Real Estate Buyer's Guide

Existing vs. New Home

New home or previously owned? That is, perhaps, one of the first questions you may ask yourself in your home search process. Perhaps you've fantasized about purchasing a fixer-upper and giving it an extreme makeover. Or maybe you've always dreamed of building a home from the ground up and making all new color and appliance choices.

Whatever your desire, talk to your Gloria Nilson & Co. Real Estate agent about the choice that’s best for you. He or she can help you consider your personality, lifestyle, budget and personal preferences, as well as show you both new and existing homes that may be of interest to you. And he or she will share with you information on numerous builders and developments in the communities that interest you most.

You may already know why you should work with a REALTOR® to help you find an existing home, but make sure you also learn more about why you need an agent for a new home purchase, too.

In the meantime, here's a quick look at the main benefits of each type of home.

New homes offer:

  • Convenience and new amenities. Standard options for new homes usually include amenities such as whirlpool tubs, central air/heat and large mirrors.
  • Peace of mind. Safety devices such as smoke detectors, circuit breakers and ground fault interrupters come standard in newer homes. Also, new homes are subject to improved safety requirements, which means no-lead paint and asbestos-free insulation are used in its construction.
  • Comfort. High-tech solutions in heating and cooling and state-of-the-art materials (such as windows) sometimes ensure a more comfortable, energy-efficient surrounding.

Existing homes offer:

  • Stability. The hallmark of an existing home is a well-developed neighborhood with established zoning laws and school districts.
  • Resale value. The return-on-investment for an existing home is often greater; especially in historic neighborhoods where the entire area is undergoing renovation and experiencing an upswing in property values.
  • Savings. Typically, there's more room for negotiation – especially when it comes to incorporating items such as a repair allowance. In addition, expect to save money on "hidden" costs such as landscaping, unforeseen repairs or dues for a homeowner's association.

Keep in mind that both choices have associated costs. New homes are subject to elevated construction and lumber costs, while existing homes often require some type of repair or remodel. If you’re thinking of remodeling, be sure to get an idea of common remodeling costs for existing homes.

Regardless of whether you choose a new or existing home, one thing's certain: home ownership remains a strong investment and home improvement a good re-investment of your financial resources.

With numerous benefits for both building new and buying an existing home, you may find it helpful to consult with a Gloria Nilson & Co. Real Estate agent to help you choose a primary path. He or she can listen to your thoughts on both options and help you determine which path meets your current needs.

Read more about home improvements from the seller's point-of-view.

FHA and VA Loans

Loans from Your Uncle Sam

There's more than one way to finance your home purchase – in fact, there are thousands! Understanding who has loan products and how they can help you will make your home-buying process much easier. Learn about the advantages of government-backed Veteran’s Administration (VA) and Federal Housing Administration (FHA) loans. Many first-time buyers choose them because they require little or no down payment for qualified buyers.

Veteran's Administration (VA) Loans
Qualified veterans including Reserves and National Guards, can take out loans with up to 100% financing for loan amounts up to the conforming loan limit (currently $417,000) – with no down payment – and still get flexible underwriting guidelines. Closing costs are regulated. Plus, VA-guaranteed loans are assumable and can be combined with second mortgages and taken on by qualified future buyers. VA loans also don’t have Private Mortgage Insurance (PMI). But the best part might just be that payments are fixed for the entire loan term so you won't have to worry about interest rate increases.

Federal Housing Administration (FHA) Loans
While the Federal Housing Administration (FHA) doesn't technically make loans, it does make getting them easier. The FHA insures loans, which can encourage lenders to offer more favorable terms. That's because the insurance protects lenders against potential losses by paying the lender if a homeowner defaults. And with an FHA loan, down payments can be as low as 3%.
The only requirement is showing sufficient monthly income to pay the mortgage and satisfactory credit, but remember that the FHA charges an upfront Mortgage Insurance Premium similar to Private Mortgage Insurance (PMI). However, this premium can be financed as part of the mortgage, so you don't have to pay it upfront, or paid at Closing. You can also pay a one-time charge (discount points) at closing to help get a lower percentage rate. FHA loans are often assumable too.

With so many loan options, you want to make sure you find the one that best meets your needs. And working with your Gloria Nilson & Co. Real Estate agent and a mortgage consultant will help you understand the different options and make the best choice.

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Follow-Up Checklist

Buyer's Checklist
It takes a lot of planning, effort and, of course, paperwork to go from finding your new home to getting the keys in the front door.

Knowing the who, what, where and when of the process will help you keep your sanity amidst one of life's most important – and exciting – financial decisions.

The first thing you can do to simplify the process is to work with a Gloria Nilson & Co. Real Estate agent who'll be with you every step of the way. Curious about all that is involved in the buying process? Check out our quick Buyer's Checklist. These are the steps you and your agent will walk through as you move from dreaming of your new home to living in it.

Buyer Follow-up Checklist

Agency Disclosure

__ Seller's Agent
__ Buyer's Agent
__ Dual Agent
__ Non-Agent
__ Facilitator
__ Yes __ No

If yes, Signature Date
_______________________________

Fair Housing

Explained __ Yes __ No

Earnest Money

Promissory Note Redeemed
Date ___________ N/A ____ Inspections Private Home Inspection
Date _________________________
Contingency Removed __________

Pest
Date _________________________
Contingency Removed __________

Municipal
Date _________________________
Contingency Removed __________

FHA/VA
Date _________________________
Contingency Removed __________

Other ________________________
Date _________________________
Contingency Removed __________

Complete Loan Application

(Check with your lender for additional needs if you are divorced, paying child support, or self-employed; or if you own income properties.)

Loan Officer ___________________
Phone # ______________________
Date _________________________

Bring:
___ Past 2 years' W-2 tax forms
___ Paycheck stubs for last 30 days
___ Last 3 months' statements from all deposit and/or investment accounts (checking, savings, 401K, mutual funds, etc.)
___ Cancelled rent/mortgage checks (12 months)
___ Name/address of any landlord (12 months)
____________________________________
____________________________________

Date _________________________
___ Application fee (check or money order) Closing Company Escrow Officer/Title Company _________________
Phone # ______________________
Date _________________________
Contact Movers Name _______________________
Phone # ______________________
Moving Date ___________________
Obtain Homeowners Insurance Agent ________________________
Phone # ______________________
Date _________________________
Arrange Utility Transfer _________________________
Gas Phone # _________________________
Electric Phone # _________________________
Telephone Phone # _________________________
Cable Phone # _________________________
Other ______________________
Final Walk-Through Date _________________________
Contingency Removed _________________________
Sign Final Papers Date _________________________
Location ______________________
Obtain Keys From ________________________
Date ________________________
Time ________________________

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Credit and Buying

Give Yourself Some Credit

Credit is an important component in helping you find the best loan product to meet your home-buying needs.

The way you handle credit obligations can greatly affect your loan choices and the interest rates you can get. In short, the better your credit, the more loan options you will have when choosing what's best for you and your financial goals.

If you're in the market to buy a home, and you want to make sure you're doing everything you can to maintain good credit, here are a few tips:

  • DO pay what you owe — regularly and on time.
  • DON'T skip payments.
  • DO have a checking and a savings account.
  • DON'T hold more than four credit cards.
  • Do sign up for automatic payroll deposit with your employer.
  • DO keep your total debt-to-income ratio under 36 percent.
  • DON'T exceed or continually increase your line of credit.
  • DO keep track of your spending and stay within your budget.
  • DON’T continually open and close accounts; maintain a constant profile.

Your lender will view your credit report when determining which loan products are best for you. Using your credit history, the credit bureau will develop a credit score. The higher your credit score, the more likely you are to qualify for a loan with the best interest rates and product features.

Not sure where you stand? It’s wise to obtain a copy of your credit report at least once a year in order to find your FICO score. You can obtain your report for free once a year from each of the three major credit bureaus at www.annualcreditreport.com. It’s especially important to figure your score before making a large purchase, like a house or a car, in order to review for accuracy and find out how you can work on improving it, if necessary. You'll see the consumer credit given to you over the past seven years and be able to check your highest balance and current balance on outstanding debt, as well as see details about on-time and late payments and collections. Your home mortgage consultant should be able to help you better understand what your score means.

You can get your credit report from many sources, but should you find something in your report that may be inaccurate, only the credit agencies can actually correct the data on your report. Contact the three major credit agencies directly:

Equifax: (800) 685-1111 or www.equifax.com
Experian: (888) 397-3742 or www.experian.com
TransUnion: (800) 916-8800 or www.transunion.com

As for less-than-perfect credit, you should know that lenders typically are more concerned with how you’ve handled your recent credit than with what happened years ago. But even if you have a blemish on your credit history, don't let that stop you from buying a home. Buying a home – and paying your mortgage on time each month—is a great way to build your credit. If you’ve got credit questions, your first step should be to contact a trusted home mortgage consultant who can help you find the right loan product to help you attain the home of your dreams.

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Closing and Moving In

Closing the Deal: What To Expect

Once you put an offer on the home you want and the seller accepts it, talk quickly turns to the much-anticipated, ceremonial end to your home-buying experience: the closing. While this is an important business meeting, it's also exciting because it means you'll soon be walking away with the keys to your new home.

Your Gloria Nilson & Co. Real Estate agent will work to arrange a closing time that's amenable to all parties. You and your agent will arrive at a designated time and place, and the closing (which is sometimes called a settlement) will be led by a closing agent — typically an attorney or title company representative. The closing agent's role is to complete the transaction by assuring all parts of the contract have been performed, you as the buyer receive clear title and all finances between the buyer and the seller are settled.

You won't see any cash exchange hands; rather, you'll be busy signing a number of important closing documents. There are literally dozens of forms to go through, and a good closing agent will explain each one to you as you go along.

Prior to sealing the deal, you and your Gloria Nilson & Co. Real Estate agent will look at your sales agreement, making sure the seller has met his or her obligations. Promises such as painting a room or replacing appliances must be completed before closing.

More specifically, at your closing:

  • Title and mortgage liens are properly recorded.
  • Title insurance is provided.
  • Old and new lender instructions are obtained.
  • Any problems noted at the walk-through are resolved.
  • Deeds of trust or mortgage and accompanying note are reviewed.
  • Lender forms and settlement sheets are explained.

Once you've signed all the necessary documents, you'll provide a certified or cashier's check to pay the balance of the down payment as well as any lender-related closing costs, which typically include an appraisal fee, homeowners insurance, etc. They may also include mortgage points and other fees.

Closing costs, which vary from lender to lender, typically make up 2 to 6 percent of the mortgage loan amount. If you want more specifics, your lender will provide you with a good faith estimate.

Depending on the city in which your new home is located, your closing may or may not include the presence of the seller. In some areas, all parties come together in what is called a round-table closing. In other areas, buyers and sellers complete the process through individual appointments. Your Gloria Nilson & Co. Real Estate agent can tell you which experience to expect at your closing.

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Green for Buyers

  • Ask the sellers how environmentally-aware they are, or if they’ve made any investments in their home to save energy or promote conservation.
  • Ask about energy bills when looking to buy.
  • Keep an eye out for any appliances that may stay in the home, and see if they carry the Energy Star label.
  • Check to see if there are any air leaks through windows or doors around the house.
  • Inquire about flooring, cabinetry or countertop materials. Are they eco-friendly?
    Are the toilets, faucets and showerheads low-flow?
  • Ask when the heating and cooling system (HVAC) was last checked and cleaned.
  • Ensure the pipes are well-insulated, and ask whether a tankless water heater is used.

Green For Renovators

  • Use bamboo, cork and eucalyptus flooring products. They mature in roughly half the time of hardwoods and are an affordable and durable option.
  • Use wood alternatives or FSC-certified wood products in your cabinetry materials.
  • Consider locally-sourced products when possible to reduce carbon emissions during transportation.
  • Install low-flow toilets and faucets for more water reduction throughout the home.
  • Look for the Energy Star label, and use those appliances in your home. They’ll be 10-50% more efficient than appliances without the label.
  • Use eco-friendly paints, stains and finishes that aren’t made up of volatile organic compounds, which give you that woozy feeling after painting and contribute to pollution.
  • Reuse scraps. If you have leftover flooring, cabinetry or countertop material, keep it around. You never know where or how you could reuse these materials in the future.