The Home Team

HOME BUYERS INFORMATIONAL BOOKLET

GETTING YOUR FINANCIAL PICTURE IN FOCUS

Here's some important advice: as soon as you have made the decision that you want to buy a house, one of your first steps should be to make certain that you have a clear picture of your financial situation. At a minimum, you will most likely want to do the following: Run a Credit Report to make certain that there are no discrepancies or problems in your credit his tory. Do an analysis of what your current financial situation is: where the money comes from and where the money is presently going. Develop a Household budget for your current situation. Get into the habit of using it on a consistent basis! Keep your spending patterns in check. Do an analysis of how a house purchase will affect your budget. Begin to gather items such as: last 3 years Income Tax returns, current copies of pay stubs, records of any past deroga-tory credit history that has since been paid off, and records of any supplemental income you may have. If you are self em-ployed, you will need all business records and tax returns for the last 3 years. Having these items close at hand will save an enormous amount of time when the Mortgage Company begins to ask for them (and ask for them they will!) Do not incur any new debt. Many mortgage applications have been stopped in their tracks because the applicants had de-cided a week before the application that a shiny new car with a big finance or lease payment would look just perfect in the driveway of their new home. Since mortgages are based on debt to income ratios (the amount you pay out monthly versus the amount you bring in) a newly acquired debt could be enough to throw the ratios off and make the mortgage unobtain-able.

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TIPS ON SAVING MONEY

Going hand and hand with an effective household budget is saving money on those things that you truly need. To start saving, take an inventory of your needs to see where you can shave the dollars. Begin with the biggest items first, where the most potential for savings is, and move down the scale to the less expensive items. A moderate savings on one of the big items (houses and cars) combined with savings on the smaller items (food, clothes, etc.) can reap a large reward in your total budget. The following are some thought starters:

General Tips

Distinguish between Wants and Needs: You will save a ton of money if you don't mistake wants for needs. Needs are pretty simple to identify--those items that are necessary to sustain: Shelter, food, clothing, transportation. Wants are those things that enhance or possibly improve our family life. A car is a need. Unless necessary for your business, a $40,000 Sport Utility Vehicle is a want, even if a lot of people don't see it that way. Have you ever heard (or said) "I abso-lutely need...?" when the actual meaning was "I really want?" This is not to suggest that you shouldn't be able to have the things you want--only that to delude yourself into believing that a want is a need--and busting your budget in the process--is a recipe for financial disaster. Is less better? Perhaps it is due to the booming economy, perhaps "keeping up with the Jonesism", maybe its ego, but for many of us, we often seem to insist on the biggest and the best, no matter what the cost. When a $15,000 new car may be more than acceptable, we stretch the seams of our budget to afford a $25,000 vehicle. We buy $25 shirts with $35 designer labels attached. We opt for the $100 dinner at the trendy restaurant when a $20 meal would have been just as delicious. Think about where you are spending the family money--and how--to see if there couldn't be savings found with minor changes in habits. Try before you Buy: This goes a long way in helping to avoid the silly purchases of things you rarely or never use. Be-fore you buy something, especially items with big price tags, borrow one, rent one or try one out before you plunk down the cash. If you are bored with it, or determine that it truly is not something you need before you buy it (and you will be on a certain percentage of items) you will definitely be bored with it, or find it not that necessary, after! Example: You feel that you absolutely must have a new Jet-Ski, at a cost of $4500 (and that is before financing and taxes). You go to the lake, rent one, and 45 minutes into a one hour rental you are saying, "geez, this is a long hour." Saved: More than $4500 (perhaps a year of college fees for the kid!)

Specific Tips

The Big Ones

HOUSE MORTGAGES. In all probability, your mortgage will be the largest single expense in your budget. Obviously, getting the best deal here is of ultimate importance. Not comparing could cost you thousands of dollars over the term of the mortgage. CARS. For most families, the next biggest expense is their cars). Mistakes made here can often be as costly (on a monthly basis) as mortgage miscues. Take a look at the vehicles) you presently own. Do you own too much vehicle for your needs? Do you have equity in a car that you no longer use frequently? Could you downsize and save money, not only in monthly payments but also in maintenance, insurance and operating expenses? Are you getting the best deal on your insurance and repairs and maintenance?

AND THE SMALLER ONES THAT ADD UP

FOOD. Not only do you need to eat food to live, the expense of it for the average family can eat you alive! Since food is a necessary and recurring expense, just saving, for example, $20 a week on your purchases can convert to over $1000 in savings over the course of a year.

Try to plan in advance. By knowing what you need, you will be able to buy in larger quantities (almost always less expensive) and cut down on convenience food purchases (always more expensive).

If you use national brands, spend a little time clipping and using coupons. $1.50 invested in the Sunday news-paper could save you $20 or more at the checkout. Organize the coupons by type, so as you develop a shop-ping list you can make a notation if you have a coupon.

Consider store brands or generics. You may find the quality is equal to (and sometimes better than) the na-tional brands, and store brands/generics are generally considerably less expensive.

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When it is on sale, stock up. Of course this only applies to those items that you use on a regular basis. Stock-ing up on an item which you use once a year doesn't make sense (and robs you of spending money, not to men-tion shelf space).

Shop at the store that is the cheapest overall. Surveys have shown that there is sometimes as much as 10-15% difference on identical grocery orders at 2 different stores in the same area. If you spend $500 a month on groceries, that can equate to $600 to $900 a year in savings. Don't throw away your money just because it is your habit to shop at a certain store.

CLOTHING. Although many consumer items have actually reduced in price over the last few years (most notably, com-puter and electronic items) the cost of clothing has seen a continuing upward spiral. In addition, a purchase price that not too long ago bought a good quality garment now seems to buy virtually "throw away" clothing. With some planning, though, it is possible to maintain clothing purchases that are in line with your family budget.

Buy separates that coordinate. You can make numerous combinations with a few well matched items. For women, jackets, slacks, skirts and blouses can be mixed and matched to create many different outfits. Plus you can change the look of these outfits with accessories such as jewelry or scarves. Men's clothing offers a wide variety of separates that can be coordinated: blazers, slacks, shirts and ties can all be interchanged to create a versatile wardrobe with a minimum of expense.

Buy a season ahead. Buy next year's winter clothes at the end of this season and save. The styles won't change that much (if at all) and you will pocket a big difference in the price.

If you are "hard" on clothes, buy quality. Buying an $80 pair of shoes that will last saves money in the long run instead of having to buy 3 pairs of $35 shoes that don't hold up.

Stay away from trendy fashions. Stick with the basics. You can always be sure you clothing styles will last from year to year when you buy perennial stand-bys such as medium length A-line skirts and solid tailored blaz-ers for women or neutral color shirts and tailored to semi-tailored sports coats for men.

COMPARISONS. IT used to be that comparison shopping was a long and drawn out process. Driving from one store to another or making numerous phone calls could be a real time waster. Even if you were able to make an adequate com-parison, sometimes it wasn't worth the hours you needed to invest to get the comparison. The Internet has changed much of that. Now you can make quick comparisons on most items, usually within a matter of minutes. What would once have taken hours to accomplish now happens at the click of a mouse: a real time and money saver. POWER BUYING. You often can save a considerable amount of money by taking advantage of Power Buying Services, which use the buying power of large numbers of consumers to save money for everyone. Sam’s Club for example may save you money. Just be sure to shop around.

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YOUR BUDGET

The development of a household budget is a desirable activity both before you make a Real Estate purchase as well as consistently during your ownership. By preparing a budget while you are looking at homes, you can better focus on mort-gage payment goals and how the new house will affect your total expenses. Maintaining a budget during the time you own the home can help to prevent potential financial disasters as well as point you in a money saving direction so you have more funds available for those things that you need or want. You will need a little time to develop your budget--it's not a five minute exercise--but should not take longer than a few hours if you gather the necessary information first. Get everyone who will be involved in spending involved in developing the budget. You can develop a form for your household budget, or pick up one from your local office supply store.

Some of the items and information you will need to develop your budget are:

All current monthly loan payments.

All other monthly expenses (such as child care, dues, etc.).

Records of variable expenses (for example, utilities, food and car repair) from the last 12 months. This will give you an estimate of your monthly expenditures.

Records of annual or semi-annual expenses (such as insurance and taxes).

An estimate of what your new mortgage payment will be.

Records of other non-fixed expenses (for example, medical expenditures) for the last year. This will give you an estimate of average expenses of this type.

Records or an estimate of personal expenses (entertainment, travel, etc.)

Having a current copy of your credit report can be very helpful. Not only will it reveal any inaccuracies in your credit history, it will also give you a clear picture of not only your total debt but your monthly obligations.

Be realistic in your budget assessment. Make provisions for possible increases in some items (for example, school tui-tions, insurance and taxes). Then, look for ways to get (and maintain) control over your budget.

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ABOUT AGENCY RELATIONSHIPS

One of the most common misconceptions that is shared by a large number of home buyers is that when working with a Real Estate Agent, he or she will "automatically" represent you as a buyer. As we will discuss, unless this is specifically disclosed in writing, in all probability the Agent will be representing the seller. The traditional relationship (probably going back to when the first thatched hut was sold by someone other than its owner) has been that a Real Estate Agent's primary loyalty was to the seller of the property. This relationship was in ef-fect whether the Agent was the listing agent or working with a buyer. This situation caused many home buyers to be con-fused: they assumed that the Agent that had been driving them around showing them houses for the last 3 weeks was representing them. In reality, the Agent was representing the owners of the houses they saw, and was bound to reveal to those owners any information he or she knew about the buyers. Buyer Agency, which is almost universally available now, changed all that. The buyer now often has a choice in repre-sentation: the Agent with whom they were working could continue to represent the seller in the transaction, or the Agent could represent them as buyers. The buyer is now able to compete on a more level playing field. Although there are state to state variations (please verify the situation in your particular locality), the following is a basic summary of the types of agency, and who the Agent represents. SELLER AGENCY: The "default" situation. Unless disclosed to the contrary, all Agents involved in a Real Estate trans-action (and their Brokers--with whom a listing agreement is actually with) represent, and owe their allegiance, to the seller. If you contact an Agent who has a property listed, that Agent will always represent the seller. BUYER AGENCY: When an Agent represents the buyer, that Agent "rejects" the implicit seller agency and thus owes loyalty to the buyer. In other word this agent has an agreement (make sure it is in writing) stating that he or she repre-sents the buyer and cannot disclose any information concerning the buyer to other parties in the transaction. This agent is working for you the buyer to get the best possible deal. DUAL AGENCY: This occurs when 2 Agents--or the same Agent--working for the same Broker each represent a buyer and a seller in a transaction. This situation must be disclosed to both the buyer and the seller. Privileged information (e.g. the price that a buyer will pay or a seller will sell at) cannot be disclosed to the other party without the express per-mission of that party.

WHAT IT MEANS TO YOU

If you leave the agency question "as-is", your Agent will automatically represent the seller in the transaction (although it is very likely that they will suggest Buyer Agency.) If the Agent does not represent the seller, in most areas you can opt for Buyer Agency. If the house in which you are interested is listed by the same Broker as your Agent, then you have an automatic Dual Agency situation. To sum it up, if you want full representation and it is available, insist on Buyer Agency.

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TYPES OF HOMES

In its most simple form, the process of buying a home is little more than a series of decisions--a sort of Real Estate "what, where, when and how." One of the first decisions (and usually one of the easiest) is the "what." Housing falls into several different categories, most notably: single family houses, townhouses, or condominiums Each brings its own set of advantages and disadvantages. One type may be much better suited to your budget and lifestyle than another. De-pending on your location, you may find more choices of one particular type of home than others.

SINGLE FAMILY HOMES

By far the most common form of housing in North America is the single family detached home--ranging from 600 square foot bungalows to 6000 (or more) square foot sprawling mansions. The most important distinguishing factors that de-termine a single family dwelling are that it sits on its own piece of land (which is sold part and parcel with the home) and it is not attached to anyone else's residence. With single family homes, your home pretty much is your castle. Subject to neighborhood and subdivision regulations and ordinances, you can do with it as you wish. Want a dif-ferent exterior color? Usually you can accomplish that (taking into account the fact that the neighbors may not be recep-tive to a purple house with ecru trim). Need more room and want to add on? Subject to the codes of your jurisdiction, you may be able to expand your living space. You will probably have a yard of some sort--from "postage stamp" size up through multiple acres, and your ownership will include all of it. In effect, when you buy a single family home your purchase will be of a parcel of land (your lot) on which sits a structure (your house).

SINGLE FAMILY HOMES

Advantages To a large degree ―your space is your own.‖ you can modify or improve it as you wish. Re-sale value is generally the highest on single family detached homes. If you need more room, you can usually add on to the existing house. Generally there are no property management fees as there may be in a condominium and in many townhouses.

Disadvantages All maintenance and repair costs—interior, exterior, and ev erything in between –are yours. Lack of amenities (for example, pools, playgrounds etc), that you may find in other types of hous-ing. You are responsible for landscap-ing and lawn up-keeping costs. In most areas single family homes are more expensive than town-houses or condominiums.

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Is a Single Family Home for You?

You like your "space." The idea of apartment living gives you the willies.

The prospect of cutting the lawn, trimming the bushes and shoveling snow excite you (or at least don't send you headed for the nearest bridge.)

You like the idea of modifying your home--changing the color, the appearance, the size. Having someone tell you that you couldn't do that would bother you.

If you like, you are able to build a single family home (building a townhouse or condominium community gets a little expensive!)

Townhouses

Townhouses often can make an excellent "middle ground" between a detached single family home and a full fledged condominium because, to some degree, they offer attributes of both. For purposes of definition, we will describe a townhouse as a home that is attached to one or more other houses, but which sits directly on a parcel of land that you also own. For this discussion, townhouses can range from duplexes and triplexes all the way through huge townhouse communities consisting of hundreds of similar homes. There is a good degree of variance in the way townhouse communities are structured. It may be a simple agreement (as is often the case of duplexes and triplexes) that each parcel of land and the home that sits on it is separately owned. In the case of larger townhouse communities, you will generally have an additional shared ownership in the common areas of the complex as well as any amenities such as swimming pools, park areas, etc. This ownership you will share jointly with all other townhouse owners in the complex. In any townhouse purchase that involves an Homeowners' Association it is vitally important to get as much information as you can, since the association can have a considerable impact on your ownership experience!

Advantages May have exterior maintenance and repairs to be responsible for. More security in attached home? Amenities Pool, tennis etc

Disadvantages You will be responsible for payment of homeowners fees. You give up privacy when compared to a single family home. Your options for changing the exterior look of your house may be limited.

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CONDOMINIUMS

The easiest way to understand the concept of condominium ownership is to see it as an apartment you own (in fact, many condominiums are apartments that have been converted over the years). Your ownership extends inward from your interior walls, floors and ceilings. In addition, you are a partner, with all of the other own-ers in the complex, of the exterior structure (the foundation, exterior walls and roof) as well as any common areas and amenities (for example, swimming pools, clubhouses, tennis courts, play areas, etc.)

One of the requirements of condominium ownership is the payment of a monthly condo fee, which covers general repairs and maintenance to the common areas of the complex as well as (hopefully) build up a cash reserve for future needs. In general, all exterior maintenance and repairs are the responsibility of the condominium although you will be charged for them, either through your association dues or a special assessment (a one time charge assessed to all owners for, as an example, a new roof). The normal day-to-day maintenance of the grounds (some examples are cutting the grass, shovel-ing snow and maintaining the pool) are also the responsibility of the association. Interior maintenance and repairs (for example, replacing a dishwasher) are the responsibility of the individual owner. In some areas, a condominium may be the only consideration that fits within your budget. The reason for this are simple. In general, the same square footage will cost less in a condo setting than it will in a single family home or townhouse, due mainly to land cost--you can build many more condos than you can single family homes on the same amount of

land.

Is a Condominium for You?

You want absolutely nothing to do with exterior maintenance and repairs.

You like the idea of amenities

like) but you don't like the idea

of having to pay for them on your own.

You like the safety of numerous and

nearby neighbors.

Advantages: You will be responsible for little or no exterior maintenance. Many condo communities offer amenities, tennis, pool, etc Condos are more likely to be located convenient to stores, town centers etc. Condos are often more affordable .

Disadvantages: You will be responsible for a monthly condo- fee. You may give up more privacy. You only own from the interior wall inward. All exterior land and structures is commonly owned. When it is time to sell it could take longer.

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House Buying "Needs and Wants"

Before you embark on your search for the perfect house, it is important that you make a realistic "shopping list" in an at-tempt to narrow your choices of properties. Hunting for a home can be a time consuming process, especially if you have not determined in advance the parameters of your search. Many home buyers make the mistake of misinterpreting a WANT as a NEED. As a result, they often dismiss homes that perfectly fit their needs in search for one that has their wants. This is not to say that you cannot have what you desire in your home--just that you must be able to differentiate between what you truly need and what you would like to have.

MORTGAGES

Probably one of the reasons that buying a home is such an emotional experience is because of the fact that not only do you have the actual house buying to deal with, but for most home buyers you also have the mortgage process to en-counter. This can be a smooth and almost uneventful process, or an unnerving one. A great deal depends on the prepa-ration of the buyer as well as the selection of an efficient mortgage company.

Need more information? Read on...

What is Pre-qualification? Does it mean that the loan is approved?

Pre-qualification is the initial step in securing a mortgage. A lender will analyze your current income, debt and basic credit history situation in order to qualify you for a maximum loan amount. This gives you a clear picture of your financial parameters and a maximum housing price (the mortgage amount plus your down payment). A certificate of Pre-qualification does not mean that the mortgage loan is approved (that cannot occur without verifications of all information relating to income and debt, an appraisal of the property and a title search).

How much down payment?

One of the first questions that home buyers ask is "how much down payment are we going to need?" Unfortunately, there is no standard answer. Down payments will vary from 0% (with a VA--Veteran's Administration loan) to upwards of 25% (with certain "non-conforming" loans). As an average, most home buyers make down payments in the 5%-15% range, although your own personal situation may dictate more or less down payment.

Advantages -Fixed: Since you know what your payment will be for the life of the loan, you can budget more easily. No possibility of an interest rate increase will make your mortgage payment unaffordable.

Disadvantages-Fixed: More income is needed to qualify because of higher initial mortgage rate. If interest rates decrease, it will be necessary to refinance to get a lower payment.

Advantages-ARM

Lower initial interest rate and therefore lower monthly payment. If interest rate declines, your payment will also decline. Easier to qualify for due to lower interest rate and payment amount.

Disadvantages—ARM: If interest rate increases, so does your pay-ment. A large increase in interest rates-and payment-could make your house unaffordable.

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What a Mortgage Payment Consists of:

PRINCIPAL: The repayment of the original amount borrowed on a monthly basis. INTEREST: The cost of borrowing the principal amount, repaid on a monthly basis. TAXES: Real Estate taxes paid to a local government agency. INSURANCE: Homeowners insurance on the home. Also any mortgage insurance, which is paid to protect the mortgage company. You will also hear the word: PITI (Principal/Interest/Taxes/Insurance) .

Types of Mortgages

Fixed: A fixed term (for example, 15 or 30 years) as well as a fixed interest rate. The interest rate and term are fixed

at the start of the mortgage. The monthly amount for the payment of principal and interest will not change during the term of the mortgage.

Adjustable: Often referred to as an ARM (Adjustable Rate Mortgage). The interest rate on your mortgage will be

adjusted up or down according to current interest rate levels. The monthly amount for your principal and interest pay-ment will go up or down with these rate changes.

COMPARING TERMS:

15 Year 30 Year

Principal and Interest Payment (per month) $985 $769

Total paid over term in P&I $177,300 $276,840

Total interest over term $77,300 $176,840

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HOUSE BUYING MISTAKES

Buying a house covers a lot of ground--including legal, financial and emotional considerations. To not educate your-self and learn from the mistakes of others only sets you up to be at best disappointed and at worst finding yourself living in the wrong house. We have listed some of the most prevalent--and potentially dangerous and expensive--mistakes made by first time home buyers.

Running before walking. This is easy to do once the decision to buy a home has been made. It means rushing off looking at homes, surfing the web or calling on advertisements before doing some up-front prepa-ration. Not spending time doing this preparation, though, can be a disaster. We get a number of emails from buyers who have contracted to purchase a home and want to know the easiest way of getting out of the pur-chase. Let it be known loud and clear: If you contract to purchase a home and "change your mind," the chances of getting released from the contract are almost non-existent. Still we hear "We found another home!" Sorry, too late. Maybe next time. "We are buying too much house!" Okay, maybe you will be able to rent out a room or two. " It's not what we want!" Maybe you can paint the house, or add on to it or replace the carpeting, but you will almost certainly will be living in it!

Over-buying the first time. Being "house poor" is a very uncomfortable existence. A large and beautiful home with little or no furniture tends to be empty and cold. A life where almost every dime of your earnings goes to the support of your house wears thin very quickly and is a frequent cause of family stress. Pushing yourself right up to--or beyond--your limits leaves you highly exposed when the inevitable changes to the na-tional or your personal economy occur. Leave yourself some breathing room!

Finding out too late that you have no representation. This can be a real nasty surprise when you assume that the Agent with whom you are working represents you when they actually represent--and owe complete allegiance to--the seller. How does this happen? By not taking the time to investigate and familiarize yourself with the laws regarding. Or, by rushing out to look at homes, whether in person or on the Internet, and con-tacting the Agent who has the house advertised (who will be the listing Agent and will absolutely represent the seller). Another pitfall occurs when you try to represent yourself in the purchase of a home, thinking that you will save money. This may be the case, but it is just as--or more--likely that you will run into a savvy seller who is looking to keep the commission savings in their pocket rather than give it to you. In addition, without representation and the use of a how do you determine a realistic selling price for a property?

Not comparing mortgages. There are far too many variables--type of mortgage, term, lender and amount of points to mention a few--not to investigate all of your options. Don't simply accept the first plan presented to you, whether it is from a mortgage broker, an Agent or on the recommendation of a friend or relative. Spend time comparing to get the most advantageous plan for your requirements and financial situation.

Waiting for the "perfect" home. Many first time buyers make the mistake that they will, if they look around long enough, find a home that has a full 100% of their needs and wants. With the thousands of variables available in housing, including location, style, size, amenities and condition, this is almost always an unrealis-tic goal. There are two potential problems with this strategy: First, these buyers pass by homes that meet 90% or more of their requirements only to eventually give up (often purchasing homes with less of their re-quirements because they are worn out!) and second, while they are waiting for the "perfect" home, housing market prices (and often mortgage rates) continue to rise, adding expense to their purchase. Instead, it makes sense to determine the most important of your needs and the most desired of your wants and select-ing a home that meets the majority of them.

Shortcutting the inspection process. This can involve skipping a whole house inspection completely in order to save the relatively small amount of money involved or it may involve using a friend or relative with limited experience to conduct the inspection. In either case you run the risk of not exposing potentially expensive--or even HAZARDOUS defects in the property.

PROTECT YOURSELF AND INVEST THE $200 TO $500 FOR A PROFESSIONAL INSPECTION.

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FINDING AND USING AN AGENT

Since the commission for the sale of a house is almost always paid for by the seller, buyers are able to get assistance and information from Real Estate Agents, usually at no cost to them. It is for this reason that the vast majority of home buyers employ the services of an Agent for their purchase. In addition, since most houses are listed by Real Estate Agencies, it gives them the maximum number of available properties to consider. The relationship between a home buyer and a their Agent is a little like a marriage: it must be based on trust, mutual goals (to get you the house that best suits your needs!) and understanding. To a large degree, the home buyer entrusts the Agent to always keep their (the buyer's) interest first and foremost. It is important that you understand who the Agent with whom you are working represents.

What to look for in an Agent: An understanding of your needs. A willingness to work with you until your needs are fulfilled. A sense of professionalism. Someone who is dedicated to their profession. A familiarity with the area in which you have an interest. A familiarity with the price range in which you have an interest. Strong references from previous buyers.

Questions to ask a prospective Agent:

Are you a full time agent? Are you familiar with the area in which we want to look? How many home sales did you participate in last year? What is the average sold price of the homes you sold last year? Do you normally work with sellers or buyers? How many buyers are you presently working with? How many sellers? Where do you feel your strengths lie? What 3 buyers that you have worked with can you give me as references?

Where to find an Agent:

Be aware: If you search for homes first and contact the Agent who has a particular property listed, that Agent will absolutely represent the seller--not you.

Search newspaper and homes magazines ads for Agents who advertise that they experience in and offer Buyer Representation. Talk with co-workers about experiences--both good and bad--that they have had with specific Agents. Get as much feedback from their experience as you can. Or, if you would like, we can also assist you in locating an Agent, whether it is in your own town or across the country in most areas of the U.S. and Canada.

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FINDING A HOME

There are probably few things in life that are as exciting--or as nerve- racking--as the search for a house. All the good emotions and the bad emotions seem to converge when the house hunting begins. Don't worry, this is a normal reaction, and is found in seasoned home buyers as well as those who are looking for their first home. One of the first decisions you need to make is whether you want to do your house hunting on your own, or by using an Agent. If you decide to go it on your own, you will be able to see (and buy) those houses that are For Sale by Owner (known as FSBO's). Depending on your area and the overall market, this will be around 20% or so of the total homes available (the other 80% are the "listed" properties--being sold through an Agent. Those homes you can't buy on your own).. With an organized house buying plan, you can minimize a great deal of the emotional impact. By determining your buy-ing power, your wants and needs, and having an organized search plan, your chances of a stress-free experience are much better.

TIPS ON FINDING THE RIGHT HOUSE:

Once the decision to buy a home has been made, take the time to prepare before you go on your home search.

Yes, it is very tempting to rush out and actually look at houses, but to do so without full preparation can be both disastrous and expensive. Get your finances in order first! We can't stress this enough--it will save you an enormous amount of time, ag-gravation and heartache. Determine what your budget will comfortably allow and stick to it. Don't spend yourself into a "house poor" situation. Get familiar with the different areas available to narrow your search. Determine your minimum requirements as well as any desired additional features. Take note of any items that you don't want in a house. Determine the desired location (schools, work, public transportation, etc.) Familiarize yourself with the contract process. If you feel that using an Agent is your best tactic, find one that you feel comfortable with and who understands your needs. Be completely aware of the agency issue. If you look for houses before you have your own Agent, you may not have the representation you want. As you are looking, use a notepad to compare homes. A scorecard is a great tool when it comes time for com-parisons (and for remembering which home had which features!) Your agent can also help you with this. Get familiar with the inspection process--especially the personal inspection aspect, so that you can weed out unacceptable houses quickly.

Maintain your perspective--and your cool! You may find an acceptable house on the first day--or the tenth.

The important thing is to get the home that is best for you!

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SAVING MONEY ON HOMEOWNERS INSURANCE

The price you pay for your homeowners insurance can vary by hundreds of dollars depending on the company you buy your policy from. Companies offer several types of discounts, but they don't offer the same discount or the same amount of discount in all states. That's why you should ask your agent or company representative about any discounts available to you.

Here are 12 STEPS you can take to help you SAVE MONEY on your HOMEOWNERS INSURANCE:

1. SHOP AROUND

Friends, family, the phone book and Internet are some of the sources you can use to find homeowners insurers. Get a wide range of prices from several companies. But don't consider price alone. The insurer you select should offer both a fair price and excellent service. Quality service may cost a bit more, but you buy insurance in case you need to make a claim, so it's important to get a company with a good reputation. Talk to a number of insurers to get a feeling for the type of service they give. Ask them what they would do to lower your costs. Check the financial ratings of the companies with AM Best or Standard and Spoor's.

2. RAISE YOUR DEDUCTIBLE

Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay. De-ductibles on homeowners policies typically start at $250. Increase your deductible to: $ 500 -- save up to 12 percent $1,000 -- save up to 24 percent $2,500 -- save up to 30 percent $5,000 -- save up to 37 percent Depending on your insurance company.

3. BUY YOUR HOME AND AUTO POLICIES FROM THE SAME INSURER

Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them.

. 4. WHEN YOU BUY A HOME…

Consider how much insuring it will cost. A new home's electrical, heating and plumbing systems and overall structure are likely to be in better shape than those of an older house. Insurers may offer you a discount of 8 to 15 percent if your house is new. Check the home's construction: In the East Brick, because of its resistance to wind damage In the West Frame, because of its resistance to earthquake damage Choosing wisely could cut your premium by 5 to 15 percent. Avoiding areas that are prone to floods can save you about $400 a year for flood insurance. Homeowners insurance does not cover flood-related damage. The closer your house is to firefighters and their equipment, the lower your premium will be.

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5. INSURE YOUR HOUSE, NOT THE LAND

The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So don't include its value in deciding how much homeowners insurance to buy. If you do, you'll pay a higher premium than you should.

6. IMPROVE YOUR HOME SECURITY AND SAFETY.

You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm, or dead-bolt locks. Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police station or other monitoring facility. These systems aren't cheap and not every system qualifies for the discount. Before you buy such a system, find out what kind your insurer recommends and how much the device would cost and how much you'd save on premiums.

7. STOP SMOKING

Smoking accounts for more than 23,000 residential fires a year. That's why some insurers offer to reduce premiums if all the residents in a house don't smoke.

8. SEEK OUT DISCOUNTS FOR SENIORS

Retired people stay at home more and spot fires sooner than working people and have more time for maintaining their homes. If you're at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies.

9. SEE IF YOU CAN GET GROUP COVERAGE

Alumni and business associations often work out an insurance package with an insurance company, which includes a discount for association members. Ask your association's director if an insurer is offering a discount on homeowners in-surance to you and your fellow graduates or colleagues.

10. STAY WITH AN INSURER…

If you've kept your coverage with a company for several years, you may receive special consideration. Several insurers will reduce their premiums by 5 percent if you stay with them for 3 to 5 years; by 10 percent if you remain a policyholder for 6 years or more.

11. COMPARE THE LIMITS IN YOUR POLICY TO

THE VALUE OF YOUR POSSESSIONS AT LEAST ONCE A YEAR

You want your policy to cover any major purchases or additions to your home. But you don't want to spend money for coverage you don't need.

12. LOOK FOR PRIVATE INSURANCE FIRST

If you live in a high-risk area --- one that is especially vulnerable to coastal storms, fires, or crime --- and have been buy-ing your homeowners insurance through a government plan, you should check with an insurance agent or company rep-resentative. You may find that there are steps you can take that would allow you to buy insurance at a lower price in the private market., 8 to 15 percent if your house is new. Insurers may offer you a discount of 8 to 15 percent if your house is new.

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HOUSE INSPECTIONS

Inspect, Inspect, Inspect!

Depending on the type of financing you choose, there should be either 2 or 3 separate inspections on the home you want to purchase. The first should be your own basic inspection (see the bottom of this page for what to look for),. The second should be a professional whole-house inspection by a reputable person. Should you select a government loan (FHA or VA), The third inspection should come at the time of the appraisal, which to some degree amounts to a "mini-inspection." Do not, however, rely on this appraisal as your only inspection of the property! We cannot emphasize enough the value and necessity of an extensive home inspection. WE can recommend a number of inspectors that are highly respected in the Charlottesville area. And also ask us about our Home Links packet for home buyers. Many home purchasers, either in the desire to save the $200 to $500 that a good inspection costs, or due to simple igno-

rance, have spent enormous sums of money repairing items that any good home inspector would have pointed out. Any offer to purchase you make should be contingent upon (subject to) a whole house in-spection with a satisfactory report.

Do not let anyone--not the agent, not your family or friends, and especially not the seller--dissuade you from having the property thoroughly inspected! Not only will you sleep much sounder

after you have moved into the house, a professional inspection can give you an escape hatch from a contract on a de-fective house. If the contract is written contingent on an acceptable inspection, any defects in the home must be either repaired or monetarily compensated for. If you are not satisfied, you have the option to cancel the contract. Inspections are designed to disclose defects in the property that could materially affect its safety, live ability, or resale value. They are not designed to disclose cosmetic deficiencies (for example, an interior wall that needs paint touch up). You will need to determine on your own those type of items that will need attention: don't expect a whole house inspec-tion to reveal them to you. Don't wait until you have placed an offer on a house before you begin the search for a home inspector. There will be a time limit in the contract designating when the inspection must be completed (typically between 7 and 14 days). If you start trying to find an inspector at that point, and cannot find an acceptable one to schedule it in that time frame, you will only have two choices: go with an inspector that is not your first choice, or run the risk of running past the deadline for the inspection (which could void any chance having the seller take care of repairs). Neither is an acceptable alternative!

Notes:

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READY TO MOVE?

A HELPFUL CHECKLIST: Make agreements with sellers (ideally at the time of the contract, but definitely long before the closing date) re-garding possession of the home and moving date. Having sellers and buyers meet on the front walk--each with a house full of furniture--is not a happy situation. Get these agreements in writing to avoid unnecessary hassles on moving day! Start planning early. Once you are reasonably confident that you will be proceeding with the purchase, start weeding out your current possessions. Toss (or give away, or sell at a yard sale) things that you don't want to move. This goes a long way toward un-cuttering your life, too! Compare moving plans. Are you going to want to do the entire move yourself? Will you want a professional mover to handle the entire process? Don't wait until the last minute--or you may be doing the whole move on your own. Compare rates and services as well as availability. Prepare a list of all those who will need to be contacted at your new home (utilities, schools, etc.) Make a list on any important items you will need to buy for the new house. Examples: draperies, blinds, shower curtains, etc. Having these things with you on the day you move in prevents unnecessary surprises. Start packing early. Anything that you are sure you will not be using before moving day should get boxed. Determine a "staging area" where any items that are ready to be moved are placed. This saves a lot of the ag-gravation associated with having boxes scattered throughout your present living quarters and gives you a place to look should you need an item that is already packed. Mark every box and carton. Again, it makes it much easier if you need an item before you move, and makes it much simpler after you move. Un-packing will probably be somewhat of a gradual process--this way you know where the most necessary items are located.

Good Luck !

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We do hope this has been helpful to

you.

And don’t forget …for that profes-

sional assistance….

Call/e-mail us (24 hrs). We’d love to

work with you !

Dave & Prue Shockley

The home team

Real Estate III

500, Faulconer Drive

Charlottesville, VA 22903

434-242-1769

E-mail: daveshockley@realestateiii.com

Www.charlottesvillerealestatebyva.com

Our final tip is to call professional Realtors, like us !!