Once you know what price range to look in, where should you begin? First try to narrow down the location you want to live in. Good schools are important even if you don't have children because they help to maintain the value of homes in their zones. An easy commute, not just to your job, but to other large employers will also help to maintain a home's value. Always keep in the back of your mind that your needs may change and you want the home you purchased to be marketable to a large percentage of the population if you want to sell it.
Once you have determined where you want to live, find out what price homes are selling for in that area. You can go to www.Realtor.com or in my market www.myfloridahomesmls.com will link you to the Orlando Regional Realtors Association's MLS listings. If you live in a different area, just google MLS and will give you different sites to go to.
Now that you see available homes, you need to understand the different types of listings you'll see.
Short Sales - The largest number of listings in many markets are short sales. A "short sale" is a distress sale in which the lender may agree to take less than the amount owed on the home's mortgage, so it can avoid the costs of a foreclosure. However the listing price may be nothing more than the listing agent's guess on what they might be able to get the lender to take. The answer from the lender may take months to get back and they may say "no thanks". There also may be other liens against the property from Home Owner's Associations or unpaid real estate taxes, that the buyer will have to pay at closing in order to get clear title. A short sale can be a very difficult first time home purchase.
Actual Resales - These are home where the seller has owned the home for a number of years and hasn't leveraged the property (taken out additional loans or refinanced with cash paid out). The seller can actually sell the home and walk away with a profit or break even. These are probably the smallest group of listings in a lot of markets right now and they are usually the highest priced. Where a short sale price is usually negotiated up, these homes can sometimes be negotiated down.
Bank or Corporate Owned - These homes have already been taken back by the lender or corporation, so the listing price is a real price but it is probably a rock bottom price too. In fact if it's too good a price, there may be multiple offers. These homes usually sell pretty quickly because they are priced so low, often they have been fixed up and the sellers are anxious to be done with them, so they respond to offers and contracts quickly.
Builder's Inventory or to "to be built" Homes - These are my favorite! I told you I work for a builder, right? The price is very attractive, though it won't be as low as bank owned or short sale listings. New homes will include a lot of "perks" that existing homes will not. Builder's homes can be built to your specifications, but even if you buy an inventory home you will be given the same advantages as a buyer who had their home built. You will be given the opportunity to walk through the home and create a "punch list" of items you want fixed or touched up. You should be given a full warranty as of the day of closing, even if the home has been completed for a few months or even a couple of years. Some builders will pay some or even all of your closing costs so you can bring less money to the closing table. Builder's homes have also been well maintained while waiting for a buyer, so there shouldn't be any damage seen or unseen.
Helpful Hint:
If you can, before even looking at individual homes, go to the neighborhoods you are interested in and just drive around. You will probably see a few unkempt yards or many For Sale signs. In the Central Florida market I don't think there are any neighborhoods that don't have at least a few "distressed" properties. These neighborhoods can be viewed as having great potential as the bargains a bought up and fixed up, but if you're not comfortable, keep looking. Location truly is the most important thing in real estate, as a first time home buyer, this isn't just an investment it's also your home. While driving around look for new home communities that may not have showed up in your on line search, you may see something you really like!
Thursday, January 29, 2009
Monday, January 26, 2009
What is the first step?
The first step to home ownership is getting pre qualified. Before you even start looking for your first home you need to be pre qualified by a reputable lender. There are several reasons to talk to a lender first.
1. You really do need to know what price range you should be looking for. You don't want to waste valuable time looking at properties that are not the right fit for you.
2. You also need to know ahead of time what loan program will work best for you and what kind of payment that means, both now and in the future.
3. When you find the right home, most sellers won't even look at an offer to purchase if you are not pre qualified as an approved buyer for their property.
Some helpful hints;
1. Find a good lender. You want to find someone you can trust to not take advantage of you and to know the business well enough to find the absolutely best program for you and your particular circumstances. You shouldn't have to give anyone any money in order to get pre qualified, if they are asking for an application fee, even though it will go to pay for specific things, you shouldn't need to put out any money just for the pre qualification process. The only reason a lender (whether it's a mortgage broker or a loan originator) will ask for money up front is to buy your loyalty. You really want to allow yourself the option of shopping several different lenders to get the best rate possible once you've found the home your looking for. One place you could go to get pre qualified is through a new home builder (yes I work for one, but that's not why I'm suggesting it). Pick a builder that doesn't necessarily have their own lender, but one that works with multiple lenders. Talk to the on site sales agent about their lenders to see if they can recommend one that might be the best fit for you. You can get pre qualified without paying any money up front and you know that the lender has an established relationship with that builder that they wouldn't jeopardize by not giving you the best deal possible.
2. Now that you've been pre qualified, ask for more than one "pre qual" letter. Say you are qualified to buy a home for up to $225,000 but you really are more comfortable with the payment on a $200,000 home; You might ask for letters that say you are qualified for up to $190,000; $200,000 and $210,000. When you make an offer on a home you want to be qualified, but not too qualified. You want the seller to take you seriously, but if your "over" qualified they may counter back at a higher number.
3. Remember, it shouldn't cost anything to talk to a lender, but you may have to fill out an application in order for them to issue you a "pre qual" letter. If they tell you they need a fee in order to pull your credit, tell them you'll provide them with a copy of your credit report. They will still want (or actually have) to pull it themselves, but they may waive the fee for you. If they say that part of the application fee pays for the appraisal, tell them you'll wait until you have a home under contract to worry about that.
4. If your lender tells you that you can't but a home right now, make sure you've got a good lender who will help you do what ever it takes to become a qualified buyer in the future. Again, this service should not cost money, plenty of lenders are happy to help you take the steps necessary to fix or establish credit so that you can be ready to take advantage of this buyer's market.
5. Last, but not least, there are some people who are "born to rent", but you probably aren't one of them. If you think you are, it shouldn't cost you anything to find out!
1. You really do need to know what price range you should be looking for. You don't want to waste valuable time looking at properties that are not the right fit for you.
2. You also need to know ahead of time what loan program will work best for you and what kind of payment that means, both now and in the future.
3. When you find the right home, most sellers won't even look at an offer to purchase if you are not pre qualified as an approved buyer for their property.
Some helpful hints;
1. Find a good lender. You want to find someone you can trust to not take advantage of you and to know the business well enough to find the absolutely best program for you and your particular circumstances. You shouldn't have to give anyone any money in order to get pre qualified, if they are asking for an application fee, even though it will go to pay for specific things, you shouldn't need to put out any money just for the pre qualification process. The only reason a lender (whether it's a mortgage broker or a loan originator) will ask for money up front is to buy your loyalty. You really want to allow yourself the option of shopping several different lenders to get the best rate possible once you've found the home your looking for. One place you could go to get pre qualified is through a new home builder (yes I work for one, but that's not why I'm suggesting it). Pick a builder that doesn't necessarily have their own lender, but one that works with multiple lenders. Talk to the on site sales agent about their lenders to see if they can recommend one that might be the best fit for you. You can get pre qualified without paying any money up front and you know that the lender has an established relationship with that builder that they wouldn't jeopardize by not giving you the best deal possible.
2. Now that you've been pre qualified, ask for more than one "pre qual" letter. Say you are qualified to buy a home for up to $225,000 but you really are more comfortable with the payment on a $200,000 home; You might ask for letters that say you are qualified for up to $190,000; $200,000 and $210,000. When you make an offer on a home you want to be qualified, but not too qualified. You want the seller to take you seriously, but if your "over" qualified they may counter back at a higher number.
3. Remember, it shouldn't cost anything to talk to a lender, but you may have to fill out an application in order for them to issue you a "pre qual" letter. If they tell you they need a fee in order to pull your credit, tell them you'll provide them with a copy of your credit report. They will still want (or actually have) to pull it themselves, but they may waive the fee for you. If they say that part of the application fee pays for the appraisal, tell them you'll wait until you have a home under contract to worry about that.
4. If your lender tells you that you can't but a home right now, make sure you've got a good lender who will help you do what ever it takes to become a qualified buyer in the future. Again, this service should not cost money, plenty of lenders are happy to help you take the steps necessary to fix or establish credit so that you can be ready to take advantage of this buyer's market.
5. Last, but not least, there are some people who are "born to rent", but you probably aren't one of them. If you think you are, it shouldn't cost you anything to find out!
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