Complete Idiot's Guide to Buying and Selling a Home, 4E

by O'Hara, Shelley; Lewis, Nancy D.

• ISBN13: 9781592571208
• ISBN10: 1592571204
• Format: Paperback
• Copyright: 2003-09-02
• Publisher: DK Publishing, Inc.

Summary

Goodbye, old house-hello, good buy! From looking to sell to finding a dream home, this all-in-one guide features new, updated, and vital information and tips on getting the best deal...no matter which side of the deal you're on. Unlike other books, this covers both buying and selling-which usually go hand-in-hand Revised edition includes more information on buying a second home, researching locations, saving on costs, and more Existing-home sales are setting new records every year Very low mortgage rates are making this a great time to buy

Author Biography

Shelley O'Hara has written more than 30 books. She works closely with real estate agents and specialists in the real estate market.

Nancy D. Lewis is a freelance writer, editor, and author of numerous books on lifestyles. She is also a multiple home buyer and seller.

Table of Contents

Part 1: Getting Started	1	(68)
1 The Dream of Owning a dome	3	(12)
The Great Things About Owning a Home	4	(2)
The Flipside: Some of the Drawbacks of Owning a Home	6	(2)
Bills To Pay	6	(1)
When Buying a Home Might Not Be Right	7	(1)
Facts About Buying a Home	8	(2)
People You Work with When Buying a Home	10	(1)
What to Expect When You Buy a Home	11	(1)
What To Expect When You Sell Your Home	12	(3)
2 How Much House Can You Afford?	15	(18)
How Much You Make and How Much You Spend	16	(2)
What If You're Self-Employed?	17	(1)
Keeping Track of Your Income	17	(1)
Keeping Track of Your Expenses	18	(1)
How Much Money Can You Borrow	18	(2)
Understanding Lender Ratios
What's Your Housing Ratio (a.k.a. Maximum Mortgage Payment)?	20	(1)
Don't Forget Taxes and Insurance!	21	(1)
Use This Example To "Get" This Concept	21	(1)
Prequalifying for a Loan	22	(2)
What Do You Need to Prequalify?	23	(1)
Advantages and Drawbacks of Prequalifying	23	(1)
Getting Preapproved for a Loan	24	(1)
Checking Your Credit	24	(6)
Getting a Credit Report	25	(1)
What's on Your Credit Report?	26	(1)
What's a FICO Credit Score?	27	(1)
Are You a Risky Creditor?	28	(1)
Correcting a Mistake or Responding to Problems	28	(1)
Strengthening Your Credit	29	(1)
Dealing with a Bad Credit Report	30	(1)
Before All the Numbers Make You Dizzy	30	(3)
3 Understanding the Up-Front Costs of Buying a Home	33	(10)
Everything You Need to Know About Down Payments	33	(3)
How Much of a Down Payment Do You Need?	34	(1)
Where Can You Get the Down Payment?	34	(1)
What If You Don't Have Money for the Down Payment?	35	(1)
When Do You Fork Over the Down Payment?	35	(1)
Additional Costs You Pay When Buying a Home	36	(5)
Paying Lender Fees	36	(2)
Coughing Up Advance and Reserve Payments	38	(1)
Paying Insurance on Your Mortgage	39	(1)
Still More Fees	40	(1)
Adding Up All the Costs	41	(2)
4 Buying a Home with an Agent	43	(16)
Understanding the Types of Agents	44	(1)
Agents Defined	44	(1)
Brokers Defined	44	(1)
Realtors Defined	45	(1)
New-Home Agents Defined	45	(1)
Is the Agent Working for You or the Seller?	45	(5)
Using a Buyer's gent	46	(3)
Using a Selling Agent	49	(1)
Using a Discount Broker	50	(1)
How Agents Can Help	50	(3)
Agents Can Navigate Financial Steps	50	(1)
Agents Can Help Find the Right House	51	(1)
Agents Can Help Negotiate and Close the Deal	52	(1)
Selecting a Good Agent	53	(3)
Finding an Agent	53	(1)
Putting an Agent to the Test	54	(2)
Firing an Agent	56	(1)
Working with "For Sale by Owner" Homes	56	(3)
5 Selecting a Mortgage Lender	59	(10)
Types of Lenders and Why They Matter	60	(2)
Understanding the Secondary Loan Market	61	(1)
Uncle Sam Helps Out	61	(1)
Portfolio and Jumbo Loans	61	(1)
Where Can You Find a Lender?	62	(3)
Using Your Agent to Find a Lender	63	(1)
Reviewing a Mortgage Advertisement	63	(1)
Using the Internet to Find a Lender	64	(1)
Questions to Ask Lenders	65	(4)
Part 2: Choosing the Home for You	69	(82)
6 Deciding Where You Want to Live	71	(10)
Where Do You Want to Live?	71	(5)
Home to Stay, or Home to Resell?	72	(1)
What Is Your Job Situation?	72	(1)
What Are Your Family's Needs?	73	(1)
What Are the Schools Like?	73	(1)
What Are the Taxes?	74	(1)
What About Emergencies?	75	(1)
What About Driving?	75	(1)
What About Fun?	75	(1)
Sources of Community and Neighborhood Information	76	(2)
Checking Out the Community	76	(1)
Ask Your Agent	77	(1)
Doing Your Own Neighborhood Assessment	77	(1)
Finding New Home Communities	78	(3)
7 Defining Your Dream Nome	81	(14)
Rule #1, Keep an Open Mind	81	(1)
What Style of Home Suits You?	82	(1)
How Many Stories?	82	(1)
What Is the House Made Of	83	(1)
Existing Home vs. New Home	83	(1)
The Benefits of an Existing Home (or the Drawbacks of a New Home)	83	(1)
The Drawbacks of an Existing Home (or the Benefits of a New Home)	84	(1)
Touring the Interior of the House	84	(4)
Casing the Kitchen	85	(1)
Touring the Bedrooms	85	(1)
Testing the Bathrooms	85	(1)
Looking at the Family/Living/Great Rooms	86	(1)
Do You Need a Home Office?	86	(1)
What About Storage? Attics and Basements	86	(1)
What About More Storage? Closets	87	(1)
Still Need Storage? Garages	87	(1)
Inspecting the Exterior of the House	88	(3)
And the Home Faces	89	(1)
Heating an Cooling Systems	89	(1)
The Home's Landscaping	90	(1)
Extra Goodies Like a Pool	90	(1)
Summing Up Your Dream House Wish List	91	(4)
8 Now to Find Your New Home	95	(10)
When Is the Best Time to Buy a Home?	95	(3)
Buyer c Market vs. Seller's Market	96	(1)
Seasonal Sales	97	(1)
Finding a Home	98	(4)
Drive Through Neighborhoods	98	(1)
Read the Local Papers	98	(2)
Read the MLS Listings	100	(1)
Ask Around	101	(1)
Shop Auctions and Foreclosures	101	(1)
Search Online Home Listings	102	(3)
9 Buying an Existing Nome	105	(12)
How the Home Tour(s) Work	106	(1)
How Does the Home Measure Up?	107	(4)
Do You Like the House?	107	(1)
Does the House Have Everything You Need?	107	(2)
Can You Live in the House?	109	(1)
If You Don't Like Something, Can You Change It?	110	(1)
Is the House Well-Maintained?	111	(2)
Check the Exterior	111	(1)
Check the Home Systems	111	(2)
Check the Interior for Structure and Maintenance	113	(1)
Evaluating the Neighborhood	113	(2)
Define the Character of the Neighborhood	113	(1)
Visit the Neighborhood	114	(1)
Your Home Comparison Checklist	115	(2)
10 Buying Other Types of Homes	117	(12)
What Other Home Types Are Available?	118	(1)
Buying a Condominium	118	(5)
The Good (and Bad) Things About Condos	119	(1)
The Condo Board Rules the Community!	120	(1)
Selecting a Community	121	(1)
Making an Offer	122	(1)
Buying a Co-Op	123	(2)
Selecting a Co-Op	123	(1)
Financing Your Co-Op	124	(1)
Vacation Homes, Fixer-Uppers, and More	125	(4)
Relocating to a New City	125	(1)
Buying a Vacation Home	126	(1)
Buying a Fixer-Upper	127	(2)
11 Building a New home	129	(22)
Considering the Pluses and Minuses of Buying a New Home	130	(1)
New Homes Are Great Because	130	(1)
The Drawbacks of a New Home	130	(1)
Selecting a Type of Home	131	(2)
Tract and Semi-Custom Homes	131	(1)
Custom Homes	132	(1)
Finding New Homes	133	(8)
Using an Agent	134	(1)
Selecting a Subdivision	134	(3)
Selecting a Good Builder	137	(2)
Selecting a Home Plan	139	(1)
Selecting a Good Lot	140	(1)
Understanding the Sales Contract	141	(5)
Contract Terms	141	(1)
Upgrades, Upgrades	142	(3)
Getting a Good Deal	145	(1)
Including Home Extras in the Mortgage	146	(1)
Getting a New Home Warranty	146	(1)
Avoiding New Home Problems	147	(4)
Part 3: Understanding Your Finance Options	151	(64)
12 Financing 101	153	(14)
How Basic Lending Works	154	(1)
How Home Loan Lending Works	154	(3)
What's the Interest Rate?	154	(1)
Other Fees: Paying Loan Points	155	(1)
How Long Do You Make Payments?	156	(1)
Different Loans for Different Folks	157	(3)
Fixed-Rate Mortgage Loans	157	(1)
Adjustable-Rate Mortgage Loans	158	(1)
Conventional Loans	158	(1)
Government-Backed Loans	159	(1)
Conforming vs. Nonconforming Loans	160	(1)
Still More Loan Types	160	(1)
Your Loan May Require Mortgage Insurance	160	(2)
Paying Mortgage insurance	161	(1)
Canceling Mortgage insurance	161	(1)
How to Decide on the Type of Financing	162	(5)
How Much Can You Afford for a Down Payment?	163	(1)
How Much Can You Afford for a Monthly Payment?	163	(1)
How Long Will You Live in the Home?	164	(1)
What's Your Risk Level?	165	(2)
13 Fixed-Rate Mortgages	167	(8)
The Advantages of a Fixed-Rate Mortgage	168	(1)
The Drawbacks of a Fixed-Rate Mortgage	168	(1)
Interest and Points for Fixed-Rate Mortgages	169	(1)
How Long Should You Pay on Your Fixed-Rate Loan?	170	(1)
Thirty-Year vs. Fifteen-Year vs. Biweekly	170	(1)
Is the Shorter Term Better?	171	(1)
Prepaying Your Mortgage	171	(4)
14 Adjustable-Rate Mortgages	175	(10)
The Pros and Cons of an Adjustable-Rate Mortgage	176	(1)
The Good Things About an ARM	176	(1)
The Bad Things About an ARM	176	(1)
How an Adjustable-Rate Mortgage Works	177	(3)
What You Pay At First: The initial or Teaser Rate	177	(1)
How the Rate Is Figured: The Index	178	(1)
The Lenders Cut: The Margin	178	(1)
How Often Payments Change: The Adjustment Interval	179	(1)
How High the Rate Can Co: The Rate Caps	179	(1)
Negative Amortization and ARMs	180	(1)
Selecting an ARM	180	(5)
What You Want (Ideally) in an ARM	180	(2)
What You Should Ask When Shopping for an ARM	182	(3)
Looking at the Worst-Case Scenario
15 Getting Other Types of Financing	185	(12)
VA Loans	186	(1)
Taking Over the Seller's Mortgage, a.k.a. Assumptions	186	(1)
Start Small and Pay Later: Balloon Mortgages	187	(1)
Two Loans and One Down Payment: 80-10-10 or 80-15-5 Loans	187	(1)
Getting a Lower Interest Rate Via a Buydown	188	(1)
Loan Help from Sellers with Carrybacks	188	(1)
Paying for Your Home with Layaway Payments	189	(1)
Fixed and Adjustable Rate Loans in One: Two-Step Mortgages	189	(2)
How to Do the Two-Step	190	(1)
Is the Two-Step for You?	191	(1)
Leasing with Option to Buy	191	(1)
Still More Options	191	(1)
Loans for Those with Blemished Credit	192	(1)
Refinancing Your Loan	193	(4)
Reasons to Refinance	193	(1)
Using Your Refinance Money	194	(1)
How Refinancing Saves You Money	194	(1)
Shopping Around for Refinance Loans	195	(2)
16 Applying for a Mortgage	197	(18)
The Roster of Loan People	198	(1)
How the Lender Decides Whether to Lend You Money	198	(4)
Taking the Loan Application	199	(1)
Verifying Information	199	(1)
Looking at Your Credit Report	199	(1)
Getting an Appraisal on the Home	200	(1)
Knowing What Lenders Look For	201	(1)
Approving or Denying the Loan	201	(1)
Applying for the Loan	202	(9)
Spilling Your Financial Guts	202	(5)
Locking in an Interest Rate	207	(1)
Estimating Closing Costs	208	(1)
Estimating Interest Rates	209	(2)
Ensuring a Smooth Application Process	211	(1)
What to Do If You Can't Get a Loan	211	(6)
Income Problems	212	(1)
Credit Problems	212	(1)
Appraisal Problems	213	(1)
Discrimination Problems	213	(2)
Part 4: Getting the Best Deal	215	(64)
17 Making an Offer on Home	217	(14)
Writing an Offer	217	(5)
What the Offer Should Include at the Minimum	218	(1)
What Else Can Be Included in the Offer?	218	(1)
Tips on Making an Offer	219	(3)
What Are You Willing to Pay?	222	(2)
Comparing Other Sales Prices	222	(1)
How Motivated Is the Seller?	223	(1)
Asking the Seller to Pay Part	224	(1)
The Offer Is Contingent On	224	(2)
Getting Financing	224	(1)
Receiving a Clear Deed and Title	225	(1)
Having the Home Inspected	225	(1)
Having the Home Appraised	226	(1)
Other Contingencies to Consider	226	(1)
Specifying Other Offer Terms	226	(3)
Setting Time Limits	226	(1)
What Personal Property Is Included?	227	(1)
Real vs. Personal Property	227	(1)
Specifying the Condition of the Home at Settlement	228	(1)
Prorating Tax and Other Payments	229	(1)
Making a Deposit	229	(2)
18 Working the Deal	231	(10)
Understanding the Offer Process	232	(1)
Using the Best Offer Strategies	232	(1)
Handling Counteroffers	233	(3)
Receiving a Counteroffer	234	(1)
Responding to a Counteroffer	234	(2)
Quitting and Moving On	236	(1)
Having an Offer Accepted	236	(1)
Withdrawing an Offer	237	(1)
Do I Need a Real Estate Attorney?	238	(3)
19 Choosing Insurance	241	(10)
Understanding the Types of Insurance	242	(1)
Insuring Your Home	242	(6)
What Home Insurance Covers	243	(1)
Types of Home Insurance	243	(1)
How Much Insurance Do You Need?	244	(1)
Tips on Home Insurance	245	(1)
Search the Web for Insurance Information	246	(1)
How Insurance Payments Are Made	247	(1)
Comparing Insurance Policies	247	(1)
Getting Title Insurance	248	(3)
The Title Search	248	(1)
What Title Insurance Protects	249	(2)
20 Having the Home Inspected	251
Seller Disclosure: Its the Law	251	(1)
Why Get an Inspection?	252	(1)
Scheduling an Inspection	252	(1)
What the Inspector Checks	253	(3)
What the Inspector Should Check	254	(2)
What the Inspector Doesn't Check	256	(1)
What the Inspector Shouldn't Do	256	(1)
Reading the Inspection Report	256	(1)
Handling Any Inspection Problems	257
Big Problems vs. Little Problems	258	(1)
Ways to Handle Problems	258
21 Handling the Closing; Buyer's Perspective	26l	(253)
What Has to Happen Before the Closing	261	(3)
Who Owns the Home?	262	(1)
The Final Walkthrough	263	(1)
What You Pay at Closing	264	(4)
Don't Forget the Down Payment	264	(1)
Closing Costs	264	(1)
Paid as Part of the Loan	265	(1)
Paid in Advance	266	(1)
Prepayments (Reserves) Held by the Lender	266	(1)
Title Charges	266	(1)
Government Recording and Transfer Charges	267	(1)
Still More Settlement Charges	267	(1)
Keeping a Reserve in an Escrow Account	267	(1)
And the Total Comes to	268	(1)
What Happens at the Closing	268	(6)
What You Should Bring to the Closing	269	(1)
Signed, Sealed, Delivered	269	(4)
Exchanging Money	273	(1)
Statement Side 1: The Totals	273	(1)
Statement Side 2: The Closing Costs	273	(1)
The Passing of the Keys	273	(1)
Handling Problems	274	(1)
Walkthrough Problems	274	(1)
Money Problems	274	(1)
Loan Problems	275	(1)
Title Problems	275	(1)
Moving In!	275	(6)
Pre- and Post-Move Tips	275	(1)
Hiring a Professional Mover	276	(3)
Part 5: Selling Your Nome	279	(88)
22 Deciding to Sell Your Home	281	(10)
Why Do You Want to Sell?	282	(2)
Tallying Your Likes, Dislikes, Wishes, and Wants	282	(1)
What Do You Hope to Gain by Selling?	283	(1)
Are You Ready to Sell?	284	(1)
Timing the Sale of Your Home: Sell First vs. Buy First	284	(2)
Buy First, Sell Later	284	(1)
Sell First, Buy Later	285	(1)
Buy and Sell Together	286	(1)
What Costs Are Involved in Selling a Home?	286	(1)
What to Expect When You Sell Your Home	287	(4)
Step 1: Getting the Home Ready	287	(1)
Step 2: Deciding Whether to Use an Agent	287	(1)
Step 3: Pricing and Marketing the Home	288	(1)
Step 4: Negotiating Offers	288	(1)
Step 5: Closing on the Home	288	(1)
Step 6: Buying a New Home	288	(3)
23 Selling Your Home Yourself	291	(14)
FSBO: What to Expect	292	(1)
Pricing Your Home	292	(1)
Figuring Your Net Proceeds	293	(1)
Defining Acceptable Financial Terms	293	(1)
Marketing Your Home-Doing It Yourself	293	(3)
Putting a Sign in Your Yard	293	(1)
Taking Out an Ad	294	(1)
Marketing Your Home Online	295	(1)
Preparing Fact Sheets	295	(1)
Showing Your Home	296	(2)
Handling Sales Calls	296	(1)
Showing Your Home	297	(1)
Holding Open Houses	297	(1)
Handling Buyer Financing	298	(1)
Negotiating an Offer	298	(2)
Be Prepared	299	(1)
Draw Up Offers	299	(1)
Review Offers	299	(1)
Closing on the Home	300	(1)
Other Key Players Who Can Help You Sell Your Home	301	(2)
Working with Agents	301	(1)
Hiring an Attorney	302	(1)
Using a HomeSelling Service	302	(1)
Using an Escrow Company	302	(1)
What to Do if Your Home Doesn't Sell	303	(2)
24 Selling Your Home with an Agent	305	(12)
Should You Use an Agent or Sell Alone?	306	(1)
Finding an Agent	307	(4)
Quizzing the Agent	308	(1)
Evaluating the Agent's Listing Presentation	309	(2)
Signing a Listing Contract	311	(6)
Types of Contracts	311	(3)
What the Listing Contract Should Include	314	(1)
Getting Out of a Listing	314	(3)
25 Getting the Home Ready for Sale	317	(14)
Doing Home Repairs	318	(4)
Inspecting the Home Yourself	318	(2)
Getting a Professional Inspection	320	(1)
Deciding What Repairs to Make	321	(1)
Do It Yourself or Hire Someone?	321	(1)
Should You Remodel?	322	(1)
Cleaning Up the Home	322	(2)
First Impressions Count-Clean Up the Outside	323	(1)
Clean the Inside	323	(1)
Eliminating Clutter	324	(1)
Put Everything Away!	324	(1)
Undecorating the Home	325	(1)
Collecting Home Information	325	(1)
Understanding Seller Disclosure	326	(5)
Do You Have to Disclose?	326	(1)
What Must You Disclose?	326	(1)
Completing a Seller Disclosure Form	327	(4)
26 Pricing and Marketing the Home	331	(12)
Setting the Listing Price	331	(4)
Studying Comparable Homes for Sale	332	(2)
Getting an Appraisal	334	(1)
How the Market Affects Price	335	(1)
Deciding What Else to Offer	335	(1)
Figuring Your Net Proceeds	336	(1)
Marketing Your Home	337	(1)
Showing Your Home	338	(5)
Scheduling a Showing	339	(1)
Getting the Home Ready for a Showing	339	(1)
Dealing with Criticism	340	(1)
Holding an Open House	340	(3)
27 Dealing with Purchase Offers	343	(10)
Dealing with Other Agents	343	(1)
Evaluating an Offer	344	(3)
What an Offer Should Include	345	(1)
What Price and at What Terms?	345	(1)
Checking the Contingencies	345	(1)
Checking the Time Limits	346	(1)
Making a Counteroffer	347	(1)
Accepting an Offer	348	(1)
What to Do If You Don't Get Any Offers	348	(2)
Should You Help with Financing?	350	(3)
28 Handling the Closing: Seller's Perspective	353	(14)
Knowing What to Expect at Closing	354	(1)
What You Have to Do	354	(3)
Handling Termites and Other Critters	355	(1)
Checking the Chain of Ownership	355	(1)
Collecting Documents	355	(1)
Hiring a Closing Orchestrator	356	(1)
Handling Problems with Closing	357	(1)
What Happens at Closing	358	(4)
Fees You Can Expect to Pay at Closing	358	(1)
The HUD-1 Statement-My Column or Yours?	359	(3)
Sign on the Dotted Line	362	(1)
Tax Implications for Home Sales	362	(2)
Reporting the Sale of Your Home	363	(1)
Figuring the Tax Basis	363	(1)
Moving Out!	364
Appendixes
A Glossary	367	(10)
B Resources	377	(6)
C Loan Payment Tables	383	(6)
Index	389