The following article is brought to you by the Long Island Board of REALTORS® Public Relations Committee. “We’re More Than Realtors®…We’re Professionals Working for You and Your Community.”
Taking the Right Steps to Home Ownership
Knowledge and experience are the keys to successful real estate transactions. One of the keys to making the home-buying process easier and more understandable is planning. In doing so, you'll be able to anticipate requests from lenders, lawyers and a host of other professionals. Furthermore, planning will help you discover valuable shortcuts in the home-buying process.
Getting Started:
Whether you are a first-time home buyer or entering the marketplace as a repeat buyer, you need to ask why you want to buy? Are you planning to move to a new community due to a lifestyle change? What would you like in terms of real estate that you do not now have? Do you have a purchasing timeframe? Whatever your answers, the more you know about the real estate marketplace, the more likely you are to effectively define your goals. Be sure to evaluate your finances. Homes and financing are closely intertwined (financing is the difference between the purchase price and the down payment, commonly referred to as debt or the mortgage.) The good news is that over the years new and innovative loan programs have evolved which require a 5 percent down payment or less. In addition to a down payment, purchasers also need cash for closing costs (the final costs associated with closing the loan). Ask yourself is your financial house in order? Those great loans with little or nothing down are not available to everyone: You need good credit.
Use a REALTOR®:
The Long Board of REALTORS® Inc. (LIBOR) includes 23,000 brokers and salespeople, individuals bound together with a strong Code of Ethics, extensive training opportunities and a wealth of community information. Why use a REALTOR®? Buying and selling real estate is a complex matter. In the maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the community and much more. Those professionals are the local REALTORS® who serve your area. Your REALTOR® will provide you with information detailing current market conditions, financing options and negotiating issues that might apply to a given situation.
Find the Right Home:
Millions of new and existing homes are sold each year. There's no shortage of housing options, but with so many choices the challenge becomes finding the property which best meets your needs. Try to decide what you are you looking for. Each of us is different and so it's important to list the features and benefits you want in a home. Consider such things as pricing, location, size, amenities (extras such as a pool or extra-large kitchen) and design (one floor or two, colonial or modern, etc.). Next, it's important to consider your priorities. If you can't get a home at your price with all the features you want, then you must determine what features are most important. Once you find the right home be sure to have an inspection done. A number of inspections are common in residential realty transactions. They include checks for termites, surveys to determine boundaries, appraisals to determine value for lenders, title reviews and structural inspections. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. This is an opportunity to examine the property's mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through.
Get Funding:
The real issue with real estate financing is not getting a loan. Instead, the idea is to get the loan that's right for you -- the mortgage with the lowest cost and best terms. By meeting with lenders -- either online or face to face -- and looking at loan options, you will find which programs best meet your needs and how much you can afford. Often the cost of real estate financing is routinely greater than the original purchase price of a home (after including interest and closing costs). Because financing is so important, buyers should have as much information as possible regarding mortgage options and costs. Mortgage financing can be obtained from mortgage bankers, mortgage brokers, savings and loan associations, mutual savings banks, commercial banks, credit unions, and insurance companies.
Get Insurance:
No one would drive a car without insurance, so it figures that no homeowner should be without insurance. The essential idea behind various forms of real estate insurance is to protect owners in the event of catastrophe. If something goes wrong, insurance can be the bargain of a lifetime. There are various forms of insurance associated with home ownership; REALTORS® often provide home insurance and such policies are also available from insurance brokers. The time to obtain insurance and warranty coverage is at closing, so speak with a REALTOR® or insurance broker prior to closing. Be sure to ask about limitations, costs, deductibles and "endorsements" (additional forms of coverage that may be available).
Seal the Deal:
Once all the terms have been agreed upon and all the documents have been thoroughly read, home buyers are ready to close the deal and go to settlement. The closing process is also known as "settlement" or "escrow," brings together a variety of parties who are part of the "transaction" process. At closing, transfer taxes must be paid and other claims must also be settled (including closing costs, legal fees and adjustments). Settlement is a brief process where all of the necessary paperwork needed to complete the transaction is signed. The title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices. One of the best parts of settlement is that buyers and sellers need to do very little. Whether you're a first-time buyer or a repeat buyer, there are several more steps you'll want to take after closing. Those papers you received at settlement are extremely valuable, so hold on to them! In the short-term they can help establish tax deductions for the year in which the property was purchased. In the future, such papers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes. Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing and you also want services transferred to your name for billing. Usually such transfers can be done without turning off utilities. REALTORS® can provide contact numbers and related information.
By following the above steps, homeowners can ensure they have covered all of the bases and made an intelligent decision in selecting a home. Owning real estate involves contracts, loans, and taxes, but ultimately what's most important is that home ownership should be a wonderful experience. Enjoy!
To learn more about the home-buying opportunities in your area, or to contact your local Realtor.