Countdown to Home Buying

The market is improving; inventory is low.  Check this countdown list to make sure you are ready to purchase:

1.  Get Pre-approved.  You are pre-approved when your credit has been checked and confirmed and your income, assets and employment history have been verified.  Be careful; some so-called pre-approvals are not worth the paper they are written on.  I have received “pre-approval” letters from lenders and submitted them with offers to purchase only to find out later that the buyer was not able to obtain a loan.  Sometimes it is advantageous to work with loan officers at the bank with which you do business, as they have a vested interest in your continuing to do business with them.

2.  Temper your expectations.  Listing inventory in the Palos Verdes area and the entire South Bay is only 50% of what it was last year.  This means that if you want to stick to any sort of budget, you are not likely going to get everything you want or you will have to be patient.  Have a clear understanding of your needs, wants and wishes, so you will take action when the right home becomes available.

3.  Be ready to compete.  Unless you are willing to purchase a home an outlying area or in need of a lot of repairs, prepare yourself to make multiple offers and compete with other buyers in the market.

4.  Be prepared to act quickly.  When you find the home of your dreams, you need to be ready to rush to get it.  If you do not act quickly and start making preparations right away, you may find yourself left out in the cold when it comes time for your offer to be accepted.

5.  Watch your behavior at open houses.  Everything you do and say when in front of the listing agent (seller’s agent) or his representative will inevitably be shared with the seller and may come back to haunt you when your make an offer the purchase the home.  Both being too excited about the home or nit-picking the condition of the home can put you at a disadvantage at the negotiating table.

6.  Call your real estate agent.  Actually, this step should be first.  Contact me at 310-995-3754 or Katie@katiemuck.com as soon as you would like to begin the process!

How To Protect Your Home Investment

Housing prices are slowly becoming a bright spot in the economy with historically low interest rates continuing across the nation.  No one knows, however, where real estate prices will head in the future.  For many individuals, their homes will continue to be their largest asset and a major contributor to building net worth.  Like all investments, you should develop strategies to manage your home prudently.  Here are some “Do’s and Don’ts” to consider:

Don’t stretch to purchase the largest home you can.  The reason homes have contributed significantly to the net worth of many people is that owners retain any price appreciation on their entire properties, even though they only put down ten or twenty per cent of the purchase price.  This fact has caused many people to strain their budgets and purchase the largest home they can afford, hoping the increase in the value will more than offset the sacrifices made along the way.

Before embarking on such a strategy, be aware of all the risks.  If home prices start to fall, you could end up owing more than the house is worth.  If your budget is strained to the limit, you might not have money left over to contribute to a retirement account or college savings plan.  It may be better to purchase a home you can comfortably afford.

Do take into account all of your monthly home payments, not just the mortgage.  Include homeowner’s insurance, flood insurance, mortgage insurance, utilities, garbage collection, cable television, unexpected repairs, taxes and any other obligations.

Don’t take equity out of your home in the form of a home-equity loan or a higher mortgage balance without careful consideration.  While lower interest rates have allowed many homeowners to reduce their monthly mortgage payments, many have also opted to take equity out of their homes and stretch mortgage payments over longer periods.  One of the main advantages of home ownership is that it is a forced savings plan, with part of every mortgage payment going toward equity.  Resist the urge to take the equity and spend it on something else.

Do investigate refinancing when interest rates go down.  If the rate on your mortgage is more than one per cent higher than current interest rates, the cost of refinancing may be worth it.

Do make sure you have adequate insurance.  Your homeowners insurance policy should be sufficient to completely rebuild and refurnish your home in the event of a disaster.  Check with local contractors for the cost-per-square-foot to rebuild in your area.  Check the limits of your policy every year and increase them if needed.  You will probably want a guaranteed replacement clause, which pays for the entire cost of rebuilding your home.

Do inventory everything in your home.  Include everything in your home, systematically working your way around each room  Keep receipts for larger items with the inventory.  This will help substantiate a claim if your home and its contents are every destroyed.

Bottom line: On a long-term basis, a home is a good investment.  By properly managing it, you can make it even better.

Real Estate News November 2011

 

 

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Equal Housing Opportunity




Congress votes to restore FHA loan
limits

House and Senate leaders signed off on a conference report for a
“minibus” appropriations bill that included language restoring FHA’s ability to
insure loans of up to $729,750 in high cost markets through 2013. …more
Top six reasons mortgage
applications are rejected

Half of refinance applications are abandoned or
rejected, as are 30 percent of purchase mortgage applications, according to the
Mortgage Bankers Association. All told, the Federal Financial Institutions
Examination Council (FFIEC) says that well over 2 million mortgage applications
were rejected last year. …more
Avoid credit dings when mortgage
shopping

Borrowers in distress often contact many lenders hoping to find
one who will approve them. For this reason, multiple inquiries can have a
negative impact on a consumer’s credit score. …more
Three mortgage mistakes you can
avoid

The mortgage market is in a state of tumult these days. Rates are
bizarrely low, but many homes are worth much less than the mortgage balances
they secure. …more
Four ways to avoid refinance
rejection

“My application to refinance my $200,000 loan was recently
turned down … do I have any recourse?”
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