How do we determine how much we can afford to pay for a home?
In order to determine how much you can afford, we need to understand debt to income ratios.
First, we must determine what your gross annual income is and divide that income by 12. (12 months)
Second, we must determine your long term debt. For example: home mortgage (principal & interest), taxes & insurance (T & I), school loan, car loan, credit card debt, etc. and calculate the monthly payments.
Third, the debt to income ratio is established by dividing the monthly debt by the monthly income. The debt to income ratio should, in most cases not exceed 35%.
Forth, if the debt to income ratio is 35% or less and your credit rating is decent, there is a good chance you will be able to get approved for a mortgage loan.
How can I determine my housing needs before I begin the search?
Your home should fit the way you live, with spaces and features that appeal to the entire family. Before you begin looking at homes, make a list of your priorities: location, size, lot, amenities, etc. Establish a set of minimum requirements and a “wish list”. Minimum requirements are things that a house must have for you to consider it, while a “wish list” covers things that you’d like to have but aren’t essential.
What should I look for when walking through a home?
In addition to comparing the home to your minimum requirement & wish lists, consider the following:
• Is there enough room for both the present & the future?
• Are there enough bedrooms and bathrooms?
• Is the house structurally sound?
• Do the mechanical systems and appliances work?
• Is the yard big enough?
• Do you like the floor plan?
• Will your furniture fit in the space?
• Is there enough storage space?
• Does anything need to be repaired or replaced?
• Imagine the home in good and bad weather and in each season. Will you be happy with it year round?
• Take your time and think carefully about each house you see. Ask your real estate agent to point out the pros and cons of each home from a professional standpoint.
How can I keep track of all the homes I see?
If possible, take photographs of each house: the outside, the yard, the major rooms, and extra features that you like or ones you see as potential problems. And don’t hesitate to go back for a second look.
Is a private home inspection worth the money?
It absolutely is! For most people, a home is the largest investment they will ever make and protecting that investment by spending a few hundred dollars is well worth it. An inspector checks the safety of your potential home. Home inspectors focus especially on the structure, construction, and mechanical systems of the house and will provide you with a report of any repairs that need to be take care of, suggestions on how to maintain your home, and most importantly, will provide you with peace of mind. Some sellers will allow you to make the sale of the home contingent upon completion of a satisfactory home inspection. In this case, the seller will either make the proper repairs or compensate you for the repairs that need to be made.
Please be aware that the purpose of a home inspection is to point out repairs that can affect the safety and resale value of your home, not cosmetic blemishes.
Be sure to choose a home inspector wisely. Be sure to ask questions and find out how many years they have been in the business. Talk to your family, friends, and realtor to see if they can recommend one to you.
Do I need to be there for the inspection?
It’s not required, but it is a good idea. Following the inspection, the home inspector will be able to answer questions about the report and any problem areas. This is also a good opportunity to hear an objective opinion about the home you’d like to purchase and it is a good time to ask general maintenance questions.
What should I look out for during the final walk-through?
This will likely be the first opportunity to examine the house without furniture, giving you a clear view of everything. Check the walls and ceilings carefully. Also check any work the seller agreed to do in response to an inspection. If you find that the work has not been done, it should be brought up prior to closing.
How can I protect my family from lead in the home?
If the house you are considering was built before 1978 and you have children under the age of seven, you may want to have an inspection for lead-based paint. It is important to know that lead flakes from paint can be present in both the home and in the soil surrounding the house. Peeling, chipping, chalking, or cracking lead-based paint is a hazard and needs immediate attention. Common problem areas are windows and window sills, doors and door frames, stairs, railings, banisters, porches and fences. The problem can be fixed temporarily by repairing damaged paint surfaces or planted grass over the affected soil. Hiring a lead abatement contractor to remove paint chips and seal damaged areas will fix the problem permanently.
What is radon?
Radon is a radioactive gas released from the normal decay of uranium in rocks and soil. It is an invisible, odorless, tasteless gas that seeps up through the ground and diffuses into the air. In a few areas, depending on local geology, radon dissolves into ground water and can be released into the air when the water is used. Radon gas usually exists at very low levels outdoors.
Radon can enter homes through cracks in floors, walls, or foundations, and collect indoors. It can also be released from building materials, or from water obtained from wells that contain radon. Radon levels can be higher in homes that are well insulated, tightly sealed, and/or built on uranium-rich soil. Because of their closeness to the ground, basement and first floors typically have the highest radon levels.
Any home can have a radon problem. This means new and old homes, well-sealed and drafty homes, and homes with or without basements. In fact, you and your family are most likely to get your greatest radiation exposure at home. That is where you spend most of your time.
Nearly 1 out of every 15 homes in the United States is estimated to have an elevated radon level (4 pCi/L or more).
How does radon cause cancer?
Radon decays quickly, giving off tiny radioactive particles. When inhaled, these radioactive particles can damage the cells that line the lung. Long-term exposure to radon can lead to lung cancer, the only cancer proven to be associated with inhaling radon. Cigarette smoking is the most common cause of lung cancer. Radon represents a far smaller risk for this disease, but it is the second leading cause of lung cancer in the United States. Scientists estimate that approximately 15,000 to 22,000 lung cancer deaths per year are related to radon.
Testing is the only way to know if you and your family are at risk from radon. EPA and the Surgeon General recommend testing all homes below the third floor for radon.
What are some tips on negotiation?
The more you know about a seller’s motivation, the stronger a negotiating position you are in. For example, seller who must move quickly due to a job transfer may be amenable to a lower price with a speedy escrow. Other so-called “motivated sellers” include people going through a divorce or who have already purchased another home.
Remember, that the listing price is what the seller would like to receive but is not necessarily what they will settle for. Before making an offer, check the recent sales prices of comparable homes in the neighborhood to see how the seller’s asking price stacks up.
Some experts discourage making deliberate low-ball offers. While such an offer can be presented, it can also sour the sale and discourage the seller from negotiating at all.
What makes up closing costs?
Closing costs are usually made up of the following:
• Attorney’s or escrow fees (yours and your lender’s if applicable)
• Property taxes (to cover the tax period to date)
• Interest (paid from date of closing to 30 days before the first monthly payment)
• Loan origination fee (covers lender’s administrative cost)
• Recording fees
• Survey fee
• First premium of mortgage insurance (if applicable)
• Title insurance (yours and lender’s)
• Loan discount points
• First payment to escrow account for future real estate taxes and insurance
Paid receipt for homeowner’s insurance policy (and fire and flood insurance if applicable)
• Any documentation preparation fees