Tips for Buyers


TIMING IS EVERYTHING WHEN IT COMES TO BUYING HOMES

The old adage that "timing is everything" especially applies to buying a new home. And trying to be at the right house at the right time and get it for the right price can be tricky. Here are some guidelines to assist you:

Turn to the real estate section of your Sunday newspaper. Monitor the market and tract home prices. Expect to spend 90 days watching the real estate market through advertisements. Question and investigate homes that are advertised month after month. Hard-to-sell properties could either be a warning sign or simply overpriced for the value.

When a real estate agent provides you with descrit8ions of homes currently on the market from the Multiple Listing Service (MLS), ask for a list of homes that were on the market within the last six months or year in the same neighborhood. Compare asking prices to actual sales prices for the same type homes.

In addition to monitoring housing prices, learn to identify hot, up-and-coming neighborhoods by tracking selling prices from week to week. If one neighborhood experiences price booms while other house prices are sluggish, its' clear which community to invest in. If you're passionate about an upscale area - and on a budget - prepare to buy a fixer-upper and invest some money in renovation. Conversely, beware of buying a beautiful home in a marginal area. You may not get your money back when you sell.

Keep close watch on the fluctuating mortgage interest rates. Low interest rates are the most inspiring reason to buy property. Watch the rate of Untied States Treasury Bills. According to Sonny Block, well-known talk show hose and real estate author. T-bills are a sure way of predicting the rise and fall of mortgage rates.

Also watch the national Discount Rate, the rate at which banks can borrow money from the government. When the Discount Rate drops, banks pay less for borrowing the money and in turn reduce mortgage rates to the borrower.

Predicting when a market is ripe for home buying is not an exact science - even for real estate experts. However, by following these simple tips - and staying on top of real estate trends, sales patterns and interest fluctuations, you are sure to get the best house for your buck.
WHAT'S YOUR STYLE?

A guide to America's most common Home Styles

Styles of houses vary across the country. From the New England Cape Cod to the Victorians of San Francisco, the choices are almost endless. Knowing which style you prefer is one of the basic elements in your hunt for the perfect home.

Following is a quick guide to help you recognize and use the professional terms for many of the most prevalent house styles:

Ranch: these long, low houses rank among the most popular types in the country. The ranch, which developed from early homes in the West and Southwest, is one-story with a low pitched room. The raised ranch, which is also common, is the U.S... has two levels, each accessible from the home's entry foyer, which features staircases to both upper and lower levels.

Cape Cod: this compact story-and-a-half house is small and symmetrical with a central entrance and a step, gable roof. Brick, wood or aluminum siding are the materials most commonly seen.

Georgian: Popular in New England, the Georgian has a very formal appearance with tow or three stories and classic lines. Usually built of red brick, the rectangular house has thin columns alongside the entry, and multi-paned windows above the door and throughout the house. Two large chimneys raise high above the roof at each end.

Tudor: modeled after the English country cottage. Tudor styling features trademark dark-wood timbering set against light-colored stucco that highlights the top half of the house and frames the numerous windows. The bottom half of the house is often made of brick.

Queen Anne/Victorian: Developed from styles originated in Great Britain, these homes are usually two-story frame with large rooms, high ceilings and porches along the front and sometimes sides of the house. Peaked roofs and ornamental wood trim, many times referred to as "gingerbread," decorate these elaborate homes.

Pueblo/Santa Fe Style - Popular in the Southwest, these homes are either frame or adobe brick with a stucco exterior. The flat roof has protruding, rounded beams called vigas. One or two story, the homes feature covered/enclosed patios and an abundance of tile.

Dutch Colonial - the Dutch Colonial has two or tow-and-one-half stories covered by a gambrel roof (having two lopes on each side, with the lower slope steeper than the upper, flatter slope) and eaves that flare outward. This style is traditionally made of brick or shingles.

New England Colonial - This two-and-one-half story early American style is box like with a gable roof. The traditional material is narrow clapboard siding and a shingle roof. The small-pane, double-hung windows usually have working wood shutters.

Southern Colonial -this large, two-to-three-story frame house is world famous for its large front columns and wide porches.

Split-levels: Split-level houses have one living level about half a floor above the other living level. When this type of home is built on three different levels, it is called a tri-level.

These are just a few of the many styles of homes available across the country - some are more prominent in different areas than others. Knowing home style terms will help you zero in on the type of house that will fill your needs and suit your taste.
HOW TO SPOT A GOOD BUY

Beauty is in the eye of the beholder, particularly when it comes to buying a home. Features that attract one home-buyer may repel another. However, the one feature of interest to every home-buyer is price. Getting the most home for your money is paramount. The real problem is figuring out whether that fixer-upper on one street is a better buy than the home in next-to-new condition two blocks away. That's why knowing what to look for before you buy can save you time, energy and money down the line.

The first step is figuring out what kind of house you need. A good buy is only a good buy if it meets your current and future living requirements. Before shopping for a home, decide how much space you and your family require. How many bedrooms, bathrooms? Is a family room necessary? Do you need a layout that will accommodate a lot of entertaining? Do you prefer a spacious or compact work space in the kitchen? If you have small children, can the house easily be childproofed?

Evaluate the front and back yards. Is there enough space to accommodate your children? Do you want a park-like or garden setting? Do you enjoy yard work and gardening, or do you want a low-maintenance yard? Take into consideration the cost of extensive landscaping and upkeep.

Next, determine how much work is required to make the house you are considering livable. Make an honest assessment of your fix-it abilities. How much work are you willing to do or pay someone else to do? Do you have basic decorating, carpentry and plumbing skills? If you plan to learn as you go, make sure you have accurately determined what you are getting into. Ask an experienced friend, family member or your real estate agent for their opinion, and be sure to consider how much remodeling inconvenience the rest of the family can handle.

Unless you are ready and able to tackle a major remodel, look for a house or condominium that needs only cosmetic improvements. These include painting, wallpapering and replacing items like flooring, window treatments, bathroom and kitchen fixtures, light fixtures, cabinet and interior door hardware and appliances. Remember that even these simple changes can be costly if you have to make many of them.

Beware of improvements that seem easy enough at first glance buy may turn into major headaches and require a lot of money once you've moved in. Remodeled kitchens and bathrooms, changes to the floor plan, room additions and redesigned landscaping are examples of seemingly minor changes that can easily eat away the money you thought you saved by selecting a so-called "bargain priced" home. Of course, you may be perfectly willing to spend whatever money is needed to customize the house to match your tastes and needs.

Make sure major systems in the house are in good working condition. The furnace, air-conditioning and plumbing should be up to date, since repairs can be costly. Your agent can arrange to have a professional inspector determine whether the electrical wiring and any room additions are to code. Local utilities often offer free or low-cost inspections to tell you if the house is energy-efficient.

Look for a house with universally popular selling points. If you're impressed, the next buyer down the line is bound to be, too. For example, a roomy, modern east-to-clean kitchen is the best selling point a home can have. A house with only one bathroom is less desirable than a house with two or more. Many buyers expect at least three bedrooms, with a master bedroom that offers a feeling of privacy. Lots of storage space and closets, especially walk-in closets, will be a real selling point. Family rooms or "great rooms" also are desirable. On closer examination, a house that looks like a bargain may lack some of these key features.

Don't forget the old adage: location, location, location. Unless you're looking for a fixer-upper, the house should be in a condition that is comparable to other homes in the neighborhood. Avoid buying the biggest or fanciest home on the block. Consider the amount of traffic or noise. Homes located in a quiet area away from a busy street will command a higher price. Make sure the schools in your district have a reputation for quality education and safety. Nearby supermarkets, gas stations, restaurants and theaters also will make a location more desirable.

Good community facilities also add appeal; pools, athletic fields, community centers, libraries and hospitals all add to a neighborhood's value and desirability. Transportation needs also should be considered. Is local public transit available? How long are typical commutes to places of current and potential employment? Are there several alternate routes? How close is a major airport? All of these can affect a home's pricing.

Consider the cost of living in a home. It's important to consider not only purchase price but the monthly cost of living in a home. Estimate your utility and maintenance costs. For example, will the house need to be painted on a regular basis and will you need to spend money maintaining a swimming pool? Ask your agent about the property tax rate and whether increases are anticipated. Will you have to pay special assessments for a homeowner's association? Consider the point in the life cycle of major household systems, such as the furnace, air conditioning, roof and kitchen appliances. You can find a bargain! Your first step should be to seek out a knowledgeable real estate agent with experience in the market areas where you wish to purchase a home. Your agent can help you locate those properties that truly are "bargains" and help find the home that most closely matches your desires and needs.

A GUIDE TO LOW DOWN PAYMENT MORTGAGE PROGRAMS

There's no question about it: Buying a first home is a big financial commitment. In most cases, a home is the largest single purchase an individual or family will make in a lifetime. However, because of the tax advantages afforded to homeowners, buying a home also can be one of the best financial decisions you'll ever make.

Problem is, many would-be homeowners remain renters simply because they mistakenly believe mortgage lenders require that buyers come up with 20 percent of the purchase price as a down payment. While its true lenders feel it's less risky to work with buyers who are able to bring a substantial down payment to the table, the standard 20 percent requirement is fast becoming a relic of the past. In recent years, lenders have become more flexible in working with first-time homebuyers by creating a variety of special programs that require only a small down payment. These programs, combined with the most favorable interest rates in two decades, have encouraged growing numbers of renters to consider the tremendous benefits of home ownership.

While the list of programs offered by individual lenders is too extensive to mention in detail, here are some common programs you are likely to come across as you work with your real estate agent to purchase your first home:

Federal Housing Administration (FHA): FHS mortgages allow homebuyers to purchase a home with as little as a 5 percent down payment, and to finance all non-recurring closing costs. The current maximum loan amount in most urban markets is $151,725. In addition, borrowers are allowed to use up to 41 percent of their gross income toward paying mortgage debt - well above the ratio allowed under most private programs.

Department of Veterans Affairs (VA): VA mortgages allow veteran or active service personnel purchase home with no down payment, up to the current maximum price of $184.000. However, there is no purchase price limitation for buyers able to make a down payment. Like the FHA program, VA borrowers can put up to 41 percent of gross income toward their mortgage debt.

Mortgage Revenue Bonds and Mortgage Credit Certificates: Mortgages funded with these instruments typically require a minimum of 5 percent down and have interest rates that are 1.5 to 2 percentage points below conventional 30-year fixed rates. These types of loans, offered by state and local housing agencies, are available only to first-time homebuyers. There generally are income and purchase price caps that vary, depending on where you plan to buy.

Private Mortgage Insurance: Most major lenders offer privately insured mortgages, which generally require a 10 percent down payment (although some lenders offer loans with a 5 percent down payment to buyers with exceptional credit). These loans typically are not limited by maximum loan amount or purchase price limitation.

Clearly, there are a lot of options for first-time homebuyers. While lenders will be more than happy to share information about their own programs, you can save yourself a good deal of time by first selecting a professional real estate agent who is experienced in working with first-time buyers in the areas where you plan to buy. As agent who focuses on first-time buyers will know from experience which lenders in your area offer a low down payment program that will meet your unique needs? Today, taking the first step toward owning your own home is easier than before. Your real estate agent is your best resource for finding innovative ways to help you come up with a down payment and qualify for financing. There's certainly no need to wait until you've saved a 20 percent down payment!

WHAT TO EXPECT IN CLOSING COSTS ON A HOME PURCHASE

Many are taking advantage of this year's low mortgage rates to purchase a home. Pent up with excitement, many families, who have scrimped and saved for a down-payment, jump for joy when the mortgage lender finally approves their application. But, they should realize that there's a whole new set of expenses that must be covered before actually closing on the sale.

New homeowners are often taken aback by up-front closing costs such as mortgage and title insurance, attorney fees, recording fees and loan points, which can run into the thousands of dollars. But there is no need to be afraid of these charges. With a little background on their purpose and shrewd financial foresight, closings can be a breeze.

A lender's charge for processing the loan can be determined at the beginning of your buying process. Referred to as "points," these charges are expressed as a percentage of the total loan. For instance, three points are equal to 3 percent of the borrowed amount. "Points" can also become a tool for negotiation with the lender and seller. In a buyer's market, home sellers will often agree to pay mortgage fees in order to close a deal.

Title insurance can be a substantial expense. The policy covers any financial set-back caused by unforeseen defects in the purchased property and home. The one-time title fee, including search and examination, averages around $485 for a $100,000 home, but it's recommended that you check with a local title insurance agent ahead of time to effectively determine what you'll owe before closing.

Additional costs, such as attorney charges, and recording, transfer and inspection fees, can also be predicated ahead of time by the buyer. Most often pest and survey inspections, although included in the official closing statement, are conducted and paid for long before the closing date. However, buyers should consider them as additional up-front costs.

Some closing costs, such as "points," are fully tax deductible that tax year if you show proof of a separate lump sum payment. They are not deductible in a few cases when the loan is the result of re-financing rather than a home purchase. Application, appraisal, documentation and broker fees can not be deducted.

Some states require payment of property taxes at closing. In some instances, buyers and sellers are asked to put money into an escrow account that will cover any past and future tax obligations. Be sure to check with an attorney or real estate agent before the closing to determine your property tax commitments.

Also, be prepared to pay any assessments if buying a condominium or into an association-governed property. Fees for credit reports, notary public seals and assumptions, which includes the processing of official documents, may also arise.

Knowing what total closing costs will be before starting your home search can help you better understand what price range is right for you. In the end, the process of closing on a mortgage will be easier than you think, leaving more time to plan for your new home.

A FEW EASY WAYS TO TAKE THE HEADACHE OUT OF MOVING

Moving from one house to another is always a challenge, but it doesn't have to be a nightmare. Here are some simple tips on how to get it done with minimal stress and strain.

Look at all the alternatives: hiring a moving company, for example, versus renting a truck and doing it yourself. Whichever alternative makes most sense for you, get bids from more than one vendor.

A few days before the moving company is scheduled to arrive or you're supposed to pick up your rental truck, call to confirm that everything is on track to happen when it's supposed to.

Prepare your change of address cards in advance and send them out as soon as it's appropriate to do so. The post office, utilities, companies and people you do business with, city hall, friends, relatives - all should be notified of your move.

Get an early start on packing by concentrating on seldom-used items first. Each box should have its contents and the room those contents belong in written on it clearly.

Take a hard look at things you seldom or never use and throw away as many of them as you can. The more you throw away, the less you'll have to move. Every item you throw away is one less item to clutter up you new home.

Use your extra towels and linens to protect breakables. When your supply of these things is exhausted, crumpled newspaper makes an excellent substitute. Write "Fragile" on all appropriate boxes.

Put your valuables (such as jewelry) and important documents (birth certificates, car titles, etc.) aside in some safe place where they won't be misplaced.

When the house is empty, go back for a thorough final inspection. Check closets, crawl spaces, basement, attic, out-of-the-way nooks and crannies of all kinds. Have a second person make the same inspection separately.

Clean your new home thoroughly before moving in. It's infinitely easier that way.

Decide in advance where you want the heavy furniture. Changing your mind after the movers have departed is no fun - especially for your back!

Locate all fuses, circuit breakers, and water/gas and electrical valves. Record the meter readings and check the smoke detectors.

List the phone numbers of the local police and fire stations, doctors, nearby hospitals, etc. Put a copy of your list near each phone.

Above all, plan, plan, plan and plan some more. Make a schedule you can live with, and then stick to it. Preparation and forethought will help you to keep everything under control and finish the move with your sanity and your nervous system intact.