help determine the value of a property, either for a seller or a buyer.
Closing - The process that effects the final transfer of the deed from the seller to the buyer, as well as finalize all aspects of the mortgage of the property.
Closing Costs - Funds needed at the time of closing (separate from and in addition to the down payment). Loan origination fees, discount points, Attorney fees, recording fees and pre-paids are some items that may be included. They often will total from 3% to 5% of the price of the home, payable in cash.
Contingencies - These are conditions--or "safety valves" written into Real Estate offers and contracts to prevent a buyer from being forced to buy a house that is unsatisfactory--either structurally or financially. Examples of contingencies are "This contract is subject to the buyer obtaining a satisfactory whole house inspection." or "Subject to the buyer being able to obtain a mortgage."
Condominium - Housing where the owner owns only the unit in which the live--from the interior walls inward, generally--as well as a portion of the common area.
Debt to Income Ratio - The ratio of a borrowers total of debt as a percentage of their total gross income.
Deed - The document that, when recorded with your local government, determines ownership of a property. Transferred from seller to buyer at closing.
Earnest Money - Money that is submitted with an offer to purchase which indicates a buyer's seriousness and good faith. In virtually all cases, earnest money will need to be submitted at the time of the offer and remains in escrow until the time of closing, at which time it becomes part of the downpayment.
Equity - The difference between the value of a property and the total of any outstanding mortgages or loans against it.
Escrow - Funds held in reserve both prior to closing (for example the earnest money and deposit) by a third party and after closing by the mortgage company to pay future taxes and homeowners insurance. In some areas, "escrow" also refers to the closing process.
Fixed Rate Mortgage - A mortgage loan where the interest rate is established at its origination and continues unchanged through the life of the loan.
FSBO (For Sale By Owner) - Real Estate that is sold without the assistance of an Agent. FSBO can refer to both the individual selling the property "They are a FSBO," or the property itself "that house is a FSBO."
Foreclosure - The process through which a lender takes back property from a defaulting owner and re-sells it.
Homeowner's Association - An owners group, whether in a condominium, townhouse or single family subdivision that establishes general guidelines for the operation of the community, as well as its standards.
Inspection - A whole house inspection of a home being considered for purchase which looks for defects in the property.
Interest - That portion of a mortgage payment that is the "charge" for using the lender's funds.
Lien - A legal claim against a piece of property that can prevent it from being sold unless the lien is satisfied (paid off). Liens can be filed by unpaid contractors or other debtors in a legal process so that they will be paid when a property is sold.
Listing - A property for sale by a Real Estate Brokerage and Agent.
Loan Origination Fee - A charge imposed by the lender, payable at closing, for processing the loan.
Lock-in - An agreement by the lender at the time of mortgage application or shortly thereafter, to write the mortgage at a specific interest rate, whether rates rise or fall up to the date of closing. Obviously a good move if rates are rising, not so good if they are falling. Lock-ins have specific expiration dates, such as 30, 60 or 90 days in the future.
LTV (Loan to Value) - The ratio of the amount of the mortgage as a percentage of the value of the property.
MLS (Multiple Listing Service) - A listing (almost always computerized) of all the properties for sale by Real Estate Brokerages in a given geographical area.
PMI (Private Mortgage Insurance) - Required on virtually all conventional loans with less than 20% downpayment. Although the payments for PMI are included in your mortgage payment, it protects the lender should you default on the loan. On FHA loans, you will pay a MIP (Mortgage Insurance Premium) which accomplishes the same purpose. Points - 1 point is equal to 1% of the loan value, paid at closing.
Points can be loan origination fees or "discount points" which reduce the interest rate of the loan (you are actually paying a finance charge up front). When a lender, for example, quotes a rate of 8 1/2% with 1 + 1 points, 1 point is for the origination fee and 1 point is for the discount fee.
Prequalification - The first stage of a mortgage application where the lender will run a basic credit report and determine your debt to income ratio in order to see how much mortgage you qualify for.
Pre-paids - Paid for (in cash) at closing for such items as homeowners insurance for one year and real estate taxes for several months.
Principal - The amount borrowed for a mortgage loan. Your monthly mortgage payment will be applied to both the interest and the principal (be assured, though, that the lions share will go to the interest portion in the first years of the loan).
Property Tax - An annual or semi-annual tax paid to one or more governmental jurisdictions based on the amount of the property assessment. Generally paid as part of the mortgage payment.
Recording - The act of entering deed and/or mortgage information into public record with your local government jurisdiction.
Sub-Agent - A Real Estate Agent who is working with a buyer but who represents the seller in the transaction.
Title Insurance - Protects your title--your ownership rights--from claims against it. Paid at closing, title insurance may be the responsibility of the buyer, the seller, or both, depending on what is traditional in your locality.
Warranty - Covers either most of the house in a new home, or selected items (for example the heating and air conditioning system or the water heater) in a used home. Warranties can vary widely and are optional in used homes (paid for by either the buyer or the seller).
Zoning - Laws that govern specifically how a zoned area can be used. For example, an area may be zoned for single family residential, condominiums, commerical or retail, or a mix of two or more uses.
Amortization - The schedule of loan payments that establishes the amount of payment to be applied to the principal and the amount to be applied to interest, usually on a monthly basis, for the full term of the loan.
Annual Percentage Rate (APR) - The TOTAL interest rate of a mortgage, including the stated loan interest as well as any upfront interest paid in securing the loan. The APR will invariably differ from the mortgage rate quoted due to the inclusion of these items.
Appraisal - An estimate of value of a Real Estate property by a professional third party. Virtually all non-owner financed mortgages will require an appraisal and is generally paid for by the buyer.
Adjustable Rate Mortgage (ARM) - A mortgage in which the Interest rate is adjustable, meaning that the rate can go up or down according to prevailing financial market conditions.
Assessment - The value of a property as determined by the local tax jurisdiction which is used to determine the amount of your property taxes.
Buyer's Agent - A Real Estate Agent that has made an agreement to represent the buyer exclusively, rather than the seller.
Comparable Market Analysis (CMA) - A comparison of the prices of similar houses in the same general geographic area. A CMA is used to help determine the value of a property, either for a seller or a buyer.
Closing - The process that effects the final transfer of the deed from the seller to the buyer, as well as finalize all aspects of the mortgage of the property.
Closing Costs - Funds needed at the time of closing (separate from and in addition to the down payment). Loan origination fees, discount points, Attorney fees, recording fees and pre-paids are some items that may be included. They often will total from 3% to 5% of the price of the home, payable in cash.
Contingencies - These are conditions--or "safety valves" written into Real Estate offers and contracts to prevent a buyer from being forced to buy a house that is unsatisfactory--either structurally or financially. Examples of contingencies are "This contract is subject to the buyer obtaining a satisfactory whole house inspection." or "Subject to the buyer being able to obtain a mortgage."
Condominium - Housing where the owner owns only the unit in which the live--from the interior walls inward, generally--as well as a portion of the common area.
Debt to Income Ratio - The ratio of a borrowers total of debt as a percentage of their total gross income.
Deed - The document that, when recorded with your local government, determines ownership of a property. Transferred from seller to buyer at closing.
Earnest Money - Money that is submitted with an offer to purchase which indicates a buyer's seriousness and good faith. In virtually all cases, earnest money will need to be submitted at the time of the offer and remains in escrow until the time of closing, at which time it becomes part of the downpayment.
Equity - The difference between the value of a property and the total of any outstanding mortgages or loans against it.
Escrow - Funds held in reserve both prior to closing (for example the earnest money and deposit) by a third party and after closing by the mortgage company to pay future taxes and homeowners insurance. In some areas, "escrow" also refers to the closing process.
Fixed Rate Mortgage - A mortgage loan where the interest rate is established at its origination and continues unchanged through the life of the loan.
FSBO (For Sale By Owner) - Real Estate that is sold without the assistance of an Agent. FSBO can refer to both the individual selling the property "They are a FSBO," or the property itself "that house is a FSBO."
Foreclosure - The process through which a lender takes back property from a defaulting owner and re-sells it.
Homeowner's Association - An owners group, whether in a condominium, townhouse or single family subdivision that establishes general guidelines for the operation of the community, as well as its standards.
Inspection - A whole house inspection of a home being considered for purchase which looks for defects in the property.
Interest - That portion of a mortgage payment that is the "charge" for using the lender's funds.
Lien - A legal claim against a piece of property that can prevent it from being sold unless the lien is satisfied (paid off). Liens can be filed by unpaid contractors or other debtors in a legal process so that they will be paid when a property is sold.
Listing - A property for sale by a Real Estate Brokerage and Agent.
Loan Origination Fee - A charge imposed by the lender, payable at closing, for processing the loan.
Lock-in - An agreement by the lender at the time of mortgage application or shortly thereafter, to write the mortgage at a specific interest rate, whether rates rise or fall up to the date of closing. Obviously a good move if rates are rising, not so good if they are falling. Lock-ins have specific expiration dates, such as 30, 60 or 90 days in the future.
LTV (Loan to Value) - The ratio of the amount of the mortgage as a percentage of the value of the property.
MLS (Multiple Listing Service) - A listing (almost always computerized) of all the properties for sale by Real Estate Brokerages in a given geographical area.
PMI (Private Mortgage Insurance) - Required on virtually all conventional loans with less than 20% downpayment. Although the payments for PMI are included in your mortgage payment, it protects the lender should you default on the loan. On FHA loans, you will pay a MIP (Mortgage Insurance Premium) which accomplishes the same purpose. Points - 1 point is equal to 1% of the loan value, paid at closing.
Points can be loan origination fees or "discount points" which reduce the interest rate of the loan (you are actually paying a finance charge up front). When a lender, for example, quotes a rate of 8 1/2% with 1 + 1 points, 1 point is for the origination fee and 1 point is for the discount fee.
Prequalification - The first stage of a mortgage application where the lender will run a basic credit report and determine your debt to income ratio in order to see how much mortgage you qualify for.
Pre-paids - Paid for (in cash) at closing for such items as homeowners insurance for one year and real estate taxes for several months.
Principal - The amount borrowed for a mortgage loan. Your monthly mortgage payment will be applied to both the interest and the principal (be assured, though, that the lions share will go to the interest portion in the first years of the loan).
Property Tax - An annual or semi-annual tax paid to one or more governmental jurisdictions based on the amount of the property assessment. Generally paid as part of the mortgage payment.
Recording - The act of entering deed and/or mortgage information into public record with your local government jurisdiction.
Sub-Agent - A Real Estate Agent who is working with a buyer but who represents the seller in the transaction.
Title Insurance - Protects your title--your ownership rights--from claims against it. Paid at closing, title insurance may be the responsibility of the buyer, the seller, or both, depending on what is traditional in your locality.
Warranty - Covers either most of the house in a new home, or selected items (for example the heating and air conditioning system or the water heater) in a used home. Warranties can vary widely and are optional in used homes (paid for by either the buyer or the seller).
Zoning - Laws that govern specifically how a zoned area can be used. For example, an area may be zoned for single family residential, condominiums, commerical or retail, or a mix of two or more uses.
First-Time Homebuyers Tips
1. Be picky, but don't be unrealistic. There is no perfect home.
2. Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.
3. Get your finances in order. Review your credit report and be sure you have enough money to cover your down payment and your closing costs.
4. Don't wait to get a loan. Talk to a lender and get pre-qualified for a mortgage before you start looking.
5. Don't ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
6. Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?
7. Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you'll buy as well as type of mortgage terms that suit you best.
8. Don't let yourself be house poor. If you max yourself out to buy the biggest home you can afford, you'll have no money left for maintenance or decoration or to save money for other financial goals.
9. Don't be naive. Insist on a home inspection and if possible get a warranty from the seller to cover defects within one year.
10. Get help. Consider hiring an exclusive buyer's agent. Unlike a listing agent, whose first duty is to the seller, a buyer's agent is working only for you to get the lowest price and best terms for you. And typically, Fox Valley buyer's agents are paid out of the seller's commission payment.
2. Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.
3. Get your finances in order. Review your credit report and be sure you have enough money to cover your down payment and your closing costs.
4. Don't wait to get a loan. Talk to a lender and get pre-qualified for a mortgage before you start looking.
5. Don't ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
6. Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?
7. Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you'll buy as well as type of mortgage terms that suit you best.
8. Don't let yourself be house poor. If you max yourself out to buy the biggest home you can afford, you'll have no money left for maintenance or decoration or to save money for other financial goals.
9. Don't be naive. Insist on a home inspection and if possible get a warranty from the seller to cover defects within one year.
10. Get help. Consider hiring an exclusive buyer's agent. Unlike a listing agent, whose first duty is to the seller, a buyer's agent is working only for you to get the lowest price and best terms for you. And typically, Fox Valley buyer's agents are paid out of the seller's commission payment.
Ten Mold Facts for Homeowners, Landlords, Tenants, and Employers
(February 28, 2005) - Homeowners, landlords, tenants, and employers should use these ten mold facts to cope with mold in homes, apartments, and workplaces, advises Phillip Fry, Certified Mold Inspector and author of the book Do-It-Best-Yourself Mold Prevention, Inspection, Testing, and Remediation .
1. Airborne mold spores are everywhere both indoors and outdoors. Resident and employee health is at serious risk if there are elevated levels of mold spores indoors, as compared to an outdoor mold control test.
2. The most dangerous indoor molds are Alternaria, Aspergillus, Chaetomium, Cladosporium, Fusarium, Mucor, Penicillium, and Stachybotrys. Laboratory analysis is required to identify specific mold species.
3. Molds spores can cause serious health problems even if the spores are dead or dormant (inactive while waiting for more moisture to resume growth). Even the smell of dead or dormant mold can make some mold-sensitive persons ill.
4. It is impossible to get rid of all mold spores indoors. Some mold spores will always be found in house dust and floating in the air.
5. The mold spores will not grow into mold colonies if there is insufficient moisture. Indoor mold growth can and should be prevented or controlled by controlling moisture indoors. If organic materials are wet for more than 24 hours, mold growth can begin.
6. Mold grows by eating and destroying organic building materials and other cellulose-based materials such as carpeting, upholstery, and clothing. The longer that mold grows, the more mold damage to the building.
7. Cellulose is the main substance in the cell walls of plants (and thus of wood), and it is used in the manufacture of many organic building materials such as drywall, plasterboard, plywood substitutes, and ceiling tiles.
8. Mold can grow hidden and undetected inside wall and ceiling cavities; beneath wallpaper, paneling, and carpeting; and inside heating and cooling equipment and ducts, attics, crawl spaces, and basements.
9. Mold growth is often the result of a structural or construction defect, or of maintenance neglect, that allows moisture to enter the building.
10. The owner or employer must first fix the water problem (roof leak, plumbing leak, high indoor humidity) that enables the mold to grow. Effective mold remediation requires killing the mold with an EPA-registered fungicide, removing it, and treating the cleaned area with an EPA-registered preventive fungicidal coating.
For more information about mold, visit -
http://www.moldinspector.com
http://www.certifiedmoldinspectors.com
http://www.moldmart.net
1. Airborne mold spores are everywhere both indoors and outdoors. Resident and employee health is at serious risk if there are elevated levels of mold spores indoors, as compared to an outdoor mold control test.
2. The most dangerous indoor molds are Alternaria, Aspergillus, Chaetomium, Cladosporium, Fusarium, Mucor, Penicillium, and Stachybotrys. Laboratory analysis is required to identify specific mold species.
3. Molds spores can cause serious health problems even if the spores are dead or dormant (inactive while waiting for more moisture to resume growth). Even the smell of dead or dormant mold can make some mold-sensitive persons ill.
4. It is impossible to get rid of all mold spores indoors. Some mold spores will always be found in house dust and floating in the air.
5. The mold spores will not grow into mold colonies if there is insufficient moisture. Indoor mold growth can and should be prevented or controlled by controlling moisture indoors. If organic materials are wet for more than 24 hours, mold growth can begin.
6. Mold grows by eating and destroying organic building materials and other cellulose-based materials such as carpeting, upholstery, and clothing. The longer that mold grows, the more mold damage to the building.
7. Cellulose is the main substance in the cell walls of plants (and thus of wood), and it is used in the manufacture of many organic building materials such as drywall, plasterboard, plywood substitutes, and ceiling tiles.
8. Mold can grow hidden and undetected inside wall and ceiling cavities; beneath wallpaper, paneling, and carpeting; and inside heating and cooling equipment and ducts, attics, crawl spaces, and basements.
9. Mold growth is often the result of a structural or construction defect, or of maintenance neglect, that allows moisture to enter the building.
10. The owner or employer must first fix the water problem (roof leak, plumbing leak, high indoor humidity) that enables the mold to grow. Effective mold remediation requires killing the mold with an EPA-registered fungicide, removing it, and treating the cleaned area with an EPA-registered preventive fungicidal coating.
For more information about mold, visit -
http://www.moldinspector.com
http://www.certifiedmoldinspectors.com
http://www.moldmart.net
Home Loan Tips Anyone Can Use
1. Check your wallet.
First thing's first. When it comes to shopping for a home loan, you need to determine how much house you can actually afford. Be sure to consider the equity in your current home (if you own), the amount of money you have for a down payment, what you can afford in monthly payments, as well as real estate taxes, closing costs and insurance (home owners insurance and possibly Private Mortgage Insurance -- PMI -- if you put less than 20% down). Remember that debt obligations, such as credit card bills, alimony, child support and student loans should be no more than 36% of your pretax income. Be sure to do the math ahead of time so you don't break your bank in the long run.
2. Know your credit.
Your credit score will ultimately determine the types of loans that are available to you so it's important to understand what your credit rating is and how, if possible, you can improve it. It's important to remember that a potential lender will check your credit immediately so it's best to clear up any credit problems before you apply for a mortgage. However, don't be discouraged if your credit is less than perfect -- there are a variety of lenders that specialize in sub-prime financing, although you'll probably pay more in the form of a higher interest rate.
3. Learn your loan.
Today, loan terms are as diverse as the organizations that provide them, so be sure to do your homework to find a mortgage that best suits your needs. In addition to the typical 30-year and 15-year fixed rate mortgages, there are plenty of other options to choose from, including adjustable rate mortgages (ARMS) where the interest rate can vary over time, hybrid ARMS, jumbos, assumables and seller financing. GoApply.com offers a variety of mortgage information resources, including news articles, financial guides, a mortgage calculator, FAQs, a glossary and a mortgage checklist to help you determine which loan is right for you.
4. Organize your paperwork.
If you're in the market for a home loan, lenders will require important financial information from you. Some general documentation you can expect to provide includes W-2 statements from the previous two years, federal tax returns from the previous two years, recent paycheck stubs, documents showing other sources of income such as second jobs, overtime, commissions and bonuses, interest and dividend income, Social Security payments, VA and retirement benefits, alimony or child support. Additionally, you'll probably be asked to provide a complete list of your creditors, such as credit cards, student loans, car loans and child support payments. And don't forget investment records such as mutual fund statements, real estate and automobile titles, stock certificates and records of any other investments or assets. Be sure to organize your paperwork ahead of time so you're prepared to present this information to your lender at processing time.
5. Find a lender.
Finding the right lender is an important step to ensuring a positive loan experience and online lending is becoming an increasingly popular way to finding the perfect financing partner. The lowest rate doesn't always mean the best loan -- in addition to annual percentage rate, be sure to check points (pre-paid mortgage interest which will increase your upfront costs) and other fees associated with a given loan. Compare mortgage loan offers and talk to several lenders before you apply for your loan.
First thing's first. When it comes to shopping for a home loan, you need to determine how much house you can actually afford. Be sure to consider the equity in your current home (if you own), the amount of money you have for a down payment, what you can afford in monthly payments, as well as real estate taxes, closing costs and insurance (home owners insurance and possibly Private Mortgage Insurance -- PMI -- if you put less than 20% down). Remember that debt obligations, such as credit card bills, alimony, child support and student loans should be no more than 36% of your pretax income. Be sure to do the math ahead of time so you don't break your bank in the long run.
2. Know your credit.
Your credit score will ultimately determine the types of loans that are available to you so it's important to understand what your credit rating is and how, if possible, you can improve it. It's important to remember that a potential lender will check your credit immediately so it's best to clear up any credit problems before you apply for a mortgage. However, don't be discouraged if your credit is less than perfect -- there are a variety of lenders that specialize in sub-prime financing, although you'll probably pay more in the form of a higher interest rate.
3. Learn your loan.
Today, loan terms are as diverse as the organizations that provide them, so be sure to do your homework to find a mortgage that best suits your needs. In addition to the typical 30-year and 15-year fixed rate mortgages, there are plenty of other options to choose from, including adjustable rate mortgages (ARMS) where the interest rate can vary over time, hybrid ARMS, jumbos, assumables and seller financing. GoApply.com offers a variety of mortgage information resources, including news articles, financial guides, a mortgage calculator, FAQs, a glossary and a mortgage checklist to help you determine which loan is right for you.
4. Organize your paperwork.
If you're in the market for a home loan, lenders will require important financial information from you. Some general documentation you can expect to provide includes W-2 statements from the previous two years, federal tax returns from the previous two years, recent paycheck stubs, documents showing other sources of income such as second jobs, overtime, commissions and bonuses, interest and dividend income, Social Security payments, VA and retirement benefits, alimony or child support. Additionally, you'll probably be asked to provide a complete list of your creditors, such as credit cards, student loans, car loans and child support payments. And don't forget investment records such as mutual fund statements, real estate and automobile titles, stock certificates and records of any other investments or assets. Be sure to organize your paperwork ahead of time so you're prepared to present this information to your lender at processing time.
5. Find a lender.
Finding the right lender is an important step to ensuring a positive loan experience and online lending is becoming an increasingly popular way to finding the perfect financing partner. The lowest rate doesn't always mean the best loan -- in addition to annual percentage rate, be sure to check points (pre-paid mortgage interest which will increase your upfront costs) and other fees associated with a given loan. Compare mortgage loan offers and talk to several lenders before you apply for your loan.
March 10, 2005
Welcome to our online forum
Welcome to our online forum for homebuyers in the Fox Valley. We intend to bring you current, relevant information on our real estate market. Be sure to check back often!
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