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Before you close on a home, you should get a home inspection to evaluate the condition of the house and make sure you will not be hit with any surprises. No one likes to spend the money it takes to buy a home only to discover that it needs a new roof or has a cracked foundation! I can help with scheduling a home inspection if needed.
Don't be discouraged! Sellers will often reject your first offer, but that does not mean you've lost the house of your dreams. Now is the time for smart negotiation which is exactly where an expert buyer's agent comes in. You may have to offer more money, but you may also get repairs made or the length of the closing period altered. It is not uncommon for negotiations to go back and forth a few times before a deal is made.
Prequalification is an informal determination by a lending professional that estimates how much mortgage you can afford. This will help you guide your home search to the correct price range.
Preapproval is a written guarantee by a lender or mortgage broker to grant you a loan up to a specified amount. It is a good idea to get preapproved before submitting an offer; sellers will take your offer more seriously than an offer from someone who is only prequalified. Also, many sellers these days will only accept an offer with a preapproval letter. Contact me if you need help with finding a lender or visit my Vendors page.
A buyer's agent is committed to working only in the best interests of the buyer – that's you! Your buyer's agent knows the local market and will help you determine whether the homes you are looking at are priced fairly. Your agent will also help you cross all of your t's and dot all of your i's when navigating contracts and paperwork.
A good starting place is to estimate that your monthly payments will be about 25% of your gross monthly income. Most lenders feel comfortable with this number, although your credit rating and other monthly debts will be factored in as well. Try using a mortgage calculator to figure out approximately how much house you can afford in different loan and interest rate scenarios.
Home ownership is a great way to build equity, take control of your living situation, and invest in your family and community. One study found that homeowners also report a higher quality of life. Check out the other findings about the social benefits of homeownership here.
A CDD fee is a "Community Development District" fee. Many planned communities (also known as Planned Unit Developments or PUDs) in Northeast Florida have been designated as CDDs. The CDD has the authority to issue bonds for financing infrastructure improvements such as roads, sewer, water, and community amenities such as swimming pools, clubhouses, parks, etc.
Most CDD fees can be handled like taxes by the lender who finances your home purchase and will be collected monthly and added to an escrow account to be paid at the appropriate time of the year so you don't receive an additional bill.
The appraised value of a house is a certified appraiser's opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process; fees range from $200 to $300.
Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a real estate agent or broker. Either an appraisal or a comparative market analysis is the most accurate way to determine what your home is worth.
Closing costs are the fees for services, taxes or special interest charges that surround the purchase of a home. They include upfront loan points, title insurance, escrow or closing day charges, document fees, prepaid interest and property taxes. Unless, these charges are rolled into the loan, they must be paid when the home is closed.
A standard homeowners policy protects against fire, lightning, wind, storms, hail, explosions, riots, aircraft wrecks, vehicle crashes, smoke, vandalism, theft, breaking glass, falling objects, weight of snow or sleet, collapsing buildings, freezing of plumbing fixtures, electrical damage and water damage from plumbing, heating or air conditioning systems, according to the Insurance Information Institute, a Washington, D.C.-based nonprofit group for the insurance industry.
Such policies are "all-risk" policies, which cover everything except earthquakes, floods, war and nuclear accidents.
A basic policy can be expanded to include additional coverage, such as for floods and earthquakes and even workers' compensation for servants or contractors. Home-based business-coverage, an increasingly popular rider, does not cover liability associated with the business.
Insurance experts recommend that homeowners obtain insurance equal to the full replacement value of the home. On a 2,000-square-foot home,for example, if the replacement cost is $80 per square foot, the house should be insured for at least $160,000.
For personal items, homeowners can increase their coverage beyond the depreciated value of items such as televisions or furniture by purchasing a "replacement-cost endorsement" on personal property.
Some experts recommend an inflation rider, which increases coverage as the home increases in value.
While your low offer in a normal market might be rejected immediately, in a buyer's market a motivated seller will either accept or make a counteroffer.
Full-price offers or above are more likely to be accepted by the seller. But there are other considerations involved:
* Is the offer contingent upon anything, such as the sale of the buyer's current house? If so, a low offer, even at full price, may not be as attractive as an offer without that condition.
* Is the offer made on the house as is, or does the buyer want the seller to make some repairs or to lower the price instead?
* Is the offer all cash, meaning the buyer has waived the financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.
Most offers include two standard contingencies: a financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction.
A buyer could forfeit his or her deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract.
The purchase contract must include the seller’s responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.
When a renter signs a lease with an option to purchase a property for a specific price within a certain time frame, that is called a lease option. In most lease-option situations, a portion of the rent is applied to a future down payment.
Lease options are most popular among buyers who don't have enough funds for a down payment and closing costs.
Doing whatever you can to put your house's best face forward is very important if you want to get close to your asking price or sell as quickly as possible. Short of spending a lot of money, here are several ideas for making your home show better:
* Sweep the sidewalk, mow the lawn, prune the bushes, weed the garden and clean debris from the yard.
* Clean the windows (both inside and out) and make sure the paint is not chipped or flaking. And speaking of paint, if your home was built before 1978, new federal law gives a buyer the right to request a lead inspection. If you think you might have some problems, do the inspection yourself beforehand and make any fixes you can.
* Be sure that the doorbell works.
* Clean and spruce up all rooms, furnishings, floors, walls and ceilings. It's especially important that the bathroom and kitchen are spotless.
* Organize closets.
* Make sure the basic appliances and fixtures work. Get rid of leaky faucets and frayed cords.
* Make sure the house smells good: from an apple pie, cookies baking or spaghetti sauce simmering on the stove. Hide the kitty litter.
* Put vases of fresh flowers throughout the house.
* Having pleasant background music playing in the background also will help set your stage.
Any points you or the seller pay to purchase your home loan are deductible for that year. Property taxes and interest are deductible every year.
But while other home-buying costs (closing costs in particular) are not immediately tax-deductible, they can be figured into the adjusted cost basis of your home when you go to sell (any significant home improvements also can be calculated into your basis). These fees would include title insurance, loan-application fee, credit report, appraisal fee, service fee, settlement or closing fees, bank attorney's fee, attorney's fee, document preparation fee and recording fees. Points paid when you refinance an existing mortgage must be deducted ratably over the life of the new loan.