FAQ

• How much should this house cost me? Can I afford it? Answering this question not only requires you to consider your income but also the amount of your current debt. In addition it is equally important that you consider what sort of life style you intend to live after you buy your home. In the glee and excitement of the purchase, the life style question is one that many individuals and couples overlook finding down the road that they begin to resent how their property debt rules their leisure activities. That said, one good approximation that many homebuyers will follow would be to buy a house costing between 1½ to 2½ times their annual income. . For example, a homebuyer or couple earning $100,000 per year would purchase a house costing between $150,000 and $250,000. Never the less, your monthly mortgage expense shouldn't exceed 28%-29% of your monthly gross income.

• Must I really find my own Agent before I buy? Before I look? No. Should you find your own Agent? Perhaps, and for a few reasons. First, it costs the buyer nothing to have their own Agent because in most normal buying situations the buyer does not pay the commission, so the services of your Agent (aka: Buyer's Agent), who is working for you, are at the expense of the seller. Secondly, without an Agent, you may be missing valuable representation of your interests and possibly evening giving up legal rights. You may want to read the page "What my clients know" if you've not done so already. In short, the seller's agent is working for them and has legal, ethical, and financial motivations to ensure his client (the seller) gets as much as possible from the buyer while giving up as little as possible. Many of my new clients are quite shocked to learn from me how exposed and unrepresented they could be leaving themselves, or worse actually "signing away" legal rights, when house hunting without their own Agent.

• How do I know I'm getting the best mortgage deal? Well, how would you purchase any large ticket item? You would "Compare." That's right, a mortgage is just another product. And like any other product there is margin, commissions, and more, that can be (and are) adjusted based on a number of issues - competition being one of them. It's a numbers game, like most businesses, some wish to do a few deals to make a months salary while some wish to do many deals to make a salary - of course those doing the many deals often find that they get more referrals and therefore find themselves ahead of the rest. You can check your local newspapers Real Estate section, often on the weekends, for a list of current mortgage rates.

• When should I get pre-approved? Now! When entering the home buying market, if you're serious, being pre-approved gives you the power to shop with cash. Some of the best deals won't wait for you to get pre-approved, not to mention that most sellers won't take an aggressive offer as a serious offer if you're not ready to buy now. When you do get pre-approved do so via multiple sources and get them all done within one week of each other.

• You offered me a cash back rebate that seems to be a substantial amount of your Agency commission - why? I've realized the power and ability the Internet has given to the homebuyer. In many cases, this newly found ability shifts some of my workload to my client. So, much like the mortgage broker example I describe I believe my clients will more likely share their home buying experience with their friends and contacts. And truthfully, I see no harm in rewarding my clients for their efforts. So, enjoy your rebate!

• Will I pay tax on your cash back rebate? No.

• As a First Time Buyer what programs exist in my area? There are many different programs depending on the location of the house you wish to purchase, your income status, and the mortgagee (the lender) you select. To learn more about the requirements and benefits in your area we can talk more when we connect OR you can also contact your local housing authority.

• When I find my dream home how much should I offer? First - remember that a house is not a home until your family makes it such! Now,,, the question about "what to offer" is a very popular one and there is no single answer. The fact is there are many things that will (or should) play a role in determining this number, some based on experience and some not. On my tools page you will find on line data that will help you understand the current competitive market conditions for a type of house and area. But, the most important point to keep in mind regarding this issue is that it is a topic you should only discuss with those working for you. (Expressly, this eliminates the selling Agent.)

• I was told I could save big with foreclosures and short sales. Can you save some money? Some times. Big money? On occasion. Keep in mind though that in most cases these properties will require work so gauge your "Handy Man Level" because if you plan to hire contractors to execute much of the needed work you will often times meet or exceed the cost of purchasing a similar property with "move in ready" status. Additionally, be forewarned that these deals normally do not close in anywhere near a timely fashion. So, if you have time, patients, and you happen to be quite handy foreclosures and short sales may be your path to locating the next diamond in the rough.

• A home inspection is costly, should I spend the money? In my opinion, this is not even an option. Hiring your own professional, licensed, home inspector (usually around $200 to $500) could result in the best small investment you'll ever make into your home. Your home inspector is trained to do more than just seek out problems (which alone is well worth the fee), they will also often offer tips to keep your home in tip-top condition both with regards to functionality and efficiency. If remodeling is the near future they may also give you a heads up on how the structure will support your vision. So be present when your home inspector arrives and allow them to talk you through their investigative journey, then be sure to ask lots of questions. Remember, he (or she) is working for you! With that said, it should be evident that you should never rely on the data of a home inspector hired by the seller. 

• When should get a real estate attorney involved? As soon as possible! The earlier in the process your attorney gets involved the better protection they can offer you and the easier it will make the entire process for you. If you're buying a home, feel free to ask me how to get your attorney involved as early as the offer letter stage for the same rate as if you waited, as do many buyers, until after the Purchase and Sale Agreement is signed. Legal council is of the utmost importance, so why not have them on your team earlier rather than later.

• Do I need to get an appraisal? Firstly, an appraisal is simply an opinion of the home's value. It is based mostly on data points such size, type, condition, age, and location. These data points are then compared to the most current home sales that have occurred in the nearby area of similarly styled homes. At some point an appraisal will likely be done by the lender as nearly every lender requires some form of appraisal before they will approve a loan - to be more confident that they are not over-lending.

This Q&A was designed to just scratches the surface of this topic and there is of course much more additional information I share with all my clients in an effort to prepare them for the home buying process, so as always, I'm am open to hearing from you so please feel free to contact me sooner rather than later.