Home Buying Primer

You know you are ready to buy a home when owning is cheaper than renting and a home purchase is a natural fit for your lifestyle and financial needs, goals and obligations. Instead of making the home-buying decision based on income alone, consider it in a more holistic context that includes your complete financial picture. Viewing home buying in a vacuum is a common misstep first-time homebuyers should avoid. Other potential slip-ups include:

Not knowing the market

In a buyer's market, buyers who feel a competitive edge are more likely to leap before they look. The glut of information on the Internet makes obtaining home buying and local market knowledge a relatively easy task. Real estate agents, brokers, lenders, title companies and other real estate professionals offer free seminars, workshops and classes. The vast library of real estate guidebooks can also give you an edge. A lack of knowledge about home buying and market conditions tends to perpetuate additional buying errors.

Failing to get pre-approved

Get pre-approved - in writing - for what you can afford, not what the lender is willing to lend. A written pre-approval reveals that you are serious about buying and it helps prevent you from shopping for more than you can afford.

Low-balling

Uneducated buyers tend to offer too little and ask for too many concessions, including asking the seller to pick up buyer's costs, to make extensive repairs, or to provide a home warranty. That could insult the seller, even in a buyer's market. In a seller's market, it will alienate a seller who has taken the time to price the home right and prepare it for market.

Paying too much

Avoid multiple-offer bidding frenzies. Make the same price checks sellers make to price their homes right -- get comparables, track sale prices in your area, scan the local newspaper to check asking prices, visit open houses and use a knowledgeable real estate agent.

Failing to buy low now to sell high later

Buy the least expensive house on the best block. Buy into the least expensive neighborhood in the best community. The cheapest home in a neighborhood, community or region in transition provides the greatest return on your investment in any market.

As you learn to avoid mistakes, you'll find it easier to put your emotions on hold long enough to reach your goal. That prevents buyer's remorse, an all-too-common malady suffered by ill-prepared buyers.

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Things to Consider When Buying a New Home

If you have made the choice that you want to buy a new home then you are in the right frame of mind for the whole process. In truth most people who say they are ready have no idea about what is involved. This can mean that they will end up with a lot of problems because they are not ready.

One needs to understand that there is nothing to be gained when one makes a rash or jumpy decision about the buying of a home. This is one time in your life when you should be taking your time and weighing all the options. There is also the matter that you need to understand that there are costs that are involved with the whole process, not to mention that you are signing up for payments that will last the better part of your life span.

With that in mind you need to have a plan and that plan needs to include a complete and total budget. You will need to know how much you have available to you for the payments on the home and also how much you will have left over for the payments that include the utilities and so on. That is the one most common mistake that many first time buyers make. They decide that they can afford the payments and in doing so they tend to forget about the rest of the expenses that come along with it.

If you are currently living in a small apartment you need to realize that the cost of the utilities will most likely double or triple per month. That means you need to have that much left after the cost of the house payment. Then there is the insurance that will be required for the


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There's No Secret to Buying a Home

The secret to buying a home in today's economic climate is to be patient and spend plenty of time preparing for the home buying process as well as the home search. There are plenty of people that will tell you about this or that other secret to success when buying a home, the real secret lies only in buying the home that is right for the needs of you and your family. The ultimate goal when searching for a home is always to find an affordable solution for the needs of you and your family not only in the immediate future but in the distant future as well. Perhaps that is the ultimate secret of buying a home-finding one that is right for you. Keep in mind that most home loans are for thirty years.

While there is no one world stopping secret to buying a home, there are several things you can do as a home buyer that will help the process go much more smoothly. After taking care of the obvious financial issues (such as managing your credit, getting financing pre approval, and establishing a working budget for your family that includes post home purchase expenses) is to decide what you really need in a house, what you'd like in a house, and what you absolutely cannot live without in a house. This may not seem like such a big secret to buying a home but if you don't have some sort of plan you will waste countless hours wandering aimlessly through house after house without finding anything that remotely suits your needs or desires.

Once you've decided these things, it's time to start interviewing realtors. Your realtor is a weapon that many people do regard as a closely held secret to buying a home. Your realtor will not only open doors



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The Real Estate Market

There are many things about the real estate market that people fail to understand. In all truth it is a very complicated issue that needs to be solved with most people before they start taking stab at it, but you need to understand that there is a reason why the agents of the world must go to school.

There is so much that goes into the learning of the real estate game that most people are unaware of. This is the reason why so many people are not looking in the right direction. If they fail to understand the entire concept of buying and selling real estate they will most likely make a mistake at some crucial point in the game and then lose a lot of money to boot. So you should not go it alone when it comes to this market. There are many things that a person needs to understand and with that comes the fact that making the kind of money that you want is not all that hard when you have the right knowledge.

This knowledge does not come from simply the schools that take part in this, but instead from the fact that you will need to understand the overall experience in the field of the real estate market. The market is a living and breathing being that can change with nothing more than a moment's notice. This will mean that you could very well be caught in the middle of something that is not all that great. This can also mean that you will end up losing a lot of money that you have invested which is not the best idea for the entire process.

Real estate is the common denominator that binds the world together. No matter where you live



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The New Home Buying Tip to Remember

Perhaps the very best new home buying tip anyone can give you is not to rush into it. Buying a home is for most people the largest single investment they will make during the course of their lifetimes. As a result, it is a decision that should not be taken lightly. There are so many steps involved in the home buying process that it makes perfect sense to sit back, get all your ducks in a row and pay close attention to proper planning rather than rushing into a house that might not be all it seems at first glance.

You will find that many people are more than willing to give you their version of the perfect home buying tip, the thing to remember is that this is your home. It is your money on the line and your family that will be living in the home you purchase. Even if you don't yet have a family, chances are that some day there will be someone you wish to share your home with. Prepare for that day and be sure you find a home that will be suitable for your needs rather than what others feel your needs should be.

Have your finances well in hand before you even consider buying a home. The better your financial outlook the less interest you will pay on your home loan. The lower your interest rate, the less you will ultimately pay for your home. I don't know about you, but the less I can get away with paying, the better I feel about the deal. You'd be surprised at the number of incorrect or outdated items that might show up on your credit report. It is important that you know what your credit reports say about you before you apply for the financing you will need with which to purchase



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The Home Buying Process-Important First Steps

The home buying process is something that most of the population experiences only a few times within the course of a lifetime-with good reason. Not only is this a time full of anticipation it is also, in many cases, filled with angst. Worries about credit history, job security, savings, budgeting, down payments, closing costs, and so many other things all bring stress into a sometimes already stressful situation. There are things you can do that will greatly reduce the amount of stress involved throughout the entire home buying process if you are of a mind to do so.

There are certain actions you can take that will make the entire home buying process far less stressful and much more enjoyable to you as the buyer of a new home. One of the first things you should do, before you even begin looking at homes is get a grip on your credit situation. The state of your credit will ultimately determine how much you will pay for your home. The better your credit, the less interest you will have to pay over the course of your loan. Also realize that while many lenders will take a risk on those with less than stellar credit, they still have certain standards that they must maintain.

Before you begin the home buying process, order a copy of your credit report from all the major reporting agencies. Go over your report with a fine-toothed comb and check for any errors or anything that might not be one hundred percent accurate. If you find discrepancies, be sure to take the appropriate steps to report the errors. Also be on guard for instances of possible identity theft. Identity theft is a growing crime and can have a profound impact on your ability to receive credit as well as the interest rates that are available to you, which will also impact



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The Great Paper Trail of the Home Buying Process

One thing you will find throughout the home buying process is that just when you thought you were finished with the paperwork, there is more paperwork. Some may laugh or chuckle about this while others want to quite literally pull out their hair. There is so much paperwork involved in this process that you will at some point begin to wonder if you aren't filling out paperwork about the paperwork. The good news is that once you are ready to actually close on the house is when the real paperwork begins.

You will find that there is paperwork required in order to find out about your credit history and get your finances in order. There is paperwork involved when applying for loan pre approval. There is even more paperwork involved when you actually get around to making an offer on a house. But that is really just the beginning of the great paper trail involved in the home buying process. You'll find that much like breadcrumbs you'll be dropping bits and pieces of paper all along the path to your home ownership.

Once you've made an offer on your home you'll have papers to fill out for appraiser and inspectors and you'll be getting quite a bit of paper in return. You'll have paper coming out of your ears before you ever make it to the closing table. And once you make it to that point, you're really committed. At least it would seem so on paper.

Closing is the point at which the actual ownership of the home changes hands. This is for most people, the most exciting part of the home buying process. Now, the bad news is that this takes about two hours (minimum) of nothing more than paperwork. Go into the closing prepared for hand cramps and bring


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Simple Guide to Buying a HUD Home

When considering buying a HUD home, one of the first things you need to do is fully understand exactly what a HUD home actually is. A HUD home is typically a home that consists of anywhere from one to four units that has been foreclosed on through an FHA insured loan. If you can purchase the home in cash or qualify for a loan for the value of the home (within certain limits) then chances are that you actually qualify to buy the HUD home. During the initial offering period those buying a HUD home in order to occupy the home receive preference. If the home has not sold during that period of time, the home will be offered for sale to those who would use the property as an investment property as well.

One important thing to remember when buying a HUD home is that the process is quite different from the purchase of traditional home loans. In fact, this is quite a unique process as far as home purchases go. HUD homes are typically listed online. The listings are handled through an outside agency and not HUD itself. If you wish to place a bid on one of these properties it is important that you keep in mind that HUD offers no guarantees about the condition of these properties and will make no improvements. In other words, have a thorough inspection performed before placing a bid or buying a HUD home and make your bid accordingly.

The road to buying a HUD home is a rather tricky road indeed. It is required that you go through a realtor if your plans involve purchasing a home that is owned by HUD. This is not a bad thing however as a realtor can help you navigate the muddy waters of home ownership with far less



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Should You Purchase In The City or County?

Who doesn't want a good deal on a home? New home buying tips are set up to guide people to good deals. No one wants to make an unwise and costly mistake when it comes to their home. Many people want new home buying tips that discuss what to do if they cannot find a home they want, or if they keep finding homes that are overpriced. The good news is there are new home buying tips for both of those scenarios.

If you find that every home you look for is either over priced or not what you would like, you should take your house hunting outside of the popular market. This does not mean that you are being forced to look for homes that are substandard. It simply means quit looking for homes where there is a large market for them. Take your house search somewhere where there are not a large number of people bidding against each other for a home. For instance, driving ten miles out of your city can bring you a large number of homes. These homes will probably be not as overly priced as homes that are located in the heart of a city or in neighborhoods.

Many people are uncomfortable looking at homes that other people are not considering. They think it is a sign that the home is not marketable or that something is wrong with it. That is simply not true. Go against the market's mentality and do something different. Just because they do not want to drive a little out of the way or they do not want to live in an area that does not have city garbage service does not mean that you don't. Some of the best homes are outside of the city limits. In fact, you can probably get more



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Racial divide persists in real estate

The racial divide in home ownership remains substantial, despite an overall growth in the national home-ownership rate, the University of Southern California Lusk Center for Real Estate reported today.

In the second quarter of 2004, the national home-ownership rate reached 69 percent, and that rate was 76 percent for non-Hispanic whites. The home-ownership rate for African Americans, though, was 50 percent, and it was 47 percent for Hispanics, according to the study, "Homeownership in the 1980s and 1990s: Aggregate Trends and Racial Gaps."

"Home-ownership increases are driven by such factors as household income, age, size of the household, full-time work, marriage and inheritance," said Stuart Gabriel, director of the Lusk Center and an author of the study. Stuart Rosenthal of Syracuse University's Center for Policy Research teamed with Gabriel in the study of home-ownership rates.

He also said there is a need to boost minority home ownership because it can serve as a wealth generator and can help to revitalize neighborhoods by reducing crime and blight, increasing price appreciation and improving outcomes for children. "Clearly, the benefits of home ownership can extend well beyond the build-up of equity to help revitalize communities," he said.

The national home-ownership rate improved by about 0.5 percent from 1983-89 and rose 3.5 percent from 1990-2001, while the gap in homeownership between whites and minorities changed little, according to the report. President Bush has said there is a need to boost minority home ownership, and he set a goal of 5.5 million new minority homeowners by 2010.

Credit barriers accounted for no more than 5 percentage points of the disparities in the home-ownership rates, according to the study, while location and household socio-demographic attributes, such as income, age, marital status, health, size of household, employment status and inheritance, accounted for most of this gap.

"An important implication of these findings is that the gain in home ownership in the 1990s appears to have been driven primarily by household demographic factors that had little to do with government and industry initiatives," the study states.

The data also suggests that "innovations in mortgage finance and declining interest rates, while clearly beneficial to prospective homeowners, likely were not the primary drivers of the rise in home ownership during the 1990s."

Authors of the study used statistics from the Federal Reserve Board's Survey of Consumer Finances from 1983-2001. An analysis of these statistics found that there is a higher propensity for home ownership among household heads who are married or have previously been married.

Also, home ownership increases with the age of the household head, household size, income, receipt of an inheritance, full-time work, and stable employment, the latter of which is inversely related to the number of previous full-time jobs held by the household head," according to the study.

"In contrast, the propensity for home ownership is reduced if the household head is in poor health or of minority status," the authors also note. And "as of 2001, for example, household attributes account for roughly 15 percentage points of the white-minority home-ownership gap for both African Americans and Hispanics."

There has been an increasing percentage of African-American and Hispanic renters who are saving to purchase a home, the study also found. In 1983, an estimated 6.8 percent of African-American renters and 8.5 percent of Hispanic renters were saving to buy a home, compared with 12.4 percent of white renters. In 2001, an estimated 16 percent of African-American renters, 22 percent of Hispanic renters and 17 percent of white renters were saving up for a home, according to the study.

Location can also play a significant role in home costs and home-ownership rates, according to the study. "African Americans and Hispanics are disproportionately concentrated in central-city locations and, as a result, may face systematically different costs of home ownership relative to the typical suburban white household," the study found.


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Midwest has highest percentage of first-time home buyers

First-time home buyers accounted for about 41 percent of first-quarter sales activity, according to a survey conducted by HouseHunt,, a real estate information and services company. First-time buyer activity rose from 36 percent in the second half of 2004, the company reported.

About 60 percent of home listings are selling in 30 days or less, according to HouseHunt's Current Market Conditions survey. Nine of 10 sellers got 95 percent or more of their asking prices despite rapid appreciation, shrinking buyer affordability and slightly higher mortgage interest rates, HouseHunt also reported, while 6 percent report getting less than 95 percent of the asking price.

First-quarter sale prices in the HouseHunt survey ranged between $160,000 to $900,000, with the median in the upper $300,000s.

Home-price appreciation in the past year was almost evenly divided between zero to 10 percent, and 10 percent or more. In 2004, the median home price appreciated 8.8 percent to $187,500. Regionally, median prices rose 13.5 percent to $222,500 in the Northeast; 14.1 percent to $278,000 in the West; 6.9 percent to $151,000 in the Midwest; and 8 percent to $169,700 in the South.

Across the U.S., results in the West and South regions were mostly consistent with the national survey, the survey found, with exceptions in the Northeast and Midwest. For example, the Midwest reported more first-time buyers (67 percent) than the national average of 41 percent while the Northeast reported the fewest (23 percent). Price appreciation of more than 10 percent was reported in the South (69 percent) while the Northeast reported 73 percent in the zero to 10 percent range. The national average was 53 percent in the zero to 10 percent range.

The survey is based on data from HouseHunt’s Exclusive Agent Referral Network members in 47 states. Results are updated quarterly.

For more detailed “Current Market Conditions” reports on housing markets across the country, visit HouseHunt.com, select the state and community or territory, then click on “Real Estate Trends.” Profiles of sales agents with exclusive HouseHunt territories are available online, too.

HouseHunt’s two primary Web sites are HouseHunt.com and MoveUp.com. The sites offer consumer information on local communities, property listings, recent home sales, electronic property-matching, buying and selling, and access to real estate agents.




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Lack of financial security a top obstacle to home ownership

Twenty four percent of consumers in a recent survey cited a lack of financial security as a primary obstacle to home ownership, while 23 percent named saving for a down payment. Together, respondents find these financial issues to be nearly as challenging as trying to find the right house to meet their needs.

The survey, conducted by GMAC Mortgage, polled 1,000 consumers nationwide to assess their barriers to home ownership and homeowner education needs.

The survey revealed that consumers see a need for greater home-ownership education, particularly regarding the numerous financial aspects of the home buying process. Consumers were more likely to want to learn new information about financial home-buying issues than real estate and house hunting concerns.

Specifically, respondents indicated the need for greater education in regard to: finding the right loan (20 percent), managing debt (18 percent), evaluating credit (17 percent), finding the right house (16 percent), saving for a down payment (10 percent) and finding a qualified Realtor (7 percent).

Credit concerns and the evaluation of FICO scores also dominated the survey results, as 12 percent of consumers named past or current credit problems as an obstacle to home ownership. The importance of achieving good credit early in life is clearly understood by younger consumers, as 43 percent of survey respondents aged 18 to 24 want to learn more about FICO scores and the evaluation of credit during the home financing process, which is significantly higher than the 17 percent average for all consumers.

Consumers aged 25 to 34 were more likely to cite saving for a down payment (36 percent) and achieving financial security (39 percent) as an obstacle to home ownership than their older counterparts. Notably, a household income of $75,000 emerged as the financial dividing line for consumers who felt financially stable enough to buy a home and those that did not. An average of 30 percent of consumers with a household income of less than $75,000 cited a lack of financial stability as their obstacle to achieving home ownership. Comparably, only 14 percent of households earning more than $75,000 per year viewed this as their primary barrier.



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What's New at American Home Guides

Earlier this year, AmericanHomeGuides.com was acquired by PRIMEDIA Inc., the country's largest publisher and distributor of free publications, including Apartment Guide and New Homes Guide. Thanks to this acquisition, we have added to our site the listings already found on NewHomeGuide.com, our parent company's online service and one of the leading new home "portals" on the Internet.

What does this mean for you? More choices! In fact, the addition of NewHomeGuide.com ALMOST DOUBLES the number of community listings found on our service, making it one of the largest collections of new homes found anywhere on the Internet.

By offering you, the online homebuyer, more homes in more communities in more locations around the country, PLUS the easiest navigation tools of any online service, AmericanHomeGuides.com hopes to make your home search easier and more enjoyable than ever before.



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Home Buying Mistakes

You're counting down the days until closing, the sellers have accepted your offer, the lender has you pre-approved and the house is officially under contract. Does this make the home yours? Nope - nothing is certain until all the paperwork has been signed, and the keys are in your hand. There are still some things that can happen before you close, and if you're not careful about your actions between now and closing, you might accidentally slow things down, cause yourself stress, or worse, break the deal. Here is some advice on what NOT to do until the ink is dry:

1. Don't Change Jobs

Banks are always nervous about lending money, and usually a mortgage is the most a person may ever borrow. Banks like to see consistency in your job history. They are less nervous if you change jobs within the same field, but they prefer if you stay put, especially when waiting for mortgage approval. Until the keys are in your hands, don't change jobs unless it's absolutely necessary.

2. Don't Make a Large Purchase

It is wonderful news if you've just found out your credit is great. However, making a major purchase can quickly change your credit rating, because it changes your debt-to-income ratio. Although a new car would look great in the driveway of your new home, the car payment will not look great to those lending you money. They may decide not to lend you money after all. It's better to wait until after closing to make any major purchases, including furniture, cars, etc. If you absolutely must make a large purchase, it's a good idea to talk to your loan officer before you do it.

3. Don't Give Earnest Money Directly to a For Sale By Owner

Sad as it is, sometimes a seller spends a buyer's deposit money prior to closing. If the transaction doesn't take place, even for valid reasons, like financing problems, repairs, etc., the buyer ends up fighting to retrieve their funds. Your deposit is probably safer if placed in a trust account. Some sellers don't realize or understand that deposit funds are to be applied to your closing expenses. Find a neutral party, preferably an attorney, someone who can hold your deposit until you close. It's also a good idea that your contract defines what happens to these funds if closing never takes place.

4. Don't Forget to Switch Utilities

It may seem simple to arrange for utilities to be started or stopped, however many people forget to cancel or apply for utility service. As soon as you have a contract, it's a good idea to call the utility company. Find out how many days lead time they need in order to switch the service, and be sure they'll be discontinuing services at your old home. Depending on how far the move between your old home and your new one, you may have to contact a different utility company for the same service.

5. Don't Forget Hazard Insurance

Hazard Insurance is another often forgotten task that some buyers scramble to take care of right before closing. Before you can close, a lender will want ensure that you have some type of coverage for the new home. Obtain this coverage as early as possible in order to avoid delaying the closing. In some areas, other types of insurance coverage may be required. Your lender can indicate what insurance requirements there are in your area.

6. Don't Allow Emotions to Take Over

While searching for a home to buy, it's important to be realistic. There is no perfect home, although there is a home perfect for you. If there are repairs needed, don't allow the seller's refusal to do a small repair ruin the deal or your dreams. Often, it isn't a big deal for the buyer to make small repairs. However also keep in mind that some repairs are too big, so don't allow yourself to fall in love with a house that you may not be able to handle, financially or emotionally. Decide beforehand what kind of repairs you can realistically handle and then stick with that decision when looking for homes. Remember to maintain a good attitude and keep a cool head throughout the entire process, including during and after an inspection, as well as at closing.

7. Don't Make Friends with the Seller

Although it's important to be cordial, it isn't a great idea to get into a lot of discussion with the seller. No matter how nice you are, the home you are buying used to be theirs and you may just hurt their feelings by making a comment you think is fine. Everyone makes changes to their new home, but some sellers don't like change and a casual statement could end up costing you when issues about repairs or other things come about. Be friendly, but don't make friends with the sellers. Remember, it's not always a good idea to mix business with pleasure.

8. Don't Panic if the Appraisal Comes in Low

If the appraisal comes in low, there are several options you have in order to resolve things before you panic. Talk to your lender, your realtor, the seller and others in order to decide what is best for your situation. Some resolution could include buyer paying more, seller asking less, finding middle ground, etc.

9. Don't Ignore Lender Requirements

Every lender will have certain requirements or documentation. Listen carefully and provide everything they need in a a timely manner if you want things to go as quickly as possible. Your closing may depend on it.

10. Don't Do Things Alone

If you decided to work with an agent, part of your agent's job is making sure things go smoothly and that closing is completed. A good agent should be tracking most of the day to day details that involve the buyer, the seller, the lender or the seller's agent. Don't let your agents off the hook by neglecting to ask for their help. Remember, they're getting paid to help you.



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