As the mediator between you and the buyer’s agent, your Realtor’s job isn’t easy. If you keep a few simple things in mind, the process will go much more smoothly.

Take Your Emotions Out of the Sale

Your home means a great deal to you. If you’ve made updates, you’ll want the buyer to appreciate your hard work. However all buyers are not going to love your exact tastes. It’s important not to be offended if a buyer doesn’t love everything about your home or consider it to be worth the price you’d like to get for it. It is not uncommon for your upgrades to not be given a dollar for dollar value when your home is appraised. In fact, sometimes they will get little to no mention in the appraisal and may not affect your appraisal value.

Cleaning Things Up

Whether it’s for a showing or after the paperwork is signed, keeping your home clean and put together can make a world of difference as perception is reality. A dirty house can and will put off potential buyers. The better the house looks, the more buyers are willing to pay, which means the more you stand to get from the sale.

Let Your Realtor Do Their Job

It’s your realtor’s job to sell your home. Trust them to market your house to the people they think have the highest likelihood of buying it. Your home should always speak for itself and if not, your real estate agent is there to do the talking. This same idea comes into play when you’re negotiating a deal. They’re there to get you the best deal possible. It’s important for your Realtor to hear your thoughts and concerns, but they do need space to do their job. It doesn’t hurt for them to like you throughout the process as well. We all enjoy working hard for clients that we enjoy and it is certainly more likely that you will not be getting 100% out of your Realtor if you are on their bad side. The same is true of contractors and others we might employ as well.

Following these tips might not be easy, but sometimes they can mean the difference between the sales process being short and sweet or long, drawn out and frustrating. If you do decide your Realtor is not a good fit, simply communicate that to them and find one that you think is a better fit. The sooner in the process you can make such a determination, the better.

If you don’t get an opportunity to met the current owners before you buy, there are important questions you need answers to that you should ask the selling agent. That being said, an unexpected visit from a former owner can give you the chance to ask lingering questions and learn more about the house from before it was yours.

What to Ask the Home Owner or Realtor Before You Buy

• How recently were the plumbing and other systems updated?
• Were there any problems during the updates?
• Are there other issues with the neighborhood, area, or the home?

What To Ask a Former Owner After the Sale

Undoubtedly, when a stranger comes to your door, it can be a little disconcerting. When it’s the former owner of your home, however, you can take advantage of the fact by asking them questions your home inspector might not have elaborated on, or about things that weren’t disclosed during the actual sale. Some of these questions can include:

• How receptive were the neighbors to renovations and updates to the home?
• Do they have any favorite contractors they can suggest?
• Do they have any thoughts for upgrades that they were considering before they sold. They may have ideas and thoughts about improving the home that hadn’t occurred to you? 
• Do they have any stories about the home’s history? 

Of course, the former owner may wish to ask you questions too. Many sellers often still feel a personal connection to the house and want to share that with you.

What Former Owners Might Say

It isn’t uncommon  for former owners return for sentimental reasons. They may have had children grow up in the home, or it might have been their first major purchase. Ultimately, they often just want to make sure you’re caring for their former residence. They even may ask you questions about your family, or how you plan to change the house to fit your tastes. In any case, meeting your home’s former owners is a chance to learn more about your home and learn about your home’s history.

Your mortgage is the backbone of the entire purchase, but without doing proper research, you might not be getting the best deal you can. Before you begin the home search process, consider the following ways to increase your chances of a speedy, stress-free home buying experience.

1. Get Pre-qualified Before You Start Home Hunting

Getting pre-qualified means you will better understand how much home you can afford and which mortgage program(s) best fits your needs. By giving yourself options, you’ll be able to find a lender you’re comfortable working with and a mortgage you’ll be able to afford. Once you’ve done this, you can begin your home search without worry. You will also save yourself time as shopping for homes that you can’t afford only takes up time you could be spending finding the right home you can afford.

2. Know Your Personal Finances

Knowing your financial situation prior to speaking with a lender can help speed up the process when you do seek financing to buy a home. Budgeting for your current expenses and using a mortgage calculator can help predict what you’d pay with a mortgage. From there you can make a choice about how much you feel comfortable borrowing. A secure, steady working situation will also help make you more appealing to lenders since you’ll be able to prove stable income.

With a little bit of preparation before you speak with a lender, your lender can help you make an informed decision about how much house can afford to purchase and which loan program is the best fit for your needs.

 3. Understand All the Costs Involved With A New Mortgage

When you pick a financial institution to work with, you will submitting your information, checking your credit, and being given a mortgage quote.  While your monthly payment is a vital part of your mortgage, you’ll also be responsible for paying interest, insurance and lender fees, which your lender will help you understand. Many borrowers forget about these extra fees and instead of consulting with a mortgage professional, use a mortgage calculator as their guide in how much they will have to pay for a given loan size without taking these extras fees into consideration.

While economists say a healthy housing market should be seeing around 6 million sales a year, the data is an improvement over the sales of the past few years, putting 2011 home sales on track to be 2010 sales.

U.S. Census Bureau: New Home Construction Increases

The  U.S. Census Bureau is reporting November housing starts (beginning of construction of a new home) are also showing improvement with a 2.3% increase to 447,000 starts, a 2.3% increase over the revised October figure of 437,000. This means that there have been 3 consecutive months of improvement in housing starts.

After months of negative data being released, this data is one more signal that housing may very likely be ready for a turn around in 2012.

Home Builders Confidence Increases

The National Association of Home Builders (NAHB) is reporting that builder confidence in the market for newly built, single-family homes has increased by two points from  on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for December.  today. This increase marks the third consecutive month of builder confidence improvement.

 NAHB Chief Economist David Crowe:

“This is the first time that builder confidence has improved for three consecutive months since mid-2009, which signifies a legitimate though slowly emerging upward trend,” said NAHB Chief Economist David Crowe. “While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months.”

Pre-Qualification: The First Step in Shopping For a New Home

The first step in shopping for a new home is getting pre-qualified so that you know how much home you can afford. We can help you get pre-qualified and help answer any questions you might have about what type of loan will best fit your needs and whether or not a rate lock makes sense for your situation. If you have questions, we can help with a no cost consultation where we put together a mortgage strategy that makes the most sense for your unique needs.

Not every house is perfect and you can sometimes use this to your advantage. Cosmetic issues like paint and finishes are often some of the most glaring, but are also typically the easiest to fix. A house that has serious issues, however, is not. Insure that you evaluate the following:

Look Structural and Foundation Issues

When you’re touring a home, look for significant cracks in the walls or the ceiling or possible areas where such cracks may have been repaired. These can be signs of settling, structural, or foundation issues, and may be costly to repair if they’re deemed serious. Also be vigilant to the presence of bugs, especially termites, because they can cause significant structural damage.

Look For Water Damage

Be sure to look for signs of water damage that might imply a leak in the roof, windows, or plumbing. If there are cracks in the foundation of the home, water can come in that way as well, causing wood to rot, mold to grow, and general damage to flooring or drywall. Depending on the extent of the damage, these repairs can be cosmetic or costly. Mold can also have serious health implications, which means it is important to check for, especially if you have children.

Other Issues To Watch Out For

While the basic structure of the house is the most important thing, home buyers should also take note that a builder or previous owner’s cost-cutting measure can result in more money spent in the end. Some of these things are a matter of comfort, and some can be a distinct issue, including:

• The quantity and quality of insulation used.
• Proper installation of rain gutters, shutters, and accent details.
• Any drafts coming from windows and doors.
• How water drains outside.

Just remember, your new home doesn’t have to be perfect, you may save money if there is work that needs to be done, just be sure that you know about existing issues before purchasing. Always do your due diligence!

Insure that you are a smart first-time home buyer by avoiding some common mistakes:

Mistakes to Avoid as a First-Time Home Buyer

• You Can’t Get Over the Decor – Don’t allow the paint colors or the furniture in a home to sway you either way. The current home owners will take their furniture with them, and paint can be easily changed. Try to picture yourself in the home to determine if it’s the right fit.
• Skip an inspection – It doesn’t matter how the home looks on the surface; you need a home inspection when purchasing ANY home. You don’t want to be surprised by issues down the road that may have been deal breakers.
• Rely on Verbal Promises – The only agreements in a real estate transaction are those put in writing. Just because there is an unwritten agreement that you ‘may’ be able to occupy the home before your official closing date, does not mean anyone is obligated to abide by that. Put the important details in your offer and subsequent contracts and you will have better guarantees.
• Get Approved For a Mortgage After You Make an Offer – It is important that you get pre-approved for a mortgage before you actually start shopping for a home. We can help you get pre-approved in minutes.
• You See the Home Only One Time – Make sure you schedule a walk-through of the home before you take possession. You never know what condition it will be in when time has elapsed between the initial viewing and the closing date.
• You Jump on the First House You Like – Seeing a number of houses will help you get your priorities in order. Visiting multiple homes even when you find one you like will help you to think with your head as well as your heart.

The specific amount required can vary from one lender to the next. It can also vary by state but the general range is between 5% and 20% at a minimum. What first-time home buyers may not know when they are struggling to come up with the money, is that it is possible to use ‘gift’ money if they have a family member with sufficient financial resources.

Gift Down Payment Guidelines

The specific regulations for the use of gift money do vary by state. However, the basic guidelines are as follows:

• Money can be provided to buyers by family or friends. However, it must truly be a gift and not simply money loaned. Often, mortgage lenders will require the person giving the gift to sign a notice guaranteeing the money is a gift. Sometimes, the source of those funds must be proven as well.
• The individual providing the gift does not have to pay taxes on the gifted amount, provided it is under the state mandated maximum.
• Often, the mortgage lender will require that the gift money be available to the buyer 30 days before closing.

Taking some or all of your down payment as a gift can help you get to the first rung on the property ladder. However, it is very important that you only use gift money when it is legitimately that – a gift. If you try to take advantage of this system and claim a loan as a gift, you are not only engaging in fraud, but you may find that you are in over your head financially even if you do obtain the loan.

The Offer Process

In many ways the offer process is straightforward. You determine a price you’d be willing to pay, add any conditions or requests you’d like the seller to consider, and then allow your agent and possibly a lawyer to review it before it’s submitted. If you’re submitting an offer without having secured financing, there are other actions you need to take, including showing proof of income.

Once your offer is accepted by the seller, there are only a couple of reasons why you’ll be allowed to back out of the deal. Some purchases are contingent on financing, while some are contingent on the results of a home inspection. If neither party backs out, however, you go to closing.

What is Closing?

Closing is the name given to the time when your home purchase becomes final. In order to close your mortgage needs to be approved, and you must officially turn in your down payment and checks for closing costs. Sometimes you’ll be able to sign the final contract early, but often that step has to wait until closing day. Your closing day is the day you receive your keys and your house is officially in your name. That’s the day when your home search is truly over.

Need Help With Your Home Purchase?

We can help you pre-qualify for a mortgage and help you understand what mortgage rate you would qualify for. More importantly, we can help you establish how much home you can afford. Since rates are near or below 2011 lows, now is the time to lock in extremely low rates before they are gone, which is not a question of if, but when.

Whether you’re applying for a mortgage for the first time or are looking at purchasing a new home and will be increasing your mortgage amount, it’s essential to understand how much you can afford. You may think that any number that fits within your monthly budget is comfortable and sustainable, but your mortgage lender may say otherwise. In order to determine what you can truly afford, there are some guidelines that mortgage lenders insist you abide by and they can ensure that you don’t get in over your head with your home purchase.

How Mortgage Debt Ratios Determine Affordability

You might think that if you make $4,000 per month that $2,000 per month to carry your mortgage is quite affordable but it’s not quite as simple as that to a mortgage lender. What they look at is a few essential debt ratios that ensure you’re taking on a mortgage well within your means with consideration to your other debts and expenses.

Gross Debt Service Ratio (GDS)

The gross debt service ratio looks specifically at the affordability of your housing costs, and it requires that they are not higher than a fixed percentage of your household income, which can vary by program and lender.

The way the GDS is determined is by calculating the monthly mortgage amount + property taxes + condo fees, and then that sum is divided by monthly income. In the case of the $4,000 income and the $2,000 mortgage payment, with this equation, that is not an amount that a mortgage lender would provide a borrower as the ratio is far too high without even considering the other housing costs.

Total Debt Service Ratio (TDS)

Your total debt service ratio is also considered to ensure that you get a mortgage amount that is easily affordable. The same calculation for the TDS applies, but with this debt ratio, all debt obligations are considered whether it’s a car loan, student loan or minimum credit card payments for outstanding balances as well as your housing expenses. This debt ratio can be no higher than 40%-42% on some programs, but this number can vary by program and lender.

Ensuring Your Mortgage is Always Affordable

While it may seem as though the mortgage amount that you’re approved for based on the debt ratios is much lower than what you believe fits into your budget, this is a realistic amount for a number of reasons:

• As a general rule, having your total debt expenses total no more than 40% ensures you have enough cashflow for savings, investments, household repairs, day-to-day living expenses and more.
• When you take on a fixed rate mortgage for 2 or more years, there’s potential that in that time period your situation or income could change. With a GDS of 32% or under, it’s more realistic to expect that if that happens, it’s more likely you’ll be able to continue to pay your bills.
• You never want to become house poor or you’ll begin to resent your investment. When you don’t over-spend on your home, you’ll still have opportunity to live your life.
• When you first buy your home, you may have fewer expenses than you would if your life changes. For example, when you make your purchase you may only be a couple and if later you have children, your variable expenses may change greatly.

BuildFax bills itself as a “a one-stop shop for building, remodel, and repair information for over 70 million U.S. properties”.

From the BuildFax Website:

BuildFax collects and organizes construction records on millions of properties from cities and counties across the United States. Once in our system, we analyze, mine and compare the data so that it becomes like a “background check” on a property. We have data on new construction, major systems repair, additions, renovations, roofs, pools, demolitions, contractors and more.”

BuildFax’s database of permit information from building departments covers in excess of 4,000 cities and counties. BuildFax provides summary reports showing major renovations or repairs done on properties including additions, plumbing, air conditioning, roof replacements, etc. BuildFax reports also including contractor and dates of work completed.

BuildFax reports are usually $39.99 per report, but you can sign up for a FREE REPORT until July 31, 2011.