Thursday, November 3, 2011

Five Tips for Potential Home Buyers

With mortgage rates at their lowest point in 60 years, there has never beena more perfect time to purchase a home, or at least refinance into a plan with lower interest rates.

Real estate everywhere is becoming more affordable, and potential buyers are taking notice and doing their homework to ensure they get the best rates on a home.

Whether you’re purchasing down in order to free up money, or purchasing up to meet the needs of your growing family, here are five tips to assure that your next move will be your best move.

Check the home for illegal additions.
There has been a recent crackdown on illegal additions to homes in revenue-starved areas.  This unpermitted work typically comes in the forms of room additions, garage conversions, and kitchen remodels.  However, the repercussions for the unpermitted work will fall upon the current homeowner and not the one who made the changes.  Consequently, if your home inspector, appraiser, or agent does not catch the unpermitted work or you (the buyer) purchase inadvertently, you will be responsible for bringing the unpermitted work up to code.

Don’t let a foreclosure defer your American Dream.
Please believe you are not the only person with a foreclosure on your record who is attempting to purchase a home. In most cases, a foreclosure won’t keep you from owning another home for as long as you may have feared.  While foreclosures can remain on your record for up to seven years, Fannie Mae and Freddie Mac (government-backed mortgage guarantors) and the Federal Housing Administration usually impose a minimum of three years before they will back another home loan (as long as your foreclosure was due to illness, relocation, or job loss).  You may be asked to pay higher interest rates or for a larger down payment (as much as 20 percent) as a consequence of your foreclosure.

Search around before you make a decision.
Don’t put all your eggs into one basket, search around before you make a final purchase decision.  Reports from realtors state only one-fifth of short sales are successful.  Also, another potential buyer with a larger budget can leave buyers out to dry in the 11th hour.  Target several homes so you will have options if a deal falls apart.  It takes the approval of many people to make a home purchase (agents, lawyers, brokers, appraisers, and inspectors), so a lot can go wrong.

Check the area of choice for lifestyle advantages.
Check neighborhood reports that include population, average age, households with children and more. All you have to do is type in your prospective Zip code and you can find information on demographics, weather, workforce, education and crime..
You can use the report to see how your personal lifestyle information fits in with the community. Do you have kids? Will you be the youngest or oldest in the neighborhood? Is there another neighborhood you’re considering with a lower burglary rate?

Hire your own agent, inspector, and appraiser.
In the long run it’s not worth saving a few thousand dollars to share the staff the seller is paying for because that staff most likely has the seller’s best interest in mind.  Likewise, don’t feel obligated to hire real estate professionals referred to you by your agent.  One of the most important purchase decisions of your life should not be blurred by accommodating a friend of a friend.  Carefully interview your inspectors and appraiser and make sure they have been practicing for at least five years and also have the appropriate state certification or state license.

Current market conditions are sure to provide you with low interest rates so read the checklist above and have a happy house hunting.

The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.

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