100 Questions Every First-Time Home Buyer Should Ask : With Answers from Top Brokers from Around the Country

by Glink, Ilyce R.

• ISBN13: 9780812932355
• ISBN10: 0812932358
• Edition: 2nd
• Format: Trade Paper
• Copyright: 2000-01-01
• Publisher: Three Rivers Press

Summary

100 Questions Every First-Time Home Buyer Should, Ask is a wealth of information for first-timers, including: -- How do I know if my broker is doing a good job?* (See question #15.)-- How do I decide what to offer for the home? (See question #26.)-- How does the negotiation process work? (See question #34.)-- How do I choose the right lender for me? (See question #54.)-- How much down payment will I need to buy my home? (See question #59.)-- What are the different types of mortgages available? (See question #73.)-- What if I'm rejected for my loan? (See question #84.)-- What exactly is the closing? (See question #87.)-- Will I need homeowner's insurance? What should it cover? (See question #91.)

Author Biography

Ilyce R. Glink is an award-winning real estate and personal-finance specialist. Millions of people coast to coast read her weekly real estate column, "Real Estate Matters," and listen to her radio shows Real Estate USA and The Real Estate Minute. Her hundreds of other radio and television appearances have included the Today show and Oprah. She is the home and mortgage expert for Quicken.com, and hosts a weekly Internet chat. The National Association of Real Estate Editors has acknowledged her outstanding contributions to the field by naming her Best Consumer Reporter. Ilyce and her family live outside Chicago; you can visit her online at ThinkGlink.com.

Table of Contents

Preface	xvii
Introduction	3	(10)
How Do I Know What I Want?	13	(30)
Should I Make a Wish List? What About a Reality Check?	14	(7)
What Does ``Location, Location, Location'' Really Mean?	21	(3)
How Do I Figure Out Where I Want to Live?	24	(1)
How Long Do I Plan to Live in My Future Home?	25	(4)
What Are the Different Types of Homes?	29	(7)
Should I Buy a New Home or an Existing Home?	36	(3)
Should I Buy a Home That Needs Renovation? And, What Do Brokers Mean by ``Overimproved''?	39	(4)
How Do I Look for a Home?	43	(44)
How Do I Find the Home of My Dreams?	43	(5)
How Can I Find a Home on the Internet?	48	(6)
What Is the Difference Between a Real Estate Agent and a Real Estate Broker? What Is a Realtor®?	54	(1)
How Do I Choose the Right Broker?	55	(5)
What Is a Seller (or Conventional) Broker? What Are His or Her Responsibilities to Me, the Buyer?	60	(4)
What Is a Buyer Broker? What Is an Exclusive Buyer Agent? Should I Use One?	64	(5)
What Is a Dual Agent? What Is a Transactional Broker? What Is a Non-agent?	69	(1)
What Is the Typical Real Estate Commission?	70	(1)
What Is a Discount Broker? When Should I Use One?	71	(3)
How Much Should My Broker Know About the Amount I Can Afford to Spend on a Home?	74	(3)
How Do I Know Whether My Broker Is Doing a Good Job?	77	(2)
How Can I Help in the Search for a Home if I Use a Broker?	79	(2)
How Should I Interpret the Home Description in the Local Newspaper or in Broker Listing Sheets?	81	(6)
How Do I Identify What I Need Versus What I Like in a Home?	87	(15)
How Do I Become Selective When Choosing a Home? How Do My Wish List and Reality Check Help Me?	87	(3)
When I Go to a Showing, What Should I Look For?	90	(2)
How Can I Remember Each Home When I've Seen So Many?	92	(3)
How Do I Know When It's Time for a Second Showing?	95	(5)
When Do I Know I've Found the Right House?	100	(2)
How Do I Know What I Can Afford to Spend?	102	(19)
How Much Can I Afford?	102	(12)
How Much Will It Cost to Own and Maintain a Home?	114	(4)
What Are Assessments? Do All Town Houses, Condos, and Co-ops Have Them?	118	(3)
Putting Together the Deal	121	(22)
How Do I Decide What to Offer for the Home?	121	(4)
How Do I Make an Offer?	125	(3)
What Goes into the Actual Offer to Purchase or Contract to Purchase?	128	(5)
What Is the Earnest Money? Who Holds It? When Do I Get It Back?	133	(2)
When I Make an Offer, What Contingencies Should I Include?	135	(2)
What Is a Mortgage or Financing Contingency?	137	(1)
What Is the Inspection Contingency?	138	(3)
What Is the Attorney Approval or Attorney Rider?	141	(2)
Negotiating the Deal	143	(41)
How Does the Negotiation Process Work?	143	(8)
How Do I Make a Counteroffer?	151	(1)
What Is a Home Warranty? What Kind Can I Get for New Construction? What About a Previously-Owned Home?	152	(5)
What Does the Contract Really Say and What Are My Obligations Under It?	157	(2)
Should I Hire a Real Estate Attorney? Should I Sign Anything Before My Attorney Reviews It?	159	(2)
How Do I Find a Real Estate Attorney? How Much Should He or She Charge Me?	161	(4)
Should I Close at the Beginning, the Middle, or the End of the Month? Why Does It Matter?	165	(2)
What Is Seller Disclosure? How Does It Affect Me?	167	(3)
Do I Need a Home Inspection? How Do I Find a Reputable Home Inspector?	170	(8)
Should I Test for Toxic Substances and Contaminated Water?	178	(2)
What if the Inspector Finds Something Wrong with the Home I Want to Buy?	180	(2)
What Do I Do if the Seller or Broker Has Misrepresented the Condition of the Home?	182	(2)
Possession and Other Parts of the Offer to Purchase	184	(6)
What Is Possession?	184	(1)
What if the Seller Wants to Stay in the House after the Closing?	185	(2)
When Is the Right Time to Terminate a Buyer's Contract?	187	(1)
What Is ``Buyer's Remorse'' and How Do I Cope with It?	188	(2)
Financing Your Home	190	(52)
How Much Can I Afford to Spend on a Home?	190	(6)
What Is a Mortgage?	196	(2)
How Do I Get Information on Mortgages?	198	(2)
What Is the Difference Between a Mortgage Banker and a Mortgage Broker? How Do I Find a Good Lender?	200	(4)
Who Are the People Involved with Making the Loan?	204	(2)
How Do I Apply for a Loan? Should I Apply On-Line for a Mortgage?	206	(5)
What Kind of Documentation Will I Need for My Application?	211	(2)
What Types of Circumstances Might Foul Up My Loan Application? How Can I Fix Them?	213	(4)
How Much of a Down Payment Will I Need to Buy My Home?	217	(2)
Should I Put Down the Largest or the Smallest Down Payment Possible?	219	(3)
What Fees Are Associated with a Mortgage Application?	222	(1)
What Lender's Fees Will I Be Charged for My Mortgage?	223	(3)
What Are Junk Fees? How Do I Avoid Them?	226	(1)
What Is Truth in Lending?	227	(1)
What Is the Annual Percentage Rate (APR)?	228	(1)
What Is a Good Faith Estimate?	228	(1)
What Is a Real Estate Tax Escrow?	229	(3)
What Is an Insurance Escrow?	232	(1)
How Can I Avoid Setting Up a Real Estate Tax or Insurance Escrow?	233	(1)
What Should I Do to Make Sure the Mortgage Application Process Goes Smoothly?	234	(5)
How Do I Get the Best Loan at the Best Rate on the Best Terms?	239	(3)
Playing the Mortgage Game	242	(46)
What Is an Assumable Mortgage? How Is It Different from a Subject-to Mortgage?	242	(1)
What Different Types of Mortgages Are Available? How Do I Choose the Right Type for Me?	243	(4)
How Small a Down Payment Can I Make? Where Can I Find a Zero Down Loan?	247	(3)
What Is a Fixed-Rate Mortgage? What Is an Adjustable-Rate Mortgage (ARM)?	250	(6)
What Is a Two-Step Mortgage? What Is a Balloon Mortgage?	256	(3)
What Is an FHA Mortgage? What Is a VA Loan?	259	(5)
What Other Sorts of Mortgages Are Out There? What Are Articles of Agreement?	264	(4)
What Is Seller Financing?	268	(2)
What Is a B-C Loan? Where Do I Get One?	270	(3)
Why Are Some Lenders Willing to Give Me a Mortgage for 125 Percent or 130 Percent of the Home's Selling Price?	273	(2)
What Is Private Mortgage Insurance (PMI)? How Do I Get Rid of It?	275	(4)
How Does Private Mortgage Insurance (PMI) Differ from Mortgage Insurance (FHA) and Mortgage/Credit Insurance?	279	(1)
What If I'm Rejected for a Loan?	280	(8)
Before You Close	288	(40)
When Should I Schedule My Preclosing Inspection? What Do I Do if I Discover Something Is Damaged or Missing?	288	(5)
When Should the Seller Move Out?	293	(3)
What Exactly Is the Closing? Where Is It Held?	296	(5)
What Are My Closing Costs Likely to Be?	301	(5)
What Is a Title Search? What Is Title Insurance? Why Do I Need Them?	306	(2)
What Is RESPA? What Does the RESPA Statement Look Like?	308	(2)
Do I Need HomeOwner's Insurance? What Should It Cover?	310	(11)
How Should I Hold Title to My New Home?	321	(7)
The Closing	328	(17)
Who Should Attend the Closing? What Should I Do if I Can't Be There?	328	(2)
What Are Prorations?	330	(2)
What Do I Need to Bring with Me to the Closing? What if Something Goes Wrong at the Closing?	332	(4)
What Should I Get from the Sellers at the Closing?	336	(1)
How Does My Deed Get Recorded?	337	(2)
How Should I Prepare for the Move to My New Home?	339	(6)
Happily Ever After	345	(8)
Discovering Problems After You Close	345	(1)
How to Lighten Your Property Tax Load	346	(6)
The Next House: Knowing When It's Time to Move On	352	(1)
Appendix I: The Top 10 Mistakes First-Time Buyers Make	353	(4)
Appendix II: 5 Simple Things You Can Do to Make the Home-Buying Process Easier	357	(2)
Appendix III: Contracts	359	(21)
Appendix IV: General Resources	380	(4)
Appendix V: State-by-State Resource Guide	384	(12)
Appendix VI: Amortization Tables	396	(81)
Glossary of Real Estate Terms Every Home Buyer Should Know	477	(17)
Alphabetical Listing of Websites	494	(5)
Acknowledgments	499	(2)
Index	501

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.

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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.