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The insider’s guide for homebuyers

The insider’s guidefor homebuyers

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The insider’s guide for homebuyers

1. Doing your preparation .............................................................................. 3

2. Find out how much you can afford ............................................................. 5

3. Advice for smart searching on the go ....................................................... 7

4. Find the best REALTOR® ............................................................................... 8

5. Touring homes and making an offer ....................................................... . 9

6. Preparing for your move . ........................................................................ . 11

Home search worksheet ......................................................................... 12-13

Loan checklist ................................................................................................ 14

Contents

REALTOR® and the realtor.com® name and logo are trademarks of the NATIONAL ASSOCIATION OF REALTORS® and are used with its permission. These and all other trademarks used in this work are the property of their respective owners. The information in this work is believed reliable but is not warranted or guaranteed, is general in nature and not based on knowledge of your specific circumstances, and should be independently verified in concert with your tax, technical, legal, real estate, investment, accounting and/or other profes-sional advisors prior to use. Individual results may vary from testimonials.

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The insider’s guide for homebuyers

If you’re like most people, buying a home represents your single biggest investment.

As such, the home buying process can be

one of the most exciting - but sometimes

also stressful - experiences you ever go

through. This may be true whether you’ve bought many homes or

you’re looking to buy your first and whether you’re in the market

for a new primary residence, an investment property or that perfect

vacation getaway. The end goal is to find a property that fits both

your emotional and financial requirements.

Right now the real estate market offers plenty of great opportunities

and there are many factors to consider and choices to make.

When buying, it’s crucial for you to have all the available resources

necessary to make a well-informed decision.

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The insider’s guide for homebuyers

Start with your list of must-have’s. What do you need and what can you not live without?

The planning stage is very important to the

process of buying a home, especially for first-

time homebuyers. Some people start searching

immediately, find a home they want and then

scramble to get their affairs in order. Such

urgency can sometimes lead to poor decision

making. Given that buying a home is such a

big step, it’s important for you to educate and

prepare yourself in advance. This means clearly

determining why you’re buying, what your long

term plans are, and what kind of home you’re

looking for.

Because buying and financing a home are so

closely related, it also means examining your

current financial situation and projecting how

much you can afford. Although you can buy

a home with a low down payment, the more

you put down, the lower your mortgage will

be. Also there are other costs, including home

inspections and taxes. Plan to budget around

2-4% of the total value of your home to be

able to handle these expenses with ease. Also

you will need to make sure you have enough

in your savings to pay for any repairs and

necessary upkeep.

Some people make the mistake of using all

their savings to fund their home purchase but

this can leave homeowners unprepared in case

of a sudden illness, unemployment, or other

emergency. It is best to have enough money

readily available that you could survive for at

least six months without your regular paycheck.

Are you planning a family, getting married, or

going back to school? All of these changes will

impact both your lifestyle and your financial

future. It’s important that the home you choose

be the right size for you not just now but over

the next few years.

Choose the location of your new home carefully

Many studies have said that having a short

commute is a key to happiness. When choosing

between more space and a longer commute or

a smaller home and a shorter commute, many

people choose to endure the long commute.

While this may be bearable in the short term

it can add stress to your life and diminish the

amount of time you actually get to enjoy your

home. Another consideration is employment

1. Doing your preparation

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The insider’s guide for homebuyers

prospects in the area. Even if your job is very

secure, it’s always a good idea to be aware of

what other opportunities in your industry are

available nearby. In order get the most out of

your investment you will likely want to make

sure that you are going to stay put for a few

years. If you have plans to move within a year

or so you may want to wait until then. You don’t

want to be in the position of needing to move

and having to sell your home quickly.

This guide includes a Home search worksheet

on page 12. If you are making this purchase

with another person it may make sense to

each fill out your lists separately and then

come together to compare notes. That way

you each get to see each other’s true feelings.

Make sure that your wishes are aligned with

reality. Also remember that the house that you

are imagining while filling out this worksheet

may not match with what is available in the

area. Location is still the most important factor

when choosing the home that is both right

for you and has good resale potential. Be

ready to factor in the proximity to major roads,

school districting, crime levels, and other

considerations once you are out shopping.

1. Doing your preparation

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The insider’s guide for homebuyers

2. Find out how much you can afford

It is recommended that you get pre-qualified for a loan before you start viewing homes with the serious intention of buying.

If you don’t have this in place you may end up losing out on a home if you are in a multiple offer situation. Home sellers give precedence to those who demonstrate that they are able to pay for the home.

The benefits of pre-qualification include:

• You’ll have information about what you can

afford and be able to plan accordingly

• As a qualified, motivated buyer you’ll be taken

more seriously when you make an offer on a

home

• Lenders can tell you whether you qualify for any

special programs that will enable you to afford

a better home (particularly if you’re a first-time

buyer)

The pre-approval process can sometimes involve

meeting with a lender and authorizing them to

examine your current financial situation and credit

history. On the basis of this examination the lender

will provide you with a document that details how

much you can borrow to buy a home. Before you

begin this process it is important to have all of your

financial information readily available.

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The insider’s guide for homebuyers

2. Find out how much you can afford

Gather your information regarding your income and

savings. This guide includes a Loan checklist on

page 14 that should help you get your documents

in order. Also you may want to run your credit score

ahead of time just to make sure your potential lenders

don’t uncover any surprises you aren’t aware of.

Lenders are more cautious than they were a few years

ago and are making sure that all potential mortgage

holders are very carefully screened.

Interest rates remain low so it is a great time to get a

mortgage and it is very important to make sure that all

your financial affairs are in order. If you previously sold

a short sale you may need to wait at least two years

before being able to get another mortgage.

Just as many people these days begin their home

search online, they also head to the internet to see

what different lenders offer. We recommend that home

buyers shop around for mortgage quotes. You can

get free, updated mortgage quotes from hundreds of

lenders at www.realtor.com/home-finance

Another way to prepare for what you will face is to go

through a blank purchase contract ahead of time so

you’ll know what decisions you’ll face when you make

an offer.

Check local market rateswww.realtor.com/home-finance

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The insider’s guide for homebuyers

3. Advice for smart searching on the go

Download the realtor.com® app for your iPhone®, iPad® or AndroidTM and get ready to search like a pro while driving around the neighborhood you love.

Realtor.com® has the largest and most accurate database of homes for sale from hundreds of MLS organizations nationwide, with most listings updated every 15 minutes. Keep it on your home screen for easy access at all times.

Explore the area you are interested in.

You can draw your search on the screen

or put in your parameters to see what’s

available in your price range. The app will

make sure you see all the homes on the

market. Zoom in on the map results to see

the most accurate status of the listings,

such as just taken off the market, recently

sold or price-reduced.

Save your search.

As you begin to zero in on that perfect

home that has everything you are looking

for, save your search so that you are

always kept up to date on everything

going on with the home.

Set up alerts to go right to your device.

You can set up price change notifications

for your saved listings right on your

mobile device so you can act quickly on

the latest information.

Stay up-to-date with real time price change alerts on the realtor.com® mobile appwww.realtor.com/mobile

Search homes by schools.

Schools are a top consideration for

many home buyers. You can search for

homes based on school and district

assignment boundaries.

Keep good notes.

Touring multiple homes is a confusing

experience for most people. Rather

than relying on memory, you can rate

and make notes about the home you

are interested in right in the app - that

way they are always with you.

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The insider’s guide for homebuyers

4. Find the best REALTOR®

In addition, you should ideally view homes with the help of an experienced and eagle-eyed REALTOR® who’ll notice things you might miss, provide expert analysis, and act as an impartial sounding board.

Buying real estate is a complex matter at the best of times, given that there are so many factors to consider, and no two homes are transactions alike.

Given that there are so many factors to

consider, and no two homes or transactions

are alike. However, with all the unique

opportunities and potential pitfalls of the

current market, it’s even more important

for you to contact a REALTOR® once you’ve

definitely decided to buy.

In choosing a REALTOR® to guide you through

the property search, financing, negotiation

and transaction processes, you should

consider their local market knowledge,

experience and track record.

In making your decision to work with an

agent, there are certain questions you should

ask when evaluating a potential agent.

• Ask whether the agent is a REALTOR®. You will

also want to make sure the agent has an active

real estate license in good standing. To find

this information, you can check with your

state’s governing agency.

• You may also want to ask if real estate is

their full-time career and what real estate

designations they hold. With realtor.com®

HyperSocial™ tools you can login with

Facebook and see which agents you are

connected to through friends or mutual

interests. You can also read recommendations

and see badges which denote designations

and specific trainings.

Search more than 1 Million REALTORS® nationwide. www.realtor.com/realestateagents

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The insider’s guide for homebuyers

5. Touring homes and making an offer

As you narrow down your home search, excitement begins to build. Don’t make a hasty decision, especially if you feel yourself becoming guided by emotion.

Selecting a home takes time, thought and analysis. You should carefully weigh the pros and cons of each house you like. Things to keep in mind include:

• Ask about other monthly expenses including

utilities and condo or home owner association

fees.

• Inspect bathrooms and kitchens carefully

as these are the most expensive rooms

to renovate. Calculate your budget for

renovations before deciding whether this

house is the right one for you.

Consider the integrity of the structure. Are

there cracks in the walls, improperly hanging

doors or mold? These may indicate serious

flaws in the structure of the home. Check all

the systems in the house, including plumbing,

heating and air conditioning.

Look at the electrical outlets for clues to

the condition of the house’s wiring. Old

fashioned outlets indicate old wiring that

may need to be updated. Modern homes,

with televisions, computers and a plethora

of kitchen appliances, require much more

electricity than older homes.

Make sure to have sufficient closet space

for your clothes, kitchen cabinets for your

dishes and a shed or garage big enough to

house your vehicles and other items.

Think about the windows. Do you enjoy the

sun streaming in the wide windows or do

you prefer your privacy? Is there sufficient

lighting?

Drive around your selected neighborhood

at different times of the day to get a feel

for the area. Also consider transportation

factors.

Does this neighborhood have convenient

access to public transportation? How far

will you need to commute to work and what

does rush hour look like?

• The general location of the neighborhood

is also an important thing to look for

when buying a house. Take a drive in the

neighboring areas. Is the neighborhood

close to an airport? Does the quality of the

neighborhood drastically drop a few blocks

over?

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The insider’s guide for homebuyers

Remain in close contact with your agent.

This is extremely important if you’re in a

strong seller’s market. Many markets are

experiencing low inventory, especially at the

starter home level, and homes that are priced

right go fast. You want a good agent who will

alert you of new listings and who will show

you houses as soon as they’re listed.

If you find a house you like, be ready to offer

a competitive bid.

You may be competing against other offers.

Your REALTOR® can advise you on what to

offer and can also help you present your offer

in the most appealing light. Make the offer

contingent upon the findings of a professional

home inspection because if the inspector

finds anything major you will want to be able

to renegotiate or reconsider the purchase.

A buyer’s agent will negotiate on your behalf.

Some compromise may be necessary. Rather

than approaching negotiations from an

adversarial winner-take-all perspective,

focus on your top priorities and don’t

let your emotions overrule your better

judgment. Successful REALTORS® tend to be

experienced negotiators. They’ve seen what

works and what doesn’t in countless real

estate transactions, and they’ve established

a track record of bringing buyers and sellers

together.

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The insider’s guide for homebuyers

6. Preparing for your move

Moving can be stressful but careful planning makes it easier.

Make sure to plan your move in advance rather than leaving it to the last minute. Here are some tips for making the move to your new home as smooth as possible:

• Use moving as an opportunity to go

through your belongings and cull out

what you may not have used in a long

time. The lighter the load the more money

you will save on your move and the less

clutter you will bring to your new home.

• Label boxes with both the details of what

they contain and the room they belong

in. Pack rooms individually.

• Pack heavy items in smaller boxes and

lighter items in larger boxes.

• Personal financial information and

important papers such as birth

certificates, wills, and passports should

be taken with you or shipped to you

by family or a friend after your move-

in. Identity theft is one reason, but so

is the difficulty in replacing important

documents, recreating bank statements

or losing passports.

• Use plastic storage bins for items you

think will be stored in the attic, garage

or closet at your next home. This will

save you on buying extra boxes and

unpacking them when you get to your new

home. For stuffed animals, towels and other

soft items, consider using large trash bags,

they are much cheaper than moving boxes.

• Pack essentials such as sheets, utensils and

plates, and personal care items for the first

few nights separately so you aren’t digging

through boxes to find them. Make sure this

box is packed last so it will be unloaded first.

You can download a move planner at Moving.com

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The insider’s guide for homebuyers

Home search worksheet

Main RequirementsPrice range: _____________________ Lot size: _______________________Area: ____________________________ Square footage: ________________Detached/Attached: ______________ Number of bedrooms: __________House style(s): ___________________ Number of bathrooms: _________Age of property: _________________ Garage: _______________________

Specific Features(e.g., waterfront, view, large lot, pool, fireplace, basement, garage size, built-in vacuum, distance to school, additional room preferences, etc.):

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Additional Comments_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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The insider’s guide for homebuyers

Home search worksheet

Main RequirementsPrice range: _____________________ Lot size: _______________________Area: ____________________________ Square footage: ________________Detached/Attached: ______________ Number of bedrooms: __________House style(s): ___________________ Number of bathrooms: _________Age of property: _________________ Garage: _______________________

Specific Features(e.g., waterfront, view, large lot, pool, fireplace, basement, garage size, built-in vacuum, distance to school, additional room preferences, etc.):

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Additional Comments_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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The insider’s guide for homebuyers

Loan checklist

Here are some, but not all, of the documents your lender will ask for when you start the loan

process. Your lender should provide the exact list of documents needed but to ensure a

smooth loan application, it pays to get your documentation in order before you apply:

___ 1. W-2 forms for each person on the loan. You will also want to provide contact

information to the person within your company who can verify your income.

___ 2. Copy of the fully executed sales contract. Include contact information of both the buyer

and seller’s agent.

___ 3. Copy of one month’s worth of pay stubs. If you are self-employed, you’ll need to show

profit and loss statements for the current year.

___ 4. Copy of the last 2 bank statements for every bank account, including retirement

accounts. Lenders may require up to 6 months of history if you are using gift money for

the down payment.

___ 5. Copy of complete federal tax forms for the last 2 or 3 years. Primarily required of self-

employed individuals or those who are claiming rental income.

___ 6. If a gift is involved, such as funds from family members, the lender will need proof the

gift giver has the funds and a gift letter affidavit indicating the funds are a gift and do

not have to be repaid. Also needed is a copy of the check, the deposit receipt and a

bank statement to verify the transaction.

___ 7. List of your addresses in the last two years.

___ 8. Proof of identity. Picture ID and a copy of your social security card.

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