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19. Are other types of inspections required? If your home inspector discovers a serious problem a more specific Inspection may be recommended. It's a good idea to consider having your home inspected for the presence of a variety of health-related risks like radon gas asbestos, or possible problems with the water or waste disposal system. 20. What about lead based paint? and how about lead in the home? If the house you're considering was built before 1978 and you have children under the age of seven, you will want to have an inspection for lead-based point. It's important to know that lead flakes from paint can be present in both the home and in the soil surrounding the house. The problem can be fixed temporarily by repairing damaged paint surfaces or planting grass over effected soil. Hiring a lead abatement contractor to remove paint chips and seal damaged areas will fix the problem permanently. 21. Is living near a power line a health hazard? There are no definitive research findings that indicate exposure to power lines results in greater instances of disease or illness.  However, there is a lot of literature which says that it is dangerous to your health. One light and power company won a major law suit by arguing that their repairmen were near the power lines making repairs and never got sick.  What was with the jury?  Of course the repairmen did not get sick:  when they arrived on the scene, the power lines were down, and as soon as the lines were up again, the repairmen left. That jury did not wear their thinking caps. 22. Do I need an attorney to help me buy a home? Laws vary by state. Some states require a lawyer to assist in several aspects of the home buying process while other states do not, as long as a qualified real estate professional is involved. Even if your state doesn't require one, you may want to hire a real estate lawyer to help with the complex paperwork and legal contracts. A real estate lawyer can review contracts, make you aware of special considerations, and assist you with the closing process. The problem here is that many people call an attorney they know to help them and that attorney knows nothing about real estate but does not tell that to his client.  He makes a fee, though.  Your real estate agent may be able to recommend a lawyer. If not, shop around. Find out what services are provided for what fee, and whether the attorney is experienced at representing homebuyers. 23. Do I need homeowner's insurance? Yes. Yes. Yes. For your own protection.  Also, a paid homeowner's insurance policy (or a paid receipt for one) is required at closing, so arrangements will have to be made prior to that day. Plus, involving the insurance agent early in the home buying process can save you money. Insurance agents are a great resource for information on home safety and they can give tips on how to keep insurance premiums low. 24. How can I lower my homeowner's insurance costs? Be sure to shop around among several insurance companies. Also, consider the cost of insurance when you look at homes. Newer homes and homes constructed with materials like brick tend to have lower premiums. Also, flood insurance does not cost that much, so consider adding it. Choose a home with a fire hydrant or a fire department nearby. 25. Is the home located in the flood plain? Your real estate agent or lender can help you answer this question. If you live in a flood plain, the lender will require that you have flood insurance before lending any money to you. But if you live near a flood plain, you may choose whether or not to get flood insurance coverage for your home. Work with an insurance agent to construct a policy that fits your needs. 26. What other matters should I consider before buying a home? Always check to see if the house is in a low-lying area, in a high-risk area for natural disasters (like earthquakes, hurricanes, tornadoes, etc.), or in a hazardous materials area. Be sure the house meets building codes. Also consider local zoning laws, (or deed restrictions)  which could affect remodeling or making an addition in the future. Your real estate agent should be able to help you with these questions. 27. How do I go about making an offer?  Your real estate agent will assist you in making an offer, which will include the following information: - Complete legal description of the property - Amount of earnest money - Down payment and financing details - Proposed move-in date - Price you are offering - Proposed closing date - Length of time the offer is valid - Details of the deal - Remember that a sale commitment depends on negotiating a satisfactory contract with the seller, not just making an offer. Other ways to lower insurance costs include insuring your home and cars with the same company, increasing home security, and seeking group coverage through alumni or business associations. Insurance costs are always lowered by raising your deductibles, but this exposes you to a higher out-of-pocket cost if you have to file a claim. 28. How do I determine the initial offer? Unless you have a buyer's agent, remember that the agent works for the seller. Make a point of asking him/her to keep your discussions and information confidential. Listen to your real estate agent's advice, but follow your own instincts on deciding a fair price. Calculating your offer should involve several factors: what homes sell for in the area, the home's condition, how long it's been on the market, financing terms, and the seller's situation. By the time you're ready to make an offer, you should have a good idea of what the home is worth and what you can afford. And, be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth until they can agree on a price. 29. What is earnest money?   Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary with local customs and conditions). If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you. If you back out of a deal, you may forfeit the entire amount, or you may have your money refunded, depending on how you have structured the contract.. 30. What is a home warranty?  Should I get a home warranty?   Home warranties offer you protection for a specific period of time (e.g., one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner's insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves cash-strapped. 31. What is a mortgage? Generally speaking, a mortgage is a loan obtained to purchase real estate. The "mortgage" itself is a lien (a legal claim) on the home or property that secures the promise to pay the debt. All mortgages have two features in common: principal and interest.  32. What is loan to value (LTV)? How does it determine the amount of my loan?  The loan to value ratio is the amount of money you borrow compared with the price or appraised value of the home you are purchasing. Each loan has a specific LTV limit. For example: With a 95% LTV loan on a home priced at $100,000, you could borrow up to $95,000 (95% of $100,000), and would have to pay,$5,000 as a down payment. The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV the less cash homebuyers are required to payout of their own funds. So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require mortgage insurance policy. 33. What types of mortgage loans are there?   Fixed Rate Mortgages: Payments remain the same for the life of the loan - 15-year. 30-year Housing cost remains unaffected by interest rate changes and inflation.  Adjustable Rate Mortgages (ARMS): Payments increase or decrease on a regular schedule with changes in interest rates; increases subject to limits. Balloon Mortgages: Offers very low rates for an Initial period of time (usually 5, 7, or 10 years); when time has elapsed, the balance is clue or refinanced (though not automatically).  Two-Step Mortgage- Interest rate adjusts only once and remains the same for the life of the loan ARMS linked to a specific index or margin. Generally offer lower initial interest rates Monthly payments can be lower May allow borrower to qualify for a larger loan amount. 34. When do Adjustable Rate Mortgages (ARMS) make good sense?   ARM = Adjustable Rate Mortgage. An ARM may make sense if you are confident that your income will increase steadily over the years or if you anticipate a move in the near future and aren't concerned about potential increases in interest rates. 35. What are the advantages of a 15 or 30 year loan? 30-Year: In the first 23 years of the loan, more interest is paid off than principal, meaning larger tax deductions. As inflation and costs of living increase, mortgage payments become a smaller part of overall expenses. 15-year: Loan is usually made at a lower interest rate. Equity is built faster because early payments pay more principal. 36. Can I pay my loan ahead of schedule?   Yes. By sending in extra money each month or making an extra payment at the end of the year, you can accelerate the process of paying off the loan. When you send extra money, be sure to indicate that the excess payment is to be applied to the principal. Most lenders allow loan prepayment, though you may have to pay a prepayment penalty to do so. Ask your lender for details. 37. Are there special mortgage loans for first time buyers?  Yes. Lenders now offer several affordable mortgage options which can help first-time homebuyers overcome obstacles that made purchasing a home difficult in the past. Lenders may now be able to help borrowers who don't have a lot of money saved for the down payment and closing costs, have no or a poor credit history, have quite a bit of long-term debt, or have experienced income irregularities. - Sales contract - During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1-6 weeks.   1 2 3 -4- 5 6 7 8 9 10 Go to Previous page       Next page

 

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