A Survival Guide for Buying a Home
Since the publication of the first edition of A Survival Guide for Buying a Home, much has changed in the real estate market. The inventory of homes-for-sale is ballooning and prospective buyers will need new techniques to narrow their choices effectively. At the same time, it is becoming increasingly difficult for the average buyer to qualify for a loan. This newly revised edition is tailored to help. It includes updated information on credit requirements, loan qualifying ratios, lease...
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If you’re looking for a home in today’s real estate market, you know that the rules have changed. Despite all the challenges that come with the current housing climate, there is glut of houses on the market, making it an ideal time to buy the home you really want. Inventories are high, interest rates are low, and sellers are flexible. With the right guidance, you can find your dream home at a price you can afford. In the second edition of A Survival Guide for Buying a Home, you will find answers that will help you face the new realities of the real estate market. In this revised and updated edition, veteran real estate broker Sid Davis includes the latest information on: • Time-saving techniques that will help buyers narrow their choices effectively • Mortgage and loan rules • Buying foreclosures and short sales • Lease options • Cleaning up, increasing, and maintaining your credit score • Twenty costly mistakes that are made by home buyers and how those mistakes can be avoided You also learn all the ins and outs of finding the right agent, evaluating neighborhoods, buying homeowners insurance and warranties, arranging for appraisals and inspections, preparing your purchase for resale, and more. With this helpful guide in hand, you will be ready to find the home you’ve always imagined without breaking the bank. Sid Davis, owner of Sid Davis & Associates, has more than 25 years of experience as a real estate broker and home renovator. He is the author of several books, including Home Makeovers That Sell, The First-Time Homeowner’s Survival Guide, and Your Eco-Friendly Home, as well as countless articles for national publications. He lives in Farmington, Utah, and can be reached at www.sid-davis.com
Introduction to the Second Edition\ When the first edition of A Survival Guide for Buying a Home was published in 2004, the housing market was well on its way to suborbit prices. The mind-set of buyers at that time was not how to buy a home they could afford and get the best deal, but how they could buy the biggest home possible with the lowest down payment.\ Real estate agents grew skilled at finding lenders that would give buyers the biggest loans and be willing to ignore any egregious credit problems. And they learned how to handle multiple offers on homes that sometimes resulted in intense bidding frenzies. Each new round of homes built in a subdivision sported price tags higher than those listed previously. It was a one-way ticket up the economic ladder and no one thought about an eventual reentry, or even whether such a thing would ever happen. We now have our answer.\ The first edition of this book covered subprime loans, high debt-to-income loans, buying conservatively or going for the max, and other concerns involved in buying a home. Those days, of course, are gone. There's now a new reality to home buying, the landscape has changed, and new home-buying skills are necessary in today's rapidly changing market.\ This second edition of A Survival Guide for Buying a Home focuses on the new home-buying landscape that's still undergoing fast-paced changes. Gone are the sections on getting a loan with zero down and adjustable rate loans with interest-only payments. Instead, the emphasis is on how to build and maintain good credit and buy a home within your income.\ Also covered is how to evaluate and compare good faith estimates from different mortgage lenders to find out which one is offering you the best deal. There should be no wondering at closing whether you got the best and cheapest loan possible. And coupled with the new information in Chapter 5 on how to make offers and negotiate the best deals, you're practically guaranteed to get the most house for your money.\ Throughout the book, I've endeavored to explain in each chapter how that particular real estate topic affects your pocketbook and what you can do to save money. For easier navigation, each chapter begins with a list of the important concepts covered. Each chapter also concludes with a list of suggestions on how you can implement what you've learned in your efforts to buy and own a home.\ Throughout the book you'll also find valuable up-to-date information on:\ How mortgage lenders now qualify you for a mortgage\ How to increase and maintain your credit score\ Why it's important to nail down a mortgage commitment before you start shopping\ How to shop for a mortgage lender and get the best deal\ How to streamline your home-shopping strategy to find your dream home fast\ How to present your offer and get it accepted\ How to find a competent home inspector, then how to use an inspection report to protect yourself and to negotiate with the sellers\ How to avoid common mistakes condo, co-op, and townhouse buyers make that cost money and happiness\ How to buy a manufactured home, whether modular, panel, precut, or mobile\ The insurance you need to protect yourself from floods, earthquakes, and other concerns\ In addition, Chapter 10 distills over twenty-five years of real estate experience into a list of twenty common mistakes home buyers make and how to avoid making them yourself. Updated and expanded from the previous edition, this book is chockfull of tips on buying the best house at the best deal.\ A new feature of this Second Edition is its wealth of "Survival Tips" that highlight critical points in the home-buying effort. Also, because single home buyers now account for nearly a fifth of all home sales, there's a new appendix for home-buying singles, with even more shopping and buying tips.\ It's a great time to buy a home. Interest rates are down, sellers are flexible, and inventories are high. After reading this book, you'll have all the tools you need to go out and make it happen.\ '\ Excerpted from A SURVIVAL GUIDE FOR BUYING A HOME by Sid Davis. Copyright © 2009 by Sid Davis. Published by AMACOM Books, a division of American Management Association, New York, NY. Used with permission.\ All rights reserved. http://www.amacombooks.org.
Chapter 1. First Steps to Becoming a Homeowner Renting vs. Home Buying Owning Your Own Home, an American Norm Financial Advantages of Buying a Home All About Leverage, Appreciation, and Equity Tax Advantages of Buying a Home The Difference Between a Buyer s Market and a Seller s Market Home Buying Step One: Talk to a Mortgage Lender How Credit Scoring Affects Your Credit Working with Credit Reporting Agencies How Much Home Can You Afford Chapter 2. Mortgage Loans 101 How the System Works FHA Guaranteed Programs Department of Agriculture Loans VA Guaranteed Loans State and Local Housing Programs Seller Financing Understanding Points and Buy-downs All About Annual Percentage Rate (APR) All About Private Mortgage Insurance (PMI) Loan Payment Options Locking in an Interest Rate Sources of Down Payment Shopping Mortgages on the Internet Chapter 3. Finding and Working with a Mortgage Lender Avoiding Predatory Lenders Prequalified vs. Preapproved Paperwork Lenders Need to Get Started How to Find a Good Lender All About Garbage Fees and Closing Costs Negotiating Lender Fees Working with a Lender on the Internet Chapter 4. Once You re Prequalified, It s Shopping Time Buy Conservative or Go for the Max Importance of Location How to Find and Work with an Agent Narrowing Down Your List Develop Your Dream House Shopping List Pros and Cons of a Fixer-upper Buying New Construction Ten Things You Should Know Before You Buy a New Home How to Shop for a Home on Your Own Narrowing Down Your Choices Chapter 5. Getting the Best Deal Emotional Factors Are Important How to Determine What to Offer What to Do When a House You Want is Overpriced Sellers Are Emotional, Too Getting the Sellers to Pay Concessions Combining Grants and Seller Concessions Filling Out the Paperwork Buying Bank Foreclosures and Short Sales Home Warranties Can Save You Money Four Things to Look for When You Buy a Policy Home Inspections: Don t Buy Without One Appraisals: They re Not Inspections The Unique Challenges of a Co-op or Condo Chapter 6. Buying Condos, Co-ops, and Other Options Condos 101 Condos and Co-ops in Urban Areas Townhouses PUDs (Planned Unit Developments) Twin Homes Financing Condos and Townhouses Homeowner Associations Do the Walk Before You Sign Chapter 7. Insurance Matters for Homeowners Homeowners Insurance 101 Three Components of a Homeowners Policy Condo and Co-op Insurance Importance of a Home Inventory How to Pick an Insurance Company Narrowing Down Your Choices Title Insurance 101 Chapter 8. Tax Aspects of Owning and Buying a Home How Tax Deductions Work Tax Advantages of Working at Home Turning Extra Space into Tax Breaks and Income Property Taxes and Your Monthly Payment Property Taxes 101 Buying a Home Using 401(k) or IRA 1031 Tax Deferred Exchange Chapter 9. Selling Your Home and Moving Shaping Up Your Home to Sell for the Most Money Positioning Your Home to Get the Most Money How to Determine Asking Price How to Handle an Offer How to Find and Work with Movers Moving-related Tax Deductions Moneymaking Garage Sales Chapter 10. Buying a Manufactured, Modular, or Mobile Home The Different Kinds of Manufactured Homes Owning vs. Renting the Lot Manufactured Home Money Matters How to Shop for a Manufactured Home Tips on Buying a Building Lot Building Permit and Site Fees Resale Value of Manufactured Homes The Bottom Line on Buying and Manufactured Homes Chapter 11. How to Avoid the 15 Costliest Mistakes Homebuyers Make #1. Not Planning Your Move #2. Buying a Home Before You ve Sold Your Current One #3. Not Getting a Preapproval Letter #4. Not Having an Exit Strategy #5. Not Checking Out the Neighborhood #6. Buying the Wrong Type of House #7. Buying a Home on Impulse #8. Buying a Property That s Hard to Sell #9. Overextending Your Budget #10. Not Protecting Yourself When You Make an Offer #11. Getting Family, Relatives, and Friends Too Involved #12. Not Being Able to Make a Decision #13. Not Getting a Buyer s Broker Early On #14. Not Getting a Professional Home Inspection #15. Not Checking Out the Homeowners Association First Appendix A. Shopping Comparison Checklist Appendix B. Step-by-step Checklist to Owning Your Dream Home Appendix C. Step-by-step Checklist to Buying a Condo or Co-op Glossary List of Additional Resources
