Ellis Realty & Auction Services

Home Buyer Advice

Benefits of Owning Your Own Home
As a general rule, homes appreciate approximately 5% a year, depending upon location, etc. Additionally, mortgage interest and property taxes are tax deductible, which means the government is 'subsidizing' your home purchase. Your rate of return when buying a home is higher than most any other investment you could make.

If you rent, expect your rent to increase. But, if you get a fixed-rate mortgage, you’ll have a set monthly payment for 30 years! If you’re lousy at saving money, think of a owning a house as an automatic savings account. Every payment you make reduces the principal balance on your mortgage. Also, your home appreciates in value, approximately 5% a year.
Also, when you own your own home, you'll have the freedom to do pretty much whatever you want to make the environment suitable for you! And, any improvements you make will only be a benefit to YOU!

Avoid changing banks or moving money around. Avoid changing jobs. Also, avoid any major purchases of any mortgage, the lender looks at your “debt-to-income” ratio. The lender is looking for a certain percentage of your gross monthly income that you spend on debt. Applying for credit accounts also will lower you credit score. Any inquiries into your credit will lower your credit score.

Supply and Demand
When the supply of available houses is greater than the supply of buyers, appreciation slows down and prices begin to fall. If you are lucky enough to purchase a home during this period, you should be certain that the economy will eventually show strength again.

How To Determine Your Offer Price
So, you know what the seller’s asking price is. But, to determine what to offer, you should look at several things.
You should have a Realtor who will analyze the recent sales of similar properties, analyze the condition of the home, market conditions and circumstances of the seller. This will help you determine a fair price to pay for the home. Comparable sales in the public record are not the most useful. These figures are generally AT LEAST ten to twelve weeks behind. The Multiple Listing Service, a private resource for Realtors, is the most up-to-date and valuable tool for determining sales price. Most weight should be given to the most recent sales.

Writing an Offer
In this first step toward negotiating a sales contract, you should put yourself in the seller's shoes by imagining their reaction to your offer. Your goal is to get what you want and anticipating the seller’s reaction will help you in attaining that goal. In todays litigious society, both you and the seller want to build in protection and contingencies to protect your investment and limit risk. Your offer will address issues of earnest money, down payment, financing, closing costs, inspections, repairs and possession among other things. It is absolutely essential to include a closing date. These decisions will affect both buyer and seller for years to come. Prior to writing an offer, it is important to carefully observe the condition of the property. If the sellers have occupied the property, you should require a copy of the seller's Residential Property Condition Disclosure. Foreclosures and investment property often do not include property condition disclosures.

It is advisable to have a professional home inspector conduct a thorough home inspection on the property. This is in addition to the termite inspection and appraisal. Sellers want this inspection done quickly so buyers can approve the inspection and move on to closing. You may want to do a final walk-through inspection just prior to closing to be sure the property condition has not changed since offer date.

How Your Financing Affects the Seller
If you are planning to use FHA or VA financing, this should be disclosed on your offer. There are certain non-allowable fees that prohibit buyers from paying. That means the seller will end up paying these fees, as they will be charged anyway. These fees are not included in conventional financing. In addition, FHA and VA appraisals are a little trickier and more detailed than conventional appraisals.

It would be good to ask your lender the physical location of their underwriters. The underwriters are the ones who make the final decision about your loan approval. It is much easier to deal with an underwriter 'down the hall' than one in Dallas or Phoenix, AZ!

Title Insurance
A most important issue and often times misunderstood. Title insurance comes as an owners policy and lender’s
policy. The lender’s policy is less expensive than the owner’s policy. The cost is determined by the sales price of
the property. If any problems occur concerning liens or judgements on the property, you can always go to the
title company to clear them up.





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