100 Questions Every First-Time Home Buyer Should Ask

by GLINK, ILYCE R.

• ISBN13: 9781400081974
• ISBN10: 1400081971
• Edition: 3rd
• Format: Trade Paper
• Copyright: 2005-05-24
• Publisher: Three Rivers Press

Summary

Fully revised and updated for today's marketplace, this classic from America's most trusted real estate expert has helped countless home buyers land the home of their dreams. The third edition includes more than 60 pages of new material as well as stories of real people involved in the buying and selling process.

Author Biography

Ilyce R. Glink’s newspaper column, “Real Estate Matters,” appears in more than 160 newspapers and websites nationwide. She is the financial reporter for WGN-TV in Chicago, a radio talk-show host for WSB-AM in Atlanta, and has appeared on Oprah, the Today Show, CNN, and CNBC. Glink’s website, thinkglink.com, gets thousands of visitors per day. She lives just outside Chicago.

Table of Contents

Preface	xv
Introduction	1	(12)
How Do I Know What I Want?	13	(38)
Should I Make a Wish List? What About a Reality Check?	14	(7)
How Do I Figure Out Where I Want to Live?	21	(1)
What Does ``Location, Location, Location'' Really Mean?	22	(3)
How Long Do I Plan to Live in My Future Home?	25	(4)
What Are the Different Types of Homes?	29	(9)
Should I Buy a New Home or an Existing Home?	38	(3)
What Are the Advantages and Disadvantages of Buying a Home That Needs Renovation? What Do Brokers Mean by ``Overimproved''?	41	(4)
Should My First Home Be an Investment?	45	(6)
How Do I Look for a Home?	51	(51)
How Do I Start My Search for the Home of My Dreams? Should I Look on the Internet?	51	(13)
What Is the Difference Between a Real Estate Agent and a Real Estate Broker? What Is a Realtor?	64	(2)
How Do I Choose the Right Agent or Broker?	66	(4)
What Is a Seller (or Conventional) Broker? What Are the Seller Broker's Responsibilities to Me?	70	(4)
What Is a Buyer Broker? What Is an Exclusive Buyer's Agent? Should I Use One?	74	(4)
What Is a Dual Agent? What Is a Transactional Broker? What Is a Nonagent?	78	(2)
What Is the Typical Real Estate Commission? How Is It Split?	80	(2)
What Is a Discount Broker? When Should I Use One?	82	(2)
How Much Should My Broker Know About the Amount I Can Afford to Spend on a Home?	84	(3)
How Do I Know If My Broker Is Doing a Good Job?	87	(2)
How Can I Help in the Search for a Home If I Use a Broker?	89	(2)
How Should I Interpret the Home Description in the Local Newspaper or in Broker Listing Sheets?	91	(5)
Now That I Can Shop for a Home on the Internet or Buy from a Developer, Do I Need an Agent? Can I Get a Better Deal If I Buy a House Without an Agent?	96	(2)
What Do I Need to Know About Buying a House That's For Sale By Owner (FSBO)?	98	(4)
How Do I Identify What I Like and Need in a Home?	102	(16)
How Do I Become Selective When Choosing a Home? How Do My Wish List and Reality Check Help Me?	102	(3)
When I Go to a Showing, What Should I Look for?	105	(2)
How Can I Remember Each Home When I've Seen So Many?	107	(3)
How Do I Know When It's Time for a Second Showing?	110	(5)
When Do I Know I've Found the Right House?	115	(3)
How Do I Know What I Can Afford to Spend?	118	(19)
How Much Can I Afford?	118	(12)
How Much Will It Cost to Own and Maintain a Home?	130	(5)
What Are Assessments? Do All Town Houses, Condos, and Co-ops Have Them?	135	(2)
Putting Together the Deal	137	(22)
How Do I Decide What to Offer for the Home?	137	(4)
How Do I Make an Offer?	141	(2)
What Goes into the Actual Offer to Purchase or Contract to Purchase?	143	(6)
What Is the Earnest Money? Who Holds It? When Do I Get It Back?	149	(2)
When I Make an Offer, What Contingencies Should I Include?	151	(1)
What Is a Mortgage or Financing Contingency?	152	(2)
What Is the Inspection Contingency?	154	(2)
What Is the Attorney Approval or Attorney Rider?	156	(3)
Negotiating the Deal	159	(46)
How Does the Negotiation Process Work?	159	(8)
How Do I Make a Counteroffer?	167	(1)
What Do I Do in a Multiple-Bid Situation?	168	(2)
What Is a Home Warranty? What Kind Can I Get for New Construction? What About a Previously Owned Home?	170	(4)
What Does the Contract Really Say and What Are My Obligations Under It?	174	(3)
Should I Use a Real Estate Attorney? Should I Sign Anything Before My Attorney Reviews It?	177	(2)
How Do I Find a Real Estate Attorney? How Much Should He or She Charge Me?	179	(4)
Should I Close at the Beginning, Middle, or End of the Month? Why Does It Matter?	183	(2)
What Is Seller Disclosure? How Does It Affect Me?	185	(2)
Do I Need a Home Inspection? How Do I Find a Reputable Home Inspector?	187	(7)
Should I Test for Toxic Substances and Contaminated Water?	194	(7)
What If the Inspector Finds Something Wrong with the Home I Want to Buy?	201	(2)
What Do I Do If the Seller or Broker Has Misrepresented the Condition of the Home?	203	(2)
Possession and Other Parts of the Offer to Purchase	205	(6)
What Is Possession?	205	(1)
What if the Seller Wants to Stay in the House after the Closing?	206	(2)
When is the Right Time to Terminate the Contract? How Do I Do it?	208	(1)
What Is ``Buyer's Remorse'' and How Do I Cope with It?	209	(2)
Financing Your Home	211	(55)
How Much Can I Afford to Spend on a Home?	211	(6)
What Is a Mortgage?	217	(2)
How Do I Get Information on Mortgages?	219	(2)
What Is the Difference Between a Mortgage Banker and a Mortgage Broker? How Do I Find a Good Lender? Who Are the People Involved with Making the Loan?	221	(6)
How Do I Apply for a Loan? Should I Apply Online for a Mortgage?	227	(5)
What Kind of Documentation Will I Need for My Application?	232	(2)
What Types of Circumstances Might Foul Up My Loan Application? How Can I Eix Them?	234	(4)
How Much of a Down Payment Will I Need to Buy My Home? Should I Put Down the Largest or Smallest Down Payment Possible?	238	(5)
Should I Borrow from My 401(k) or Other Retirement Accounts to Fund My Down Payment?	243	(2)
What Fees Are Associated with a Mortgage Application? What Lender's Fees Will I Be Charged for My Mortgage?	245	(3)
What Are Junk Fees? How Do I Avoid Them?	248	(2)
What Is Truth in Lending?	250	(1)
What Is the Annual Percentage Rate (APR)?	251	(1)
What Is a Good Faith Estimate?	252	(1)
What Is a Real Estate Tax Escrow? What Is an Insurance Escrow? How Can I Avoid Setting Them Up?	253	(5)
What Should I Do to Make Sure the Mortgage Application Process Goes Smoothly?	258	(5)
How Do I Get the Best Loan at the Best Rate on the Best Terms?	263	(3)
Playing the Mortgage Game	266	(63)
What Are the Different Types of Mortgages Available? How Do I Choose the Right Type for Me?	266	(4)
How Small a Down Payment Can I Make? Where Can I Find a Zero-Down Loan?	270	(3)
What Is Private Mortgage Insurance (PMI)? How Can I Avoid Paying It? How Do I Get Rid of It? How Does It Differ from FHA's Mortgage Insurance and Mortgage/Credit Insurance?	273	(6)
What Is an Assumable Mortgage? Are These Loans Still Available?	279	(1)
What Is a Fixed-Rate Mortgage? What Is an Adjustable-Rate Mortgage (ARM)?	280	(7)
What Is a Two-Step Mortgage? What Is a Balloon Mortgage?	287	(3)
What Is an FHA Loan? What Is a VA Loan?	290	(5)
What Is an Interest-Only Loan? Should I Get One?	295	(4)
Should I Automatically Get a Home Equity Loan or Home Equity Line of Credit (HELOC) When I Close?	299	(1)
Are There Other Loan Programs I Should Know About?	300	(5)
What Is Seller Financing? What Is a Lease with an Option to Buy?	305	(7)
What Loans Exist for Buyers with Mediocre or Poor Credit? Where Do I Get One?	312	(3)
What Is a Predatory Lender? How Do I Spot One?	315	(4)
Why Are Some Lenders Willing to Give Me a Mortgage for 125 Percent or 130 Percent of the Home's Sales Price?	319	(1)
What If I'm Rejected for My Loan?	320	(9)
Before You Close	329	(41)
When Should I Schedule My Preclosing Inspection? What Do I Do If I Discover Something Is Damaged or Missing? When Should the Seller Move Out?	329	(8)
What Exactly Is the Closing? Where Is It Held?	337	(4)
What Are My Closing Costs Likely to Be?	341	(5)
What Is a Title Search? What Is Title Insurance? Why Do I Need Them?	346	(4)
What Is RESPA? What Does the HUD-1 Statement Look Like?	350	(4)
Do I Need Homeowner's Insurance? What Should It Cover?	354	(10)
How Should I Hold Title to My New Home?	364	(6)
The Closing	370	(17)
Who Should Attend the Closing? What Should I Do If I Can't Be There?	370	(2)
What Are Prorations?	372	(2)
What Do I Need to Bring with Me to the Closing? What If Something Goes Wrong at the Closing?	374	(4)
What Should I Get from the Sellers at Closing?	378	(1)
How Does My Deed Get Recorded?	379	(2)
How Should I Prepare for the Move to My New Home?	381	(6)
Happily Ever After	387	(10)
Discovering Problems After You Close	387	(2)
How to Lighten Your Property Tax Load	389	(5)
The Next House: Knowing When It's Time to Move On	394	(3)
Appendix I: The Top 10 Mistakes First-Time Buyers Make	397	(6)
Appendix II: Five Simple Things You Can Do to Make the Home-Buying Process Easier	403	(2)
Appendix III: Five Mistakes People Make When Buying New Construction	405	(4)
Appendix IV: Contracts	409	(26)
Appendix V: General Resources	435	(4)
Appendix VI: State-by-State Resource Guide	439	(12)
Glossary of Real Estate Terms Every Home Buyer Should Know	451	(18)
Alphabetical Listing of Websites	469	(8)
Acknowledgments	477	(2)
Index	479

Excerpts

Chapter 1: How Do I Know What I Want?

You can’t always get what you want. But if you try sometimes, well you just might find you get what you need. —Rolling Stones

The difference between being a wannabe and a successful home buyer may boil down to nothing more than knowing the difference between what you want in a home and what you can’t live without.

It sounds simple, but that difference requires an ability to recognize what’s really important to you and compromise on the rest. Unfortunately, our ability to compromise is often lost between two spouses or partners who forget that they can’t afford to satisfy their every whim.


SHOULD I MAKE A WISH LIST?

WHAT ABOUT A REALITY CHECK?

First, let’s talk about what exactly constitutes a wish list. A wish list is nothing more than a list of everything you’ve ever dreamed of having in your house: granite or slate kitchen countertops (or perhaps inlaid, stained concrete), a wood-burning fireplace, three-car garage, four-person whirlpool, the best school district in your state, a five-minute walk to work, four bedrooms, a master suite with his and her closets, and vaulted ceilings. You get the picture.

The best real estate agents and brokers will ask their first-time buyers to create a wish list detailing everything they’d love to have in a home, including:

1.Location. Think about where you like to shop, where your children will attend school, where you work, where you worship, and where your friends and family live.

2.Size. Think about the number of bedrooms you want, the size garden, the extra room you may need for expansion or family flexibility, where you’ll do the laundry, what kind of storage space you need, and if you need a home office.

3.Amenities. Think about the garage, kitchen and bathroom appliances, swimming pool, fireplace, air-conditioning, electrical wiring, furnace, and hardwood floors.

4.Condition. Do you want a home in move-in condition? Or are you willing to put in some “sweat equity,” to borrow a This Old House phrase, to build in value?

At first glance, many of these items may seem to be in conflict with each other: You want to be close to a transportation network so it’s easy to get around, and yet you want a quiet and peaceful neighborhood. You might want to walk to work, but when you come home, you want your home to be silent and secure. You want a wide variety of shopping, and yet you also need to be close enough to your health club to use it on a regular basis. You want to take advantage of the city, and yet live in the suburbs.

But that’s what a wish list is all about. If you’re honest about what you want, the inconsistencies and conflicts will come out. Most first-time buyers are confused by all their choices. First-time buyers take on that “kid in a candy store” mentality: Many have difficulty choosing between different styles of homes. One broker says she always has a few first-time buyers each year who need to see at least one of everything in the area: a California ranch, an old Victorian, an in-town condo, and several new subdivisions. It takes a tremendous amount of time, which is wasted if the buyer decides ultimately to go with a loft.

Some agents and brokers also use a tool to help their clients define their needs as well as their wants. They call this a reality check.

Joanne, a real estate sales associate in New Jersey, says she asks her first-time buyers very specific questions about what they need to survive in their first home. “I just know their pocketbook will not allow them to have everything they want. I tell them they’ll begin to get what they want with their second home. Not the first.”

Here are some of the questions Joanne might ask:

•How many bedrooms do you need?

•How many children do you have or are you planning to have while you live in this home?

•Is a garage absolutely necessary?

•Why do you need a home with a basement or an attic?

•Do you use public transportation on a daily basis?

•How close to work do you need to be?

•Does driving on a major expressway or in traffic make you crazy?

•Do you want to care for a garden or would you prefer a maintenance-free home?

By asking specific questions about your daily lifestyle, Joanne and other brokers can center in on the best location, home size, and amenities for your budget. They can read between the lines on your wish list.

Wish lists and reality checks have another use. By prioritizing the items on these lists, a good real estate agent can tell which items you might be willing to trade off. For example, if the first wish on your list is to have a four-bedroom, two-bath house, and the 38th item is a wood-burning fireplace, then the broker knows you’d probably prefer a four-bedroom, two-bath house without a fireplace to a three-bedroom, two-bath home with a fireplace.

The bottom line is this: Unless you win the lottery or are independently wealthy, you’re probably going to have to make some trade-offs when buying your first home.

And sometimes you’re going to make a mistake.

---

Excerpted from 100 Questions Every First-Time Home Buyer Should Ask: With Answers from Top Brokers from Around the Country by Ilyce R. Glink
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.