Do’s and Don’ts for Finding Your Dream Home

The quest for your dream home can be very exciting, but it is also easy to get overwhelmed by options. There is a tendency at times to lose sight of the bigger picture and get caught up in small details. Home buyers should keep in mind some simple guidelines on what to look at and what to look beyond when visiting homes:

Many first (and even second, third or fourth) time home buyers pass over homes with tremendous potential because they can’t see past ugly paint, flooring or countertops. So, here are some “do’s” and “don’ts” for homebuyers as you hit the streets looking for your dream home.

Don’ts:

  • Don’t worry about color. It can be changed. It will be changed. Assume you will have to paint when moving into a home, and if somehow the previous owners picked your absolute favorite  colors, then you’ve won the new homeownership lottery.
  • Don’t try to be a structural expert. Yes, the structural integrity is something that will end up being incredibly critical to a home purchase, but this is why we rely on inspectors. As a buyer, don’t over-analyze every crack and imperfection in the dry wall. Sometimes, a home with seemingly no structural flaws can require thousands of dollars worth of foundation work, and a home with some small cracks here and there can be perfectly sound.
  • Don’t be afraid. If you’ve never done any sort of home repairs or renovation, it can be intimidating. The good news is a licensed contractor can do just about anything. Ok, maybe not anything, but pretty dang close. And if you don’t have room in the budget and have to DIY, many projects are actually easier than they seem. Just keep in mind when searching for a home which of these categories you fall in to. If you’ve never picked up a hammer and can’t afford a contractor, you may not want to plan on knocking out walls in a new home yourself.

Do’s:

  • Do look for general layout. If you like to cook, then it may be incredibly important to you to have a kitchen that opens directly to the main living area. Many people are not even really aware of the things they are looking for in the floor plan of a house; for many of us it is difficult to envision. So think about your lifestyle and try to picture yourself doing daily activities in your ideal home. Talk about it with your agent, they should be able to hash it out with you and figure out the most important aspects of general layout of a home that fits your particular situation.
  • Do be picky about location. If you know you want to live in a particular neighborhood or area, be patient and only look at homes in that area. Location is something you will not be able to change.
  • Do make estimates about how much time and money will be spent making cosmetic repairs. While you don’t want to immediately rule out a house because it needs a fresh coat of paint or new carpet, those types of upgrades can quickly add up. If the home is just barely in your price range, and you can’t afford all the repairs it needs right off the bat, then that home may not be the best fit for you.

Realtor.com

Are You Ready To Own A Home?

There comes a time in many young adults’ lives when they begin to think about owning a home. Home ownership is, after all, the American Dream, but it’s not the right choice for everyone at a prescribed time.

Employment History, Ample Savings and Good Credit

Mortgage lenders expect to see stability in your employment history, so they’ll look more favorably on buyers who have been employed in the same field for at least two years. Lenders also want buyers to have two-three months of mortgage payments saved in reserve. Consider this a small emergency fund, but lenders want to know that you haven’t taken absolutely everything you have and put it into the home purchase. You’ll need to make sure your credit history is as clean as possible, as you will most likely need to get a mortgage to enable you to buy a piece of property. You’ll need to review your current credit score, and the higher your score the better chance you’ll have to be approved for the mortgage loan. If there’s anything on your credit report that’s not entirely favorable, try to resolve it if possible.

Roots Not Wings

For those just starting out in life, buying a home may be premature until you’re settled on life decisions including career choices, the city you’d like to reside in and whether you’d like to marry and start a family. If those choices are settled, home ownership might be a good option for you, as you can start to build up equity instead of just paying rent. Owning a home requires hard work. There’s a lawn to mow, windows to wash and other repairs from time to time. Are you going to have the financial resources, time and desire to put in the effort ownership requires? Also, if you don’t plan to remain in one place for at least a few years, home ownership may not be the right choice for you right now. With the costs of buying and selling a home, if you’re forced to sell sooner than a few years’ time, you may end up losing substantial money.

Review Your Financial Condition

The rule of thumb is that you can buy housing that runs about two and a half times your annual salary. But beyond that, you’ll want to understand if you undertake this major purchase if you’ll be able to afford anything else outside your home. Lenders use a debt-to-income ratio, which is the percentage of your monthly income that goes to existing debts, to see if you’ll be able to handle your current monthly debt obligations, your new mortgage and home ownership costs, and still have some cash left over every month. If you’re trying to buy a condo, you’ll also need to factor in the possibility of special assessments into your budgetary considerations. To determine how much house you can afford to buy, another common rule of thumb is the 28/36 rule. Your monthly housing payments, including your mortgage, insurance and property taxes, should not exceed 28 percent of your gross monthly income. Your total debt should not exceed 26 percent of your gross monthly income. Also, you’ll need to ask yourself the following questions to determine if you can financially swing home ownership:

  • Do I have a reliable source of income?
  • Do I handle my finances responsibly?
  • Do I have a written budget?
  • Do I have money for closing costs, a down payment and moving costs?
  • Do I understand the additional costs associated with home ownership, such as insurance, maintenance and larger utility bills?

If you understand both the financial and emotional ramifications of home ownership, and think your current lifestyle and future goals fits into those parameters, then happy home hunting!

Realtor.com

Helpful Hints for Finding the Right Lender

It makes sense to shop around when choosing the right lender. Even if you have been pre-approved by one lender you are not obligated to choose that lender.

You’ve decided that it’s finally time to buy a home. You’re excited about the prospect and you can’t wait to start the search process with a real estate agent. One of the biggest decisions that you should make is your selection of a financial institution to handle your mortgage.

Although it is important to begin your search by having a lender prepare a pre-approval letter, that by all means does not indicate that you need to use that particular lender. The choice goes beyond the rate being offered.

A buyer needs to consider all the other variables involved since not all loans are equal. A lender who has the lowest rate could very well have the highest processing fees. That lender might also require a higher down payment or will require points. A point is 1% of the purchase price. This amount is above and beyond the down payment that is required.

As a rule of thumb, a buyer should consult with three different lenders in order to determine the best deal. Keep in mind that a home mortgage is a retail product, no different than any other purchase one might make. Buyers should specifically inform each prospective lender that they are shopping for the best deal and will make their decision only after carefully reviewing each mortgage offer. Thrown into the mix is choosing the type of loan. Conventional? FHA? VA? USDA? There are many variables and it is important to consider each type that is available in order to pick the one that will save the buyer the most amount of money in the long run.

Get excited about your home purchase but keep a businesslike attitude about your loan purchase. Your agent can help you make a good decision about an offer on a home but your agent is not your financial counselor.

Realtor.com

3 Questions a Realtor Needs to Help Buyers Answer

Those considering a home purchase today are inundated with conflicting advice and opinions from the people they know – and even people they don’t know. That’s where your Realtor comes in. Real estate trainer and negotiation expert Steve Harney shares smart responses to the top questions that buyers have today.

“If It’s possible that prices will continue to fall, why should I buy now?”

While price is the major concern for anyone selling a home, cost should be your primary concern as a buyer. That means you have to take into account what your monthly payment will be, considering not only the price of the home but also the interest rate of your mortgage. Waiting for prices to bottom out while rates are increasing can wind up costing more over the life of the mortgage. Fannie Mae, Freddie Mac, the National Association of Realtors, PMI, and the Mortgage Bankers Association are all projecting interest rates will increase over the next several quarters. It’s best that you meet with your mortgage professional to help you determine what an interest rate increase will cost you based on the expected size of your loan. That will help you make a decision.

When will I begin to see appreciation if I buy now?”

Appreciation varies by market, so it’s important to look closely at local pricing trends. Nationally, there are indications that values will begin to rise this year. NAR projects home prices to grow slightly (0.5 percent) in 2011. Macro Markets LLC, a financial technology company, recently asked more than 100 housing industry experts to project housing prices through 2015. The results – released in the company’s 2010 Home Price Expectation Survey – show that experts think prices will start increasing in the second half of 2011, reaching a cumulative appreciation of more than 10 percent between now and 2015.

Does buying really make better sense than renting?”

Forget the finances for a minute. Why did you even begin to consider purchasing a home? The Fannie Mae National Housing Survey shows that four of the biggest reasons people buy a home have nothing at all to do with money: They want a place to raise and educate their children, a place where their family will feel safe, to have plenty of living space, and to have control over the space. What nonfinancial benefits will your family gain from owning a home? Your realtors answers to that question should be the reason you decide to purchase or not. The bottom line is that the cost of a home will probably remain relatively unchanged even if prices continue to depreciate. Don’t allow money to be the only factor in making the decision that’s right for you.

Realtor Magazine 2011

Schooled in Home Buying

When looking to buy a house, most families put a stellar school district at the top of their list of non-negotiables. But be careful, says Yahoo! personal finance expert Laura Rowley. People pay more to live in high-ranked school districts, although the better value may actually be a less-expensive house in a lesser-ranked district. For one, ranking alone does not determine school quality. “When you compare schools, look at what different courses and enrichment are,” she advises, “not just test scores.” And she notes recent research showing that the difference between the best and next-best schools is negligible. Finally, remember that situations change. “Even if you do buy in the best district,” she says, “your kids may not end up there.” She cites recent cases in which so many parents flocked to particular districts, “ there’s now overcrowding-and rezoning,” Ultimately, she says, factoring in stress and time burdens of a mortgage that overstretches you. “you’re better off buying a house you can afford.”

From September 2010 issue of Better Homes and Gardens

Tax Credit for Military

Attention Military, Foreign Service and Intelligence Community

Its A Great Time To Buy A Home!

  • $8000 Tax Credit (for first time home buyers)
  • $6500 Tax Credit (for repeat home buyers)

Who Qualifies?

Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a primary residence home in the United States and qualify for the credit. The eligible taxpayer must enter into a buying contract by April 30, 2011 and the purchase must close by June 30, 2011.

It applies to any person (and, if married, the individuals spouse) who serves on qualified official extended duty service outside the US for at least 90 days during the period beginning after Dec. 31 2008 and ending before May 1, 2010.

Call for more information!

Robin Stallings

757-539-6600 or 757-621-9483

Southern Trust Mortgage, LLC is proud to be an Equal Opportunity Lender licensed in SC 288885/288857, MD 5104, DE 7342, GA 16579, WV-Broker MB-21645, AL MC-21137, DC MLB 2921. Southern Trust operates as a subsidiary of Middleburg Bank in VA, NC, PA (FDIC #6881) and WV-Lender.

Specializing in properties in South Hampton Roads, Virginia.