Home Buying

Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet)? Also ask about the house and neighborhood, focusing on quality of life issues. Be sure the seller’s or real estate agent’s answers are clear and complete. Ask questions until you understand all of the information they’ve given. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive.

A credit bureau score is a number, based upon your credit history that represents the possibility that you will be unable to repay a loan. Lenders use it to determine your ability to qualify for a mortgage loan. The better the score, the better your chances are of getting a loan. Ask your lender for details.

When looking for a house, be sure to check out the local schools, even if you don’t have school-age children. Research has shown that properties near good schools appreciate faster in strong markets and hold their values better during weak markets.

Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary with local customs and conditions). If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you. If you back out of a deal, you must forfeit the entire amount.

There may be closing costs customary or unique to a certain locality, but closing costs are usually made up of the following: Attorney’s or escrow fees (yours and your lender’s if applicable). Property taxes (to cover tax period to date). Interest (paid from date of closing to 30 days before first monthly payment). Loan origination fee (covers lender’s administrative costs). Recording fees. Survey fee. First premium of mortgage insurance (if applicable). Title insurance (yours and your lender’s). Loan discount points. First payment to escrow account for future real estate taxes and insurance. Paid receipt for homeowner’s insurance policy (and fire and flood insurance if applicable). Any documentation preparation fees.

The best measure of market conditions is not the prices sellers are asking, but the difference (if any) between asking prices and prices buyers are paying.

Your home should fit the way you live, with spaces and features that appeal to the whole family. Before you begin looking at homes, make a list of your priorities – things like location and size. Should the house be close to certain schools? your job? to public transportation? How large should the house be? What type of lot do you prefer? What kinds of amenities are you looking for? Establish a set of minimum requirements and a “wish list.” Minimum requirements are things that a house must have for you to consider it, while a “wish list” covers things that you’d like to have but aren’t essential.

The monthly mortgage payment mainly pays off principal and interest. But most lenders also include local real estate taxes, homeowner’s insurance, and mortgage insurance (if applicable).

This is a loan that enables the homebuyer to finance both the purchase and rehabilitation of a home through a single mortgage. A portion of the loan is used to pay off the seller’s existing mortgage and the remainder is placed in an escrow account and released as rehabilitation is completed. Basic guidelines for 203(k) loans are as follows: The home must be at least one year old. The cost of rehabilitation must be at least $5,000, but the total property value-including the cost of repairs-must fall within the FHA maximum mortgage limit. The 203(k) loan must follow many of the 203(b) eligibility requirements. Talk to your lender about specific improvement, energy efficiency, and structural guidelines.

A low-ball offer is a term used to describe an offer on a house that is substantially less than the asking price. While any offer can be presented, a low-ball offer can sour a prospective sale and discourage the seller from negotiating at all. Unless the house is very overpriced, the offer will probably be rejected. In a buyer’s market a motivated seller will either accept or make a counter-offer.