Getting Started - Buyer
How much house can you afford? Have you consulted a mortgage lender to determine the size of the mortgage you would qualify for? Before you start looking for a home you should ask yourself a few questions.
- Where do you want to live?
- Do you want to be close to schools, shopping, or work?
- What kind of house would you like (need)?
- Are you looking for a particular style?
- How many bedrooms and bathrooms do you want?
- Do you want a yard?
Here are a few tips to help you get organized:
- Pull a credit report on yourself and make sure the information is accurate. If you find any errors take steps to correct them immediately.
- Browse through real estate advertisements in the newspaper and Homes magazines. This will give you a good feel for the types of homes that are on the market and what they cost.
- Visit open houses on the weekend. It doesn’t cost anything to look, and looking at a few different homes might give you some ideas of things you’d like in a house but haven’t considered.
- Start saving money – you’ll need to have cash on hand for a down payment and closing costs.
- Don’t incur any additional debt. Pay down your credit cards – and don’t apply for any new ones. Don’t make any major purchases on credit – buy the furniture or car later.
What Type of Home Do You Want?
You will probably look at many homes before you make an offer on one. But even before you begin house hunting, it helps to have in mind the type of home ownership you want and the features that are most important to you.
Types of Home Ownership
Single family
This is the most popular type of home ownership. As the owner of a single family dwelling, you are totally responsible for paying the mortgage, property taxes, and any other carrying expenses, including all maintenance costs.
Condominium
As the owner of a condo, you own your living quarters (apartment, town home, or other unit) in the same way that a single-family homeowner does. You also own a share of the common space, such as gardens, parking areas and community facilities (e.g., pool, golf course, recreation hall, tennis court). You pay a monthly maintenance fee for the common expenses. The owners’ association, which you belong to, makes decisions about how the condo is run.
Co-operative
As the owner of a co-op, you buy a share or a number of shares in the corporation that owns and manages the building your apartment is in and the land it is on. If you took out a mortgage for the apartment, you are responsible for paying it off. You also pay a monthly maintenance fee for your part of co-op expenses, repairs, and taxes. You must be approved by the co-op board before you can purchase.
Condominiums and co-ops may be less expensive than single family homes, although association fees can up the cost. They may also be safe and provide a variety of services and extra features that single family homeowners often can’t afford. However, you must obey the by-laws and rules of the association. Also, these dwellings generally do not appreciate (increase) in real estate value as quickly as single family homes do.
Multi-family
This type of home has separate living quarters for two or more families to rent. The owner may be able to use rent from the other tenants to cover his or her own housing costs. These homes are often restricted to certain areas by zoning laws.
Getting Pre-approved for a Mortgage
Pre-approval is more formal than pre-qualification and it takes longer. To get pre-approved, you provide the same paperwork you will be asked for when you make a formal loan application. This will probably include your credit history, employment, and down payment funds, all of which will be verified.
Pre-approval guarantees your loan, but it is not a mortgage contract. You can’t get the mortgage until the lender can appraise the property and do a title search. (These steps happen after your offer to buy a house is accepted.) When you formally apply for a mortgage, certain facts may have to be re-checked. This depends on how much time has passed since the preapproval.
How much house can you afford?
Simply put, you can afford a house that costs as much as the largest monthly mortgage payment you qualify for.
A quick way to estimate the size of mortgage you qualify for is to take your gross monthly income (that’s before taxes and other deductions) and multiply it by .28. This works out to just over ¼ of your gross income.
Mortgage companies use something called qualifying ratios to determine how much they’ll lend you. Most mortgage companies use either a 28/36 ratio or a 25/33 ratio. The first number in each pair is the percentage of your gross income that the lender would consider acceptable as a monthly mortgage payment (i.e., if you make $3,000 per month, 28% of that is $840 per month).
The second number in each pair is used when all debt payments are considered, not just the mortgage (i.e., if you make $3,000 per month, but also have a $250 a month car payment, 36% of $3,000 is $1,080 minus the $250 car payment equals $830).
As you can see, in this example the numbers work out to be almost the same. Obviously if you have more debt you would qualify for less. Click on our Financial Tools section to help you start figuring out how much you'll qualify for.
Why you should work with a REALTOR®
- Working with a professional Veronica Lynch LLC Sales Representative to buy your home is a good idea for several reasons:
- They will analyze your financial situation to help you determine how much
you can afford.
- They are familiar with the process of buying a home and can explain things to you.
- They can easily access information on all properties listed for sale by REALTOR®s in your area.
- They can set up appointments for you to see homes that interest you.
- They will help you complete all the necessary paperwork when it comes time to make an offer.
- They will help you arrange financing.
- They will be there at closing to answer your questions and make sure everything runs smoothly.
- Talk to your Veronica W. Lynch agent about NY State Agency Disclosure.
New York’s Real Property Law requires that brokers and sales persons give prospective sellers and buyers (or landlord and tenants) a disclosure
statement that describes the role of seller’s agent, buyer’s agent and dual
agent. The buyer or seller must sign an acknowledgement that certifies that
he or she has read the disclosure form and understands the role of the
particular agent in the transaction.
Choosing a REALTOR®
- Searching for your dream home can be a time consuming experience. Working with a professional REALTOR® will make the process much more efficient.
- Since most people spend a fair amount of time with their REALTOR®, it's important to choose a REALTOR® you feel comfortable with and one who is responsive to your needs. The following questions will help you decide if a particular REALTOR® is right for you.
- Does he/she return your phone calls?
- Does he/she ask you questions to determine what you want/need in a house?
- Does he/she perform a financial analysis to help you determine how much you can afford?
- Does he/she explain things clearly?
- Does he/she suggest financing methods?
- Does he/she seem knowledgeable about the community?
- Do you feel comfortable spending time with them?
- If the answer to most of these questions is "yes" - you've found yourself a great REALTOR®.
- If you find yourself answering "no" to many of these questions, or to any
individual questions that are important to you, you should keep looking
until you find a REALTOR® you feel comfortable with.
Making and Offer
Once you decide on a house you want your next step is to negotiate about what to include in the offer. In New York State your Veronica W. Lynch agent can help you determine what to say or even say it for you.
If possible, ask your Veronica W. Lynch sales representative to let you see a blank copy of a purchase agreement when you first begin looking at homes. That way, you will have time to think about what you want your agreement to cover.
Capital Region Multiple Listing Service
PURCHASE OFFER PROCEDURES AND RIGHTS OF BUYERS AND SELLERS
Prospective buyers and sellers should be aware of the following offers to purchase real property:
- Purchase offers and acceptances involve contract rights of the buyer and seller.
- Verbal communications do not create an enforceable obligation on the part of the buyer to purchase or on the part of the seller to sell.
- Until all material terms of an offer to purchase have been set forth in writing and signed by the proposed buyer it is not binding on the buyer, and unless and until it is countersigned by the seller, it is not binding on both parties.
- A seller is not required to accept any offer regardless of its terms, including a “full price” offer.
- A seller is not obligated to offer a prospective buyer a “right of first refusal” or the opportunity to improve his/her offer. Although this could occur in negotiations, it is not required.
- An offer to purchase, when signed by all parties, becomes a binding contract according to its terms, subject to any and all contingencies contained therein.
- If contract documents are not fully understood, we recommend consulting an attorney before signing.
Appraisal and Inspection Time!
After the offer is accepted, you apply for a mortgage.
The appraisal: an evaluation of the property’s value. The appraiser visits the house and reviews recent selling prices of similar homes in the area. You will probably pay the appraisal fee at closing or before.
The structural inspection: an evaluation of the property to find out if there are any problems with it that could change its value. The inspection also helps you decide if there are any items that you want the seller to repair before the final contract is signed. The inspector is expected to carefully examine the entire house, inside and out. He or she writes up a detailed report that indicates any problems found.
The buyer generally hires the inspector. Because the inspector is an important member of your home-buying team, you want someone who is trustworthy and experienced. Referrals may come from recent homebuyers, your Realtor and/or your lender. Review a sample of each candidate’s previous reports for thoroughness. Be sure that the inspector you choose lets you go to the inspection. Walking through the house together will give you a hands-on feel for what is right and wrong with it. A good inspector will check the entire house from top to bottom for:
- General condition of the property
- Electrical system
- Heating and cooling systems
- Exterior (outside) structure, possible water damage, garage doors, roof and chimney
- Interior (inside) structure; insulation, foundation, windows and doors
Pest control
Pest Inspection: Most areas require a pest inspection. If pests are found, you must have proof that the house has been treated and that any pest damage has been repaired. This is usually the seller’s responsibility.
Other inspections could include:
- Radon
- Lead paint (if house was built prior to 1978)
- Septic (if applicable)
- Water (if applicable)
- Government approvals
For a list of ASHI inspectors, please go to our Real Estate Related link. |