Getting Started
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Elkins & Associates, Inc.
Do You Know What You Want?
Whether you are a first-time homebuyer or entering the marketplace as a repeat buyer,
you need to ask why you want to buy. Are you planning to move to a new community due
to a lifestyle change or is buying an option and not a requirement? What would you like
in terms of real estate that you do not now have? Do you have a purchasing timeframe?
Whatever your answers, the more you know about the real estate marketplace, the more
likely you are to effectively define your goals. As an interesting exercise, it can be
worthwhile to look at the questions above and to then discuss them in detail when
meeting with local REALTORS®.
Do You Have The Money?
Homes and financing are closely intertwined. (Financing is the difference between the
purchase price and the downpayment, commonly referred to as debt or the mortgage.)
The good news is that over the years new and innovative loan programs have evolved
which require a 5 percent downpayment or less. In fact, a number of programs now allow
purchasers to buy real estate with nothing down.
In addition to a down payment, purchasers also need cash for closing costs (the final
costs associated with closing the loan). Several newly emerging loan programs not only
allow the purchase of a home with no money down, but also underwrite closing costs.
Not everyone, however, elects to purchase with little or no money down. Less money
down means higher monthly mortgage payments, so most homebuyers choose to buy
with some cash up front.
As to closing costs, in markets where buyers have leverage, it may be possible to
negotiate an offer for a home that requires the owner to pay some or all of your
settlement expenses. Speak with local REALTORS® for details.
Is Your Financial House in Order?
Those great loans with little or nothing down are not available to everyone: You need
good credit. For at least one year prior to purchasing a home, you should assure that
every credit card bill, rent check, car payment and other debt is paid in full and on time.
Get a REALTOR®
More than 2 million people in the United States have earned real estate licenses.
However, real estate is a tough business with a steep dropout rate, and the result is that
only a small percentage of those with licenses actively help buyers and sellers.
The National Association of REALTORS® (NAR) includes 750,000 brokers and
salespeople, individuals bound together with a strong Code of Ethics, extensive training
opportunities and a wealth of community information. NAR members are routinely active
in PTAs, local government committees and a variety of neighborhood organizations.
Being actively involved in community affairs provides REALTORS® with a better
understanding of the area in which they are selling.
Why?
Buying and selling real estate is a complex matter. At first it might seem that by checking
local picture books or online sites you could quickly find the right home at the right price.
How do you choose?
In every community you're likely to find a number of realty brokerages. Because there is
heated competition, local REALTORS® must fight hard to succeed in your community.
The best place to find a local REALTOR® is from REALTOR.com's® extensive listing of
community professionals and properties. Other sources include open houses, local
advertising, Web sites, referrals from other REALTORS®, recommendations from
neighbors and suggestions from lenders, attorneys, financial planners and CPAs. The
experiences and recommendations of past clients can be invaluable.
In many cases buyers will interview several REALTORS® before selecting one
professional with whom to work. These interviews represent a good opportunity to
consider such issues as training, experience, representation and professional
certifications.
What should you expect? (Working with a REALTOR®)
Once you select a REALTOR® you will want to establish a proper business relationship.
You likely know that some REALTORS® represent sellers while others represent buyers.
Each REALTOR® will explain the options available, describe how he or she typically
works with individuals and provide you with complete agency disclosures (the ins and
outs of your relationship with the agent) as required in your state.
Once hired for the job, the REALTOR® will provide you with information detailing current
market conditions, financing options and negotiating issues that might apply to a given
situation. Remember: Because market conditions can change and the strategies that
apply in one negotiation may be inappropriate in another, this information should not be
set in stone. During your time in the marketplace REALTORS® will keep you updated
and alert you to each step in the transaction process.
Get Loan Preapproval
Few people can buy a home for cash. According to the National Association of
REALTORS® (NAR), nearly nine out of 10 buyers in 1999 financed their purchase, which
means that virtually all buyers -- especially first-time purchasers -- required a loan.
The real issue with real estate financing is not getting a loan (virtually anyone willing to
pay lofty interest rates can find a mortgage). Instead, the idea is to get the loan that's
right for you -- the mortgage with the lowest cost and best terms.
REALTORS® routinely suggest that consumers start the mortgage process well before
bidding on a home. Many lenders (the sources of money) and programs, for example,
are available right here in the finance section of Homestore.com as well as through
recommendations from local REALTORS®. By meeting with lenders -- either online or
face to face -- and looking at loan options, you will find which programs best meet your
needs and how much you can afford.
REALTORS® also recommend preapprovals for another reason: Purchase forms often
require buyers to apply for financing within a given time period, in many cases, seven to
10 days. By meeting with loan officers in advance and identifying mortgage programs, it
won't be necessary to quickly find a lender, check credit, and rush into a financing
decision that may not be the best option.
What is it?
"Preapproval" means you have met with a loan officer, your credit files have been
reviewed and the loan officer believes you can readily qualify for a given loan amount
with one or more specific mortgage programs. Based on this information, the lender will
provide a preapproval letter, which shows your borrowing power. You can visit as many
lenders as you like and get several preapprovals, but keep in mind that each one carries
with it a new credit check, which will show up on future credit reports.
Although not a final loan commitment, the preapproval letter can be shown to listing
brokers when bidding on a home. It demonstrates your financial strength and shows that
you have the ability to go through with a purchase. This information is important to
owners since they do not want to accept an offer that is likely to fail because financing
cannot be obtained.
How do you get preapproval?
Real estate financing is available from numerous sources, including lenders here in the
finance section of Homestore.com, mortgage companies that have worked with local
REALTORS® and in some cases, individual REALTORS® themselves. Based on his or
her experience, the REALTOR® may suggest one or more lenders with a history of
offering competitive programs and delivering promised rates and terms.
The loan officer will carefully review your financial situation, including your credit report
and other information. The lender will then suggest programs which most-closely meet
your needs. For instance, a first-time buyer may qualify for state-backed mortgage
programs with little money down and low interest rates, while a repeat purchaser
(someone who has bought a home before) with more equity (money invested in the
home) might want to get a 15-year loan and the lower overall interest costs it represents.
Typically, first-time buyers opt for the traditional 30-year loan, with either a floating
interest rate or a fixed rate of interest over the life of the loan.
Look at Homes
Some 6 million new and existing homes are sold each year. There's no shortage of
housing options, but with so many choices the challenge becomes finding the property
which best meets your needs.
The housing market is complicated because the stock of homes for sale is always in flux.
If it were possible to have a complete list of every home for sale at this very moment in a
given community, such a list would become obsolete within seconds as new homes
become available and properties now for sale are put under contract.
In effect, buyers are looking at a moving target in a marketplace that is never static.
Because of this, it is important to know as much as possible about the choices in
preferred markets, and the way to do that is by working closely with a local REALTOR®
who has a good "lay of the land."
What are you looking for?
A home is more than just a collection of bedrooms and bathrooms. Several properties --
each with four bedrooms, three baths, and the same price -- may well represent radically
different designs, commuting distances, lot sizes, tax costs, interior dimensions, and
exterior finishes.
Each of us is different and so it's important to list the features and benefits you want in a
home. Consider such things as pricing, location, size, amenities (extras such as a pool or
extra-large kitchen) and design (one floor or two, colonial or modern, etc.).
Next, it's important to consider your priorities. If you can't get a home at your price with all
the features you want, then what features are most important? For instance, would you
trade fewer bedrooms for a larger kitchen? A longer commute for a bigger lot and lower
cost?
Lastly, consider your needs in several years. If you'll need a larger home, maybe now is
the time to buy a bigger house rather than moving or expanding in the future. If you
expect your income to increase, perhaps you should consider a more expensive home
financed with a loan program where monthly payments increase in the future.
Where should you look?
All neighborhoods and communities have a special nature that gives them identity and
value. One community may be well known for historic homes while another offers both
suburban living as well as easy access to downtown office areas.
REALTOR.com® offers about 1.4 million homes online. By any standard, it's the largest
source for property information online or off. You can look at homes to contact listing
brokers, and you can also search Realtor.com to find brokers who offer buyer
representation services.
Whether you are a first-time homebuyer or entering the marketplace as a repeat buyer,
you need to ask why you want to buy. Are you planning to move to a new community due
to a lifestyle change or is buying an option and not a requirement? What would you like
in terms of real estate that you do not now have? Do you have a purchasing timeframe?
Whatever your answers, the more you know about the real estate marketplace, the more
likely you are to effectively define your goals. As an interesting exercise, it can be
worthwhile to look at the questions above and to then discuss them in detail when
meeting with local REALTORS®.
Do You Have The Money?
Homes and financing are closely intertwined. (Financing is the difference between the
purchase price and the downpayment, commonly referred to as debt or the mortgage.)
The good news is that over the years new and innovative loan programs have evolved
which require a 5 percent downpayment or less. In fact, a number of programs now allow
purchasers to buy real estate with nothing down.
In addition to a down payment, purchasers also need cash for closing costs (the final
costs associated with closing the loan). Several newly emerging loan programs not only
allow the purchase of a home with no money down, but also underwrite closing costs.
Not everyone, however, elects to purchase with little or no money down. Less money
down means higher monthly mortgage payments, so most homebuyers choose to buy
with some cash up front.
As to closing costs, in markets where buyers have leverage, it may be possible to
negotiate an offer for a home that requires the owner to pay some or all of your
settlement expenses. Speak with local REALTORS® for details.
Is Your Financial House in Order?
Those great loans with little or nothing down are not available to everyone: You need
good credit. For at least one year prior to purchasing a home, you should assure that
every credit card bill, rent check, car payment and other debt is paid in full and on time.
Get a REALTOR®
More than 2 million people in the United States have earned real estate licenses.
However, real estate is a tough business with a steep dropout rate, and the result is that
only a small percentage of those with licenses actively help buyers and sellers.
The National Association of REALTORS® (NAR) includes 750,000 brokers and
salespeople, individuals bound together with a strong Code of Ethics, extensive training
opportunities and a wealth of community information. NAR members are routinely active
in PTAs, local government committees and a variety of neighborhood organizations.
Being actively involved in community affairs provides REALTORS® with a better
understanding of the area in which they are selling.
Why?
Buying and selling real estate is a complex matter. At first it might seem that by checking
local picture books or online sites you could quickly find the right home at the right price.
How do you choose?
In every community you're likely to find a number of realty brokerages. Because there is
heated competition, local REALTORS® must fight hard to succeed in your community.
The best place to find a local REALTOR® is from REALTOR.com's® extensive listing of
community professionals and properties. Other sources include open houses, local
advertising, Web sites, referrals from other REALTORS®, recommendations from
neighbors and suggestions from lenders, attorneys, financial planners and CPAs. The
experiences and recommendations of past clients can be invaluable.
In many cases buyers will interview several REALTORS® before selecting one
professional with whom to work. These interviews represent a good opportunity to
consider such issues as training, experience, representation and professional
certifications.
What should you expect? (Working with a REALTOR®)
Once you select a REALTOR® you will want to establish a proper business relationship.
You likely know that some REALTORS® represent sellers while others represent buyers.
Each REALTOR® will explain the options available, describe how he or she typically
works with individuals and provide you with complete agency disclosures (the ins and
outs of your relationship with the agent) as required in your state.
Once hired for the job, the REALTOR® will provide you with information detailing current
market conditions, financing options and negotiating issues that might apply to a given
situation. Remember: Because market conditions can change and the strategies that
apply in one negotiation may be inappropriate in another, this information should not be
set in stone. During your time in the marketplace REALTORS® will keep you updated
and alert you to each step in the transaction process.
Get Loan Preapproval
Few people can buy a home for cash. According to the National Association of
REALTORS® (NAR), nearly nine out of 10 buyers in 1999 financed their purchase, which
means that virtually all buyers -- especially first-time purchasers -- required a loan.
The real issue with real estate financing is not getting a loan (virtually anyone willing to
pay lofty interest rates can find a mortgage). Instead, the idea is to get the loan that's
right for you -- the mortgage with the lowest cost and best terms.
REALTORS® routinely suggest that consumers start the mortgage process well before
bidding on a home. Many lenders (the sources of money) and programs, for example,
are available right here in the finance section of Homestore.com as well as through
recommendations from local REALTORS®. By meeting with lenders -- either online or
face to face -- and looking at loan options, you will find which programs best meet your
needs and how much you can afford.
REALTORS® also recommend preapprovals for another reason: Purchase forms often
require buyers to apply for financing within a given time period, in many cases, seven to
10 days. By meeting with loan officers in advance and identifying mortgage programs, it
won't be necessary to quickly find a lender, check credit, and rush into a financing
decision that may not be the best option.
What is it?
"Preapproval" means you have met with a loan officer, your credit files have been
reviewed and the loan officer believes you can readily qualify for a given loan amount
with one or more specific mortgage programs. Based on this information, the lender will
provide a preapproval letter, which shows your borrowing power. You can visit as many
lenders as you like and get several preapprovals, but keep in mind that each one carries
with it a new credit check, which will show up on future credit reports.
Although not a final loan commitment, the preapproval letter can be shown to listing
brokers when bidding on a home. It demonstrates your financial strength and shows that
you have the ability to go through with a purchase. This information is important to
owners since they do not want to accept an offer that is likely to fail because financing
cannot be obtained.
How do you get preapproval?
Real estate financing is available from numerous sources, including lenders here in the
finance section of Homestore.com, mortgage companies that have worked with local
REALTORS® and in some cases, individual REALTORS® themselves. Based on his or
her experience, the REALTOR® may suggest one or more lenders with a history of
offering competitive programs and delivering promised rates and terms.
The loan officer will carefully review your financial situation, including your credit report
and other information. The lender will then suggest programs which most-closely meet
your needs. For instance, a first-time buyer may qualify for state-backed mortgage
programs with little money down and low interest rates, while a repeat purchaser
(someone who has bought a home before) with more equity (money invested in the
home) might want to get a 15-year loan and the lower overall interest costs it represents.
Typically, first-time buyers opt for the traditional 30-year loan, with either a floating
interest rate or a fixed rate of interest over the life of the loan.
Look at Homes
Some 6 million new and existing homes are sold each year. There's no shortage of
housing options, but with so many choices the challenge becomes finding the property
which best meets your needs.
The housing market is complicated because the stock of homes for sale is always in flux.
If it were possible to have a complete list of every home for sale at this very moment in a
given community, such a list would become obsolete within seconds as new homes
become available and properties now for sale are put under contract.
In effect, buyers are looking at a moving target in a marketplace that is never static.
Because of this, it is important to know as much as possible about the choices in
preferred markets, and the way to do that is by working closely with a local REALTOR®
who has a good "lay of the land."
What are you looking for?
A home is more than just a collection of bedrooms and bathrooms. Several properties --
each with four bedrooms, three baths, and the same price -- may well represent radically
different designs, commuting distances, lot sizes, tax costs, interior dimensions, and
exterior finishes.
Each of us is different and so it's important to list the features and benefits you want in a
home. Consider such things as pricing, location, size, amenities (extras such as a pool or
extra-large kitchen) and design (one floor or two, colonial or modern, etc.).
Next, it's important to consider your priorities. If you can't get a home at your price with all
the features you want, then what features are most important? For instance, would you
trade fewer bedrooms for a larger kitchen? A longer commute for a bigger lot and lower
cost?
Lastly, consider your needs in several years. If you'll need a larger home, maybe now is
the time to buy a bigger house rather than moving or expanding in the future. If you
expect your income to increase, perhaps you should consider a more expensive home
financed with a loan program where monthly payments increase in the future.
Where should you look?
All neighborhoods and communities have a special nature that gives them identity and
value. One community may be well known for historic homes while another offers both
suburban living as well as easy access to downtown office areas.
REALTOR.com® offers about 1.4 million homes online. By any standard, it's the largest
source for property information online or off. You can look at homes to contact listing
brokers, and you can also search Realtor.com to find brokers who offer buyer
representation services.
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