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Congratulations on the search for your new home! Below you will find

  • common questions
  • buying tips and resources
  • moving tips

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Common questions

As a “rule of thumb” you can afford to buy a home equal in price to twice your gross annual income. More precisely, the price you can afford to pay for a home will depend on six factors:

  1. Your income
  2. The amount of cash you have available for the down payment, closing costs and cash reserves required by the lender.
  3. Your outstanding debts
  4. Your credit history
  5. The type of mortgage you select
  6. Current interest rates

Lenders will analyze your income in relation to your projected cost of the home and outstanding debts. This will determine the size loan you can borrow. Your housing expense-to-income ratio is determined by calculating your projected monthly housing expense, which consists of the principal and interest payment on your loan, property taxes and hazard insurance. The sum of these costs is referred to as “PITI.”

Monthly homeowner association dues, if you’re purchasing a condominium or townhouse, and private mortgage insurance are added to the PITI. Your housing income-to-expense ratio should fall in the 28 to 33 percent range. 28 percent of your gross monthly income is allotted toward PITI. 33 percent of you gross monthly income is allowed for PITI and all long term debt. Some lenders will go higher under certain circumstances.. Your total income-to-debt ratio should not exceed 34 to 38 percent of your gross income.

First and foremost it is strongly recommended that you hire a professional person to inspect the home. Many inspectors belong to the American Society of Home Inspectors (ASHI). They attend seminars and stay abreast of the latest developments.

Secondly some states require sellers to complete a disclosure form revealing everything known about their property. Home sellers are required to indicate any significant defects or malfunctions existing in the home’s major systems. A checklist specifies interior and exterior walls, ceilings, roof, insulation, windows, fences, driveway, sidewalks, floors, doors, foundation, as well as the electrical and plumbing systems.

The form also asks sellers to note the presence of environmental hazards, walls or fences shared with adjoining landowners, any encroachment of easements, room additions or repairs made without the necessary permits or not in compliance with building codes, zoning violations, citations against the property and lawsuits against the seller affecting the property.

Also look for settling, sliding or soil problems, flooding or drainage problems.

People buying a condominium must be told about covenants, codes and restrictions or other deed restrictions, if the homeowners association has any authority over the subject property and ownership of common areas with others. Be sure to ask questions about anything that remains unclear or does not seem to be properly addressed by the forms provided to you.

There are always some sellers who for some reason must sell quickly, however in general, a very low offer in a normal market might be rejected immediately. In a strong buyer’s market, the below-market offer will usually either be accepted or generate a counteroffer. If few offers are being made, an outright rejection of offers becomes unlikely. In a strong seller’s market, offers are often higher than full price. While it is true that offers at or above full price are more likely to be accepted by the seller, there are other considerations involved:

  1. Is the offer contingent upon anything, such as the sale of the buyer’s current house? If so, such an offer, even at full price, may not be as attractive as an offer without that condition.
  2. Is the offer made on the house “as is,” or does the buyer want the seller to make some repairs before the close of escrow or make a price concession instead?
  3. Is the offer all cash, meaning the buyer has waived the financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.
  4. Are there any requests for seller concessions, such as asking the seller to contribute towards points and/or closing costs? If so, the offer is not really full price.

Different sellers price houses very differently. Some deliberately overprice, others ask for pretty close to what they hope to get and a few (maybe the cleverest) underprice their houses in the hope that potential buyers will compete and overbid. A seller’s advertised price should be treated only as a rough estimate of what they would like to receive.

If possible try to learn about the seller’s motivation. For example, a lower price with a speedy escrow may be more acceptable to someone who must move quickly due to a job transfer. People going through a divorce or are eager to move into another home are frequently more receptive to lower offers.

Some buyers believe in making deliberate low-ball offers. While any offer can be presented to the seller, a low-ball offer often sours a prospective sale and discourages the seller from negotiating at all. And unless the house is extremely overpriced, the offer probably will be rejected anyway.

Before making an offer, also investigate how much comparable homes have sold for in the area so that you can determine whether the home is priced right.

Should I put more or less down, if we can afford it?

Various types of loan programs exist. Some require a minimum of 3 percent down payment (FHA Loans) or 5 percent on conventional loans. Veterans can purchase with no money down (VA Loan).

Putting down as little as possible allows buyers to take full advantage of the tax benefits of home ownership. Mortgage interest and property taxes are fully deductible from state and federal income taxes. Buyers using a small down payment also have a reserve for making unexpected improvements. It may be more prudent to make a larger down payment and thereby reduce the amount of debt that must be financed. Once a buyer puts twenty percent or more as a down payment on their desired home, they will waive the requirement for mortgage insurance.

Mortgage insurance is a requirement on all loans, with the exception of veterans guaranteed loans. That means a full years premium for the insurance is collected “up front’ at the closing of escrow, plus you will be paying monthly as part of your PITI, principle-interest-taxes-insurance.

Title insurance is a form of insurance in favor of an owner, lessee, mortgage or other holder of an estate lien, or other interest in real property. It indemnifies against loss up to the face amount of the policy, suffered by reason of title being vested otherwise than as stated, or because of defects in the title, liens and encumbrances not set forth or otherwise specifically excluded in the policy, whether or not in the public land records, and other matters included within the policy form, such as lack of access to the property, loss due to unmarketability of title, etc. The title policy form sets forth the specific risks insured against. Additional coverage of related risks may also be added by endorsements to the policy or by the inclusion of additional affirmation insurance to modify or supersede the impact of certain exceptions, exclusions or printed policy “conditions.” The policy also protects the insured for liability on various warranties of title.

In addition, the policy provides protection in an unlimited amount against costs and expenses incurred in defending the insured estate or interest.

Before it issues a title policy, the title insurance company performs, or has performed for it, an extensive search, examination and interpretation of the legal effect of all relevant public records to determine the existence of possible rights, claims, liens or encumbrance that affect the property.

However, even the most comprehensive title examination, made by the most highly skilled attorney or lay expert, can not protect against all title defects and claims. These are commonly referred to as the “hidden risks.” The most common examples of these hidden risks are fraud, forgery, alteration of documents, impersonation, secret marital status, incapacity of parties (whether they be individuals, corporations, trusts or any other type), and inadequate or lack of powers of REALTORS® or fiduciaries. Some other hidden risks include various laws and regulations that create or permit interests, claims and liens without requiring that they first be filed or recorded in some form so that the potential buyers and lenders can find them before parting with their money.

Since the cost for home owner’s title insurance is usually sharply reduced when taken simultaneously with the issuance of a purchase money mortgage, the risk is one that a well informed buyer should not take. In fact, several states have adopted statutory requirements which require a notice to home buyers as to the availability of title insurance similar to that being obtained by their purchase money mortgages.

It is strongly recommended that home buyers are prequalified or pre-approved for a loan as their first step in the process. By being prequalified, a buyer knows exactly how much house they can afford. They can make more informed decisions in the market place. This does not mean they will definitely get the loan because their credit reports, wages and bank statements still need to be verified before you can receive a commitment from the lender for the loan.

Almost all mortgage lenders prequalify people at no charge. Many of them will even do it on the internet. In order to be pre-approved, an application will be taken. For a fee, your credit report will be pulled, your employment and income will be verified, your checking and savings accounts will also be verified. In other words, all the necessary documentation will be completed in order for you to obtain a loan. The only things remaining will be for you to find a home, obtain an appraisal on it to prove its value to the bank and perform whatever inspections you may want on the property. This process considerably shortens the time frame to closing.

Compare the mortgage charts published in most newspapers.

Occasionally some lenders are willing to negotiate on both the loan rate and the number of points. This isn’t typical among many of the established lenders who set their rates. Nevertheless, it never hurts to shop around, know the market and try to get the best deal. Always look at the combination of interest rate and points and get the best deal possible. This is reflected in what is called the APR or Actual Percentage Rate.

The interest rate is much more open to negotiation on purchases that involve seller financing. Generally, these are based on market rates but some flexibility exists when negotiating such a deal.

Sales price increases in either type of housing are strongly tied to location, growth in the local housing market and the state of the overall economy.

Some people feel that buying into a new-home community is a bit riskier than purchasing a house in an established neighborhood. Future appreciation in value in either case depends upon many of the same factors. Others believe that a new home is less risky because things won’t “wear out” and need replacement.

“Existing homes have been appreciating a little more than new homes but every once in awhile they’re at the same level and sometimes the new home prices go up a little quicker” according to the National Association of REALTORS® (NAR).

NAR figures show the median price of existing homes went up 3 percent between 1994 and 1995; projections are that prices will increase 3.2 percent in 1996 and 1.2 percent in 1997.

New home median prices went up 0.8 percent in 1995 and are likely to increase another 0.5 percent in 1996. For 1997, the group predicts a 1.1 gain in median new home prices.

Distressed properties or fixer-uppers can be found everywhere. These properties are poorly maintained and have a lower market value than other houses in the neighborhood. It is often recommended that buyers find the least desirable house in the best neighborhood. You must consider if the expenses needed to bring the value of that property to its full potential market value are within your budget. Most buyers should avoid run-down houses that need major structural repairs. Remember the movie ” The Money Pit?” Those properties should be left to the builder or tradesman normally engaged in the repair business.

HUD’s Rehabilitation loan program, Section 203(K) is a program designed to facilitate major structural rehabilitation of houses with one to four units that are more than one year old. Condominiums are not eligible.

A 203(K) loan is frequently done as a combination loan. You purchase a “fixer-upper” property “as is” and rehabilitate it. Or, you may refinance a temporary loan to buy the property and do the rehabilitation. It can also be done as a rehabilitation-only loan.

Investors are required to put 15 percent down. Owner-occupants have a required down payment of 3 to 5 percent. A minimum of $5,000 must be spent on major improvements.

Major repairs can be: a new heating system, roof, replacement windows, etc. You may then also finance additional repairs and improvements i.e.: new carpeting, kitchen cabinets, appliances, etc. You must of course “qualify” for the total amount you will be borrowing through this program.

Two appraisals are required. These appraisals will be on the property “as repaired” not “as is.” Plans and specifications for the proposed word must be submitted for architectural review and cost estimation. Once approved mortgage proceeds are advanced periodically during the rehabilitation period to finance the construction costs.

Remodeling a home improves its livability and enhances curb appeal, making it more salable to potential buyers. Some of the popular improvement projects are updated kitchens and baths, enlarged master bedroom suits, home-office additions and increased amenities in older homes.

The resale market is often difficult because you are competing with new construction. You need to give your home every competitive advantage you can if you are selling an older home.

Home offices are a relatively new remodeling trend. Adding one to a house often recoups 58 percent of the costs, according to a survey found in a report called “Cost vs. Value Report” in Remodeling Magazine.

The incidence of foreclosures is cyclical, based on national and regional economic trends.

People can get a rough estimate of the number of foreclosures in a target area by dividing its population by 2,500, according to John T. Reed of Reed Publishing, Danville, Calif.

New England had so many foreclosures that newspapers added foreclosures-only sections to their real estate classified advertising section. But these states recovered in the mid-1990’s.

Buying directly at a legal foreclosure sale can be risky and dangerous. The process has many disadvantages. There is no financing so purchases require cash. The title needs to be checked before the purchase or the buyer could buy a seriously deficient title. The property’s condition is not well known and generally, an interior inspection of the property is not possible before the sale.

Additionally Estate (probate) and foreclosure sales are exempt from some states’ disclosure laws. The law protects the seller (usually an heir or financial institution) who has recently acquired the property through adverse circumstances and may have little or no direct information about it.

Be sure to find out who your real estate REALTO®R is representing before you tell them too much. The degree of trust you have in an REALTOR® may depend upon their legal obligation of representation. An agency working with a buyer has three possible choices of representation. The REALTOR® can represent the buyer exclusively, called buyer agency, or represent the seller exclusively, called seller agency, or represent both the buyer and seller in a dual agency situation. Some states require REALTORS® to disclose all possible agency relationships before they enter into a residential real estate transaction. Here is a summary of the three basic types:

  1. In a traditional relationship, real estate REALTORS® and brokers have a fiduciary relationship to the seller. Be aware that the seller pays the commission of both brokers, not just the one who lists and shows the property, but also to the sub-broker, who brings the ready, willing and able buyer to the table.
  2. Dual agency exists if two REALTORS® working for the same broker represent the buyer and seller in the same transaction. A potential conflict of interest is created if the listing REALTOR® has advance knowledge of another buyer’s offer. Therefore, the law states that a dual REALTOR® shall not disclose to the buyer that the seller will accept less than the list price, or disclose to the seller that the buyer will pay more than the offer price, without express written permission.
  3. A buyer can hire an REALTOR® who will represent their interests exclusively. A buyer’s REALTOR® usually requires a retainer which is refunded once the buyer purchases a house. The amount of the retainer differs from REALTOR® to REALTOR®. A buyer’s REALTOR® can perform enhanced services for the buyer, such as preparing a market analysis on the home they are buying. All information provided to the buyer’s REALTOR® shall remain confidential and will not be relayed to the Seller’s REALTOR®.

Buying a home may well be the largest financial investment you will ever make. Naturally you will want to know as much as possible about the property before you finalize the purchase at closing.

It’s important to hire a knowledgeable, independent home inspector for advise on the overall condition of the property. The purchase contract usually requires specific time periods for each inspection, and it’s critical that these time frames be met. Usually the cost for any and all inspections and re-inspections are paid by the Buyer. Prices can range from $350 to $500 for whole-house inspections.

Some examples of common inspections are:

  • Structural – Defects caused by poor construction, soil movement, water or drainage conditions, settlement, fire, etc.
  • Environmental Hazards – Including asbestos, lead-based paint, radon gas or any other toxic material.
  • Roof – Can include framing members, decking and shingle condition.
  • EMP – Electrical, Mechanical and Plumbing – Should include electrical and plumbing systems, built-in appliances, heating and cooling systems, swimming pool/spas, sprinkler systems and security systems.
  • Termite – Report would show any visible infestation or visible damage caused by and wood destroying organism (termites, water damage, wood rot).

Many companies specialize in only one area of inspection, and others will group several together and offer a package price. Whichever route you go, assure yourself your getting the inspections you need. Many can be found in the yellow pages or your Broker can provide a list of several of each to choose from.

Moving

  • Simplify – Use the move as an opportunity to de-clutter your life. A garage sale is a great way to raise money for moving costs. Getting rid of unused, broken and out-dated items can be a huge relief in itself, plus you won’t have to pack, move, and unpack all of the extra weight. Donate anything left over to a local charity, or post items for sale on eBay and/or Craigslist.
  • Organize – Try to avoid packing in haste. This is how items get broken or damaged, plus it makes it much more difficult and time-consuming to unpack everything. Keep items of similarity together: décor, kitchen ware, linens, toys, consumables, etc. and be sure to clearly label all boxes.
  • Think Ahead – When packing things into the moving vehicle, think ahead for what you will want/need out first and remember to pack those things last so they will be the most accessible.
  • Special Care – Take special care with items of value and sentiment. We recommend moving items like this in your own vehicle for added peace of mind.

Get a Head Start – Don’t wait until the last minute to begin the moving process. Pack whatever you can, as soon as it is convenient. The sooner you begin, the less work and the less stress you will have on moving day.

Moving your pets can add stress to any move. Moving companies are not permitted to handle living creatures, nor are buses or trains. You will either need to move your pets yourself, or hire a professional company (recommended when traveling long distances over an extended period of time) to handle the well being of your animals for the duration of your move.

Regardless of the distance you will be traveling, you will want to consider your pet’s comfort and safety throughout the relocation. Be sure to have a sturdy, comfortable carrier for your pet. Familiarize your pet with the carrier several days (or even weeks) in advance.

If you are moving across state lines or with exotic animals, there are several things you need to take into advanced consideration:

  • Health Certificate – Many states require a health certificate less than 10 days old. The certificate must be issued by a licensed veterinarian, and current inoculation records must accompany it.
  • Permit – If you are entering the state with an exotic pet, you must apply for a permit to keep it.  Your veterinarian can assist you in obtaining this documentation.
  • Identification – Identification is absolutely crucial when traveling. Your pet
  • should be clearly identified using a collar and tags if at all possible. The tags should include your name, phone number and destination address. Some states also require a rabies tag. Check with your veterinarian for more information.

Moving yourself, versus hiring a professional company, has certain advantages and disadvantages. Of course, you will save a considerable amount of money, however you will likely end up trading that savings for additional time and effort. Actual savings and added effort really depend on the details of your move though.

If you are moving from a small home and/or to a local destination, this can definitely be the most cost-effective, quick and simple solution. Call in some favours to your friends and have your moving plan ready to execute on moving day. Remember to try to pack as much as you can ahead of time, if at all possible.

If you are moving from a large home and/or to a distant destination, moving yourself will definitely be a significant amount more effort and time, in turn, possibly costing you more money.

Self-Packing Tips

  • Use only boxes with lids. This allows better packing of the moving truck and greatly reduces the possibility of damage.
  • If necessary, purchase boxes and packing materials from a moving company. Use linens and towels to cushion fragile items.
  • Label all boxes with a list of contents, and which room they will be moved to in your new residence. If a box has fragile contents, boldly mark the outside of the box “FRAGILE”. Label both the top and the side of each box.
  • Use about four inches of crumpled paper in the bottom of every box loaded with fragile items. Wrap each item individually and add paper cushioning around it. If items are particularly delicate, pack one box inside another.
  • Wrap plates, saucers and china individually, and then bundle in groups of three or four. Stand them on end in the carton; never lay them flat. Don’t use newspaper to wrap fine china and other items that can’t be easily washed. Newspaper ink smears easily.
  • Wrap cups and glasses individually and pack them rim down in the box.
  • Box stereo and computer equipment to prevent damage.
  • Pack pictures and mirrors in boxes. If you are concerned about damage, have these items professionally packed.
  • Leave clothes in drawers.
  • Upright file cabinets with drawers can be left full. Lateral file cabinets, desks and credenzas need to be emptied.
  • Check to see that caps are secure on toiletries, medicines, cleaning products and laundry soap.
  • Do not pack any flammable materials or aerosol products, including hair spray, shaving cream, deodorant, insecticides, cleaning products, spray paint, nail polish remover, bleach, lighter fluid, and motor oil. The temperature inside a closed moving van can reach 150 degrees, and these combustible items can trigger an explosion.
  • As you pack small boxes, move them into a staging area such as the living room or the garage. This makes moving day progress faster.
  • Make sure a few hand tools are easily accessible. You may need them right away in your new house.
  • If you are moving your belongings into a storage unit, get a unit larger than you require. This way boxes can be stacked against each wall to leave an aisle down the middle for easier access to stored items.
  • Make sure your belongings are insured for an adequate amount, and carry enough cash to cover emergency situations during your move.

Today moving companies offer a multitude of services above the basic loading, transporting, and unloading of your belongings. Extended services now include packing your belongings, the sale or hire of packing materials, unpacking, cleaning and the setup of your new home!

Choosing a company to trust with all of your possessions can be difficult though. Here are some tips to guide you in selecting a reputable company in your area:

  • Be sure to start shopping companies well in advance of your move. You should choose your moving company four to eight weeks before your moving day.
  • Use your friend’s and family’s recommendations as a starting. If someone you know had a good experience with a company, you are likely to experience a similar level of satisfaction.
  • Get several quotes for like moving services. Prices can range drastically, so the more information you have up front, the better informed decision you can make on which company if right for you.
  • Be sure to ask how long the company has been in business and if they have any customer referrals. Also ask about their insurance coverage and claims protection.
  • Read the fine print of any contracts you sign, as that is where any additional fees will be hidden.

The largest moving companies are Allied, Mayflower, North American, United Van Lines, and Van Lines. They all offer long distance moves across the country and will quote your move at no cost to you. Each has a website where you can get general information on moving, and also estimate your move time and the cost to use their company.

It is important to understand the moving industry. It is a tough business that always carries the potential risk for damage of cargo. Customers are rarely forgiving when it comes to their personal possessions, so you can imagine that most moving companies will have some complaints or negative reviews. Websites like Moving.com can help you identify local companies with the best reputation and a minimal amount of negative feedback.

Moving costs can range drastically based on the distance of the move and the amount of furniture/belongings being transported. Other variables that affect moving costs include the time of year, how much lead time was provided to the moving company, and who will be doing the packing and unpacking.

Getting multiple quotes can mean the difference between getting a reasonable price and becoming the victim of a moving scam. Be sure to discuss any and all circumstances that could add additional costs to your final bill with your moving company during the quoting process.

  • File a change of address request with the United States Postal Service
  • Locate grocery, hardware and gas stations near your moving destination before you move.
  • Locate nearby hospitals and notify your medical insurance carrier which hospital you will need to go to in the case of an emergency.
  • If you have a recreational vehicle, boat or trailer that you will be storing on your new property, research city ordinances beforehand to avoid citations and fines.

Making an offer

There are several factors to consider when deciding how much to offer: the listing price of the home, the prices of comparable properties that have recently sold, and of course what you can afford.

Once you have considered the factors at hand, it is time to decide on a number. In competitive areas or “hot markets”, you may have to offer no less than the asking price. You should be mentally prepared for negotiations, and in some cases even bidding wars, which can erupt among aggressive buyers. In hot markets, properties often sell for 10% to 30% above the asking price.

If you are making an offer in a hot market, you may need more than just a well-priced bid. Considering the seller’s needs is the best way to achieve an advantage in the competition. Your ability to close the deal quickly is often an advantage. For example: buying with all cash or having your loan pre-approved tells the seller that you are a serious buyer. Your flexibility and accommodation of seller time frames can also be beneficial. For example: extending the closing time frame for a party that cannot move for several months; or making your offer for the property “as is”, meaning you will pay for any needed repairs.

In less competitive areas, or “cold markets”, you will have more room to negotiate with the seller at a lower purchase price. REO, short sale and Bank Owned properties can often be obtained at great prices, but be prepared for a long and challenging closing process.

In any market, you will want to bid to win. Be sure to discuss the best strategy for your offer with your REALTOR®.

Also called the “asking price”, this is a rough estimate of what the seller would like to receive. It is important to consider how long the property has been on the market for and if there have been any price reductions. Other factors that should affect how seriously you consider the listing price include whether the property is a foreclosure or short sale, and if there are multiple offers being presented to the seller.

  • Your REALTOR® can provide you with a list of comparable properties, or “comps” that have recently sold in the area near the property you are about to make an offer on. The most relative and supporting comparables should fall within these guidelines:
    • Sales that have occurred within the last three to six months – the more recent, the better.
    • Sales of properties similar to the one you’re making an offer on, in terms of age, size, and bedrooms and bathrooms.
    • Sales within a reasonable proximity (six to ten blocks in an urban area; consult your REALTOR® in rural areas) of the property you are making an offer on. This radius may need to be reduced if a freeway or other dividing line splits the neighborhood.

You should come to the offer table pre-approved. When figuring the total cost of the property, be sure to include closing costs into your budget. Closing costs are typically 2%-5% of the final purchase price.

Insurance

Home insurance, also called hazard insurance or homeowners insurance, is a type of insurance that covers private homes. It combines various personal insurance protections, which can include: losses to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy’s territory.

A dwelling policy (DP) is similar to a home insurance policy, but is used for residences which do not qualify under various circumstances, such as vacancy/non-occupancy, seasonal/secondary residence, or age.

You should refer to the actual policy for specifics to what will and what will not be paid in the case of various events. Basic policies protect you and your house against losses from fire, theft, liability, vandalism, water damage, wind damage, tornadoes and loss of use.  Traditionally, claims due to termites, floods, earthquakes or war (typically including a nuclear explosion from any source), are excluded; however special insurance can be purchased for these circumstances.

There are several types of homeowner’s policies available. Understanding the coverage that each type offers will help you select the right policy for your needs. The following three policy types are the most common coverages available:

  • Standard Policy requires coverage for at least 80% of the value of your home, excluding land and the foundation. It will usually insure your personal property at actual cash value.
  • Broad-From Policy is more inclusive than the standard policy and covers additional named perils such as glass breakage, smoke damage, etc.
  • All-Risk Policy covers even more than the standard and broad-form policies. An example of a covered risk might be damage caused to your roof from ice build-up in the gutters.

Some of these policies offer optional guaranteed replacement cost coverage on your home and its contents. Replacement cost coverage will pay to rebuild your home and replace its contents with no depreciation coming into play.

The premium of a home insurance policy varies and typically depends on the cost to replace the property (including contents and personal possessions), and will also factor in the likelihood of the home being damaged or destroyed. Deductibles also vary and will affect the annual price of the policy you choose.

It is important to understand that the replacement value of your home is based on your insurance company’s estimate of the cost to rebuild your home on your property. It is not based on the purchase or appraised value of the home. Most policies have a built-in annual increase of replacement cost coverage.

When purchasing home insurance, there are ways of lowering your premium. Most insurance companies offer discounts for smoke alarms, fire extinguishers, deadbolt locks, and whole-house alarm systems.

If your home is fairly new, or if you elect to insure your automobiles with the same company, you are likely to receive an additional discount on your premium.

Again, you can reduce your premium by electing to have a high deductible, but make sure to keep the number realistic should you need to make a claim.

Insurance is the type of service you buy hoping that you will never have to use it. Unfortunately, in the world we live in, there is always the potential for the unexpected. Wherever you live in the world, there is the risk of natural disaster, accident, and sadly theft. Because all of these factors are out of your control, you will want to protect yourself from loss with home insurance.

Discuss your unique needs and concerns with your insurance agent before purchasing a policy, or whenever your needs may change. The right policy can give you a sense of security in knowing that you are adequately protected. If you do not have a trusted insurance agent, your REALTOR® can refer you to one.

Mortgage

Most mortgage lenders take the guess work out of applying for a loan by figuring out for you the amount you can afford to borrow. Then, they give you a printed document stating the maximum mortgage amount you qualify for based on your particular finances and income.

Mortgage pre-approval establishes your price range and strengthens your buying position by letting the Seller know that you have already been approved for the loan. It can also ease time constraints once the purchase agreement in signed between Buyer and Seller.

Consider these Scenarios:

You’re out looking at homes. Your Real Estate Broker never mentions that you should get pre-approved and just ballparks what you can afford. Of course, the more house he shows you, the better he usually comes out. You find the perfect house and work out a deal with the Seller. Three weeks later, the lender informs you that the house is $10,000 over what you qualify for and does not approve your loan. The Seller has already bought another house. You’ve given notice where you’re renting and told all your friends about the great house you bought. And then, there’s the money you’ve already spent on inspections on a house you can’t own.

or

You and your REALTOR® have been working diligently finding that “perfect” home. A new listing comes on the market that’s priced right and has got everything you’ve been looking for. You write an offer. Your REALTOR® takes it to the listing REALTOR® and is informed that another offer is coming in and will have to present both offers simultaneously to the Seller. The other Buyer is pre-approved for his loan. Whose offer do you think the Seller will negotiate first??

Should You Get Pre-Approved for a Loan First??

Most Definitely!!

Why choose an accredited buyer representative (ABR)

Until the early 90’s, direct representation of buyers was basically nonexistent. As public interest in the concept began to grow, changes to state real estate regulations were pushed into effect (away from sub-agency and undisclosed dual agency towards direct representation of buyers), and the National Association of REALTORS® (NAR) took notice. In early 1996 the designation was officially recognized by NAR.

Superior buyer representation is now widely available to homebuyers across the country through the ABR® designation.

ABR® professionals have honed their skills in representing the specific needs of homebuyers throughout the real estate transaction process with comprehensive training, continuing education, keeping informed on issues and trends, and being proactive in consumer awareness.

An ABR® professional’s highest mission is to provide homebuyers the high level of representation that was previously only awarded to sellers in a real estate transaction.

Inspections

Buying a home may well be the largest financial investment you will ever make. Naturally you will want to know as much as possible about the property before you finalize the purchase at closing.

It’s important to hire a knowledgeable, independent home inspector for advise on the overall condition of the property. The purchase contract usually requires specific time periods for each inspection, and it’s critical that these time frames be met. Usually the cost for any and all inspections and re-inspections are paid by the Buyer. Prices can range from $350 to $500 for whole-house inspections.

Some examples of common inspections are:

  • Structural – Defects caused by poor construction, soil movement, water or drainage conditions, settlement, fire, etc.
  • Environmental Hazards – Including asbestos, lead-based paint, radon gas or any other toxic material.
  • Roof – Can include framing members, decking and shingle condition.
  • EMP – Electrical, Mechanical and Plumbing – Should include electrical and plumbing systems, built-in appliances, heating and cooling systems, swimming pool/spas, sprinkler systems and security systems.
  • Termite – Report would show any visible infestation or visible damage caused by and wood destroying organism (termites, water damage, wood rot).

Many companies specialize in only one area of inspection, and others will group several together and offer a package price. Whichever route you go, assure yourself your getting the inspections you need. Many can be found in the yellow pages or your Broker can provide a list of several of each to choose from.

Home warranty

A home warranty is an affordable way to cover the costs of unexpected mechanical failure of a major system or appliance. A home warranty is specifically designed to cover the kinds of repairs that home insurance does not: appliances, plumbing and electrical, air conditioning and furnaces, and pool equipment.

The average annual cost of a home warranty policy is between $250 and $400. Most home warranty companies offer comparable coverage within the same price range. The premium is payable at closing and customarily protects you for one full year. Repairs are typically handled through the home warranty company with a minimal deductible. Often times the cost of the first year premium is offered as an incentive by sellers to solicit the sale of the property.

The age and condition of the home should be a consideration when choosing to purchase a home warranty. A fifteen year-old home with original equipment, versus a two year old home will likely have different financial risks. Your REALTOR® can help you decide if a home warranty policy is right for you based on your individual circumstances.

Why Should I Consider a Home Warranty?

Homeownership is expensive enough all on its own, without adding the cost of repairs and replacements. When moving into a home where appliances and systems have been previously used, there is always the chance that the general wear and tear, or the way in which they were previously used and maintained, could cause breakdown and/or complete failure. These repairs/replacements can be astronomically costly and often times occur unexpectedly. A home warranty will protect you financially from most of the frequently occurring breakdowns of home system components and appliances.

Discuss your unique needs and concerns with your home warranty representative. If you do not have a trusted home warranty representative, your REALTOR® can refer you to one.