Ready... Set... Buy...

  • Initiate an all-family member housing priority discussion before beginning to house-hunt. Begin with a thorough and realistic discussion of family requirements: the "must list". Include every member of the family in the discussion, especially the kids, as their needs and requirements are likely to grow or change more than those of the adults or parents.
  • Complete the Homebuyer's Priority List in this magazine. It will save you time and help you to focus on factors you might otherwise overlook.
  • Establish the price range and mortgage for which you qualify by completing the Mortgage &Price Range Worksheet on page 14.
  • Ask yourself how long you expect to live in your new home? Is there reason to believe that you will live in this home for 5 years, 10 years, until you retire?
  • Is the location convenient for all family members? Home purchases are too often based primarily on the number of bedrooms and baths, total square feet or a new, gourmet kitchen, without sufficient thought about the proximity of neighbors, schools, stores or extracurricular activities important to all household members. Geographical convenience for all of the family is essential as more families have wage earning parents.
  • Your family's lifestyle and size, your kids off to college, grandparents moving in, job changes and the need for a home office.
  • Make specific considerations for books, collections, art.
  • How about adequate closets for clothes, seasonal storage, sports, games, hobbies, and valuables.
  • Select a competent, experienced REALTOR.
  • If you plan to move to a new community, select an expert relocation specialist to advise you on every step of the move.
  • Identify privacy needs of each family member and preview homes accordingly. Some children may enjoy sharing a room when very young but resent having to share as adolescents.
  • What sports, hobbies, activities of family members require allocated space inside or outside the home? Is one member an inveterate gardener, another a prima ballerina or aspiring basketball player?
  • Are parents ardent golfers, boaters, travelers or types who are frequently away from home, or people who enjoy gardening, working around the house? Why settle on a house that requires considerable time, expense and effort to maintain if most of your free time is spent away from the home and/or time and money to do both are not available?
  • Keep in mind that the space needs of children change dramatically as children mature. Family togetherness is hardly the common mode during high school years. Anticipate the inevitable, short-term changing needs of your family as you preview homes to buy.
  • Accommodate individual, adult lifestyles if possible. If one spouse is an early riser and the other a night owl, look for a home that accommodates the differences between adults with minimum compromise.
Expect some anxiety. It's normal whether you are first-time buyers or veterans of many moves. Most home buyer's anxiety tends to focus on money issues, including the three primary issues of.
  • How do we qualify for an adequate mortgage, and at what rate?
  • How large will the monthly mortgage payments be?
  • How much do we have to have for a down payment? The lowest down payment for most conventional mortgages is five percent ($5,000 on a $100,000 home). And, if you are a first-time home buyer, it is possible to reduce that amount. Many lenders will loan part or all of the down payment depending on your financial statement including annual family income, investments, long-term debt, and a satisfactory credit report.
If you qualify for an FHA loan, you will need only 3 percent as a down payment or $3,000 on a $100,000 home. And, if you qualify for a Veteran s administration loan, your down payment requirement will probably be zero!
  • Avoid "qualification anxiety" and quantify your monthly mortgage payments in advance by completing the Mortgage and Price Range Worksheet in this issue. Refer to the Interest Rate Chart for your correct interest rate factor.
  • If you expect any problems or "glitches" in your credit report, talk with the lender about the problem before it comes to light in the report. Your up-front honesty will help you gain the respect of the lender and to build trust that you will be responsible in paying off the loan.
  • The total monthly mortgage payment usually consists of 4 elements, known as PITI, Principle, Interest, Taxes, Insurance. The lender may not require you to escrow for tax and insurance payments, but it's best to pro-rate the expense through an escrow account with the lender. Use the Mortgage Price Range Worksheet to calculate your monthly PITI payment.
  • In reality, every home buyer has unique priorities. Unfortunately, many home buyers never take time to recognize and prioritize their unique needs and desires or answer their specific housing related questions. Here are some thoughts worth considering as you begin your search.
·         Purchase price and resale value:
      • Is the price of the home you want to buy too high relative to other neighboring homes?
      • Call the County's recorder of deeds for the most recent sale price on the property you want to purchase.
·         Does architectural style affect price?
      • Most markets tend to value one or two architectural styles over others. For example, in many suburban areas close to large cities, the "two story colonial" is a preferred architectural style and demands higher resale prices as a result.
·         Tax Consequences:
      • Are you downsizing or "downpricing" to gain equity or reduce monthly expenses? If so, you may qualify to exclude up to $500,000 in capital gains on the scale of your present home. The rules are complex so be sure to talk first with your accountant.
·         New construction versus a previously owned home:
      • It s largely a matter of personal preference.
      • Recognize the realities of either preference, however. A newly built house will probably need landscaping, wall-to-wall carpeting and other amenities. On the other hand, mechanical systems, roofing, appliances will be new. Often, the decision comes down to the family's preference for new construction vs an established neighborhood, or less building maintenance but more outside work in landscaping or gardening.
      • If you are not handy with tools, think twice about buying a "fixer-upper" with Loads of charm, needing TLC and constant maintenance and capital investment.
·         Size, number of bedrooms and "public" spaces.
      • The size question prompts a host of additional questions and answers. For example, is your family's life centered around the home or around other, out-of-home activities (golf, sailing, kid's sports, work). How much time (or money) do you want to invest in maintenance? How often do you use the public spaces for entertainment?
      • If you are "empty-nesters", ask yourselves "how much house do you really need" and, "how much house will you be willing to maintain in 5 years? In 10 years?
      • How many bedrooms should the home have? Married, childless or neither, a spare bedroom comes in handy. Obviously it can accommodate friends or family who come to visit. But the extra bedroom also doubles as an effective home office, or quiet room for reading or contemplation. When resale time arrives, the extra space will be an added value to buyers.
·         Schools, community activities and investing.
      • How can I obtain accurate information on the quality of schools in the community to which I am moving? Start by asking your REALTOR or relocation specialist about schools in the community. Most states grade schools in comparably sized communities by many criteria and such data are available. Make appointments to visit each school your children will attend. Talk with school administrators and ask to meet teachers. Take a proactive role in evaluating the quality of education at each school.
      • How about community attitudes, events, activities? Your REALTOR, relocation specialist, Chamber of Commerce and local media will give you a good picture of what is important to the community.
      • If you plan to be short-term owners (7 yrs or less), be sure to consider an ARM (Adjustable Rate Mortgage).
      • If you are buying a home primarily as a financial investment, be sure to do your homework. Ask what "upward leverage" exists and on what criteria is it based? What are your specific financial goals for this investment, and what period of time have you set for achievement of your financial goals? Ask your tax advisor or accountant for advice before investing.
This article provided for you by Premier Real Estate.
Reprinted with permission from Homes & Land Magazine. © S.M.A.R.T. Marketing, Inc.
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