Plain and simple, owning a home can improve your quality of life, provide stability and give you a sense of control you just can't get from renting. You have a place to live when you rent, but buying is something much deeper – and better.
The intangibles are tough to measure, but there are other benefits you can quantify:
If you're unfamiliar with the area where you’re moving, your buyer’s agent is an invaluable resource. He or she can offer insider knowledge on neighborhoods, schools, access to recreation and shopping districts, and the many other details on local neighborhoods and subdivisions.
It’s important to have a clear picture on the features that matter most to you in a home or location. Creating a list of “must haves” and flexible "nice-to-haves" from the start will make things a lot easier for you.
Your buyer's agent can offer advice on the countless items you should consider according to your lifestyle, budget and particulars.
For most people, finding the right home begins with a house-hunting strategy combining personal preferences, guidance from others (including an agent) and a mix of neighborhood exploring and online search.
For some, the search takes a while; others find what they want right away. In either case, your real estate agent can be a huge resource of insight and guidance, working through issues or complications that arise along the way.
Here’s a general outline of what to expect during a home purchase, from the buyer's perspective.
This is it! You've found the home of your dreams, looked over disclosure documents, reviewed comparable sales data, talked it over with your agent and submitted an offer. The sellers may accept your first offer, but more often will return a counteroffer. In fact, additional negotiations are common, and your agent will help you through this generally stressful stage.
Once everyone is happy with the terms, the parties have reached what is known as mutual acceptance and enter into a purchase and sale agreement.
To solidify your intent to buy, you'll place a deposit, or earnest money, on the property. The amount varies, but is generally at least 1 percent of the purchase price. You'll write the check to the escrow company, not the seller. Note: This money counts toward your down payment later.
The earnest money deposit goes into an escrow account, where all funds will be held until closing, when they are then distributed to the right people (lender, mortgage broker, title insurer, real estate agents, etc.).
This step is streamlined if you've already been preapproved for a loan (which is a smart thing to do). If not, you'll begin the loan application process now. The lender inspects title history and orders a property appraisal. The lender needs key information about the property before granting a loan. This is when potential problems can come to light. For example, the appraisal could show a lower value than the purchase price, or the lender could have trouble finding comparable homes. Also, the title search could turn up liens or other problems.
You'll hire an inspector – generally, your agent will suggest one, or provide several options – to check the home and point out minor and major problems that should be fixed before closing. At this point, you still have the option of backing out of the deal. Through your agent, you'll submit a list of requested work, and the sellers have the option to complete the tasks, do some of them but not others, or reject the request. The sides will negotiate until reaching an agreement.
If the house passes inspection, appraisal and title search, and everything is good to go, then all contingencies can be removed, paving the way to a closing.
Once contingencies are removed and financing is set, all parties sign a seemingly endless stack of documents, and the transaction closes.
When the final signatures are in place, it’s time to put down the pens, shake hands, exchange smiles and start packing for the move!Why Use A Buyer Agent?
A real estate transaction is a complex process involving stacks of paperwork and a number of outside service providers and contractors.
An experienced buyer's agent can guide you through the process, answering your questions and serving as your advocate (see the Anatomy of a Home Purchase). Your agent will help you find the property that fits your needs, submit offers and counteroffers, suggest a good property inspector and other professionals, and provide all sorts of relevant advice.
With a buyer's agent, you'll have someone on your side, looking out for your interests every step of the way.
As a buyer, you don’t pay your agent directly. Instead, the agent receives an agreed-upon portion of the listing agent's sales commission (usually about half), which is paid by the seller. If you're thinking this structure works against you by giving your buyer's agent an incentive to let you pay more than you need to, consider this:
The increase in a buyer's agent commission on, say, a $5,000 to $10,000 jump in price would be only $125 to $250. Good buyer's agents – those who are productive and engaged in the business full time – aren't going to risk their reputations. Your satisfaction – which can generate referrals to your friends and family – is the lifeblood of their careers.
The 28/36 rule is an established benchmark used by many lenders to determine how much credit to offer you. Here's how it works:
The "28" refers to the notion that no more than 28 percent of your gross monthly household income should go toward housing costs, which include mortgage principal, interest, taxes and insurance.
To calculate, simply multiply your gross monthly income (amount before taxes) by .28. Use this amount as a guide for how much house you can afford.
Example: You earn an annual salary of $70,000. Divide 70,000 by 12, giving you a monthly gross income of $5,833. Multiply that by .28, and you'll find you should spend no more than $1,633 each month on total housing costs.
The "36" part of the 28/36 rule refers to your overall debt, which shouldn't exceed 36 percent of your income. This is important to consider because other high monthly debt loads – such as car and credit card payments – impact the amount you can afford to spend on housing. For first-time home buyers, the tricky part is knowing how much to budget for taxes and insurance. An experienced real estate professional can assist you with this.
Get preapproved for a mortgage. Your lender can approve you for a certain to loan amount prior to your home search. This gives you a solid number against which you can assess the affordability of the houses you visit.
As a Seller, you establish an agency relationship with the Broker when you list your home. As a buyer, you must choose to be represented in a real estate transaction or to merely act as a homebuyer without representation. If you need help buying your next home, I, Jeffrey Burnatowski of RE/MAX Real Estate, will provide you with guidance, market research, loan referrals and help negotiating. I will be at your side for closing and long after.
It is customary in Pennsylvania that the buyer's agent fee is paid by the Seller at closing. Because of this, buyer representation is FREE, so why not have the advantage of a REALTOR with over 30 years of experience working for you?
When buying a home, the cost is the same if you choose to be represented by a REALTOR or to have no representation. Representation offers far more benefits and greatly streamlines the home buying process. It is, therefore, to your advantage to choose representation when buying your next home.
My clients receive a level of service that is unsurpassed in the industry today. If you are buying a home or selling your current one, I not only specialize in helping you find your next home, but also in guiding you through the closing process.
Buyers and sellers who sign a Buyer Broker agreement can receive emails of every listing that meet their specific criteria so they can drive by and look at homes throughout the listing period. You can contact me about any home you see advertised. I am able to show any home even if it is not listed by RE/MAX Real Estate. In addition, if you decide to sell, the search for your new home will be stress-free. I will always keep you up-to-date about the market and current listings.
I want you to tell me everything down to the smallest detail that describes your perfect home. Does it have a window seat, three car garage, an office, or perhaps a whirlpool tub? How does it feel? Open and airy, warm and cozy, or bold and dramatic? What type of neighborhood? Are schools important? What is your lifestyle like? Would you like amenities, such as a pool or a tennis court? What are some things you do not want? I will show you EVERY listing that has all of the features you desire within your price range. Then, just tell me which ones you would like to see in person. It’s as simple as that. I find the best available homes on the market. In most cases, my buyers find their new home in the first group of property matches.
Enlisting the services of a professional Buyer’s Agent is similar to using an accountant to help you with your taxes, a doctor to help you with your health care, or a mechanic to help you with your car. The advantage is obvious. You could learn about accounting, medicine, and automotive mechanics and perform these services yourself - but, who has the time? You probably committed to a full-time career and family responsibilities. This is why you allow other professionals to help you in specific areas of expertise.
I have devoted over 30 years to perfecting my services. It’s always better to make an informed decision to buy something than it is to be sold something. When you have me as your Buyer’s Agent your interests are professionally represented, you have more control and peace of mind than if you buy without an agent. Buying a home is a big decision. Let me act as your advocate, even if you find that perfect home yourself. Finding the home is only one step in the entire home buying process.
The advantage to signing a Buyer’s Agency Agreement with me is that you will find and secure the perfect home exactly when you need it. Without an experience agent, it is nearly impossible to find a home that meets your needs, get a contract negotiated, and close the transaction in a reasonable amount of time. When you tour homes with your personal Buyer’s Agent you will already know that the homes meet your criteria for bedrooms, bathrooms, garage space, basement, square footage, neighborhood, etc. all within your price range.
Just as your accountant, doctor, and mechanic get to know your needs through a steady relationship, your Buyer Agent also gets to know your real estate needs and concerns. This type of relationship is built through constant open communication and by touring homes together. I will compile feedback and concerns about each home and refine your search criteria.
Plain and simple, owning a home can improve your quality of life, provide stability and give you a sense of control you just can't get from renting. You have a place to live when you rent, but buying is something much deeper and better.
Before you decide to buy a home, it's essential to make sure your credit is in good shape and repair any damage previously done. Know your credit score: 35% of successful buyers recently reported they didn't know their credit score when they went house shopping, according to a national survey fielded for MortgageMatch.com. Having enough money set aside for a down payment is a key component to making sure you are ready to purchase a home. Also, it's important to not put all of your money in the down payment as other fees or unexpected expenses often arise after closing.
Find out how much you can afford: establishing your purchase power upfront, including how much money will be required for a down payment and closing costs, is a must for first-time buyers. Look for special loans available from FHA and government sponsored loans for first-time home buyers that reduce the amount of money required to get into a home.
Since first-time buyers are new to the market and will finance a significant portion of their purchase, it’s important to get familiar with the processes and terminology associated with home buying. Here are a few key terms to add to your vocabulary:
Although the thought of paying a mortgage is more enticing than paying rent, it's important to understand all the costs involved in buying and owning a home as you determine whether you can afford to join the ranks of homeowners.
The days of calling up the landlord to fix your problems come to an abrupt halt when you're a homeowner. You'll be responsible for everything from malfunctioning appliances to leaky faucets to broken heating and air conditioning units and everything in between. And if you buy an older home, you'll probably eventually encounter costly repairs, such as replacing the roof or windows.
Once you crunch the numbers and find you come up a bit short, investigate ways to reduce or creatively fund your down payment—it can come from a variety of sources. Check with your realtor or lender to find out what's available.
You'll also need to factor in the cost of homeowners insurance. In addition to the type of construction, age of the home, your credit history and past insurance history, new issues like litigating costly toxic mold cases are raising homeowners insurance rates.
In fact, the National Association of Insurance Commissioners reports that homeowners will spent an average of $822 on homeowners insurance in 2007, the last year data was available. In your final analysis of whether you can afford to buy a home, you'll want to weigh the costs with the financial benefits—a consistent mortgage payment (unlike rent, which can increase), the tax benefits (you can deduct, in most cases, mortgage interest, closing costs, and property taxes), and the all-important appreciation factor—the rate of increase in a home's value. And of course, you'll want to weigh perhaps the biggest benefit of all—having a place to call your own.