Buying
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Buy a Home With Zero Cash
The Zero Cash Down payment program offers you a way to buy a home with no down payment. That’s right zero down payment. You may have owned a home before and are presently renting, or are a first time home buyer and need a way to break into the housing market but held back because you thought you required a substantial down payment. Or you may be in the position where you do not want to liquidate your financial assets to use as a down payment on a home. Regardless of your present situation, you want a way to get into or to re-enter the housing market without having to make a cash down payment. The Zero Cash Down payment Program may be just the answer you need. Here’s what is required to qualify for the Zero Cash Down payment Program.
Program Qualifications
1. An excellent credit history
no recent history of bad debts consistent and timely payment of current liabilities
2. Limited liabilities
You will be required to disclose all current liabilities you have in order to determine how much more debt you can carry. (ie. present car loan, credit cards, etc.)
3. At least 3 years of employment stability
You will be required to show proof of employment for the past 3 years, ie. a letter of employment from your employer or financial statements for the past 3 years if self-employed.
4. The financial ability to carry larger monthly payments
Without a down payment you will be required to meet the obligation of larger mortgage payments. Your monthly payments could vary from a few to several hundred dollars more per month.
Under the Terms of the Program You Can Purchase Many Types of Properties They include:
- detached or semi-detached homes
- free-hold town homes
- condominium town homes
It is important to note that not all properties qualify for the Zero Cash Down payment Program. To ensure that you get an accurate picture of what properties may or may not be included in this program in your particular area, it is advisable to review the terms of the program with your Realtor ® .
Benefits of the Zero Cash Down payment Program
1. No Down payment
If you are renting, why pay your landlord’s mortgage? Why not reap the benefit of building your own equity? Are you renting because you are held back from owning your own home because you think you need a substantial down payment? The general perception of many would-be-home buyers and even that of some Realtors ® is that a substantial down payment is required in order to purchase a home. This is simply not true. Because of this perception many would-be-home-buyers feel they have to save for years before they have enough money for a down payment so that they can finally enter the housing market. In the meantime they are lining someone else’s pockets, while waiting a long time before they can start building their own equity. Well, with the Zero Cash Down payment Program you don’t need a down payment to buy a home.
2. Buy a Home Now!
If needing a down payment is keeping you from owning your own home, this new program offers you an immediate way to get into the housing market. With the Zero Cash Down payment Program you don’t have to wait to purchase a home.
3. Approved Bank Program
It is important to know that the Zero Cash Down payment Program is an approved bank program. Review this program with your lender or Realtor ® who has specialized knowledge in financing and can assist you with the Zero Cash Down payment Program.
Steps to Home Ownership!
Systematic steps to help you buy your home
Are You Ready?
Knowledge and experience are the keys to successful real estate transactions. The expertise, experience, and training of your local Realtor is the key to your success.
One of the keys to making the home buying process easier and more understandable is planning. In doing so, you’ll be able to anticipate requests from lenders, lawyers and a host of other professionals. Furthermore, planning will help you discover valuable shortcuts in the home buying process.
Do You Know What You Want?
Whether you are a first-time home buyer 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 down payment, 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 down payment 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 home buyers 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.
Home Buyer Protection
Protect Yourself When Buying A Home!
Before you select a Realtor to work with, you should educate yourself on the subject of Agency Relationships.
For years, both the seller’s agent (the listing agent)and an outside agent bringing an offer from a purchaser (the selling agent or sub-agent) were legally considered to represent just the seller and owed their loyalty, best efforts and other fiduciary duties only to the seller.
This archaic concept left buyers totally confused and legally exposed because they were being treated as a third party customer without any representation.
Confusion would set in when a purchaser believed that a relationship or allegiance had developed with their Realtor, only to find out that during negotiations their supposed agent was ethically and legally bound to work on behalf of the seller, trying to get the seller the best price and terms possible on the sale of the house!
The purchase of a new home, regardless of where it is located, is a significant investment for anyone. The agent you choose for the position of buyer/broker should consult with you to find out what is most important to your family. Location, education, safety, conveniences and other factors should be considered so that your new home matches your lifestyle. Because this purchase will affect your future, it’s important to have someone in whom you can confide. You want to make sure that you are truly represented; not just because it is a law, but because the agent you choose has been educated in representation and works on your behalf, not their own.
We will counsel you in determining:
- The home buying process
- How much home you can afford
- What price is fair to pay for the home
- What items we need to have the seller fix, or
- What issues we need to address with the seller
- How to gain pre-approval by a lender
- And much, much more!
We offer buyer brokerage service to all or our clients. By counseling with them, we are able to meet their home buying needs and help them make the right choices for their families. There is no cost to the buyer. The seller or builder pays the entire brokerage fee.
Working exclusively with an experienced and skilled agent ensures that you will be adequately represented when dealing with a seller or builder.
Closing on your home
Go to any local courthouse and you can find property records detailing real estate ownership in your community — sometimes records that date back hundreds of years.
These records are important because they provide today’s owners with proof that they have good, marketable and insurable title to the property they are selling. Equally important, such records enable buyers to provide proof of ownership when they sell.
The closing process, which in different parts of the country is also known as “settlement” or “escrow,” is increasingly computerized and automated. In many cases, buyers and sellers don’t need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery.
In practice, closings bring together a variety of parties who are part of the “transaction” process. For example, while the history of property ownership has been checked, it’s possible that the records contain errors, unrecorded claims or flaws in the review itself, thus title insurance is necessary. At closing, transfer taxes must be paid and other claims must also be settled (including closing costs, legal fees and adjustments). In most transactions, the closing agent also completes the paperwork needed to record the loan.
What to expect.
Settlement is a brief process where all of the necessary paperwork needed to complete the transaction is signed. Closing is typically held in an office setting, sometimes with both buyer and seller at the same table, sometimes with each party completing their papers separately.
Whatever the case, the result is that title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices.
What you need to do.
One of the best parts of settlement is that buyers and sellers need to do very little.
Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not materially changed since the sale agreement was signed. At closing itself, all papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records and state governments collect their transfer taxes.
Getting a Mortgage
Shopping for a mortgage is the first step toward owning a home and perhaps the most daunting, especially if you are not prepared.
Once a simple task that meant comparing fixed rates from among perhaps a dozen or fewer savings and loan companies, the mortgage hunt today is like finding your way through a maze.
There are dozens of loan types and hundreds of loan programs available through thousands of mortgage brokers, bankers, lenders, finance companies, credit unions, even stock brokerage firms.
Contrary to popular belief, finding a mortgage doesn’t begin with an application.
Education is a better first choice. Mortgage information sources are as vast as the number of mortgages available. Web sites, topical newspaper articles, mortgage books, consumer seminars and workshops, financial planners, real estate agents, mortgage brokers and lenders are all available to assist you along the way.
First and foremost, you must determine how your mortgage payment will fit your current budget and, to some extent, your future obligations 15 to 30 years down the road.
If you discover too late that you can’t afford your mortgage, you’ll not only face the possibility of losing the roof over your head, but you could also damage your ability to purchase a home later.
Step 1: Examine Your Finances
If you can afford to buy a home, you must then determine how much mortgage you can afford. Lenders are apt to put your loan application in the best light and qualify you for as much as they are willing to lend, which can be more than you can afford.
It’s up to you to take stock of your income and expenses, both current and projected to determine what you can comfortably manage each month. Along with your mortgage payment, don’t forget related insurance, taxes, homeowner association dues and any other costs rolled into the mortgage payment.
Step 2: Shopping For a Loan
When you are ready to shop for a loan you have two basic types of mortgage stores to shop — direct lenders and mortgage brokers.
Direct lenders have money to lend. They make the final decision on your application. Brokers are intermediaries who, like you, have many lenders from which to choose. Lenders have a limited number of in-house loans available. Brokers can shop many lenders for each lenders’ store of loans. If you have special financing needs and can’t find a lender to suit them, an experienced broker may be able to ferret out the loan you need. Mortgage brokers, however, are paid with a slice of the amount you borrow, some more than others some less. Internet brokers today perhaps receive the smallest cut, sometimes none at all, and can prove to be a real bargain.
Along with shopping the source, you’ll also have to shop loan costs, including the interest rate, broker fees, points (each point is one percent of the amount you borrow), prepayment penalties, the loan term, application fees, credit report fee, appraisal and a host of others.
Step 3: Apply For a Loan
The application process is the easy part — provided you’ve gathered documents necessary to prove claims you make on the application.
The application will ask for information about your job tenure, employment stability, income, your assets (property, cars, bank accounts and investments) and your liabilities (auto loans, installment loans, mortgages, credit-card debt, household expenses and others).
The lender will run a credit check on you to take a look at your credit status, but you’ll have to supply additional documentation including paycheck stubs, bank account statements, tax returns, investment earnings reports, rental agreements, divorce decrees, proof of insurance, and other documentation. If the lender deems you creditworthy, it will likely hire a professional appraisal to make sure the value of the home you are about to buy is truly worth your loan amount.
Home Inspection Report
The majority of purchasers are not overly surprised by the findings of their home inspection. Before getting this far, they have usually had a very close look at the property. And yes, they already know about the peeling paint and old furnace. They may even have noticed the wet basement and taken that into account when making their offer.
It is when an inspection uncovers something unexpected that an inspection condition could save you from making a major mistake. Below are some of the more common problems found in a typical home inspection. While most of these problems are usually obvious and have already been reflected in the purchase price, a home inspection lets you know if your personal opinion of the structural condition of the property is correct (i.e. is it in as good shape as I think it is?).
1. Minor maintenance problems:
Poor overall maintenance usually leads to a large range of problems that will require the new homeowner’s attention. These can include everything from peeling paint to rotting decks.
2. Minor structural problems:
These problems are typical in older homes and can cover everything from cracked plaster to small movements in the foundation. While they are not likely to cause the house to fall down, they should be corrected before they become more serious.
3. Grading/drainage problems:
In many parts of the United States this is a very common problem. Improper grading and drainage can often lead to damp or wet footings/basements. Correction can range from installing new roof gutters and downspouts to installing weeping tiles. It should be noted that sometimes simply re-grading the surrounding lawn to channel surface water away from the house is sufficient.
4. Older/insufficient electrical system:
It is very common to find older homes with undersized services, aluminum wiring, knob-and-tube wiring or inadequate/poorly-renovated distribution systems. It is important to have these problems looked into since they are potentially dangerous.
5. Older/poorly installed plumbing:
It is also very common to find plumbing problems in older homes. Repairs can range from a simple ten-minute fix to expensive replacement. It is a good idea to get an expert opinion.
6. Older/leaking roof:
An asphalt roof lasts an average of 15 to 20 years. It is difficult to estimate roof age accurately from the ground unless the roof is either very new or very close to the end of its life span. You also need to know how many layers are under it in order to determine if the roof needs to be completely stripped before installing the new shingles.
7. Older heating/cooling system:
Older and poorly maintained heating/cooling systems are inefficient and could pose a serious safety and health risk. While replacement may seem expensive, the newer more efficient systems do reduce heating/cooling costs substantially, thus helping to recoup your investment.
8. Poor ventilation:
Excessive moisture from unvented bathrooms and cooking areas can damage plaster, promote the growth of mold and fungus, deteriorate windows and cause allergic reactions. These problems need to be corrected before the damage becomes excessive.
9. Excessive air leakage:
Poor weather-stripping, badly fitted doors, deteriorated caulking and poor attic seals all contribute to a cold and drafty home. Repairs are usually simple and inexpensive.
10. Environmental problems:
These can include asbestos, formaldehyde, leaking underground oil tanks, nearby gas stations, contaminated drinking water, lead-based paint and radon gas. It is important to discuss these potential hazards with a professional and arrange for a specialized inspection if necessary.
If you have other concerns or questions, please feel free to contact us directly.
How Much Can I Afford?
As you think about applying for a home loan, you need to consider your personal finances. How much you earn versus how much you owe will likely determine how much a lender will allow you to borrow.
First, determine your gross monthly income. This will include any regular and recurring income that you can document. Unfortunately, if you can’t document the income or it doesn’t show up on your tax return, then you can’t use it to qualify for a loan. However, you can use unearned sources of income such as alimony or lottery payoffs. And if you own income-producing assets such as real estate or stocks, the income from those can be estimated and used in this calculation. If you have questions about your specific situation, any good loan officer can review the rules.
Next, calculate your monthly debt load. This includes all monthly debt obligations like credit cards, installment loans, car loans, personal debts or any other ongoing monthly obligation like alimony or child support. If it is revolving debt like a credit card, use the minimum monthly payment for this calculation. If it is installment debt, use the current monthly payment to calculate your debt load. And you don’t have to consider a debt at all if it is scheduled to be paid off in less than six months. Add all this up and it is a figure we’ll call your monthly debt service.
In a nutshell, most lenders don’t want you to take out a loan that will overload your ability to repay everybody you owe. Although every lender has slightly different formulas, here is a rough idea of how they look at the numbers.
Typically, your monthly housing expense, including monthly payments for taxes and insurance, should not exceed about 28 percent of your gross monthly income. If you don’t know what your tax and insurance expense will be, you can estimate that about 15 percent of your payment will go toward this expense. The remainder can be used for principal and interest repayment.
In addition, your proposed monthly housing expense and your total monthly debt service combined cannot exceed about 36 percent of your gross monthly income. If it does, your application may exceed the lender’s underwriting guidelines and your loan may not be approved.
Depending on your individual situation, there may be more or less flexibility in the 28 percent and 36 percent guidelines. For example, if you are able to buy the home while borrowing less than 80 percent of the home’s value by making a large cash down payment, the qualifying ratios become less critical. Likewise, if Bill Gates or a rich uncle is willing to cosign on the loan with you, lenders will be much less focused on the guidelines discussed here.
Remember that there are hundreds of loan programs available in today’s lending market and every one of them has different guidelines. So don’t be discouraged if your dream home seems out of reach.
In addition, there are a number of factors within your control which affect your monthly payment. For example, you might choose to apply for an adjustable rate loan which has a lower initial payment than a fixed rate program. Likewise, a larger down payment has the effect of lowering your projected monthly payment.
12 Ways to Lower Your Homeowner’s Insurance Cost
1. Be sure to shop around.
It will take a few phone calls, but they could save you a good sum of money. Ask your friends for a referral, check the yellow pages, use the internet and check consumer guides. This will give you an idea of price ranges and tell you which companies or agents have the lowest prices. But don’t consider price alone. The insurer you select should offer both a fair price and excellent service. Quality service may cost a bit more, but it provides added conveniences, so talk to a number of insurers to get a feeling for the type of service they give. Ask them what they would do to lower your costs. Check the financial ratings of the companies, too. Then, when you’ve narrowed the field to three insurers, get price quotes.
2. Raise your deductible.
Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay according to the terms of your policy. Deductibles on homeowner’s policies typically start at $250. By increasing your deductible to $500, you could save up to 12 percent; $1,000, up to 24 percent; $2,500, up to 30 percent; and $5,000, up to 37 percent, depending,of course, on your insurance company.
3. Buy your home and auto policies from the same insurer.
Some companies that sell homeowner’s, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them.
4. When you buy a home…
Consider what insuring it will cost. Because a new home’s electrical, heating and plumbing systems and overall structure are likely to be in better shape than those of an older house, insurers may offer you a discount of 8 to 15 percent if your house is new. Check its construction, too. Brick, because of its resistance to wind damage is better in the East; frame, because of its resistance to earthquake damage, is better in the West. Choosing wisely could cut your premium by 5 to 15 percent.
Avoiding areas that are prone to floods can save you $400 or so a year for flood insurance. A typical homeowner’s insurance policy does not cover flood-related damage. If you do buy a house in a flood-prone area, you’ll have to buy a flood insurance policy, too.
Does your town have full-time or volunteer fire service? Is your house close to a hydrant or fire station? The closer your house is to firefighters and their equipment, the lower your premium will be.
5. Insure your house, not the land.
The land under your house isn’t at risk from theft, windstorm, fire and the other perils covered in your homeowner’s policy. So don’t include its value in deciding how much homeowner’s insurance to buy. If you do, you’ll pay a higher premium than you should.
6. Beef up your home security.
You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm, or dead-bolt locks. Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police station or other monitoring facility. These systems aren’t cheap and not every system qualifies for the discount. Before you buy such a system, find out what kind your insurer recommends and how much the device would cost and how much you’d save on premiums.
7. Stop smoking.
Smoking accounts for more than 23,000 residential fires a year. That’s why some insurers offer to reduce premiums if all the residents in a house don’t smoke.
8. Once you retire…
Retired people stay at home more and spot fires sooner than working people. Retired people have more time for maintaining their homes, too. If you’re at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies.
9. See if you can get group coverage.
Alumni and business associations often work out an insurance package with an insurance company, which includes a discount for association members. Ask your association’s director if an insurer is offering a discount on homeowners insurance to you and your fellow graduates or colleagues.
10. Stay loyal to your insurer.
If you’ve kept your coverage with a company for several years, you may receive special consideration. Several insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more.
11. Compare the limits in your policy and the value of your possessions at least once a year.
You want your policy to cover any major purchases or additions to your home. But you don’t want to spend money for coverage you don’t need. If your five-year-old fur coat is no longer worth the $20,000 you paid for it,you’ll want to reduce your floater and pocket the difference.
12. If you’re in a government plan…
If you live in a high-risk area — say, one that is especially vulnerable to coastal storms, fires, or crime — and have been buying your homeowner’s insurance through a government plan, you should check with an insurance agent or company representative. You may find that there are steps you can take that would allow you to buy insurance at a lower price in the private market.
Please contact us if you have any questions.
How to Save Thousands When You Buy
“When you analyze those successful home buyers who have the experience to purchase the home they want for thousands of dollars below a seller’s asking price, some common denominators emerge.” If you’re like most home buyers, you have two primary considerations in mind when you start looking for a home. First, you want to find a home that perfectly meets your needs and desires, and secondly, you want to purchase this home for the lowest possible price.When you analyze those successful home buyers who have been able to purchase the home they want for thousands of dollars below a seller’s asking price, some common denominators emerge. Although your agents negotiating skills are important, there are three additional key factors that must come into play long before you ever submit an offer. These Steps Will Help You Save Thousands When You Buy a Home
Make sure you know what you want . . . As simple as this sounds, many home-buyers don’t have a firm idea in their heads before they go out searching for a home. In fact, when you go shopping for a place to live, there are actually two homes competing for your attention: the one that meets your needs, and the one that fulfills your desires. Obviously, your goal is to find one home that does both. But in the real world, this situation doesn’t always occur.
When you’re looking at homes, you’ll find that you fall in love with one or another home for entirely different reasons. Is it better to buy the 4- bedroom home with room for your family to grow, or the one with the big eat-in kitchen that romances you with thoughts of big weekend family brunches? What’s more important: a big backyard, or proximity to your child’s school? Far too often people buy a home for the wrong reasons, and then regret their decision when the home doesn’t meet their needs.
Don’t shop with stars in your eyes: satisfy your needs first. If you’re lucky, you’ll find a home that does this and also fulfills your desires. The important thing is to understand the difference before you get caught up in the excitement of looking.
Find out if your agent offers a “Buyer Profile System” or “House-hunting Service,” which takes the guesswork out of finding just the right home that matches your needs. This type of program will cross-match your criteria with ALL available homes on the market and supply you with printed information on an on-going basis. A program like this helps home-owners take off their rose-colored glasses and, affordably, move into the home of their dreams.To help you develop your home buying strategy, use this form:
What do I absolutely NEED in my next home:
______________________________
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What would I absolutely LOVE in my next home:
_______________________________
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How Sellers Set Their Asking Price
For you to understand how much to offer for a home you’re interested in, it’s important for you to know how sellers price their homes. Here are 4 common strategies you’ll start to recognize when you begin to view homes:
1. Clearly Overpriced:
Every seller wants to realize the most amount of money they can for their home, and real estate agents know this. If more than one agent is competing for your listing, an easy way to win the battle is to over inflate the value of your home. This is done far too often, with many homes that are priced 10- 20% over their true market value.
This is not in your best interest, because in most cases the market won’t be fooled. As a result, your home could languish on the market for months, leaving you with a couple of important drawbacks: your home is likely to be labeled as a “troubled” house by other agents, leading to a lower than fair market price when an offer is finally made you have been greatly inconvenienced with having to constantly have your home in “showing” condition . . . for nothing. These homes often expire off the market, forcing you to go through the listing process all over again.
2. Somewhat Overpriced:
About 3/4 of the homes on the market are 5-10% overpriced. These homes will also sit on the market longer than they should. There is usually one of two factors at play here: either you believe in your heart that your home is really worth this much despite what the market has indicated (after all, there’s a lot of emotion caught up in this issue), OR you’ve left some room for negotiating. Either way, this strategy will cost you both in terms of time on the market and ultimate price received
3. Priced Correctly at Market Value
Some sellers understand that real estate is part of the capitalistic system of supply and demand and will carefully and realistically price their homes based on a thorough analysis of other homes on the market. These competitively priced homes usually sell within a reasonable time-frame and very close to the asking price.
4. Priced Below the Fair Market Value
Some sellers are motivated by a quick sale. These homes attract multiple offers and sell fast – usually in a few days – at, or above, the asking price. Be cautious that the agent suggesting this method is doing so with your best interest in mind.