11
Questions Your Real Estate Agent Can’t Answer
The job of a real estate agent is to guide you through the process of selling or buying a home, but do you know the questions you can’t ask your agent to answer? If your agent deflects your questions regarding neighborhood information, don’t mistake their actions for lack of knowledge when they might just be following the law. As licensed professionals, real estate agents must abide by certain rules and regulations. These rules are designed to protect the integrity of the sale as well as all parties involved. One such law would be the Fair Housing Act that was put into to action to prohibit discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions, based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap.
Questions Your Agent Can’t Answer:
“Which schools are ‘the best’ in the area?”
Asking your agent to describe the different area school systems and what schools in the area are considered to be ‘the best’ is a big no-no. If an agent answers this question they are guilty of steering your opinion. To find out more information about area schools, do some research on your own; there are great websites out there designed specifically to inform new residents about each school.
- Check out: http://www.greatschools.org/ to see how area schools
rate nationwide.
“What is the main religion in this neighborhood?”
The decision to purchase a home should be made based on the property’s fair market value. If you’re interested in the religious services available in a neighborhood do a Google maps search for religious structures in the area of question and see what is available. (Example search: house of worship in Albany, NY)
“Does this block have a lot of children?”
Your agent can’t single out neighborhoods based on the age of area residents. If you’re looking for older neighbors consider moving into a community that is designed specifically for people age 55 and older. If you are interested in getting to know your potential neighborhood make sure you drive by the property throughout different points during the day and throughout the week; this will also give you an idea of the traffic or street parking situation.
“Can you tell me what the crime rate is for the area?”
If you’re interested in crime statistics, you may like to visit the following two sites for information:
- http://www.neighborhoodscout.com/ny/crime/
- http://www.familywatchdog.us/(this site is a National sex offender registry website)
“What is the average household income in this neighborhood?”
Interested in what your potential neighbors are making? For median household value, median household income, and a brief description with information about the neighborhood in question visit this site:
“Has this property ever been the site of a landfill?”
Your agent might not know the answer to this question. For information regarding past and present environmental concerns in your area visit the EPA’s website that lets you search by zip code.
11
The ABC’s of Financing
A: Ask your bank or your lender questions to gather more information.
B: Be prepared to account for additional homeownership costs (Ex: bank, lender and attorney charges).
C: Choose the right type of lender. Some of the most popular types:
- Mortgage Bankers
- Mortgage Brokers
- Wholesale Lenders
- Portfolio Lenders
- Direct Lenders
- Correspondents
- Banks or Credit Unions
D: Determine what you can afford for a down-payment.
E: Estimate your mortgage payments.
F: Focus on mortgage affordability, not how long it will take you to pay off.
G: Gather as much information as possible.
H: Help avoid potential dilemmas and pay attention to the terms of any loan you decide upon.
I: Investigate all the financing options available to you.
J: Judge the mortgage payment that will work best for you.
K: Know the source of your funds.
L: Look ahead at your future financial situation.
M: Mortgages are loans for the purchase price of a home that don’t include the amount of down-payment. Payments are made on a monthly basis. They include the amount of money borrowed (the principle) plus the interest the lender charges.
N: Never forget to factor in taxes and insurance when determining your annual home expenses.
O: Options exist for down-payments outside of a savings or checking account. Contact your local Affordable Housing organization to learn about the assistance and grant programs that are in your area.
P: Pay close attention to the interest the lender charges if you have decided to take out a loan. They are very competitive!
Q: Question and communicate with your lender to reach the best option.
R: Research different options to pay for a down-payment:
|
Down-Payment Options |
Definitions |
| LTV Conventional loan (Loan to value) | A loan that allows you to borrow the entire purchase prices, with a high interest rate |
| Down-payment programs | Programs like AmeriDream, Downpayment Gift Program, The Nehemiah Program. |
| Government-backed loans | The government backs part of the loan so the lender can offer a higher percentage loan to value (Ex: Veterans Administration loans) |
| Sellers who do owner financing | Sellers can act as a bank and allow you to make payments without a down payment |
S: Standard down payments are around 20% of the homes purchase price if you do not want to pay PMI.
T: Try not to rely on your 401K plan, IRA or Roth IRA to finance a down payment. These are risky last resorts.
U: Understand your current financial situation.
V: Verify all your information.
W: Will you be comfortable with your decisions in the future?
X: Examine the types of loans that may be available to you:
|
Type of Loan |
Definition |
| Thirty-year | Payments are spread over thirty years with more affordable monthly payments |
| Fifteen-year loan | Payments spread over the course of 15 years. You have a higher monthly payment, but you reduce the total amount of interest paid altogether. |
| Amortized | The same payment amount is made over time that includes interest as well as the money to pay back the principal. |
| Annual percentage rate (APR) | Includes upfront costs in addition to the interest rate. |
Y: You are not alone, 92% of home buyers borrow money to finance the purchase of their home.
Z: Zip up a solid plan by using this worksheet to help plan where your money will come from:
|
Source of Funds |
Current Amount |
Future Amount |
| Bank accounts (checking/savings accounts) | ||
| Cash gift(s) expected/promised (gifts from family and friends) | ||
| Certificates of deposit | ||
| Sale of stocks | ||
| Cashing in of bonds | ||
| Sale of mutual funds shares | ||
| Sale of personal property | ||
| Tax refund due | ||
| Other | ||
| Total Cash Available for Down Payment |
11
Tips for First-Time Home Buyers
Tips for First-Time Home Buyers
We have all dreamt of our dream home at some point in our lives. We have all wondered what it would be like to have a house with a certain number of rooms, a big backyard and possibly even a pool. We all want that house in a safe neighborhood; more than a house – we want a home.
- Consider down payment programs: If you’re planning ahead, open a matched savings account. Eligible participants can earn up to $4 for every $1 saved – As much as $7,500 towards an eventual (within 10 months – 3 years) home purchase in New York State or New Jersey. Visit the organizations matched savings page for details and income limits. If you’re looking specifically in the City of Albany, we encourage you to check out the Buyer’s Choice Program, which can provide you with up to $20,000 in down-payment assistance PLUS up to $20,000 in necessary repairs.
- Get a mortgage pre-qualification letter: In order to begin your search, you will need to know how much you will be able to afford as a first-time home buyer. Most banks offer this mortgage pre-qualification at no cost to you – simply stop into the bank or call to make an appointment to meet with a mortgage originator. A few local banks in the area that Realtricity often recommends include Sunmark Federal Credit Union and SEFCU.
- Know the average process and length of buying a home: Some buyers will look for years and not find that perfect property – those buyers are not motivated. You have to truly be motivated to find a home. Studies show buyers will look at 20 to 30 houses before they finally decide on a property. This can take anywhere from two days to two months. To make life easier, start your search from home by visiting Realtor’s websites and searching their listings by inserting your own criteria, looking through virtual tours and getting more information about the surrounding neighborhood. Print out a few of the properties you are interested in and call the listing agent for more information and to schedule a tour. To understand the process better, read our Step by Step Buyer’s Guide.
- Consider signing on with a Buyer’s Agent: Unless you’re an agent yourself, it’s wise to sign on with a Buyer’s Agent who will represent your needs and desires while helping you locate the property that’s best for you. Locating a professional advocate, who is required by law to get you the best price and terms, can alleviate home shopping stress. Good real estate agents will listen to your wants and needs and arrange to show only those homes that fit your particular parameters. They are required to point out defects and will help you feel more confident in making your decision. If time permits, your agent may even wish to preview homes for you before showing you the property.
- Know what to do when touring a property: When looking at a property for the first time, you should bring a camera and take several pictures and notes about your thoughts and observations. Don’t be afraid to think out loud – Do you like the location? Is it near your work place? Examine your lifestyle – Is the house childproof? If not, will it be easy to childproof? Is it in an urban or rural area? Is it convenient to locations where you can enjoy your favorite hobbies? Does it have the social culture you’re looking for or are used to? A good listing agent should have all this information available to you. When you leave the property, rate it on a scale of 1 to 10 with 10 being the highest and review your notes when you get home.
- Find a good home inspector: Before making the purchase, you will want to know how the home was built and what problems it may bring with it. The only way to truly know what’s going on inside (and over and under) a home’s structure is to secure the services of a reputable home inspector. Their services can save you thousands of dollars later on and pull you out of a potential money pit. If you are signed on with a Buyer’s Agent, they will be able to provide you with a reputable list of good home inspectors and who they always refer. If you don’t have an agent working on your behalf, you can always ask friends and family who they would recommend.
- Be aware of the buyer’s expenses and costs of owning a home: After finding a home or two, sit down and figure out if you can even meet the expense of this purchase. There is much more to take into consideration than your monthly mortgage. Consider whether or not you will be able to afford the utilities, property taxes, repairs, lawn maintenance expenses, and so on. The cost of private school tuition and transportation will also add up if you go that route.
- Protect your assets: Overall, the best way to protect your assets during this process is to have every part of the sale in writing. Make sure you understand every aspect before making this huge commitment. For the future, it is strongly encouraged to purchase homeowners insurance after purchasing your new home, which will surely help you in the long run. A Buyer’s Agent will have some great companies lined up that you can talk with.
