What you need to know about buying a home!
Today’s market can be very complex. Although housing prices have started to rebound and are expected to continue rising in 2013-2014 prices still remain below their peak before the housing crash. Mortgage rates however are steadily increasing and inventory levels are beginning to decline. Now is the time to jump in to the real estate market, here are some tips to help you along the way!
1. Know the market. Spartanburg has seen 3 types of sellers:
Traditional Sales – sellers with equity in their homes who are looking to close escrow within 30-45 days. When writing an on a traditional sale, negotiations are conducted with the seller directly through the buyers agent and the seller’s agent.
Short Sales – These are sellers who owe more than they can sell their home for and therefore have to negotiate with their bank to receive a lesser amount. Typically the negotiation process with the bank can take upward to 4-6 months to get an offer approved and the price is subject to change during this time. There is also a chance that he bank will reject the sellers request for a short sale and instead foreclose on it.
Foreclosures – These are homes that have been foreclosed on and taken back by the bank also known as REO’s (Real Estate Owned) or “bank owned”. Like the traditional sale, the bank will want to close escrow within 30-45 days upon accepting your offer. The banks are motivated to sell these homes quickly and will typically price them slightly below market value to get multiple offers and create a bidding war to drive the price back up. Even though you may pay over the asking price for a foreclosed home, these can still be a great value.
2. Do the math! Put together a plan to determine if you can really afford to buy. Just because it’s a good time to purchase a home doesn’t mean it’s a good time for YOU. Understanding how much home you can afford is vital to achieving your dream.
3. Save 20% for a down payment. Although the Federal Housing Administration allows less and USDA offers Rural Housing no money down loans in some areas of Spartanburg County, it’s important to save at least 20% for a down payment. Keep your down payment fund in cash or cash equivalent accounts that are easily accessible.
4. Be Informed! Pretty pictures and a nicely manicured neighborhood don’t always tell the true value of the home you are about to purchase. Ask your Realtor for neighborhood comparisons and for the most recent list (6 months) of active and sold homes. Your realtor can help you to understand the data so that you can make an intelligent offer.
5. Get a copy of your credit report. If you haven’t done so in a while, simply go to www.annualcreditreport.com and request your free copy. It’s important that you correct any errors on the report before you start the mortgage process.
6. Get pre-approved for a mortgage. Pre-approval is a good gut check on your price range for a home. You’ll need to be prepared for your visit with a lender so make sure our paperwork is in good order and fair warning — there may be requests for even more documents as you move toward closing. For more information, go to Preparing for the Lender and Lender Recommendations.
7. Contact Me! Buying a home is complex and so much can go wrong. It is important that you are represented by a professional who is looking out for your best interest. The most important qualities in brokers are honesty, experience, good connections with other agents, and good referrals from buyers like you. Remember that most agents represent the seller, not the buyer. At the very least interview agents who you feel comfortable with and who you feel you can trust to represent your best interests!
8. Schedule a home inspection. So, you’ve found your dream house? Maybe, but unless you have the premises inspected, you might be buying a new roof in a couple of years or worse, you could be living with Mold! Don’t be alarmed if a problem arises during the inspection; it can often be addressed with a simple request of the seller to fix the problem or with adjustment in price. It’s imperative to protect yourself.
9. Start with a fair offer. Now that you are informed as to the true values of the properties in the area you are looking to make your purchase, the offer should be based on similar houses sold in the neighborhood in the past six months. Again, your agent will help you with this process. The offer should include the price you’re willing to pay for the house, your financing terms and any contingencies you place on the terms of the sale.
10. Review your HUD Statement BEFORE closing. The HUD is a government document providing the basic details about the involved parties and the financial terms therein. Your closing attorney will provide you with a preliminary copy and will be glad to discuss it with you and prior to the closing. Since mistakes do occur, it is vital that you review the statement and correct any errors in advance.