Buying a Home

Financing     Home Inspection     Agency     Mortgages

Buying a home will probably rank as one of the biggest personal investments one can make. Being organized and in control will contribute significantly to getting the best home deal possible with the least amount of stress. It's important to anticipate the steps required to successfully achieve your housing goal and to build a plan of action that gets you there.

Before you can build a plan of action, take the time to lay the groundwork for your decision-making process.

First, ask yourself how much can you afford to pay for a home. If you're not sure on the price range, find a lender and get pre-approved. Pre-approval will let you know how much you can afford so that you can look for homes in your price range. Getting pre-approved helps you to alleviate some of the anxieties that come with home buying. You know exactly what you qualify for and at what rate, you know how large your monthly mortgage payments will be, and you know how much you will have for a down payment. Once you are pre-approved, you avoid the frustration of finding homes that you think are perfect, but are not in your price range.

Second, ask yourself where you want to live and what is the best location for you and/or your family. Things to consider:

*convenience for all family members
*proximity to work, school
*crime rate of neighborhood
*local transportation
*types of homes in neighborhood, for example condos, town homes, co-ops, newly constructed homes etc.
 

In a buyer's market, houses may be listed for more than a year and the prices of houses listed may drop considerably. This market is advantageous to the buyer. As a buyer, you have the time to make an offer that works to your best interest. It is not uncommon to low-ball and to find that sellers are accommodating to meet your needs. Keep in mind that even though this market is a great time for buyers, you do not want to lose your dream home by being unrealistic. Your goal is to get your dream home at the best possible price

Things to remember

• buying a home involves compromise - the perfect home does not exist
• the quality of local schools usually has an impact on property values in the area
• a new home is only as good as its builder
• the price on a new home is often non-negotiable but the builder may make concessions on upgrades and closing costs
• buying foreclosure properties requires a lot of research and is not recommended for novice home buyers
• market value is the price a ready, willing and able buyer will pay
• selling prices not listing prices are the true indicators of current market value
• one way to lower your closing costs is to settle late in the month

Get more purchasing power

• pay off debts
• consolidate debts to lower interest rate
• borrow from parents
• use an ARM
• use portfolio lender
• buy with partner
• ask for money from parents for down payment (gift letter)
• ask seller to pay some of non recurring closing costs
• ask seller to take second mortgage
• ask seller or lender to buy down the interest rate on your mortgage
• ask employer to lend you money, pay some of closing costs or buy down interest rate for you
• buy when interest rates are low
• buy property that generates rental income
• take advantage for first time buyer loan program
• take advantage of government assisted financing programs
• close late in month to reduce the interest owed to lender at closing
• reduce cash needed for closing costs with zero point loan
• borrow against a 401K retirement plan or insurance policy
• borrow against or liquidate securities
• use mortgage with 40 year due date (watch for pre-payment penalty)
• ask parents to co-sign loan
• take a penalty free IRA withdrawal

Today there are "quarter share" properties especially in a resort or vacation area. Those who buy these fractional (1/4 ownership, thus quarter share) properties are partial owners along with 3 others partial owners and each has a deed to their partial ownership of one specific unit. In other words, quarter ownership gives the owner a 25% interest in a deeded property. These owners have the right to sell their interest and can leave it to their heirs as in full ownership. The benefits of this type ownership is they get to use the whole unit for their proportionate time....quarter of the time, or to receive any rental income for that period of time. Thus if you buy a $250,000 quarter share property, you will own 25% of approximately a million dollar property. Take note - interest rates are higher than for normal second home purchases.

Seller's Market - This is an extremely competitive market, one that is advantageous to the seller. Sometimes, homes will sell as soon as they are listed or even before homes are listed. The number of houses on the market is less than the number of buyers looking to buy. Typically, during a hot market, multiple offers will be made on each home and more often than not, homes will sell for more than their asking price. It is even more crucial to be prepared and to be ready as a buyer when the market is hot. It can be easy to get caught up in the bid for a home, but if you are prepared (pre-approved, solid in price range, realistic about your needs), it is easier to remain focused on your housing needs and price range.


In a normal market, there is fairly a large number of homes available and an average number of buyers. This market does not necessarily favor the buyer or the seller. A seller may not have as many offers on their home, but he or she may not be desperate to sell either. Again, it is the buyer's responsibility to be prepared. During a normal market, the chances to negotiate are higher than in a hot market. As a buyer, you can expect to make offers at lower than the asking price and negotiate a price at least somewhat less than what the sellers are asking

Buyer's Market - It is a buyer's market when the inventory of available homes is greater than the amount of qualified buyers looking to purchase a home. Homes usually stay on the market longer than 6 months and some sellers will take a lower price, help with refinancing or pay settlement costs. Supply and demand is the catalyst that decides what kind of market exists but remember.......whatever market - it is all relative. If you are buying in a buyer's market, you also are selling in one ...and the same with a seller's market.

How much can you afford?

• On average your mortgage payments, including taxes, should not exceed 28% of your gross income. However, this is looked at on an individual basis when you apply.

• Here is a loan calculator to help you find out just how much that new house is going to cost you each month. Just fill in the amounts below with the given number of payments, interest rate, and loan amount and you will get your monthly payment. 

Top of Page

 

FASY REAL ESTATE 1229 Asbury Avenue Ocean City, NJ 08226 (609) 398-8000                   fax: (609) 398-5084 bfasy@comcast.net  1 (800) 662-3323               cell: (609) 602-4492