• Overview of the Buying & Selling Process
  
• Benefits of Home Ownership
  
• Finding the Right Home
  
• Home Shopping Tips
  
• Home Inspections
  
• Answers to Frequently Asked Questions
  

Overview of the Buying & Selling Process

Benefits of Home Ownership

Credit:
Owning a home helps you establish financial credibility.

Independence:
Owning your own home provides you with independence and more privacy than renting. You are free to paint walls, plant flowers, keep pets and anything else within legal bounds.

Investment:
As you make more payments and own more of your home, you add to its investment value. Most improvements you make will also add to its value.

Pride:
A home reflects its owner's values and lifestyle. Owning a home can provide you with a source of pride, enjoyment and satisfaction.

Security:
A home can provide security against inflation because the value of your home increases as prices go up.

Stability:
Being established in a community provides a sense of belonging, stability and security.

Tax Advantages:
Interest on your mortgage loan is deductible on your yearly personal income tax return. Many of the closing costs associated with purchasing your home are deductible, as are your property taxes.

Finding the Right Home

Real Estate Agents
You can sit down with a real estate agent and discuss your needs, type of area, style of home, amenities and everything you really want in your next home. Real estate agents can help you by accessing a Listing Service which covers all properties listed for sale within a specific area. Together, you can select the homes you would like to see, set appointments and preview homes in a short period of time. An agent can guide you through the entire process.

Newspaper Ads/Internet
Many people go through the real estate classified section or browse the Internet to find a home that appeals to them. However, your real estate agent will have many listings available that may not appear in the newspaper or Internet on a continuous basis. New listings come on the market daily.

Multiple Listing Service
Your real estate agent should have access to the multiple listing service if it is available in your area. It usually includes the following details about homes and properties for sale:

• Location
• Price
• Photograph
• Utilities
• Amenities
• Annual property tax
• Current financing (when assumable)
• Listing company

• Write notes when previewing a home so you will be able to discuss the details later with your real estate agent.
• Ask questions about the home and discuss any objections or concerns you may have.
• Ask about the community - schools, shopping and transportation.
• Ask specific questions about the construction of the home; electrical, plumbing, heating, cooling systems, etc.

Have Fun
Relax. Finding your new home can be a rewarding experience. Have a good time and enjoy the process.

Home Shopping Tips

• Bathroom
  
  • Sinks
  • Showers/tubs
  • Toilets
  • Vent fan
  • Heating fan
• Appliances
  • Dishwasher
  • Stove
  • Oven
  • Ice maker
  • Garbage disposal
  • Range hood
  • Refrigerator
  • Freezer
  • Microwave
  • Trash compactor

• Kitchen
  • Kitchen cabinet doors
  • Drawers
  • Sinks
• General
  • Lights (interior & exterior)
  • Windows
  • Heating system
  • Ceiling fans
  • Hot water system
  • Air conditioning system
  • Electrical outlets
  • Door bells
  • Doors
  • Water purifier
  • Fireplace damper
  • Garage door

• Exterior
  • Brick bulging or cracking
  • Shingles missing or broken
  • Siding rotted or missing
  • Gutters damaged or need to be cleaned
  • Concrete cracked in sidewalks/driveway
• Basement
  • Water seepage in basement
  • Cracks in foundation
  • Poor ventilation

• Interior
  • Sub-flooring damaged or loose
  • Cracked walls or ceiling
  • Cracked tiles
  • Loose plaster
  • Flooring damaged
  • Soft, springy floors
  • Water stains near windows
  • Water stains on ceiling below bathroom
  • Water stains in attic
  • Pipe insulation missing

Home Inspections

What is an inspection?
There are numerous types of inspections. An inspection is meant to evaluate, at minimum, the structural and mechanical condition of a property. It is not the same as an appraisal which evaluates the market value of a property. Persons involved in real estate transactions need unbiased information about the physical condition of property they plan to buy or sell and your contract should include a contingency that you obtain a satisfactory inspection report. Talk with your agent about the types of inspections available.

Home Inspectors vs. Engineers
Home Inspector: A person who examines any component of a building, through visual means and through normal user controls, without the use of mathematical sciences.

Engineering: Analysis or design work requiring extensive preparation and experience in the use of mathematics, physics, chemistry and the engineering sciences.

• Referrals from satisfied customers
• Referral from a local real estate agent or mortgage company
• Local consumer affairs office
• Yellow Pages under "Building Inspection Services"

Ask if she/he is a member of the American Society of Home Inspectors (ASHI). The ASHI has established standards of practice which include the specific services, limitations and exclusions that can be expected from private home inspectors.

What the inspection, at minimum, includes
Every inspection should include, but not be limited to, an evaluation of at least the following:

• Foundations
• Plumbing and electrical systems
• Doors
• Ceiling, walls and floors
• Roof
• Hazardous materials concerns
• Heating and air conditioning systems
• Common areas (in condominiums)
• Insulation
• Ventilation

Answers to Frequently Asked Questions

What is the difference between "pre-qualified" and "pre-approved"?
If you are "pre-qualified" you have determined, with a loan officer, what price you can afford based on the down payment, your debts and the amount the mortgage company will approve for your mortgage. Being "pre-qualified" is only a determination of your probable credit. If you are "pre-approved", your credit, employment and funds have been approved by the lender.

What are closing costs?
Closing costs are an accumulation of charges paid to different entities associated with the buying and selling of real estate. For buyers, they are usually about 4-6% of the total sales price of a property. Some of the closing costs you might encounter are: application fees, appraisal fee, county taxes, credit report, discount points, documentation fee, escrow fees, homeowners' association fees, loan fees, mortgage insurance, origination fees, tax registration and title insurance premium.

What is a point?
One point is equal to 1% of the new loan amount. Whenever government regulation, state usury laws and/or competitive practices prohibit the lender from charging a rate of interest that would make the real estate loan competitive with other fields of investments, the lender must seek some method of increasing the yield for the investors. By charging "points", the lender can bring the real estate loan up to those other investments.

What is earnest money?
When you make an offer, you will need to put up an earnest money deposit as a sign of good faith that you are seriously interested in buying a home. That deposit becomes a part of the purchase price and is held in a trust account until there is full acceptance of the offer. Typically, an earnest money is 3-5% of the offer amount.

What is title insurance?
Title insurance protects the named insured against loss because of defects, liens, encumbrances, adverse claims or other matters not shown or disclosed to the new owner that attach before date of policy.

Is VA or FHA financing unfair to sellers?
FHA and VA loans provide purchasers the opportunity to buy homes with minimal cash investment and at lower interest rates. The result is a larger market for sellers, who also benefit by receiving all cash for their equity.

Buyer Information
Are You Ready To Buy?

In order to know about your homebuying potential, it will be useful for you to take a look at your income, savings, monthly expenses, and debt. All of these are important factors in how much mortgage you can afford and also in how purchasing a home can affect your monthly budget.

Together the following four categories are a guide that will give you a better understanding of your financial situation. Just print this page, and fill in the blanks for each of the categories listed. Use this information when you visit the Affordability Calculator.

1) Review your income. Purchasing a home may require that you have a certain amount in savings that can be applied to your down payment and closing costs. If you don't have a lot of cash available, there are loan programs available (especially through FHA and VA mortgage programs) that do not require much cash payment at closing. Some questions to consider:

• On average, what is your monthly income?
• Will your income remain stable in the near future?
• Are you expecting any increase or decrease in income in the near future?

Here is an example of some income categories to help you estimate your monthly income.

Income Category	Monthly
Borrower's Salary	$
Co-Borrower's Salary	$
Taxable Interest	$
Investment Dividends	$
Other Income	$

 

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2) Review your savings. A little savings can help a great deal when planning to purchase a home. There are some costs that you cannot finance through your loan; you have to pay those at closing, the day that you buy your home. Some questions to consider:

• What portion of your income are you saving?
• Can you save more money than you are now?

Here is an example of some savings categories to help you estimate your monthly savings.

Savings Category	Monthly
Savings Account	$
Checking Account	$
Retirement Fund Contributions	$
Stocks, Mutual Fund Investments	$
Other Savings	$

 

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3) Monthly expenses may increase. The purchase of your home will likely change how much you will need to spend on expenses every month. If you have trouble saving now, your finances may be too tight with the purchase of a home. Some questions to ask yourself:

• How will the purchase of a home affect my monthly budget and my ability to save?
• Can I support the additional expenses that the purchase of a home will bring?
• Do I expect to maintain a stable income for the foreseeable future?

Here is an example of expense categories to help you estimate your monthly expenses. This can be useful to determine your current monthly expenses and to estimate how these expenses will impact your budget.

Expense Category	Monthly (current)
Utilities	$
Car Expenses	$
Insurance	$
Medical Expenses	$
Clothing	$
Taxes	$
Entertainment/Purchases	$
Child Support	$

 

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4) Review your debt responsibilities. Consider how your debt in relation to your income will influence a lender's decision on your mortgage loan amount. Carefully consider how additional debt from house payments, on top of your existing debt, will restrict your lifestyle. Some questions to ask yourself:

• How much debt can I afford to manage comfortably?
• Will I be able to manage my debt responsibilities through the life of my loan?
  
  

Debt Category	Monthly
Credit Card	$
Car Loans	$
School Loans	$
Alimony	$
Child Support	$
Other Personal Debt	$