Home Buying and Selling Kit
 
 
 
 
 
 
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Introduction
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Spring is traditionally the busiest home-buying season of the year. And this year there are three big reasons why it’s a good time to buy:
If you’re a seller, you know what a tough market it is. But we have resources to help you get the “sold” sign on your front yard as quick as possible. This home buying and selling kit will help you tackle today’s unique real estate market.
Buyers
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If you’re buying a home…
There’s no doubt that with mortgage rates and real estate prices this low, it’s a buyer’s market. Yet, don’t let cheap prices influence a buying decision you may not be ready for. This chapter will make homebuyers sure they are truly prepared for their purchase. To learn more:
REOs
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Buying a distressed property
To call the current real estate market “unique” may be an understatement. Homebuyers will be presented with myriad buying options – everything from “normal” sales to properties that have been repossessed by banks. This chapter will prepare and educate homebuyers on what to expect when they encounter foreclosures, short sales and real-estate or bank-owned properties when shopping for their new homes. To learn more:
Sellers
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If you’re selling your home…
Homeowners looking to sell their properties will face a lot of competition in the market, especially with all the distressed, discounted properties for sale. This chapter will inform sellers on how they can set themselves and their properties apart in this highly-competitive market. To learn more:
Videos
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Preparing your home for sale
One of the simplest and perhaps cheapest ways to prepare your home for a successful sale is to make sure you properly stage your home. Since your home’s first impression may be a buyer’s only impression, properly staging your home for sale will leave potential buyers with a positive, long-lasting impression. Take a look at the following videos:
Resources
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Tools for decision-making
Buying and selling a home comes down to one question: Do the numbers add up? HSH.com has a host of tools and resources that will help you answer that question. From our mortgage amortization calculator to our “How much house can I afford?” calculator, we have all the tools and information you’ll need to make the right home buying or selling decision. Tools and resources: |
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| New Homebuyer Top Stories | Homebuying Q&A: Ask Our Expert |
Question: Eight years ago I refinanced my home loan with a home equity loan because the bank was offering a cheaper interest rate than what I had and no closing costs. I want to sell my home to get out of debt. I need to fix some things before I sell it. How do I get a small home improvement loan without refinancing my loan? I have lots of debt but I also have a lot of equity in my home.
Answer: Provided your home equity loan is the only loan against your home--that is, it is in the first-lien position--you should be able to obtain a second mortgage, or better, a home equity line of credit. Equity lines of credit are usually available with rates just slightly above the prime rate (3.25 percent today) and can provide maximum flexibility for your home improvement projects.
That said, if your income won't support much more debt, you will still have trouble borrowing new money, no matter the loan vehicle you choose. With lenders stung by losses in the downturn, underwriting standards have stiffened considerably. In general, you won't be able to leverage your home beyond about 80 percent of its present value, and your debt load often cannot be greater than 36 percent to about 41 percent of your monthly gross income.
Since home equity products are usually "portfolio" loans (lenders keep them on their books), there can be considerable variability in the rates and terms you might be offered, so you'll want to shop around your market to see what, if anything, can be made available to you.
Are you ready to buy a home?
Chances are your home purchase will be the largest transaction you embark on over the course of your lifetime. That in itself is reason enough to make sure you’re not only prepared but well-educated when it comes time to buying your home. Shopping for your mortgage is at least as important as shopping for your home, because the right home loan can save you tens of thousands of dollars. Especially for first-time homebuyers, the more you understand about your mortgage and the homebuying process, the better off you’ll be and the more money you’ll save.
Before you begin shopping for a home loan, you need to ask yourself a few questions:
- How much home can I afford?
- How long do I plan on staying here?
- Am I ready?
Affordability
Before you worry about Realtors, property listings or locking in a mortgage rate, you must first determine how much home you can afford. HSH.com offers homebuyers several home loan calculators that can help give you a sense of your level of affordability. Our How much house can I afford calculator is just the tool to get you started. Simply plug in a few sets of numbers (e.g., annual income, projected down payment, your monthly bills) and you’ll get a sense of your price range.
However, while affordability calculators can certainly give you a good starting point in terms of learning how much house you can afford, only you truly know how well a monthly mortgage payment, not to mention taxes and insurance, will fit into your budget and lifestyle.
On paper, you may qualify for a lot more or a lot less than you should spend. So when determining what you can afford, sketch out what you think your life may look like one, five or 10 years down the road. Look at your goals and what kind of money you need to meet them, and where it's going to come from. Decide what payment works for you, and then enter current mortgage rates into our home loan calculator to find a projected loan amount and maximum purchase price.
Timeline
This brings us to the next big question: How long do you plan on living in the house you’re buying? Is this a starter home or a place you see yourself raising your family in? Understanding your life’s plans and future goals is not only crucial in deciding how big a home you should buy, but finding the right mortgage product to match.
Sure adjustable rate mortgages have gotten a bad reputation over the last few years, but if you aren’t planning to stay in your prospective home very long, these adjustable-rate products offer the opportunity to take advantage of even lower mortgage rates.
Yet remember, it’s hard enough to make plans for the upcoming weekend let alone five, 10 years down the road. This is why most homeowners prefer the stability that comes with a 30-year fixed rate mortgage. If mortgage rates do fall in the future, you can always crunch the numbers to determine if a refinance can save you cash each month.
Are you up for the task?
HSH.com visitor and recent first-time homebuyer Eric told us that when he and his wife went to look at houses with their real estate agent, they could tell a home “just wasn’t for them” before even stepping foot out of their car. Yet finding and maintaining your dream home has to do with a lot more than just aesthetics.
Owning a home is about a lot more than simply being able to afford your monthly mortgage payments. There are recurring maintenance costs to consider (you should budget saving at least 2 percent of your home’s value each year for repairs), property management costs to plan for (if the home you’re buying has a decent-sized property, you will have to dedicate a lot more time and money to your investment as opposed to someone who purchased a condo or townhome), and those unexpected emergencies (like your water heater bursting in the middle of the night) that you’ll surely have to deal with.
We asked first-time homebuyer Michael Herley from Coatesville, Pennsylvania what was the one thing he wished he knew before buying his home. “I wish I would have appreciated the gravity of purchasing a house,” he explained. “Don't get me wrong, our place is beautiful and I love it, but the work that goes into everything is much more than one could ever know. Do not think that your work is over once you have found your dream home -- rather it has just begun.”
Continue your education
As Mr. Herley mentioned, once you’ve found your dream home, the work has just begun. On a daily basis HSH.com publishes new information for not only homebuyers but for homeowners as well on a wide-range of topics. We cover everything from how to find the best real estate agent, to mortgage rate forecasts, to home equity loans, refinancing and home maintenance. Good Luck.
