8 Tips for Protecting
Yourself When You Buy a House
By Michele Dawson
If you're getting ready to buy a house during what
is typically the busiest buying and selling time
of the year, then offers may be flying, loans may
seem confusing, and everything may be moving way
too fast. That's why it's important to do everything
you can to protect yourself throughout the entire
homebuying process.
Low mortgage interest rates and a strong underlying
demand for housing drove total state existing-home
sales to a new record in the first quarter of
2003 with 34 states experiencing sales increases
over the first quarter of 2002, according to the
National Association of Realtors.
And the NAR says that many states that saw sales
decline actually had a shortage of homes for sale
- and the biggest price increases.
"Too many buyers, not enough sellers is
making this an exceptional sellers' market ...
Some bidding wars are here again especially in
the first-time buyers market of single-family
homes," said Ben Lambert, a Realtor in Herndon,
Virg.
The same phenomenon is being felt in other parts
of the country.
"The lack of inventory continues to be a
concern for the buyer," said Dave Petruncio,
a broker in Western Springs, Ill.
What this means if you're buying during the frenzied
spring and summer months is that you'll need to
do everything you can to protect yourself as you
make offers, obtain your loan, buy insurance,
and strike up contracts.
Freddie Mac offers a number of tips:
- Get pre-approved for a loan. With competition
fierce, you'll want to be ready to make an offer.
With a pre-approved loan, you'll have more clout
as the seller considers your offer.
- Make sure it's in writing. Don't settle for
verbal agreements. If the seller says he'll
replace the carpet or leave his washer and dryer,
get it in writing.
- Get a good-faith estimate. Your mortgage lender
is required to provide you with a good-faith
estimate of closing costs within three days
of receiving your application. They need to
provide it in writing. If you don't have to
pay loan application fees, you may want to compare
lenders and compare closing costs.
- Don't settle for the first lender you come
across. Contact at least three lenders and compare
rates.
- Lock-in your rate. One of the most stressful
parts of the loan process is watching rates
inch up and down each day and trying to figure
out when to lock in your rate. Once you do lock
in, be sure to get a written statement that
outlines your interest rate and length of the
lock.
- Get a home inspection. A professional home
inspector will examine the house's major systems
and let you know if there are any problems or
defects. You can then use the information in
your negotiations. Look for an inspector who
is a member of the American Society of Home
Inspectors. Members are required to have completed
at least 250 paid professional home inspections
and passed two written exams that test the inspector's
knowledge. Also, ask for references.
- Shop for homeowners' insurance as soon as
your offer is accepted. The National Association
of Realtors recently cautioned homebuyers to
not take homeowners insurance for granted. You
and your spouse may have a clean claims history
and a stellar credit history - something insurance
companies use to determine whether they will
insure you - but it's not just you they're looking
at. If the house you're eyeing has had claims,
there's a chance they won't insure you, especially
if it's a water-related claim.
- Read everything. When you have the closing
meeting to sign the mountain of papers, make
sure you read through everything carefully and
don't hesitate to ask questions if there are
something you don't understand.
Finally, give yourself enough time between your
closing and your move date, just in case there
are delays in the closing process.
The Realty Times
Published: May 19, 2003
www.RealtyTimes.com
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