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5 Important Steps for First-Time Home Buyers

by Pat Fales, Associate Broker

5 Important Steps for First-Time Home Buyers

As you've probably heard, today's market offers many opportunities for first-time home buyers. While shopping for your first home is an exciting time, it can also be a stressful experience as you navigate today's market.

Before you begin looking, make sure you're completely prepared and know what to expect. Work with a professional real estate agent who can help guide you through the following five steps:

Step 1: Take an honest look at your finances. Before you dive into the exciting part of home-buying - the search - make sure you have all your ducks in a row. Figuring out your finances and crunching some numbers will allow you to set a realistic budget.

Step 2:
Secure a loan. After you get your finances in order, talk to lenders and mortgage brokers to ensure you can secure a loan. Shop around to get the lowest interest and overall best deal possible and make sure you understand all the fees involved. Talk to your agent whose brokerage may have an in-house mortgage lender you can work with.

Step 3: Map out your criteria. Now that you have your funding in order, begin your search. With a plethora of online home-search tools at your fingertips, it's relatively easy to map out different types of homes and neighborhoods and find what is right for you. Make big decisions - like urban versus suburban settings, an estimated property size and neighborhood requirements - before you start to physically look at properties. This will save you time and money.

Step 4: Take notes. On your own and with the help of an agent, you've found some houses you're interested in looking at. Don't venture out without a pen, paper and camera. Keep track of important details by taking notes and pictures. Have a list of questions ready and scope out neighborhoods by driving around for a bit.

Step 5: Close the deal. If you've found a home you love, don't wait to make a move. I've seen many first-time buyers miss out on a home because they got cold feet and continued shopping around. Make an offer and be ready to negotiate. Once a deal has been made, thoroughly read the contract and make sure you understand everything before you sign. Then you will be ready to begin with the appraisal and home inspection process.

Considering a Home Equity Line?

by Pat Fales, Associate Broker

Considering a Home Equity Line? What You Need to Know

A form of revolving credit where your home serves as collateral, home equity loans must be carefully considered, especially in today’s market, to make sure the benefits outweigh the costs. Therefore, before applying for a home equity loan, discuss the idea with your real estate agent and review the following considerations from the Federal Reserve Board. While an equity line can be a great way to fund a college tuition or pay off a big debt, such as medical bills, it can also put your home on the line should you find yourself unable to repay.

Interest Rates

Home equity lines of credit typically involve variable rather than fixed interest rates. In such cases, the interest rate you pay for the line of credit will change, mirroring changes in the value of the index. Because the cost of borrowing is tied directly to the value of the index, it is important to find out which index is used, how often the value of the index changes, and how high it has risen in the past. See if your lender will allow you to convert from a variable interest rate to a fixed rate during the life of the plan, or let you convert all or a portion of your line to a fixed-term installment loan.

Fees and Costs
Many of the costs associated with setting up a home equity line of credit are similar to those you pay when you buy a home, such as: paying for an appraisal; an application fee; up-front charges, such as one or more "points;" closing costs, including fees for attorneys, title search, mortgage preparation and filing, property and title insurance, and taxes. Make sure the investment you make to establish the home equity line isn’t more than the amount you actually draw against the line—otherwise, the initial charges would substantially increase the cost of the funds borrowed.

Repayment Plan
Before taking out an equity line, create a realistic plan for paying it back. Some plans set a minimum monthly payment that includes a portion of the principal (the amount you borrow) plus accrued interest. But, unlike typical installment loan agreements, the portion of your payment that goes toward principal may not be enough to repay the principal by the end of the term. Other plans may allow payment of interest only during the life of the plan, which means that you pay nothing toward the principal. If you borrow $10,000, you will owe that amount when the payment plan ends. Whatever your payment arrangements are, when the plan ends, you may have to pay the entire balance all at once.

Selling or Renting?

If you sell your home, you will probably be required to pay off your home equity line in full immediately. If you are likely to sell your home in the near future, consider whether it makes sense to pay the up-front costs of setting up a line of credit. Also keep in mind that renting your home may be prohibited under the terms of your agreement.

5 Important Steps for First-Time Home Buyers

by Pat Fales, Associate Broker


As you've probably heard, today's market offers many opportunities for first-time home buyers. While shopping for your first home is an exciting time, it can also be a stressful experience as you navigate today's market.

Before you begin looking, make sure you're completely prepared and know what to expect. Work with a professional real estate agent who can help guide you through the following five steps:

Step 1: Take an honest look at your finances. Before you dive into the exciting part of home-buying - the search - make sure you have all your ducks in a row. Figuring out your finances and crunching some numbers will allow you to set a realistic budget.

Step 2:
Secure a loan. After you get your finances in order, talk to lenders and mortgage brokers to ensure you can secure a loan. Shop around to get the lowest interest and overall best deal possible and make sure you understand all the fees involved. Talk to your agent whose brokerage may have an in-house mortgage lender you can work with.

Step 3: Map out your criteria. Now that you have your funding in order, begin your search. With a plethora of online home-search tools at your fingertips, it's relatively easy to map out different types of homes and neighborhoods and find what is right for you. Make big decisions - like urban versus suburban settings, an estimated property size and neighborhood requirements - before you start to physically look at properties. This will save you time and money.

Step 4: Take notes. On your own and with the help of an agent, you've found some houses you're interested in looking at. Don't venture out without a pen, paper and camera. Keep track of important details by taking notes and pictures. Have a list of questions ready and scope out neighborhoods by driving around for a bit.

Step 5: Close the deal. If you've found a home you love, don't wait to make a move. I've seen many first-time buyers miss out on a home because they got cold feet and continued shopping around. Make an offer and be ready to negotiate. Once a deal has been made, thoroughly read the contract and make sure you understand everything before you sign. Then you will be ready to begin with the appraisal and home inspection process.

 

Remodeling? Make Sure Your Insurance is Up to Par

by Pat Fales, Associate Broker

Remodeling? Make Sure Your Insurance is Up to Par

 


According to the BuildFax Remodeling Index (BFRI), remodeling reached a record high during this past summer.  The company attributes this to the many who are choosing to stay put and invest in home improvements, as opposed to putting their home on the market.   Markets with slow or limited sales are making potential sellers think that the best alternative in the short term is remodeling to spruce up their homes.  They can enjoy the fruits of the updates and position themselves better for a sale in the near future. A home that has been updated sells better in any market!

The latest BFRI indicates that residential remodeling activity registered the 21st-straight month of year-over-year gains, demonstrating that many Americans are continuing to remodel their current homes. The data shows July 2011 as the month with the highest level of remodeling activity since the Index was introduced in 2004.

When it comes to remodeling your home, there are important insurance issues to take into consideration. For example, if you are planning an addition to your home, evaluate the materials used. Wood-framed structures are highly flammable and will cost more to insure, whereas cement- or steel-framed structures will cost less because they are less likely to succumb to fire or adverse weather conditions.

Once your addition or remodel is completed, it’s critical to make sure your insurance is in line with your home improvements. Many homeowners neglect to calculate the increased value of their home caused by a remodel/addition and fail to secure the necessary coverage. If you have a "guaranteed replacement value" policy, which all homeowners should, noting the new value of your home post-remodel is essential to be assured of sufficient coverage in the event of a loss..

In all cases, the following steps can help you save money on rates:

  • Install a security system. A burglar alarm that is monitored by a central station, or that is tied directly to a local police station, can help lower a home owner's annual premiums by 5% or more.
  • Install additional smoke alarms. Smoke alarms are another way to reduce your homeowners' insurance premiums. While these are standard in most new houses, installing them in older homes can save the homeowner 10% or more on annual premiums. Make sure you add the necessary number of smoke alarms to correspond with your remodel or addition.
  • Install dead bolt locks on your exterior doors.
  • Raise your deductible. Like health insurance or car insurance, the higher the deductible you choose, the lower the annual premiums will be. This will mean, however, that you’ll need to foot the bill for smaller home repairs that don’t meet your deductible.
Whether you have remodeled or not, be sure to review your home insurance policy at least once a year and make note of any changes that could lower your premium, like a burglar alarm, sprinkler system or even the removal of a trampoline, as an example. Neighborhood changes can also affect your rates -  the addition of a fire hydrant within 100 feet of your home, a new firehouse nearby, a security gate limiting access to the community.

As a Member of the Top 5 in Real Estate Network®, my team and I have a wealth of current real estate and financing information and homeowner trends that may be of interest to you.   Feel free to contact our team any time to learn more  and be sure to forward this article on to any friends or family that may be interested in real estate topics as well.  We'll always enjoy talking with you!

 

Displaying blog entries 1-4 of 4

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