For more information about our BuySmart® program, contact your SellSmart® Mackey professional today.

BuySmart® 

 Buying Your Home (What You Need to know but were rarely told!)

Seven reasons to own your own home

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the costs involved in buying your home.

2. Gains. Between 1998 and 2002, national home prices increased at an average of 5.4 percent annually. And while there’s no guarantee of appreciation, a 2001 study by the NATIONAL ASSOCIATION OF REALTORS® found that a typical homeowner has approximately $50,000 of unrealized gain in a home.

3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your mortgage payments don’t go up (fixed rate) over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.

6. Freedom. The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

 

To calculate whether renting or buying is the best financial option for you,

use this calculator courtesy of Ginnie Mae:

 http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp?Section=YPTH

Ten Steps to Prepare for Home-Ownership

1. Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

2. Develop a wish list of what you’d like your home to have. Then prioritize the features on your list.

3. Select three or four neighborhoods you’d like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.

4. Determine if you have enough saved to cover your down payment and closing costs. Closing costs, including taxes, attorney’s fee, and

transfer fees average between 2 percent and 7 percent of the home price.

5. Get your credit in order. Obtain a copy of  your credit report.

6. Determine how large a mortgage you can qualify for. Also explore different loans options and decide what’s best for you.

7. Organize all the documentation a lender will need to preapprove you for a loan.

8. Do research to determine if you qualify for any special mortgage or down payment assistance programs.

9. Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.

10. Find an experienced REALTOR® who can help you through the process.

Tips on Making the Offer - Increase your chances of getting your dream house instead of losing it to another buyer, with these easy steps, some of which need to be taken before making an offer.

• Get pre-qualified for a mortgage. You’ll be able to make a firm commitment to buy and make your offer more desirable to the seller.

• Stay in close touch with your real estate sales associate to find out first about new listings that come on the market. And be ready to go see a house as soon as it goes on the market.

• Scout out new listings yourself. Look at Internet sites, newspaper ads, and drive by the neighborhood frequently. Maybe you’ll see a brand-new “for sale” sign before anyone else.

• Be ready to make a decision. Spend lots of time in advance deciding what you must have so you won’t be unsure when you have the chance to make an offer.

• Bid competitively. You may not want to start out offering the absolute highest price you can afford, but don’t try to go too low to get a deal.  In a tight market, you’ll lose out.

• Keep contingencies to a minimum. Restrictions such as needing to sell your home before you move or wanting to delay the closing until a certain date can make your offer unappealing. In a tight market, you’ll probably be able to sell your house rapidly. Or talk to your lender about getting a bridge loan to cover both mortgages for a short period.

• Don’t get caught in a buying frenzy. Just because there’s competition doesn’t mean you should just buy anything. And even though you want to make your offer attractive, don’t neglect inspections that help ensure that your house is sound.

Ten Tips for First-Time Homebuyers

 

1. Be picky, but don’t be unrealistic. There is no perfect home.

2. Do your homework before you start looking.  Decide specifically what features you want in a home and which are most important to you.

3. Get your finances in order. Review your  credit report and be sure you have enough money to cover your down payment and your  closing costs.

4. Don’t wait to get a loan. Talk to a lender and get prequalified for a mortgage before you start looking.

5. Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.

6. Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?

7. Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that suit you best.

8. Don’t let yourself be “house poor”. If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.

9. Don’t be naïve. Insist on a home inspection and, if possible, get a warranty from the seller to cover defects within one year.

10. Get help. Consider hiring a REALTOR® as a buyer’s representative. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. And often, buyer’s reps are paid out of the seller’s commission payment.

Financing Your Home

 

Eight Steps to Getting Your Finances in Order

 

1. Develop a family budget. Instead of budgeting what you’d like to spend, use receipts to create a budget for what you actually spent over the last six months. One advantage of this approach is that it factors in unexpected expenses, such as car repairs, illnesses, etc., as well as predictable costs such as rent.

2. Reduce your debt. Generally speaking, lenders look for a total debt load of no more than 36 percent of income. Since this figure includes your mortgage, which typically ranges between 25 percent and 28 percent of income, you need to get the rest of installment debt—car loans, student loans, revolving balances on credit cards—down to between 8 percent and 10 percent of your total income.

3. Get a handle on expenses. You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You’ll probably see some great ways to save.

4. Increase your income. It may be necessary to take on a second, part-time job to get your income at a high-enough level to qualify for the home you want.

5. Save for a down payment. Although it’s possible to get a mortgage with only 5 percent down—or even less in some cases—you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20 percent down payment.

6. Create a house fund. Don’t just plan on saving whatever’s left toward a down payment.  Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.

7. Keep your job. While you don’t need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate.

8. Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly.

 

Five Factors That Decide Your Credit Score

Credit scores range between 200 and 800.  Scores above 620 are considered desirable for obtaining a mortgage. These factors will affect your score.

1. Your payment history. Whether you paid credit card obligations on time.

2. How much you owe. Owing a great deal of money on numerous accounts can indicate

that you are overextended.

3. The length of your credit history. In general, the longer the better.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay promptly.

5. The types of credit you use. Generally, it’s desirable to have more than one type of credit—installment loans, credit cards, and a mortgage, for example.

 

For more on evaluating and understanding your credit score, go to http://www.myfico.com.

Eight Ways to Improve Your Credit

 

Credit scores, along with your overall income and debt, are a big factor in determining if you’ll qualify for a loan and what loan terms you’ll be able to qualify for.

 

1. Check for and correct errors in your credit report. Mistakes happen, and you could be paying for someone else’s poor financial management.

2. Pay down credit card bills. If possible, pay off  the entire balance every month. However, transferring credit card debt from one card to another could lower your score.

3. Don’t charge your credit cards to the maximum limit.

4. Wait 12 months after credit difficulties to apply for a mortgage.  You’re penalized less for problems after a year.

5. Don’t purchase big-ticket items for your new home on credit cards until after the loan is approved. The amounts will add to your debt.

6. Don’t open new credit card accounts before applying for a mortgage. Having too much available credit can lower your score.

7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if  submitted over a short period of time.

8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will  probably be considered a sign of poor credit management.

 

This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation. To obtain a complete copy of the publication, “Knowing and Understanding Your Credit,” visit http://www.homebuyingguide.org.

 

Ten Questions to Ask Your Lender  

Be sure you find a loan that fits your needs with these comprehensive questions.

 

1. What are the most popular mortgage loans you offer?

2. Which type of mortgage plan do you think would be best for us? Why?

3. Are your rates, terms, fees, and closing costs negotiable?

4. Will I have to buy private mortgage insurance? If so how much will it cost and how long will it be required? NOTE: Private mortgage insurance usually is required if you make less than a 20 percent downpayment, but most lenders will let you discontinue the policy when you’ve acquired a certain amount of equity by paying down the loan.

5. Who will service the loan? Your bank or another company?

6. What escrow requirements do you have?

7. How long is your loan lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if they drop during this period?

8. How long will the loan approval process take?

9. How long will it take to close the loan?

10. Are there any charges or penalties for prepaying the loan?

Used with permission from Real Estate Checklists  & Systems http://www.realestatechecklists.com).

Inspecting Your Home

 Hidden Home Defects to Watch For

 

• Water leaks. Look for stains on ceilings and near the baseboards, especially in basements or attics.

• Shifting foundations. Look for large cracks along the home’s foundation.

• Drainage. Look for standing water, either around the foundation of the home or in the yard.

• Termites. Look for weakened or grooved wood, especially near ground level.

• Worn roofs. Look for broken or missing copings and buckled shingles as well as water spots on ceilings.

• Inadequate wiring. Look for antiquated fuse boxes, extension cords (indicating insufficient outlets), and outlets without a place to plug in the grounding prong.

• Plumbing problems. Very low water pressure, banging in pipes.

 

What Your Home Inspection Should Cover

 

• Siding: Look for dents or buckling

• Foundations: Look for cracks or water seepage

• Exterior Brick: Look for cracked bricks or mortar pulling away from bricks

• Insulation: Look for condition, adequate rating for climate

• Doors and Windows: Look for loose or tight fits, condition of locks, condition of weather stripping

• Roof: Look for age, conditions of flashing, pooling water, buckled shingles, or loose gutters and downspouts

• Ceilings, walls, and moldings: Look for loose pieces, drywall that is pulling away

• Porch/Deck: Loose railings or step, rot

• Electrical: Look for condition of fuse box/ circuit breakers, number of outlets in each room

• Plumbing: Look for poor water pressure, banging pipes, rust spots or corrosion that indicate leaks, sufficient insulation

• Water Heater: Look for age, size adequate for house, speed of recovery, energy rating

• Furnace/Air Conditioning: Look for age, energy rating; Furnaces are rated by annual fuel utilization efficiency; the higher the rating, the lower your fuel costs. However, other factors such as payback period and other operating costs, such as electricity to operate motors.

• Garage: Look for exterior in good repair; condition of floor—cracks, stains, etc.; condition of  door mechanism

• Basement: Look for water leakage, musty smell

• Attic: Look for adequate ventilation, water leaks from roof

• Septic Tanks (if applicable): Adequate absorption field capacity for the percolation rate in your area and the size of your family

• Driveways/Sidewalks: Look for cracks, heaving pavement, crumbling near edges, stains

 

What Not to Overlook on a Final Walk-through

Be sure that:

 

• Repairs you’ve requested have been made. Obtain copies of paid bills and warranties.

• All items that were included in the sale price—draperies, lighting fixtures—are still there.

• Screens and storm windows are in place or stored.

• All appliances are operating.

• Intercom, doorbell, and alarm are operational.

• Hot water heater is working.

• HVAC is working.

• No plants or shrubs have been removed from the yard.

• Garage door opener and other remotes are available.

• Instruction books and warranties on appliances and fixtures are there.

• All personal items of the sellers and all debris have been removed.

 

 

How Comprehensive Is Your Home Warranty?

Check your home warranty policy to see which of the following items are covered. Also check to see if the policy covers the full replacement cost of an item.

 

• Plumbing

• Electrical Systems

• Water Heater

• Furnace

• Heating Ducts

• Water Pump

• Dishwasher

• Stove/Cooktop/Ovens

• Microwave

• Refrigerator

• Washer/Dryer

• Swimming Pool (may be optional)

 

 

 

Insuring Your Home

Ten Ways to Lower Your Homeowners Insurance Costs

 

1. Raise your deductible. If you can afford to pay more toward a loss that occurs, your premiums will be lower.

2. Buy your homeowners and auto policies from the same company. You’ll usually qualify for a discount. But make sure that the savings really yields the lowest price.

3. Make your home less susceptible to damage. Keep roofs and drains in good repair.

Retrofit your house to protect against natural disasters common to your area.

4. Keep your home safer. Install smoke detectors, burglar alarms, and dead-bolt locks. All of these will usually qualify for a discount.

5. Be sure you insure your house for the correct amount. Remember, you’re covering replacement cost, not market value.

6. Ask about other discounts. For example, retirees who are home more than working people may qualify for a discount on theft insurance.

7. Stay with the same insurer. Especially in today’s tight insurance market, your current vendor is more likely to give you a good price.

8. See if you belong to any groups—associations, alumni groups—that offer lower insurance rates.

9. Review your policy limits and the value of your home and possessions annually. Some items depreciate and may not need as much coverage.

10. See if there’s a government-backed insurance plan. In some high-risk areas, such as

the coasts, federal or state governments may back plans to lower rates. Ask your agent.

Five Points to Understand About Homeowners Insurance

1. Look for exclusions to coverage. For example, most insurance policies do not cover

flood or earthquake damage as a standard item. These coverage's must be bought separately.

2. Look for dollar limitations on claims. Even if you are covered for a risk, there may a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.

3. Understand replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.

4. Understand actual cash value. If you choose not to replace your home when it’s destroyed,

you’ll receive replacement cost, less depreciation. This is called actual cash value.

5. Understand liability. Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have

significant assets.

Five Things to Understand About Title Insurance

1. It protects your ownership right to your home both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as mistake in the spelling of a person’s name or an inaccurate description of the property.

2. It’s a one-time cost usually based on the price of the property.

3. It’s usually paid for by the sellers.

4. There are both lender title policies, which protect the lender, and owner title policies, which protect you. The lender will probably require a lender policy.

5. Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available.  There are enhanced title policies available which you need to discuss with your Realtor.

 

Reprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS® Copyright2005. All rights reserved. www.realtor.org/realtormag

 

AB100 SellSmart® Consumer Guide

 

 We invite you to:   BuySmart® with Mackey Real Estate

 Saving consumers money with satisfaction

Here is how BuySmart® works in Nevada County

 

1.  You participate in your home search by excluding or including homes, saving you time!

 

2.  We save you money!  Rebating a portion of our commission back to you through escrow.

 

 For more information about our BuySmart® program, contact your SellSmart® Mackey professional today.  

Interested in what a BUYSMART® credit could mean to you?

The Buyer understands and accepts the fact that the BUYSMART® credit must be used in one or more of the options listed below.

q        To pay closing costs which are allowed by lender.  

q        To reduce the interest rate by buying down the loan.  

q        To make the following home improvements to be paid directly to vendor or contractor through escrow.  Reimbursement checks cannot be paid to the buyer.

 

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1.  Haven't heard about us.

2.  Lack of understanding what and how we do what we do.

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