Adding Value by Dennis O'Hagan

So It's A Good Deal -- But Is It A Good Deal For YOU?

You have been looking and hunting for that "deal" in this buyer's market -- and you think you've found it -- but have you? Understanding what constitutes a Good Deal may be more personal than you think. The thrill of the search and looking at real estate can put your head in a spin and your heart may become attached to a certain home. However, when you get to the point of putting in an offer, step back and make sure you have a clear mind about the property -- not just the price.

Price Is Not Everything

While the price of the home may be attractive, it isn't cheating to ask why it is so low. Is the home in need of repair? Are there permits required to make those repairs? How extensive are they? Can you live in the dwelling while those repairs happen? Are you capable of doing the repairs yourself, or will you hire someone to accomplish the tasks? Do you have the constitution to deal with the repairs -- are you able to make decisions, do the research, hire the right people, and have the tools/time you need?

While price may be a driving factor, in real estate it is often location. Did you find a good price but in a location that you are compromising? If so, this is one factor you cannot change. Think hard if you are compromising on this one. Commuting a long distance takes time and gas, which can be figured as dollars, making that low price not so low.

Look at features of the home, landscape, location or neighborhood that make it uniquely suited for you, or that affect the price. Understand these before you buy. Even if you never plan to have children attend the local schools, you still might want to know about the schools in your area - it is part of the entire profile of the property you are buying. Look at hospitals, bus routes and other aspects of civil services in the area, too. Some people want to be close to everything, some prefer to be off the main flow - but most importantly: does the profile of this property feel right for you?

When The Price Is Not The Price

A large home with poor insulation, an aging furnace or heating/cooling system, older windows, roof in need of repair or other "big ticket" needs can quickly affect your budget after you buy. Have an expert evaluate features like pools and hot tubs, as these attractive perks might not be in good repair or cost more than you expect to operate and maintain. And remember: pools need to have adequate fencing and safety features. If you need to add them, it could be expensive.

Smaller homes might require that you rent office or storage space off site -- also affecting your budget. And don't forget property taxes, homeowner's or condo fees -- these are annual expenses that must be considered. Don't forget to look at driveways and sidewalks, if you are responsible for these. Often overlooked, replacing or repairing sidewalks that present liability issues might be a pricey fix.

Issues around location can also lead to hidden costs. Longer commutes, poor or inadequate parking, security systems for homes and cars, or costs to keep the home at the level of the neighborhood can add to your expenses. If you plan to work from home, or have clients into your home office, be certain that your business is welcome in the neighborhood. Some cities or communities have strict regulations about running a business from your home. If you cannot use your property in the way you want or need to, then it might not be good for you.

Know Thyself: The Key To Knowing A "Good Deal"

Understand how you deal with stress. If you can't handle the stress of a remodel or complicated/lengthy transactions, getting a house that is in foreclosure or requires extensive work might not be such a good deal. Permits require understanding codes or hiring contractors who do -- but ultimately the homeowner is responsible if there is a permitting issue. Moving itself is stressful, so consider when your "good deal" brings any extra stresses with it. Some people thrive on getting a good deal and doing home projects, so they have extra energy to deal with such things. Know if this is you.

Personal Style -- You always dreamed of a cozy urban oasis, but you are about to settle for a suburban family home. Are you really ready for lawn-care 101? Have you compromised your personal style for a price tag? Allow yourself to really feel good about who you are and what you want. Compromising your personal style is probably not something that you can put a price on.

Health issues -- You have seasonal affective disorder, and light makes all the difference. Who needs a southern exposure and big windows -- that's what those fancy light fixtures are for, right? Determine if making the house suitable for your needs will require extensive remodeling or big work-arounds. If you are compromising on issues that affect your health, do so carefully. If mobility is an issue, doorways and bathrooms could need to accommodate wheelchairs... and what about stairs? Homes in wet areas can have mold issues, which can be expensive to deal with. Be realistic and conservative with any home issues that could affect your health.

Work -- Are you or someone living in the home planning to commute to a job? Is the building/property/neighborhood suitable to working from home? Location is one aspect of this question, but proper light, heat, sound-proofing or other issues may make work related issues a bigger deal than you first imagine. Consider the availability of communications like phone, internet, and other essentials if you plan to work from the property. If clients come to your home office, will you need a separate entrance or more parking? Again, understand the local regulations for running a business from your home in any situation where you are considering doing so.

Know The House And How It Fits YOU

Does the house have what you want? If you are compromising on things like storage, closets might be built, or furniture could remedy some of that -- but building a garage, or adding an attic or basement might not be possible or practical. Look at the house with a critical eye, seeing how it matches with what you are really wanting to buy. The fewer compromises you make, the happier you will be long-term.

Upkeep and Maintenance: Notice elements of the home or property that require work to maintain. Pay attention to things like decks, countertops, bathtub surrounds, floors, fencing, landscaping and other areas where there might be work to do seasonally. Are you prepared to do that yourself, or will you hire this work out? Does the climate affect materials in such a way that decks or fences will need to be stained or replaced more frequently? Can you keep up with all the grout involved in that fancy tile work? If a property requires more work, attention, or money for upkeep than you can afford, perhaps the good deal is just not a good fit for you.

Community: Remember, when you buy a property you are buying into a community. What is the climate of the neighborhood? Are there issues to cause you personal concern? Evaluate the people who live in the area. Are there a lot of rentals, or do people own their own homes? How are the schools and local stores? Do you feel comfortable walking the streets, driving around, parking your car? What are the social opportunities and would you partake in them? Are you a person of faith or do you have strong political leanings? Buying into a neighborhood can call all of these questions into the forefront. Getting to know the tenor of the community and neighborhood can aid you in determining if there are issues to consider, especially if you are home a lot. Driving or walking around the neighborhood at different times of day and on the weekends might give you a better idea of the people in the area. A perfect home can be an island in a stormy sea if you don't feel good in the area.

Going For It

Your hard work in considering all the above is just part of the due diligence when buying a home. Answering honestly will pay off in all sorts of ways. You will go in to your new home with open eyes and hopefully a good deal -- just make sure it is good deal for YOU. 

You have been looking and hunting for that "deal" in this buyer's market -- and you think you've found it -- but have you? Understanding what constitutes a Good Deal may be more personal than you think. The thrill of the search and looking at real estate can put your head in a spin and your heart may become attached to a certain home. However, when you get to the point of putting in an offer, step back and make sure you have a clear mind about the property -- not just the price.

Price Is Not Everything

While the price of the home may be attractive, it isn't cheating to ask why it is so low. Is the home in need of repair? Are there permits required to make those repairs? How extensive are they? Can you live in the dwelling while those repairs happen? Are you capable of doing the repairs yourself, or will you hire someone to accomplish the tasks? Do you have the constitution to deal with the repairs -- are you able to make decisions, do the research, hire the right people, and have the tools/time you need?

While price may be a driving factor, in real estate it is often location. Did you find a good price but in a location that you are compromising? If so, this is one factor you cannot change. Think hard if you are compromising on this one. Commuting a long distance takes time and gas, which can be figured as dollars, making that low price not so low.

Look at features of the home, landscape, location or neighborhood that make it uniquely suited for you, or that affect the price. Understand these before you buy. Even if you never plan to have children attend the local schools, you still might want to know about the schools in your area - it is part of the entire profile of the property you are buying. Look at hospitals, bus routes and other aspects of civil services in the area, too. Some people want to be close to everything, some prefer to be off the main flow - but most importantly: does the profile of this property feel right for you?

When The Price Is Not The Price

A large home with poor insulation, an aging furnace or heating/cooling system, older windows, roof in need of repair or other "big ticket" needs can quickly affect your budget after you buy. Have an expert evaluate features like pools and hot tubs, as these attractive perks might not be in good repair or cost more than you expect to operate and maintain. And remember: pools need to have adequate fencing and safety features. If you need to add them, it could be expensive.

Smaller homes might require that you rent office or storage space off site -- also affecting your budget. And don't forget property taxes, homeowner's or condo fees -- these are annual expenses that must be considered. Don't forget to look at driveways and sidewalks, if you are responsible for these. Often overlooked, replacing or repairing sidewalks that present liability issues might be a pricey fix.

Issues around location can also lead to hidden costs. Longer commutes, poor or inadequate parking, security systems for homes and cars, or costs to keep the home at the level of the neighborhood can add to your expenses. If you plan to work from home, or have clients into your home office, be certain that your business is welcome in the neighborhood. Some cities or communities have strict regulations about running a business from your home. If you cannot use your property in the way you want or need to, then it might not be good for you.

Know Thyself: The Key To Knowing A "Good Deal"

Understand how you deal with stress. If you can't handle the stress of a remodel or complicated/lengthy transactions, getting a house that is in foreclosure or requires extensive work might not be such a good deal. Permits require understanding codes or hiring contractors who do -- but ultimately the homeowner is responsible if there is a permitting issue. Moving itself is stressful, so consider when your "good deal" brings any extra stresses with it. Some people thrive on getting a good deal and doing home projects, so they have extra energy to deal with such things. Know if this is you.

Personal Style -- You always dreamed of a cozy urban oasis, but you are about to settle for a suburban family home. Are you really ready for lawn-care 101? Have you compromised your personal style for a price tag? Allow yourself to really feel good about who you are and what you want. Compromising your personal style is probably not something that you can put a price on.

Health issues -- You have seasonal affective disorder, and light makes all the difference. Who needs a southern exposure and big windows -- that's what those fancy light fixtures are for, right? Determine if making the house suitable for your needs will require extensive remodeling or big work-arounds. If you are compromising on issues that affect your health, do so carefully. If mobility is an issue, doorways and bathrooms could need to accommodate wheelchairs... and what about stairs? Homes in wet areas can have mold issues, which can be expensive to deal with. Be realistic and conservative with any home issues that could affect your health.

Work -- Are you or someone living in the home planning to commute to a job? Is the building/property/neighborhood suitable to working from home? Location is one aspect of this question, but proper light, heat, sound-proofing or other issues may make work related issues a bigger deal than you first imagine. Consider the availability of communications like phone, internet, and other essentials if you plan to work from the property. If clients come to your home office, will you need a separate entrance or more parking? Again, understand the local regulations for running a business from your home in any situation where you are considering doing so.

Know The House And How It Fits YOU

Does the house have what you want? If you are compromising on things like storage, closets might be built, or furniture could remedy some of that -- but building a garage, or adding an attic or basement might not be possible or practical. Look at the house with a critical eye, seeing how it matches with what you are really wanting to buy. The fewer compromises you make, the happier you will be long-term.

Upkeep and Maintenance: Notice elements of the home or property that require work to maintain. Pay attention to things like decks, countertops, bathtub surrounds, floors, fencing, landscaping and other areas where there might be work to do seasonally. Are you prepared to do that yourself, or will you hire this work out? Does the climate affect materials in such a way that decks or fences will need to be stained or replaced more frequently? Can you keep up with all the grout involved in that fancy tile work? If a property requires more work, attention, or money for upkeep than you can afford, perhaps the good deal is just not a good fit for you.

Community: Remember, when you buy a property you are buying into a community. What is the climate of the neighborhood? Are there issues to cause you personal concern? Evaluate the people who live in the area. Are there a lot of rentals, or do people own their own homes? How are the schools and local stores? Do you feel comfortable walking the streets, driving around, parking your car? What are the social opportunities and would you partake in them? Are you a person of faith or do you have strong political leanings? Buying into a neighborhood can call all of these questions into the forefront. Getting to know the tenor of the community and neighborhood can aid you in determining if there are issues to consider, especially if you are home a lot. Driving or walking around the neighborhood at different times of day and on the weekends might give you a better idea of the people in the area. A perfect home can be an island in a stormy sea if you don't feel good in the area.

Going For It

Your hard work in considering all the above is just part of the due diligence when buying a home. Answering honestly will pay off in all sorts of ways. You will go in to your new home with open eyes and hopefully a good deal -- just make sure it is good deal for YOU.

Don't Forget a Home Inspection with a New Construction Home...

RISMEDIA, Monday, February 06, 2012— Every home—whether it’s a resale or new—has some kind of an issue, and the reality is that there is no “perfect” house. Many homebuyers embark on their search for a home with the belief that new homes should be flawless, when this is never actually the case.

Problems are found in all homes, but the issues with new homes are totally different than the defects found in resale homes. When evaluating a resale home, most problems are often related to older systems that are near the end of their service life. On the other hand, problems in new homes typically involve incomplete work, damaged systems, missing pieces of key materials and imperfect workmanship.

Unfortunately, many people who purchase new construction homes put a lot of trust in their builder and opt not to perform a home inspection. REALTORS® can help their clients take a proactive approach to identifying underlying problems in new homes by recommending a reliable home inspection company that goes beyond the basics to provide thorough home inspections that catch even the smallest of problems. Hiring a home inspection company prior to the closing of a new home can help save homebuyers money and prevent headaches due to unexpected home repairs down the road.

New home construction problems primarily fall into four categories:

1. Incomplete work: Many new home construction projects aren’t completed properly. The incomplete work may be as simple as a layer of paint on a wall that was accidentally skipped, or a room that has no air ducting. In many cases, the unfinished or imperfect work isn’t detected until the homebuyer moves in. A home inspection company will uncover these issues prior to the move-in date.

2. Damaged systems and finishes: Homes often incur damage during construction as a result of rain, snow, impact damage and stacking and storage damage. An example of this is ducting that gets compacted under attic insulation.

3. Missing elements: Oversights during construction due to human error are more common than many REALTORS® and homebuyers think. For example, the construction team may have forgotten to install insulation in the attic. Taking a proactive approach to identify issues before moving in can prevent costly problems that could arise in the future.

4. Imperfect or sloppy workmanship: While perfect workmanship is ideal, it’s nearly impossible. In reality, any number of things can go wrong on the construction site of a new home. A contractor could get delayed by work on another site and has to hurry to finish the current home he’s working on; rain and other elements can damage a home before it’s closed in; tradesmen could be diverted to another site, etc.

Other common problems with new homes include interior and exterior finish issues, tile and floor damage, water damage, buckled siding, roofing issues and structural problems. All new homes should be inspected to uncover possible defects. Knowing upfront what issues might arise in the future can save homebuyers thousands of dollars in the long term. The most reliable way to uncover problems is by hiring an unbiased third-party home inspector.

Dan Steward is the president of Pillar to Post Home Inspections.

For more information, visit www.pillartopost.com.

The Stress of Buying a New Home...

Buying a home can be one of the more stressful experiences in life. It is often a long and sometimes intimidating process, lasting up to six months on average. The Real Estate market is huge and changes often with swings up and down. It's easy to become overwhelmed by how much is ahead of you and how little you know about the process. But with the right attitude, it can also be an enjoyable, even exhilarating experience.

Here are some tips to make your home-buying experience positive and less stressful.

Preparing to Move

Organize

Be prepared by becoming knowledgeable. Educate yourself on each step of the process so you know what to expect. Get organized ahead of time. Keep a notebook and calendar dedicated exclusively to the home-buying process. An Excel spreadsheet is a great way to organize and compare all the information you gather, such as the homes you are interested in, potential lenders, and different mortgage rates.

Finances

Assess your financial situation before you begin looking for a home. Come up with a solid number for the maximum amount you can afford, as well as a target amount you would like to spend, ahead of time. Overestimate the closing costs (interest rates can change). This is also a good time to begin gathering the financial documents that you'll need when applying for a loan.

Keep your finances in order until you close on your new home, which could be as long as six months away. Do whatever you can to help improve your credit score; don't acquire new debt (no major purchases, new loans or new credit cards), reduce or eliminate any current debt, and pay your bills on time. It is never too early to begin improving your credit and is best started as early as two years prior to purchasing a home.

Find an Agent

Find a real estate agent who you trust and connect with on a personal level. Communication in this relationship is fundamental. Some questions to ask yourself: Are they good at translating industry jargon into terms you can easily understand? Do they communicate well using media that works for you, such as email, cell phone, or video conferencing? Credentials are a big factor too. Choose an agent with proven expertise in both the type of property and property location that interests you.

Finding a Home

"Think from the end," is a common phrase heard in human potential circles. See yourself in your new home. How does it make you feel? What does it look like? Keep a journal to record these thoughts. Be as descriptive as possible. This can help to not only narrow down precisely what you are looking for in a home, but it can also help anchor you emotionally during a potentially unstable time by keeping the big picture in mind.

While dreaming of your new home is an important first step, keeping your expectations in check is equally important. Keep in mind that the criteria of what you are looking for in a home will change along the way. No house is perfect. Be willing to compromise on some of your requirements. Make a list of your top priorities (must-have's) and lower priorities (nice-to-have's). This will help identify areas where you can be more flexible.

Once you've found a home you like and know what you can work with financially, don't let the latest market news influence your decision to move forward. If you start second-guessing the housing market or interest rates, you risk losing the home to another buyer. Choose a home because you love it. Listen to your heart.

Waiting for Acceptance

Once you've made an offer on a new home, try to relax and engage in your routine activities while you wait to hear whether the seller accepts your offer. During this waiting period, there are many potential stressors that could send your mind reeling. What if the seller rejects your offer, or comes back with an unreasonable counter-offer? Was your offer too little, or too much? Be prepared to make many offers before one is accepted. Keep in mind, even if your offer is accepted, there's no guarantee it will close. Try to remain detached from the outcome until after the property has been inspected and you've been approved for a mortgage.

Inspection Period

Hire experienced and certified inspectors to conduct a thorough inspection of the property including possible insect damage. Be present during inspection, so you can ask questions regarding the home and become knowledgeable about any issues that are discovered.

Getting approved for a Loan

Taking out a loan can be the most stressful part of the home-buying process. Transactions typically take at least a month to complete. Having your financial situation scrutinized can be an uncomfortable process. Worrying about whether you will be approved is an added stressor. It helps to gather your financial records (credit card balances/statements, bank statements, investment statements) prior to meeting with a loan officer. Obtain a copy of your credit report; you're entitled by law to one free credit report per year. A copy of your 4506 T form (IRS Tax Return Transcript), which includes a summary of your tax information, is also available online for download.

Don't lose sight of the fact that you have options when choosing a lender and a mortgage. This can help restore a sense of control when so much of the home-buying process is out of your hands. Talk to several lenders; don't just go for the first lender you talk to. Consult with your Real Estate agent to help you through the process of securing a mortgage. Don't hesitate to ask questions until you understand the answer.

After Close, Moving In

Congratulations! You've successfully negotiated yourself through the complex maze that is home-buying and now find yourself at last kicking back on your couch with your favorite drink in the home of your dreams.

USDA Program Makes "Rural" Homes More Accessible...

One of the biggest difficulties many first-time homebuyers face is a lack of down payment and the necessary funds for closing costs. However, even with the widespread availability of "no-money-down programs" evaporating in the credit crisis, one national no-down payment program still remains: USDA Rural Development home loans.

Guaranteed by the USDA (United States Department of Agriculture), this program might make you think that homebuyers have to buy farmland or live "in the country" to qualify, but this is often not the case. In fact, you might be surprised to see just how many neighborhoods actually do qualify as rural development areas. For this program, the term "rural" really applies to those areas with a lower population or fewer homes, not necessarily those areas and neighborhoods far outside of the city.

Other than the location of the property homebuyers are seeking to buy, there is one other limitation to this valuable program that homebuyers must consider: their income. Luckily, however, these numbers have recently increased to allow more potential buyers to take advantage of this special program. For households in non-high cost areas, with up to four people, the income limit can be over $70,000 (every area will be different). In households where 5-8 people reside, the income limitation can be over $90,000 (again, every area will be different). These income limitations are guidelines and, in some cases, may be exceeded.

It's important to note that buyers don't have to be first-timers to qualify for a USDA loan. However, in most cases they cannot own another property at the time of closing a USDA mortgage.

To find out more about USDA loans, give us a call. For more information and income limits, go to http://eligibility.sc.egov.usda.gov.

Contact Craig Wilbur at Craig@CraigWilbur.com

Mortgage Rates Finish 2011 near Historic Lows...

RISMEDIA, Wednesday, January 04, 2012— Freddie Mac recently released the results of its Primary Mortgage Market Survey®, showing average fixed mortgage rates finishing the year near their all-time historic lows helping to keep homebuyer affordability high. Averaging 3.95 percent, the 30-year fixed has been at or below 4.00 percent for the past nine consecutive weeks and only twice in 2011 did it average above 5.00 percent.

The survey results showed that the 30-year fixed-rate mortgage (FRM) averaged 3.95 percent with an average 0.7 point for the week ending December 29, 2011, up from last week when it averaged 3.91 percent. Last year at this time, the 30-year FRM averaged 4.86 percent.

15-year FRM this past week averaged 3.24 percent with an average 0.8 point, up from last week when it averaged 3.21 percent. A year ago at this time, the 15-year FRM averaged 4.20 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.88 percent, with an average 0.6 point, up from the previous week when it averaged 2.85 percent. A year ago, the 5-year ARM averaged 3.77 percent.

1-year Treasury-indexed ARM averaged 2.78 percent this week with an average 0.6 point, up from last week when it averaged 2.77 percent. At this time last year, the 1-year ARM averaged 3.26 percent.

"Mortgage rates ended the year hovering near historic lows in an already affordable housing market,” says Frank Nothaft, vice president and chief economist, Freddie Mac. “For instance, the seasonally-adjusted S&P/Case-Shiller® 20-City Composite home price index in October was the lowest seen since March 2003. The largest hit areas were Las Vegas with the lowest reading since January 1997 and Atlanta which was since June 1998. It's not surprising then that over 5 percent of households in December plan to purchase a home over the next six months, the highest share since May, according to The Conference Board."

For more information, visit http://www.freddiemac.com.

Tips for First Time Home Buyers...

If you are currently in the market for your first home, you probably have lots of questions. You are about to be making an important decision for your future, a great investment of both money and time. We have a wealth of experience helping first time buyers like you make sound, informed decisions. Here are some tips that can help make your home buying process successful:

• Tip #1: Do Your Homework
  The perfect home won't find you by itself. The key step in buying a home is doing the proper research. Educate yourself on local schools, neighborhoods, and the kinds of homes available. By reading available materials and talking with experts such as ourselves, you can start to put together your idea of the perfect home.
• Tip #2: Start Planning
  Most decisions benefit greatly from proper planning, and home buying is certainly no exception. Start a filing system with sections such as home buying, home financing, and service providers. By forming a home buying plan you can more easily focus on the most important factors and help give structure to the entire process. Our website is a great resource for property information.
• Tip #3: Get PreQualified
  Getting prequalified for a loan normally only requires a short phone conversation with a lender, and can greatly help your home search. Prequalification does not guarantee you a loan, but it does provide you with an estimated monthly payment and a price range to use as a guide when shopping for homes. Being prequalified can also often indicate to sellers that you are a serious, prepared buyer.
• Tip #4: Look for Value
  When shopping for homes, it's important to consider potential value. Even if you're not planning to sell the home some time down the line, it's a good idea to consider the future value of the home. Protect yourself against things like falling prices and gradual shifts in the nature of the neighborhood. You may not think of a new home as a means to make money, but it's an important investment that requires caution.
• Tip #5: Decide What You're Looking For
  Settle on the home features that are important to you (covered parking, hardwood floors, architectural style, etc.) and make an ordered list. Having well established guidelines will help narrow down your search and will prevent you from being shown properties that lack your key amenities. It can help you make the decision not to buy an attractive property that doesn't really fit your needs. Our website has a search feature that allows you to filter thousands of listings based on attributes that you select. If you know you want a brick house with gas heat and a garage, you can get the results you're looking for.
• Tip #6: Relax
  You don't have to make an offer on the first home you see. Make sure to look at other listings in the area to get a feel for the marketplace. When you decide to make an offer on a house, consult with your real estate professional so that all of your questions are answered.
• Tip #7: Shop Around for Your Mortgage
  Deciding on the financing for your home can be as important as choosing a home itself. The first step is deciding what kind of loan best fits you: a fixed rate mortgage, or an Adjustable Rate Mortgage (ARM). There are benefits to each form of loan, and your real estate professional can provide you with more information. Next you'll want to begin to shop around for the best lender.
• Tip #8: Protect Yourself
  Be careful when signing a contract on a home that allows you to find financing, have the home inspected, and work through any problem areas that may arise. Paying for a quality home inspection is absolutely crucial! You can save yourself thousands in repair costs by being sure of what you're getting into.

More information for first time buyers can be found on our website, or by giving us a call. We are confident that we can provide the kind of exceptional service that will make this process an exciting one. Don't hesitate to contact us with any questions you may have, we would love to be of assistance to you.

Things to Consider When Purchasing a Home...

There are many issues to evaluate when considering a home purchase including what you can afford, what kind of loan best suits you, the property itself and once you find your dream house, how much you are willing to pay for it.

How Much Can You Afford?

Before starting your search for a home, you must decide how much you can afford. Generally speaking, it is recommended that the down payment be a minimum of 5-20% of the purchase price. In addition, there are two other standard thresholds to consider in terms of how much of your monthly income should be spent on housing.

• Your total housing costs (mortgage, interest, property taxes, insurance) should not exceed 28% of your income.
• The combination of your housing costs and all other monthly debt (car loans, student loans, etc.) should not exceed 36% of your income.

What Type of Loan Structure Works Best For You?

There are many different types of loans available. However, one of the basic decisions you'll have to make is whether you prefer the predictability of a conventional loan, knowing that your payment will be the same amount each month over the life of the loan, or whether you are comfortable with foregoing the fixed monthly payment for an adjustable loan where the initial interest rate is lower and the monthly payment amount will fluctuate periodically throughout the life of the loan. Both conventional and adjustable loans provide a variety of terms to select from to best meet your needs. A mortgage broker will be able to provide a wealth of information on the various options available as well as determine whether you qualify for any government-backed loan programs.

Where Do You Want to Live?

Once you have decided how much you can afford, then you must consider which areas to target for your property search that will both meet your budget constraints and are conducive to your lifestyle. Where do you wish to live: in the city with all of its hustle and bustle, in family-oriented suburbs, in the quiet countryside or perhaps in the mountains? Do you want to be close enough to walk, bike or ride the bus to your favorite destinations, or is a longer drive an acceptable cost to living further away from services? Are high quality school districts important to you either because you have children or for resale purposes? What degree of safety does an area need to possess? How close do you need to be to groceries, shopping, medical services and other amenities?

What Style of Housing Meets Your Needs?

Houses still have the greatest appeal and are a good option for individuals who want a place for the kids and/or animals to be able to run and play, for those who love to garden and create their own landscaping masterpiece, and for people who want a little elbow room between themselves and their neighbors. Houses come in all shapes and sizes: rambler, two-story, split level, modern, traditional, Victorian, Colonial, one room cabins, large mansions or estates. Newer homes located in housing developments will generally have a Homeowners' Association with wide-ranging dues/fees to cover community property expenses, bylaws and covenants, and enforcement practices; whereas, older homes or homes in more rural areas may or may not have any such associations.

Condominiums are frequently a good choice for individuals who prefer to live in an urban setting, people who travel extensively, and those who don't want the responsibility of maintaining a yard. Condominiums come in all sizes, ranging from apartment size to spaces that can exceed the size of an average house. Condominiums will most certainly have an association established to levy fees for building and grounds maintenance. When considering any condominium it is critical to review not only the by-laws and covenants prior to purchase, but also relevant financial documents to ensure that enough funds are in reserve to address future expenses and to prevent buying into an organization's mismanagement or poor planning.

Vacation properties and homes are often sought out in the mountains or near water access. While mountain locations provide easy access to outdoor activities such as skiing, snowmobiling, and snowshoeing in winter and hiking, biking in summer, homes near water provide for a wealth of summer activities involving swimming, boating, waterskiing and beachcombing. These properties can range from a parcel of unimproved land or a plot with a small cabin and just enough amenities to meet basic needs, to a large, fully modernized home suitable for year-round living.

Is This Your New Home Sweet Home?

Once you've found the perfect home, you'll want to try to assess how well the property has been maintained over time, carefully review all property disclosure documents and do a more thorough examination of the property for any hidden surprises. Hiring a home inspector who has extensive credentials is generally considered a wise move.

A home inspection should include a thorough review of:

• Structural elements: construction of walls, ceilings, floors, roof, foundations
• Exterior evaluation: elevation, drainage, driveways, fences, sidewalks, fascia, trim, doors, windows, lights, and exterior receptacles
• Roof/Attic: framing, ventilation, type of roof construction, flashing, and gutters
• Plumbing: identify pipe materials for potable, drain, waste and vent pipes as well as condition of toilets, showers, sinks, faucets, and traps
• Systems and components: water heaters, furnaces, air conditioning, duct work, chimney, fireplace and sprinklers
• Electrical: main panel, circuit breakers, types of wiring, grounding, exhaust fans, receptacles, ceiling fans and light fixtures
• Appliances: dishwasher, range/oven, built-in microwaves, garbage disposal and smoke detectors
• Garage: slab, wall, ceiling, vents, entry, firewall, garage door, openers, lights receptacles, exterior, windows and roof

You'll also want to know what isn't included in the home inspection. Some areas frequently not included in the inspection, or included only at a cursory level are:

• Asbestos
• Radon, methane, radiation, formaldehyde
• Wood-destroying organisms
• Mold, mildew, fungi
• Rodent presence
• Lead

Many home buyers have found talking to prospective neighbors quite enlightening. Not only can you learn more about the neighborhood and get a feel for who may be your future neighbors, but sometimes these interactions can provide valuable information including why the house is on the market, prior issues with the house (flooding/leaks, repeated pest infestations, illegal drug use/production) as well as general information about the neighborhood such as whether there are problems with vandalism and theft, high homeownership turnover, high level of rental properties, or local issues that may impact your interest (plans for a new road or shopping center, etc.).

Another frequently overlooked source of information may be your insurance company. For instance, if you are looking in an area that is prone to earthquakes or flooding, they should be able to tell you if the specific area has a higher than average level of claims which may impact your insurance premium and whether special insurance riders would be required for coverage. They may also be able to tell you if your premiums would be impacted by a higher incidence of claims due to theft and vandalism.

Factors to Consider When Preparing an Offer

Once you have decided you're interested in a specific home, the last step is figuring out how much to offer for it. There will be many factors to consider: your budget, how quickly you want/need to move, how quickly homes are selling, what similar homes in the area have been selling for, how long the house has been on the market, what repairs may be required and perhaps most importantly, how much you want this particular house.

Top Reasons to Own a Home

There's good reason that over half of all Americans are homeowners. Social and financial benefits are key factors when it comes to deciding to buy. Homeownership allows people to grow wealth slowly over time, to hold assets that build equity, and to bring stability into chaotic lives.

Despite these facts, homeownership rates have taken a hit since the recession in 2009. Falling home prices along with reduced access to credit has kept many would-be buyers from entering the market. According to Morgan Stanley, the current homeownership rate is around 59.2%. This is lowest rate since the Census Bureau began tracking in 1965. Has this reduction been a fear-based one?

The top benefits of homeownership haven't changed, even in the face of a down economy. Here are the top five:

1. Savings: Be sure to check out the calculator at the end of this article. You'll find that long-term homeownership is still a way to get big savings.

2. Tax Breaks: They're not on the chopping block just yet. Many homeowners are still able to take the mortgage interest deduction (MID) each year, along with great rebates and credits associated with upgrades made to your home.

3. Equity: When you pay a landlord, it's money down the drain. When you pay on a mortgage, you are paying towards owning a piece of something. You may still owe $100,000, but perhaps the home is worth $200,000. This means you have $100,000 worth of equity you've built up over time.

4. Budgeting: Unless you live in a rent-controlled apartment (and not many do), then each lease renewal could mean a jump in prices. A fixed-rate mortgage, however, means your monthly payment is the same amount for the life of the loan. A $1,000 a month payment on a 30-year mortgage is the same now as it will be in 30 years!

5. Security: When you own, it's yours. You can paint, improve, and decorate. The trees and flowers are yours to enjoy -- for a lifetime if you wish. Most homeowners are in neighborhoods with other homeowners, meaning more time to build relationships and friendships. Recent studies have also shown that homeowners rank themselves as healthier than their renter counterparts.

Should you rent or buy? For a strictly financial evaluation, be sure to check out The New York Times' Interactive calculator to crunch the numbers. This advanced calculator takes into account everything from yearly costs to selling costs and broker fees.

Experts have recommended for years that if you're planning on staying put for 5+ years, buying becomes an increasingly better deal. You have time to recoup any extra expenses found in closing costs and are now making an investment in your future through home price appreciation. Once your mortgage is paid off, you'll have a real asset. That brings real stability.

Home affordability is at near record highs. Now is a good time to run the numbers and see if buying makes good financial sense. If it does, then you're in store for a wealth of benefits that only homeowners can experience.

Published: August 30, 2011

Use of this article without permission is a violation of federal copyright laws.

THANK YOU Carla Davis for allowing me to puplish this article...  MUCH APPRECIATED...

FHA Loan Myths -- The Self-employed and FHA Loan Qualification

One of the biggest myths about getting an FHA home loan? The idea that self-employed people are automatically disqualified for an FHA mortgage because of their employment status. While it’s true that it’s tougher for some in the early stages of a small business to make ends meet, being self-employed is not the kiss of death on an FHA loan application.

Proof of this can be found on the forms and FHA mortgage pages of lender websites—most financial institutions offering FHA loans offer a page on the bank’s website offering “FHA loan prep” checklists which include advice on what to submit if you are self-employed. The notion that you can’t qualify if you work for yourself isn’t shared by lenders.

That said, it can be more difficult for some small business owners to qualify for an FHA loan, FHA refinance or homeowner bailout program for one simple reason; not keeping good records. You may be quite successful in your small business or as a freelance contractor, but if you can’t show on paper that you have a consistent income, the FHA can’t conclude that you are a good risk.

Your FHA loan application requires you to show not only that you were gainfully employed, but also what your net income was compared to business expenses. Self-employed people will also need to show a profit-loss statement. If you don’t keep good records of legitimate business expenses, don’t have your taxes professionally prepared, and guesstimate your profits and losses, the FHA loan process could come to a halt very quickly for you. The question your loan officer will ask goes from “Can you afford your monthly FHA home loan payments?” to, “How long until my applicant needs some kind of homeowner bailout program?”

This is why self-employed people should take plenty of extra time when planning to buy a home. For some, the average prep time is about one year—especially if there are issues with credit repair or disputes on credit reports to deal with. For a self-employed person, showing reliable income for two years is a very good way to make conditions as favorable as possible to get approved for an FHA mortgage.

That means solid record-keeping, an aggressive approach to finding (and keeping) steady work, and paying strict attention to your taxes. Remember that unlike those with traditional careers, there’s an additional layer of scrutiny to the ebb and flow of steady income. If you went a long period between contracts, or if your business shut down for a time, your loan officer will want to know why and whether such periods of inactivity could happen again or how they affect your ability to make your FHA mortgage payments.

Is it more difficult for self-employed people to get an FHA mortgage? Yes. Is it impossible? Absolutely not, but you need to plan for extra scrutiny to your personal bottom line, keep good records, and be able to show your loan officer that you are indeed a good risk.

Loan pre-qualification is different from loan pre-approval...

Before you make an offer to buy a home, be sure your financial affairs are in order by getting pre-approved or pre-qualified for a mortgage loan. Either scenario puts you in a stronger position as a buyer, but they mean different things.

When you are pre-qualified for a home loan, you provide a lender approximate income, current debts and any important details from your credit history. The lender uses these figures to calculate how much money you may be eligible to borrow. You may receive a Conditional Qualification Letter, which determines your likelihood of obtaining a loan. However, all information submitted during pre-qualification is subject to verification at the time your actual loan application is submitted. Because your financial situation has yet to be verified, there is no guarantee of a home loan.

Typically, pre-approval means that your financial situation has been verified by the lender. When you get pre-approved, you fill out a mortgage loan application and may have to pay an application fee. After an extensive examination of your financial situation, your lender will commit in writing to fund your loan, pending a successful appraisal of the home and a few other conditions.

Just because you’re pre-approved for a mortgage loan doesn’t mean you have to borrow the money. However, the lender must stand behind his written loan commitment unless something changes with your situation. Think how attractive you’ll be as a buyer when your offer for a house comes with a letter pre-approving you for the necessary mortgage loan.

There are some things that could cause a lender to withdraw from providing a loan after a pre-approval letter is issued. If your credit situation changes between your pre-approval and the loan’s funding, the lender could change your interest rate or even deny the loan application. So, while you’re buying a house, abstain from applying for credit cards or other loans.

If you haven’t done so already, get a copy of your credit report, which lists your financial history, including total debt and whether you pay bills on time. Checking your credit report regularly is the best way to spot identity theft, credit report errors or other financial missteps that very well could affect your ability to buy a home.

You’re entitled to one free credit report from each of the three credit-reporting bureaus every year. Find out how to obtain your free reports at AnnualCreditReport.com.

Be smart, take steps to secure your finances, and get pre-approved for a home loan. Soon you’ll be in the home you’ve always dreamed about. And, when you’re ready to find your dream home, give us a call (Cheryl @ 469-223-7568 or Den @ 214-507-7475) or send us email (Cheryl – Cheryl@CherylOHagan.com or Den – Dennis@DennisOHagan.com).   We’ll be glad to help...