Analyzing the Numbers is the First Step in Buying a Home

You’ve been waiting for the housing market to stabilize and the funds for a down payment are on hand. 2008 is shaping up as a the year you make an important financial decision — purchasing a new home. Before you jump in, have you analyzed the numbers? Specifically, have you determined whether you have the financial wherewithal to buy a home, make monthly payments, and maintain your investment for years to come?

The first step in buying a home is understanding your financial picture, with five points to grasp before you take the next step:

Determine how much home you can afford. You may want to live in Beverly Hills but the numbers are indicating that a less tony L.A. suburb is much more affordable for you. Monthly payment and monthly affordability calculators can go a long way in helping you understand what you reasonably can afford.

What goes into the numbers. Your down payment, points, and closings costs must be considered. Weigh these costs against retirement funds, gift money, and other monies you can use and you’ll know whether you have enough money to get started.

Consider the tax benefits of home ownership. Could it be that you cannot afford not to own a home? If you are in a high tax bracket, the deduction of your monthly mortgage interest, closing costs, and property taxes can reduce your overall tax burden. Taxes for high net-worth people is expected to go up following this fall’s presidential elections if certain politicians have their way. Check with your financial advisor to learn how what your tax benefits will be.

Get pre-approved from a mortgage lender. Realtors like to pre-qualify people when it comes to determining whether (in their minds) you can afford a particular home or not. However, only a mortgage lender can say for sure whether you can afford that home, not the realtor. Get a no obligation pre-approval letter from a your lender and bring that with you when you bid on a home.

Qualify for credit. Closely related to the pre-approval letter from a mortgage lender is qualifying for credit — lenders look at two things when it comes to lending money: your capacity to repay the loan and your credit history. Expect your credit reports to be pulled, credit scores obtained, and current salary information and other important documentation supplied.

Once you have analyzed the numbers, the next step is to search for a home. We’ll be discussing the second through seventh steps in the home buying process over the weeks ahead.

Tags: buy home, buying a home, home buy, Home Buying, home purchase

You found the home you want and now comes the third step in the home buying process: negotiating the price you will pay for the home. Certainly, meeting the buyer’s asking price can take the edge off of the buying process but other factors will weigh in including market conditions. How you tackle this part of the home buying process could cost or save you thousands of dollars.

What Type Of Market Are You In?

What is going on in your local market? Is it a buyer’s market or a seller’s market? If you are in a buyer’s market you can offer less for the home than the seller’s price, but if you are in a seller’s market you may have to pay above the asking price especially if other parties are competing with you.

What’s In The Contract?

Your agent will provide you with a copy of the terms of the contract prior to you making your offer. You’ll want to acquaint yourself with all of the details to learn exactly what you are getting when purchasing the home.

Purchase price, terms of the sale, earnest monies required, financing contingencies, settlement and possession, a selling of your home contingency, home inspection, and termite inspection and environmental testings should all be noted. Your attorney will work on your behalf to make certain that your interests are protected.

Before Extending Your Offer

What are you getting with the home that you are buying? It should include all of the fixtures and just about everything that is nailed or bolted down. However, the refrigerator, washer/dryer, shed, outdoor furniture, window treatments and other items may be excluded, and could be pawns used in negotiating the final price.

Presenting Your Offer

Once you are satisfied that all of the previous steps have been accomplished, you can then present an offer based on the information on hand. You will present your offer to your real estate agent who will contact the seller’s agent. The seller’s agent will then contact the homeowner and present your offer to them.

The homeowner can respond to your offer in several different ways including:

• Accept your offer as is.
• Reject your offer outright.
• The seller could change the terms of the contract and present a counter-offer.
• You can then counter the counter-offer.
• The seller can entertain a second offer.

Once an agreeable purchase price has been reached then you are on your way to home ownership. Of course, one or more contingencies could kick in otherwise the acceptance of the contract makes it a legally binding document for both parties.

Negotiating a home purchase can be accomplished quickly provided that all of the contract conditions are worked out. Skilled real estate agents working closely with the buyer and seller can smooth out any rough patches and bring the negotiations to a successful and orderly conclusion.

Tags: buying a home, buyng home, home buy, Home Buying, home buying contract, home buying steps, Home Financing, home listings, home loans, mortgage, mortgage lending, negotiating home buying contract

There are all kinds of people out there who are willing to sell you your next home. Brokers, licensed realtors, a homeowner, your neighbor, or a friend are points of contact for buying a home. However, most buyers retain the services of a licensed realtor as they rightfully expect that this person knows the local market very well and will act in their best interests. Let’s take a look at some things to consider when choosing your real estate agent.

Questions Every Homeowner Should Ask Prospective Real Estate Agents

Who are you representing? Some realtors are agents for the seller, others act as agents for the buyer, while some are dual agents — representing the buyer and the seller equally. You will want to make sure that you receive at least partial representation. Of course, when the realtor shows you homes she has personally listed you will know that she is acting as a dual agent. Realtors are required by law to state in which capacity they are serving you.

What types of buyers do you represent? Some realtors specialize in high end homes while others enjoy working primarily with first time homebuyers. If you want to buy a condo and the agent works primarily with single family residences, will you feel comfortable enough to have this realtor represent you?

Where is your primary territory for buying and selling homes? If the agent’s office is in one town and the homes you are interested in are in the next town (or county) do they know that market well enough (i.e., neighborhood reports, home values, schools, businesses, etc.) to offer adequate representation to you?

Do you charge a fee? Real estate agents should never charge a fee for their services. When they sell you a home, they receive a portion of the seller’s commission. Business etiquette says that it is fine to send a “thank you” note to the realtor for the work that they do on your behalf and a small gift is not out of the question. What real estate agents really want from you is referrals for future business!

Do You Like Your Agent?

Of course, the one question you have to ask yourself about any real estate agent is this: do you like him or her? Oftentimes, it takes interviewing two or three agents before deciding which one you will work with. A good rapport, an understanding of your needs, and an agent who is truly interested in satisfying you is essential to a successful home buy. Without a good relationship you may find the home buying process to be a big disappointment.

Links To Empower You

Finally, the following resources can help you find the home you want while working with an agent:

• Search MLS
• Search FSBO
• Search Foreclosures
• Search New Homes
• 12-Step Mortgage Lending

Happy home shopping!

Tags: buying a home, buyng home, home buy, Home Buying, home buying steps, Home Financing, home listings, home loans, mortgage, mortgage lending