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Spring is the perfect time to buy a home

April 4th, 2008 8:56 AM

RISMEDIA, April 4, 2008-For home buyers, this might be called the “perfect spring,” when conditions have come together to create a rare and excellent opportunity to buy a home, says Diane Turton, broker of record at Diane Turton, Realtors. In fact, for the first time in 30 years, home buyers can take advantage of low mortgage rates, combined with a large selection homes that are realistically priced.

By acting now during the spring selling season families can find a home, complete the sale and move in just before the new school year. Also, there is still time purchase a vacation or second home and enjoy this summer at the shore.

“The advantages of buying a home this spring are crystal clear,” said Turton. “The wisest and most serious buyers are in the market today.”

Even though it is a perfect home buying time, knowing your options, getting prepared and bringing in the right help will make the home buying experience successful.

Following are guidelines from Turton that will help make this the perfect season to buy a home:

- Get a handle on your expenses, plan a budget and start a fund for your down payment. Although it is possible to get a mortgage with only five percent down - or even less in some cases - you can usually get a better rate and lower overall cost by putting more money down.
- Do your homework to determine how big a mortgage you can afford. Your mortgage lender can assist you with this process or you can do the work yourself with online mortgage calculators.
- Retain a good real estate sale associate who is experienced, an excellent negotiator and knows the local housing market. A real estate transaction is complicated and is difficult to complete alone. In most cases, buying a home requires completing disclosure forms, inspection reports and mortgage documents as well as getting insurance policies and taking care of many details. Finding someone who can guide you through this process will help avoid delays and costly mistakes.
- Know what kinds of other professionals you will need to make to complete the transaction. Some of these professionals include a real estate attorney, home inspector, appraiser, title company expert, tax advisor and various environmental inspectors and specialists.
- Determine your closing costs. From homeowners’ and title insurance to well water testing, there are many costs, both large and small, that a homebuyer will be expected to pay at the signing. The sales agent can provide an accurate estimate of these costs, so there are no surprises as the transaction approaches a close.

Posted by Belinda Arroyo on April 4th, 2008 8:56 AMPost a Comment (0)

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Important information about interest rates

April 22nd, 2008 11:14 PM

Real Estate buyers are usually highly focused on the purchase price of a property. This is a legitimate concern. The purchase price is one of the most important considerations in a real estate transaction. But at the same time home buyers too frequently treat interest rates as a secondary concern. Many buyers will stress over $300 or $400 in negotiations over purchase price. But when told that interest rates dropped half a point, home buyers will often respond with a shrug.

This is frequently because it is easy to understand the difference between paying 200k and 195k for a house. But it's harder to appreciate the difference between an interest rate of 6.5% and 6.0% for a house. But interest rates can have a large influence on mortgage payments. Using a mortgage calculator first let's look at the difference between the mortgage on a 200k and the mortgage on a 195k house assuming a 6.5 percent interest rate.

200k (6.5%) Mortgage $1264.13 per month
195k (6.5%) Mortgage $1232.53 per month

The difference ends up being $31.60 a month.

Now let's look at the difference between an interest rate of 6.5% and 6.0% on a 200k house.

200k (6.5%) Mortgage 1264.13 per month
200k (6.0%) Mortgage 1199.10 per month

The difference ends up being $65.03 a month or $780.36 a year. A simple half point drop lowered the mortgage payment by 5.4 percent.

Interest rate changes are not that uncommon. We wrote a tool that graphs mortgage rates over time based on the interest rates provided by Freddie Mac. In the middle of 2007 we saw interest rates of 6.7%. At the beginning of 2008, interest rates were down to 5.75%. What is a little more interesting is when we switch the toggle on our tool from the interest rate to the mortgage on a 200k house based on the interest rate for that date http://www.escapesomewhere.com/blogim/mortgage_rates_broker.jpg. From the middle of 2007 to the beginning of 2008, we saw a drop in the monthly mortgage payment on a 200k house drop from $1290 to $1170, a difference of 9.3 percent. This is why when buyers say they are waiting for prices to drop 5%, it might be a good idea to tell them that the actual mortgage they would get on a house has already dropped by more than 5 percent.

In light of all the mortgage issues over the last few years, it highlights why home buyers should shop around for interest rates. All too frequently home buyers will go with the first mortgage person they meet under the assumption that everyone has roughly the same rates and that a half point isn't really that big of a difference. As we have seen above, a half point can make a significant difference in someone's mortgage payment.

In summary, home buyers should still focus on price because it will always be an important part of the real estate transaction. But if home buyers start to look at interest rates more closely, they will end up with more success in their real estate purchases and lower mortgage payments.

posted by Belinda Arroyo

Posted by Belinda Arroyo on April 22nd, 2008 11:14 PMPost a Comment (0)

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Do's and Dont's in buying your first home

April 19th, 2008 6:39 PM

For most people, buying a home is the most significant investment of their lives. And in spite of the doubt and confusion clouding both the financial markets and news headlines, 2008 presents many genuine real estate opportunities – especially for first-time buyers. On average, housing inventory is up, prices are stable and historical data demonstrates that purchasing a home has proven a sound long-term financial investment. However, first-time homebuyers are often understandably anxious when it comes time to making what could be the largest purchase in their life. DO:

DO utilize free online tools to arm you with as much knowledge as possible.
DO take time to access and closely review your credit score. A sound financial track record and solid credit score can help lock in a loan and lower interest rates. Checking your records with a fine-tooth comb in advance will also ensure that you catch any errors ahead of time, as well as help you better understand how lenders may perceive you.
DO explore mortgage pre-approval. Getting this early green light will help others involved with your purchase that you are serious about home ownership – and well-qualified.
DO line up your “all-star” team of professionals before game day. A team of experienced professionals will be key to making the home buying process simple and seamless. Start by interviewing and selecting a sales associate who you “connect” with. That sales associate should also be able to help you identify suitable lawyers, mortgage lenders, home inspectors and others who play a role in the process.
DO anticipate your future needs and buy for lifestyle. Try to anticipate how long you’ll live in your next home and plan for major lifestyle changes when possible. What may make a perfect starter home for a couple might not work as well when children come into the picture. Remember, people move for lifestyle reasons and your first home will likely not be your last.
DO hone in on your housing priorities. Your ideal home may have a porch, a pool and five full baths. But before you start looking, make sure to separate your “must-haves” from your “nice to haves,” so you know where you can compromise to meet your budget.

DON’T:

DON’T fall in love with the first house or neighborhood you see. That grand colonial with the picturesque view may win your heart at first glance, but don’t fall in love too fast. You need to keep an open mind to make sure you find the right fit for all your needs. At the end of your search, it may turn out that the riverfront ranch that’s closer for your commute is a better bet all-around.
DON’T buy beyond what you can afford. It’s easy to fall into that all-you-can-eat attitude when it comes to your first home purchase. You “want it all” when it comes to size, amenities, location, etc. But remember that your eyes may have a larger appetite than your wallet. Make sure that the down payment, closing costs, monthly expenses and taxes are truly within your income and savings range before you sign on the dotted line.
DON’T treat your home the way you treat your stock portfolio. It’s unrealistic and unwise to expect your housing investment to appreciate as quickly as you’d hope for your high-risk bonds. Buying for lifestyle, as opposed to trying to turn a quick profit, will help ensure that you are viewing home purchasing and ownership in the right context.
DON’T try to time the market. By the time most consumers sense a major real estate or financial market shift, the tables have typically already turned. Instead of waiting for a slim and unreliable window of time – and potentially missing out on the perfect home – buyers should focus on their own lifestyles and buy when the time is truly right for them.
DON’T jump into an exotic or confusing mortgage. When it comes to downpayments and mortgages, if it sounds too good to be true, it probably is. Be sure to read carefully through every aspect of the proposed agreements to fully understand your end of the bargain. For instance, what seems like an attractive rate now may balloon exponentially a few years down the road. So arm yourself with information and don’t be afraid to ask questions.
DON’T underestimate the value of a trustworthy real estate agent’s on-the-ground expertise. While being a savvy buyer and doing one’s homework will help on the road to homeownership, a local expert with years of negotiating experience is invaluable when it comes to scouting out the perfect home – and closing the deal.