Be cautious. Five, six months prior to your house hunting, check your credit history (free) to be sure it's accurate. For instance, if you've closed a credit card, make sure it's reported not just as closed, but rather closed at your request. Plan ahead and let lenders check your credit report within the 14 -or 45, depending on the lender-  day span. Be sure to read detailed information under Mortgage Info.

It’s wise to avoid: moving money around, changing banks, or making large purchases three to six months before buying a new home. Lenders need to see that you’re reliable and they want a complete paper trail so that they can get you the best loan possible. Avoid opening new credit cards, amassing too much debt or buying big-ticket items.

When you decide to buy, choose a lender, and get pre-qualified. Then a week before you start house-hunting get a pre-approval letter. It will put you in a much better position to make an offer when you do find the right home. Read more information under Mortgage Info. Be ready to also hand in (to your broker) the earnest money deposit when sending your offer. If it's a cash offer, include your proof of funds.

Timing the Market. When home prices are lower, it is very tempting for potential buyers to try to wait as long as possible in the hopes that prices will decline even further. Once a home is priced to what the current market will bear, buyers will make offers.

Further, the $8,000 tax credit created a high demand as buyers hurried to beat the April 30th deadline. Consequently, home sales went up, inventory got lower, and houses that were being offered at bottom low prices got multiple offers. Many selling for more than the listing price. Econ 101: Low supply plus high demand equals higher price.

Shop Around. The National Association of REALTORS reports that, on average, homes are staying on the market for 7.5 months.

The large inventory gives homebuyers a great opportunity to compare homes that meet their needs.

There’s an old adage in real estate that says buy the smallest, lowest priced house on the block.

Sometimes it is best to buy the worst house on the block, because the worst house per square foot always trades for more than the biggest house.

When you find a home you love, put in your bid and negotiate. Don't provide an opportunity for another buyer to make an offer before you.

You need to look at what other homes have gone for in that neighborhood and you want to get an average price per square foot. Before you buy, drive by the house at all hours of the day to see what’s happening in the neighborhood.

Do your regular commute from the house to make sure it is something you can deal with on a daily basis. Find out how far it is to the nearest grocery store and other services. Even if you don’t have kids, research the schools because it affects the value of your home.

Watch Mortgage Rates. Studies such as the Homeownership in America Index revealed that that majority of people move based on lifestyle changes such as new job, marriage, or family expansion.

Pay close attention to the mortgage rates because buying a new home will likely result in a change in mortgage rates. How much? A monthly payment of a 30-year fixed 5.875 mortgage rate on a 300,000 loan is $1,774.61.  Make sure you click Mortgage Information above and read it carefully.

Negotiate on the Incentives. Sellers eager to move their homes may offer you a variety of incentives. If you accept an incentive, make sure it makes sense for you. Instead of having your bills paid, you may opt to have the seller renovate the master bathroom or install new flooring. Of course, you can always ask the seller to simply deduct the amount in question from the list price.

Be patient.

We're in the midst of a very active market, and acceptable HVCC appraisals are taking a minimum of 10 days to get back. Then middle lenders are waiting for days (5-10?) after the approval because the secondary market (add more days) won't purchase loans fast enough due to the money shortage. 

The July 2009 annual survey by the Office of the Comptroller of the Currency showed us the extent of a second consecutive year of tightened lending standards (following four years of eased underwriting.)

Thus, expect closing about 5-6 weeks after approval of offer. If it's a short sale purchase, be really patient. It varies per case. Some banks are taking over three months to approve the sale.

First calculate the estimated mortgage payment

Several formulas exist to help determine how much a lender will allow a consumer to borrow. One of the more accurate formulas is a front- and back-end ratio.

It states that the buyer can afford as much as 28 percent of his or her gross-monthly income toward the monthly mortgage payment, assuming that the consumer's other debt payments (credit cards, car loans, student loans, etc...) are less than or equal to 8 percent of his or her gross-monthly income.

To better understand this formula, assume a gross-family income of $5,000 a month. The front-end ratio or maximum monthly mortgage payment is (28 percent of $5,000) $1,400. The back-end ratio is (8 percent of $5,000) $400.

Therefore, the buyer can afford a $1,400.00 monthly mortgage payment as long as monthly debt payments are less than or equal to $400. If debt payments exceed the back-end ratio, it will reduce the monthly mortgage payment dollar for dollar. For example, if debt payments are $500, the maximum monthly mortgage payment a person could afford would be reduced to $1,300.

Be cautious

Please click on Mortgage Info on top of this page for other calculators and tools to help you better understand the mortgage process, including a mortgage calculator which allows you to project monthly mortgage payments.

Property Tax Estimator

Down Payment and Closing Costs

These terms refer to how much money the buyer will have to pay out of pocket and up-front to purchase a home.

Down payment is simple; it refers to the amount of money the buyers needs to invest at closing toward the price of the home. Most lenders request a down payment of at least 20 percent of the cost.

When down payment is less than 20%, buyers are asked to buy Private Mortgage Insurance -PMI- to protect the lender should the buyer be unable to pay off.

Closing costs vary from state-to-state, city-to-city and even from home-to-home. Closing costs can include attorney fees, home inspection costs, title search fees, bank fees, termite inspection fees and radon inspection fees, to name a few.

The mortgage lender requires some of these services and others are legally necessary depending on where the buyer lives. For the sake of estimating, closing costs can range from 2 to 7 percent of the purchase price.

Much depends on the points and origination fees a lender charges to make the loan, which are disclosed on the buyer's Good Faith Estimate, a disclosure containing a mortgage lender's "best guess" estimate of all the costs associated with obtaining a loan.

Why I Need A Home Inspection

A home inspection helps ensure homebuyers of the quality of their investment by making them aware of its condition and alerting them to any concerns. This can serve to relieve stress, increase confidence and even reduce the threat of legal action in the future. Please, make sure you have an inspection before purchasing any home, regardless of it's condition. Part of your agent's job is to help you find the home, helping you with the contract, negotiations, and the closing process. Only professional inspectors can properly inspect a house. Some of the benefits of a home inspection are:

  . Knowledge: Understanding exactly what you're buying - old or new

  . Peace of mind: Helps in making a sound buying decision

  . Savings: The home inspection reveals the need for repairs or replacements before you buy

  . Fewer surprises: The home inspection limits the number of problems you may discover after you move in. Request a pest, and Radon Test as well.

  . Education: A good home inspection also gives you invaluable details about your new home in addition to information about the condition of the property. You'll learn where the main shutoff valves to the utilities are located, how the house operates and more!

How do I find a reputable home inspector?

Be cautious

Consider the following when shopping for home inspection companies.

. Experience: How much experience do the inspectors have and how long have they have been in the business? The best home inspectors have been in business for years and have seen thousands of homes.

. Home Inspection Training: Have the inspectors gone through any extensive home inspection training? In many states inspectors can simply call themselves home inspectors without any training or licensing.

. Association Membership:

Is the inspector a member of a professional home inspection organization? Companies that are affiliated with professional organizations are serious about what they do, and know about all the new developments in their fields.

Some well-known trade associations are: American Society of Home Inspectors http://www.ashi.org/ and

National Association of Home Inspectors http://www.nahi.org/

Inspectors in your area can be located through these associations.  

. Liability Insurance: Does the inspector carry Professional Liability Insurance (Errors and Omissions Insurance)? If you ever need to collect on a legal judgment, an inspector without insurance my not be able to pay your claim.

What if I'm buying a newly constructed home?  

An inspection on a new home is important for the buyer to level the playing field.  A home inspector is better able to see nuances that may not be readily visible to an untrained eye. You also need an inspector to offset the builder's or contractor's interest. Much of the information about homes is either taken for granted by people, or remains unfound.   

For newly constructed homes, an inspection of the house before the drywall is installed, otherwise known as a "pre closure inspection", provides a level of quality assurance for the buyer.

This inspection gives you a better chance of identifying and correcting potential problems when they are much easier and less expensive to fix, before they become physically or financially prohibitive.

Step #1 Choose a Lender based on their Mortgage Programs

An experienced mortgage company should be able to work with you one-on-one to determine exactly which mortgage programs will meet your individual needs and what you can qualify for based on your personal information. Applicants with higher credit ratings and/or higher levels of financial reserves generally receive more competitive mortgage rates. 

Step #2 Research the Terms of the Mortgage

Different mortgage lenders have varying price structures that can affect the amount that you pay for your home. An annual percentage rate (APR) includes the actual interest rate on the loan, as well as certain fees and costs associated with the loan. Because a customer may be paying points and other closing costs, the APR disclosed may appear to be higher than the actual interest rate quoted for the loan.

Not all lenders calculate APR identically; however, it does give customers a relatively fair method of comparing price on their potential loans.  

Step #3 Get a pre-approval letter

Even before the house hunting begins, homebuyers need to determine how much they can afford. Mortgage companies or other lending institutions provide pre-qualified loan commitments.

Then when shopping for a home,  a pre-approved mortgage enables a customer to negotiate and submit an offer on a home with more confidence that the mortgage will be issued and the sale will be completed.

Step #4 Do Your "Home-work"

Be sure to go online to sites to check for listings, neighborhood information, current mortgage information and home ownership services.  The right amount of research will help you to better understand the marketplace and homes available in your price range when you're ready to work with a real estate professional.

Step #5 Make a Checklist

To help make the home buying process a little easier, create a checklist of the important features you want in a home.

Keeping in mind that what can't be easily changed -  such as location, year home was built, type and style, floor plan, exterior, basement, number of floors, size of yard  - should be on top of your list.  Then, your lifestyle: How big a role certain amenities, feature play in your daily life?  For instance,  the number of bedrooms, bathrooms, square footage, what will the commute to work be like in winter, are there parks, library, shops, and good schools located near the home?

Step #6 Find a Buyer's Broker

A buyer's broker or agent represents the buyer's interests and helps identify homes that are for sale and in the right price range. The broker also can help with such tasks as writing contracts, negotiating the asking price, and closing the purchase.

Step #7 Make an Offer

Once you find the right home, make an offer. Make sure that your offer is contingent on two items:

1) You're able to obtain adequate financing (it should be already written on your contract) and

2) you can pull out if the property doesn't pass the home inspection, and the owner can't come to terms about how to fix the problem.

Be prepared for counter-offers from other buyers and some negotiation with the seller.

Make an earnest money deposit - a check to indicate that you're serious about buying the home. The check -1-2% of the purchase price-  will apply toward the sales price if the deal goes through; if not, you get it back. When your offer is accepted, it goes to the contract phase. Notify your loan officer that you've found a property,  to begin the appraisal and underwriting process and lock in your interest rate.

Your loan officer will send you a revised good faith estimate which indicates your monthly mortgage payment as well as your estimated cash needed for closing.

Step #8 Hire A Home Inspector

Making your offer contingent on an inspection by a reputable, experienced  home inspector can save thousands of dollars by avoiding unseen problems. Inspectors will check the house for any structural damage. In the contract with the seller, it should state any necessary repairs that must be made before closing on the home.

Prior to closing, walk through the home and check that such repairs have been completed.

It pays to be cautious

Step #9 Decide how you’ll hold title

Plan ahead, talk with your legal counsel and decide how you’ll hold title.

If you’re married, a tenancy by the entireties is a form of joint ownership where the co-owners are husband and wife. In a tenancy by the entireties, neither the husband nor the wife may sell the property unless the other consents to the sale. When one dies, the surviving spouse automatically becomes the sole owner of the property.  No probate is necessary.

If two people who own property as husband and wife divorce and continue to own the property, the form of ownership is converted to a tenancy in common.

As "tenants in common" each party owns a percentage interest in the property. If one party passes on, his or her interest does not go to the surviving owner but is distributed in accordance with the will of the deceased, whose estate must be probated.

In most courts, if a deed is written without specification of how title is held, the property is titled as "tenants in common."

Unmarried persons should seek legal advice regarding how title should be held.

A joint tenancy is a form of property co-ownership in which each co-owner owns an equal, partial interest in an entire property. When a joint tenant dies, the decedent’s ownership interest goes to the remaining joint tenant(s), not to the decedent’s heir(s). As "joint tenants" each party owns an undivided, equal interest that passes automatically to the surviving joint tenant.

Probate is not necessary if the deed reads "joint tenants with rights of survivorship". Any of the joint tenants may transfer his or her interest in the property to another party, but this dissolves the joint tenancy and creates a tenants-in-common interest with respect to the other parties whose names are on the title. Seek legal advice.

Step #10 Buy Homeowners Insurance

Lenders require homeowners insurance to protect the new homebuyer's interests as well as their own. There are many providers so shop around for the best rates.

Step #11 The Closing

This is where the seller and buyer sign many settlement-closing papers to transfer the ownership of the home and all transactions are finalized.

The least you'll need to bring is a photo id, a cahier's check. and the payment receipt for your homeowners insurance certificate.

First, Get Organized.

When moving many miles away it makes sense to organize a list of the key information required before deciding where to live. Important questions that will need to be answered include:

 What is the cost of living? How far will the new money go?

 What is the price of a similar sized house in the new location?  

 What is the community like?

 What is the public transportation system like?  

 How long will my commute be?

Will this be a good area for my spouse to find work?  

 How is the school system?  

 What is the noise factor?  

Due Diligence

To learn more about the typical lifestyle of the new town, as well as community events, get a few back copies of the local newspaper, or log on to the local papers Web site. This third party information, together with what you learn from the local Chamber of Commerce, will give you a sense of the personality of the area.

Use the Internet.

For perhaps the biggest decision in the entire process, finding a home, the World Wide Web is an invaluable tool. Web sites can provide visitors with an abundance of incredibly useful information.

A function like the Home Price Comparison Index  will calculate approximately how much a home will be worth in the new market, which as a result will provide insight into the cost of living. Visitors also can find a variety of community and neighborhood information including median age and income, percentages of married couples and children, recent home sales, and a listing of elementary and high schools with demographic information on the schools.

Feet on the Street.

We can send you names of experienced agents in the 50 states.

When you have a chance to physically visit the new city and have begun working with a real estate sales associate look to see how much new construction and remodeling work is taking place. This will tell you whether the neighborhood is popular, and whether current residents plan to stay. Also, have the sales associate take you through the neighborhood after hours. See what the neighborhood looks like when all have returned from work and school.

Coffee Talk.

If possible, try to have a few conversations with the locals near a prospective home. More than anyone, they have their fingers on the pulse of the neighborhood and the community at large.

Work With Your Employer, if your spouse will need a job.

Make it clear to your new employer that your spouse now will be in need of a job. The company likely will have relationships with relocation experts and executive recruitment firms to help in the spousal job search process.