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Tip #2: Make A Plan And
Get Pre-Qualified
Carefully examine each
important decision and think it through. Develop a well
organized plan for making your home purchase. Focus on the most important
factors. Create file folders on house hunting, home financing, service
providers, etc. Get yourself pre qualified for a loan so you
can determine the amount of home you can afford. Getting pre qualified
also increases your chances of closing a deal, The seller is
more likely to accept an already funded offer than one from a home buyer
who still needs to get a loan. Lenders usually employ the 28% formula
(your monthly mortgage must not exceed 28% of your monthly income)
in approving your loan. Plan your actions and get pre qualified,
this reduces the chance of panic situation and allows you seize opportunity
when it is presented. A thorough plan will save both time and
money!
Tip #3: Value, Value,
Value
The days of 10-30% annual appreciation
still exist. Home buyers in the 1990's benefited tremendously from
what seemed like ever appreciating home prices, now we are seeing growth
along the same line. Nowadays, you're looking at stable growth while
guarding against the possibilities of falling prices, low interest rates
and corporate layoffs that can dramatically affect your home values.
The classic rule of buying the worst house in the best neighborhood
still applies. If you buy with an eye towards improvement, you can customize
the home to fit your needs. The saying, "make money buying a home, not
selling one," should keep you focused on the long-term importance of
the purchasing price.
Tip #4: Create A Top 10
List of Amenities
When shopping for a home, list
the features (fireplace, fenced-in yard, new appliances, etc.)
that are most important to you in deciding on which home to buy.
Establishing "your criteria" early on will save time shopping for inappropriate
homes and may keep you from buying a home on a whim -- for example,
because of a circular stairwell -- that doesn't meet your fundamental
requirements. As detailed in Tip #3, your top reason for buying a home
should be the value you are getting. Some of your top 10 amenities should
logically be sacrificed if an incredible value is available.
Tip #5: Fixed vs. Adjustable
Rate Mortgages
Which type of loan fits your
particular needs? Are you a first home buyer or are you moving to
a larger home? If you're planning to own for a short time, an ARM
may be the best type of loan. If you're shopping for your dream home
or you plan to raise a family, a fixed rate mortgage may be more suitable
for you. If you choose an ARM, the index should be based on the Cost
of Funds Index if rates are increasing, and Treasury Bills
if they are decreasing. The COFI's are less volatile over time
than T-Bills. Find out the what the teaser rate is and what the
real rate would be.
Whichever loan you choose,
make sure that you scrutinize all the closing costs. If you are
required to have a mortgage escrow account and private mortgage insurance,
make sure you understand the terms and cancellation procedures. Also,
make sure there are no prepayment penalties so that you can utilize
an accelerated mortgage plan. A good mortgage reduction plan can save
you tens of thousands in interest costs, and shorten your loan term,
with only small extra principal payments. If you experience negative
changes in your job, health, or marital status, you can revert to the
standard payments in your mortgage contract.
View Murrieta Homes for Sale with Photos
Tip #6: Sign A Contract
That Protects You
Make sure that the contract
you put on a house allows you to arrange financing, inspect the home
and negotiate any problems that you uncover. Ensuring that the contract
you sign will minimize potential legal battles will let you swim in
your new pool with your family and neighbors instead of with the sharks.
Tip #7: Put Yourself In
The Seller's Shoes
You are about to make one of the
most important decisions that will affect both your life and the life
of the seller. If you take time to understand the reasons the seller
bought the home, their reasons for selling, and the home improvements
they have or have not made, you'll be in a better position to evaluate
the home and negotiate a better deal. In the end, the home buying
process excludes the professionals and comes down to the individuals
buying and selling the home. A closer look at the seller may help you
in deciding whether and for how much to buy a particular home.
Tip #8: Develop A Mortgage
Shopping Chart
One of the biggest decisions to
make before putting a contract on a home is how to finance the purchase.
There are 10,000 lenders competing for your mortgage business. The days
of simply walking into the community bank and negotiating with the loan
department manager are over. Today, you can apply for a loan over the
Internet or even use a mortgage broker to shop for your loan with hundreds
of lenders. When choosing a lender, you want to avoid apples to oranges
contrasts by comparing fixed rates to fixed rates, not fixed to ARM's.
Create a chart that lists different types of loans, fees, and at least
five mortgage providers (including a mortgage broker).
Tip #9: Get A Quality
Home Inspection
Although it is hard to believe,
more people pay for inspections before buying used cars than when making
the biggest investment of their lives -- their homes. Paying for
a qualified home inspection before you buy a home isn't just spending
"a little extra" for peace of mind; it's absolutely essential for anyone
who doesn't want to spend thousands of dollars for repairs.
Tip#10:
Peace of Mind: Home Protection Plans
To protect both yourself as a
buyer, and well as the seller, it is a good idea to purchase a home
protection plan. What exactly is it? A home warranty,
or home protection plan, is a service contract, normally for one
year, which protects homeowners against the cost of unexpected repairs
or replacement on their major systems and appliances that break down
due to normal wear and tear. A negotiable contract between
the buyers and sellers which do not overlap or replace homeowner's insurance
policy, this type of warranty can save the new homeowner lots of headaches,
as well as put seller's fears to rest. The warranty covers mechanical
breakdowns, while insurance typically repairs the related damage, for
example: if a hot water heater burst and destroyed a wall in your home,
the warranty would repair the water heater and your insurance would
pay to fix the wall.
Information provided by
The American Homeowners Association, Copyright© 2002
Murrieta Real Estate services for buying and selling offered by the Realtor
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