Kristin Garnett - BUYING YOUR FIRST HOME

BUYING YOUR FIRST HOME

Kristin Garnett

Table Of Contents

Owning vs. Renting

Needs and Desires

Getting That First Home Loan

First-Time Homebuyer Programs

Common First-Time Mistakes

Searching for the Right Home

12 Steps to Buying a Home

Hire an Agent or Buy Alone?

Dos and Don'ts of Negotiations

10. What to Know About Home Inspections

11. The Closing Process

12. Moving Tips for the First-Timer

13. Real Estate Horror Stories

Testimonials & Reviews for Kristin Garnett

Kristin is awesome. As our realtor she met and exceeded our expectations. She listens to your wants and needs and found us a perfect home. She was patient with us as we wanted to tour both ends of our budget. She has a lot of contacts in Portland and surrounding neighborhoods making it easy come inspection time. Thanks again Kristin and if you need a realtor she's top notch. Dcan Uno Kristin was amazing to work with. She gave me great advice the whole way through. She explains things thoroughly and is a great negotiator. I’m so grateful for her help and expertise. I recommend her 1000% Joanna Hofer Kristin was a pleasure to work with. We hit a small speed bump during the transaction but she helped us navigate around it with ease like a true professional! Looking forward to working with her again in the future. Colton Zakowski - Reger Homes Realty

Great agent and a pleasure to work with! Brian Eason – Century 21

Kristin was great to work with, she listened to what we needed and helped us get the perfect house that met our needs. Guadalupe Harris Working with Kristin was a pleasure! She was supportive and attentive as we searched for the right house, and she did a great job negotiating once we found it Jean Little v

I cannot speak highly enough of Kristin and the outstanding job she did as our realtor. From start to finish, she was a consummate professional, always going above and beyond to ensure that we found the perfect home. Her dedication, expertise, and attention to detail were second to none, and we felt confident and supported throughout the entire process. Christopher Quiambo Kristin is AMAZING. From start to finish she was there for us and more. We couldn’t imagine going through this process with anyone else. Her knowledge and experience in the market & her passion and drive to get us in the right house for us were unmatched. She helped us secure our dream house and we couldn’t be more thankful for her time and efforts. We cannot say enough good things about her. If we could give 10 stars we would!! Brooke Scheideman My team and I have worked with Kristin for years on the financing side of things. As a Mortgage Banker, sometimes creativity is required to make a transaction work. Kristin is always willing to go the extra mile to help her buyers implement creative solutions. In many cases, this is the difference between a buyer obtaining loan approval or not - We greatly appreciate Kristin's ability to 'think outside the box' and highly recommend Kristin as your buyer and/or listing agent. Todd W. Johnson – Lender (Change Mortgage) Kristin is an exceptional professional. I’ve known her for over 30 years and her integrity, honor and trustworthiness are unmatched. She will always look out for her clients and put their interests first. Derick Mitchell

I have had the pleasure of working with Kristin over the years. I

am a escrow officer and I find it very important that the real estate agents have excellent communication and stay on top of their transactions. Kristin exceeds this expectation and does an amazing job for her clients. If I have questions she is always available to get them answered. You are in great hands with Kristin. Rochelle N – Title Rep (Ticor Title) She was very helpful and knowledgeable. Helped my in-laws prepare for the sale of their home. Took time out of her day to assist an elderly couple. Scott Park I’ve known Kristin for a very long time! She’s still the same; very determined, fun, person who pays close attention to detail. As a Real Estate professional myself, I know that these things are very important in this business. Kristin is a true professional! Ardella Powell Kristin is a very smart and hard-working agent. She will tell you the truth not always what you want to hear but what you need to hear, so you can make a good and informed decision, that is needed for your own needs. Roger Clements Kristin offers such a wonderful experience for her clients! Whether you are buying or thinking about buying, contact Kirstin for excellent and accurate professional advice. She won’t fail you!! LaJewel Lewis My experience with Kristen was fantastic. She was very professional & responsive. Very knowledgeable with any questions presented to her. Will refer her services to anyone looking for her expertise... Delbert Newton

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I am looking at moving back to Oregon & saw Kristin Garnett’s Realtor page I was very impressed. I spoke w/ Kristin & have since met with her to view multiple properties in the Portland area over the past year and am sticking with her as my agent. I spoke to many other agents prior to us connecting & what won me over was her warm friendly no pressure approach. She understands my needs & has made it a point to keep in touch w/ me as to what’s happening in the Portland market without any pressure. I will absolutely recommend her to anyone looking to buy or sell their home. Pearl Johnson Kristin is the go-to agent in Oregon & Washington. She is very knowledgeable, sweet and hard working. She always puts her client's needs and concerns first. She is definitely the Agent you want by your side through the home buying/selling process. Call Working with Kristin was great. She was friendly and responsive throughout the home search and buying process. We had a particular schedule and needs, and she worked with us to ensure that we could see as many homes as needed to find just the right one. I really appreciated how prepared she was when we set off looking at homes. We didn't have endless time to look at homes, so her preparation and scheduling/mapping efforts were crucial. I'd happily recommend Kristin to my friends and family, so its easy to do the same here. Good luck housing hunting/selling! Jay Harris Kristin is great! She gives great advice, answers questions right away, and always helps any way she can. Tracy Seo – Realty One Kristin today! Lisa Chapman

Kristin Garnett is an excellent example of a real estate agent. She

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is knowledgeable, and patient, and takes great care in making sure the seller and thebuyer have satisfaction as it relates to a real estate transaction. If you're looking for a professional real estate agent she is tremendous. J.W. Matt Hennessee Kristin is excellent to work with! Her industry knowledge, expertise, and professionalism is top-tier. Sharon Henessee Kristin is a great realtor! She is extremely helpful and patient, which really helps to make the process of buying a home easier. She also knows a lot about all of the local areas and is a great source of knowledge. I really could not recommend her enough! She will definitely do everything possible to make sure you find your perfect home! Sam R Great working with Kristin! Very professional from start to finish and easy to communicate with. Hope to do business together again. It was a pleasure!! Cheryl Johnson Kristin is a great agent and a true professional. Our deal was smooth and easy. Her steady, guiding hand helped ensure that everyone was happy and satisfied at the end of the transaction. Cody Williams – Rose City Realty I really don’t even know where to begin. Kristin is such an amazing lady! She is very open and very honest filled with knowledge and answered all of our questions we could call her anytime. She was right on with everything. She was not just our realtor she became our friend! Did everything to move our house and did an amazing job through the whole process of the sale. Thank you so much Kristin I could go on and on and on! Trust this Lady!!

Sandee Gardner

Kristin was Unbelievably responsive 7 days a week; provided assistance and clarification throughout the process of both buying and selling. Hard to imagine a better experience. David Edwards-Schofield Kristin was a super helpful and resourceful realtor. She helped us with both buying and selling. We got great prices for both. Emily Edwards-Schofield Kristin was nothing short of a miracle worker. I sent her my friend Laura as a referral. Kristin helped her list and sell and locate a new home quickly. Even with a crazy market, Kristin was able to find my friend a home she loves. Thank you Kristin for being the best! Troy Elston – West USA Realty I worked with Kristin for over 7 years. She’s like my best friend and sister. She has a great work ethic, loyalty, and honesty. Anybody would be very lucky to knowand work with her. Vicki Nguyen – Summa Realty Kristin Garnet handled both the sell of our home and our new purchase. She went above and beyond what most realtors would do. Made both seamless andmade sure any issues were addressed. Best realtor we ever had!!! Paul Klinetobe "I would love to work with Kristin again. She was professional, polite and responded quickly. A real PRO!" Rachel Sheller – Oregon First Realty In a challenging market Kristin was able to make the impossible, possible. Her expert negotiation and attentiveness made our offer work against the stream of competing offers. We are so

grateful to her for our new home. Aaron W.

Working with Kristin was very easy. She is very professional and has great knowledge of the real estate industry. With her help and persistence, we were able to acquire the home of our dreams. Biff Wellendorf Kristin was an absolute pleasure to work with on a recent real estate transaction where she represented a buyer for one of my listings. Her great communication and attention to detail made her one of the best agents I have ever worked with. Even with a unique transaction, we were able to make it a win-win for both parties. Looking forward to working with you again in the future! Steven Dyer – Keller Williams Realty Kristin is fantastic to work with! I referred a client to her for help with a home sale and she was great to work with. She is very professional, very good at communicating and easy to work with. I would recommend her highly to anyone looking to buy or sell their home. She is top class! Ellen Sanford – Haven Real Estate Group Kristin is a wonderful lady and realtor. You are in excellent hands with her as your home buying/selling guide! Julie Ottaway – Lender (Academy Mortgage) Kristin’s caring and giving attitude, along with her knowledge of the real estate market are second to none. She’s in the trenches with her buyers and sellers at all times. One of my favorite people to have had the pleasure to work with. Give Kristin a call

today. You’ll be happy you connected with her. JD Campbell – Lender (Change Mortgage)

Kristin is amazing to work with! Very knowledgeable, professional and personable. I love working with her. Cindy K – Lender (Newland Mortgage)

Kristin is a real professional. She is thorough and gets work done in a timely fashion. Honesty and integrity define Kristin's work ethic, and anyone who works with her is in for a real treat. Kristin is the Realtor I want to help me with all my Real Estate needs. Sue Pantages – Summa Realty Kristin is professional, and very knowledgeable about the area! Love her commitment to finding what will work best for your family! Loved our experience :) Kasey McAllister Kristin is very sweet and helpful and went out of her way to get us our lovely home. We recommend her to anyone in the market. She goes above and beyond! Kira S Kristin marketing skills are beyond amazing! Her ability to spread her marketing through different channels to reach every Kristin is the best agent I have ever worked with! she is so patient and attentive, and always available and timely. I am pretty picky and have a lot of requests and she did such a great job bearing with me and took her time to find me a property that suited all my needs. I highly suggest working with her, you will not be disappointed. Mahdy Atwi Kristin is amazing I have had the pleasure working with her for a couple years now and everything has been awesome please market is great. Chris Lisignoli

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know I am in the hvac trade and not many realtors are as amazing as her thanks a ton for being you!!!!!! Kevin Pierce Kristin is an upstanding/honest agent. I have worked with her in the past. Kristin truly listens to your needs and makes one of our biggest investments in life stress free. I refer all of my friends to her. J.P. I highly recommend Kristin!!! I've had a few deals with Kristin and she has always been knowledgeable, proactive, and great at breaking things down into a matter that is easy to understand for me which helps because there can be some high stress moments. She's accessible and doesn't beat around the bush. These qualities are what you need when you are looking for a Realtor to represent you. Joshua Kim – formerly with Summa Realty I can’t speak highly enough of Kristin Garnett @ Summa Real Estate. Her professionalism, knowledge, honesty, integrity and hard work ethics are very much appreciated and respected. She is detail oriented, honest, good with us and has a knack for matching the perfect home for me and my fiancé. Go see her, you'll be glad you did! Sue Erland-Wellendorf – Summa Realty Kristin did a great job; We had very difficult buyers and she fielded a bunch of questions and issues for us. We would recommend her to anyone! And she makes great Cookies! Kimberly Sutherland Kristin Garnett of Summa Real Estate Group was my choice to help me sell my house and also find another one. My anxiety about trying to find a ranch style home, in my price range, was more than I could handle, but from the moment I met Kristin,

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she assured me we would find the perfect home. She helped me with many things including people to help me pack, clean and fix things I needed done in the house. She also recommended a mortgage company Change Mortgage to help me get the financing process started. I give both of them the most excellent reference I could give anyone. Both companies were easy to work with and very attentive to me and my needs. Kristen went beyond the call of duty for me and was always a phone call away. She was also available at any time to show me houses I was interested in. I highly recommend her to help find the house of your dreams. She helped me find mine. Laura Miller Kristin Garnett truly considered our feelings when it came to selling our home. We talked to her not just one time but three times in a 5 year time period. She did not give up on us. No pressure to make a decision; the third time around we were ready to go. Kristin is very professional and her knowledge to guide us in the right direction created a trust and belief she was Buying and finding a house in a buyers market was not an easy task.. Kristin was very professional as well as personal…our stresses were high as we had manycriteria that needed to be met for our home. Kristin is not only a fantastic realtor, she is an excellent support system. ANYTIME there was a house we wanted to see Kristin moved fast as houses were flying off the market. She negotiated and helped us to obtain the house of our dreams, working hard to make sure things like repairs were fair. Kristin is amazing and I would highly recommend her to anyone looking to purchase a home, you won’t regret it. Bryan Goble the one to sell our home. Rodney & Sheila Schuller Kristin was great to work with. She was always responsive to our queries and on top of all the steps in the home buying process.

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As first time home buyers we did not feel lost at any point- thanks to her. Shachi Agarwalla We had a very good experience buying and selling with Kristin Garnett. She has excellent relationships with a wide network of professionals from home inspectors to contractors to stagers to fellow agents at many other firms. We were delighted with our house going pending so quickly after being placed on the market, the smoothness of all our transactions with Kristin, and how willing she was to help; she even adjusted a cabinet door that we hadn't been able to get to close quite right before the listing went live. She was also great about wearing a mask whenever we met and her team adhered to COVID-19 protocols in running open houses and showings, which we really appreciated. E.R. Kristin went above and beyond from the beginning always responded to text calls emails had answers to all our questions and if Kristin didn’t have the answers she… would find out. Kristin made this journey seamless and although at times for me the buyer it became bumpy she reassured me that it was a part of the process and she let me know not to stress out. Kristin has great energy a great smile and I would recommend her to absolutely anybody. When we purchased our next home Kristin will be our realtor again I give her an A+ all the way around. Thank you so much Kristin for your time hard work and effort! Ewalk22 Kristin is an amazing realtor! As a professional, she listened to our needs and desires, and helped us navigate through the home buying process. Our journey… to purchasing was over a year, and she walked every step with us, from beginning to end. We highly recommend her services! Chanesa Hart

We were renters all this time, up until the time our neighbors in the wonderful cul-de-sac we live in approached us and said "want to buy our house"? Being a potential first-time home buyer I had no clue what to do and so called our best friend and he recommended hiring someone to represent us in the private sell... the house was not listed. I cannot say enough good things about Kristin and her ability to be our advocate, our voice and our negotiator in the home buying process, especially when it came to dealing with the neighbors who had certain demands because the house wasn't listed. Long story short, it was a great experience and I will only use Kristin moving forward, as we do have plans to move and sell in about 5 to 6 years. Kristin does indeed deserve 5 stars across the board on all those areas, thats Kristin was AMAZING! My husband and I were first time homebuyers, she was very patient with us, explaining everything as we went through the process. She was also able to give us great reference for a mortgage company, recommended a great place where we could get appliances and even brought us a beautiful gift on the day we closed. I would recommend her to anyone looking to buy a house. Krystal DeMartino the honest truth! Corey Chambliss Kristin is a very knowledgeable and supportive agent. She worked quickly and efficiently to Support us in buying our forever home. She is knowledgeable and very detailed in the process. I would recommend her to anyone looking to buying a home! Andrea Waltrip-Norberg We recently bought a house in Portland with Kristin's help. We were in a rush, on a tight budget, and searching in the middle of a pandemic - but that didn't stop Kristin! She helped us find and

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close on our dream home quickly and smoothly. Kristin is on top of her game. She responds quickly to messages and is excellent at communicating with listing agents. She learned what we wanted early on in the process and didn't try to sell us on houses that weren't right for us. We wouldn't hesitate to recommend Kristin to anyone looking to buy/sell a home in the Portland area. Thanks, Kristin!! Ryan Viles Thank you so much for helping us find our first home! Kristin was always quick to reply and thorough in everything that she did. We really appreciated how dedicated she was to helping us throughout the entire process. Thanks again!!! Alexandra Marin Kristin, is the best, I was afraid that I might have got on her nerves bugging her so much, but she stuck with me the whole time. After several attempts of putting in an offer on homes and then getting beat out by higher offers, she got me and my kids into our dream home. Being a first-time home buyer can be very difficult but Kristin made it easy and fast. If you need to buy a home Kristin Is your go to girl, she is wonderful, patient, kind but wants what’s best for you, and she will find what you are looking for. Thank you Kristin Bianca Morelos Kristin is not just an amazing realtor. She is an amazing person who will always go above and beyond for others. I've known her for many many years and can say without a doubt that she will take the time to listen to you and what you want and she'll be off and running!! So, if you want a agent that will go the extra mile to sell your home or find you your dream home. SHE's YOUR GIRL Kali Brase

Even 3 years post-closing, Kristin still stays in contact with me

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to see how I'm doing. Truly the best and most personal I have ever worked with. Her extra-curricular activities at the schools and nonprofits support the amount of respect I have for her. Be well until our next listing. John Harvey Kristin was amazing and very Professional, she had so much patience and time and experience and knowledge it was amazing. Couldn’t have done it without her! Laura Moore Kristin will never lead you to anything other than what is the very best for you and your family. She will never pressure you or try to talk you into any purchase that you are not 100% confident in. She is genuine, patient, and very encouraging. She is the person you want guiding you through your home buying or selling experience! Marshall Day Kristin is very patient and NEVER pushy! She has guided us through our house hunting process with encouragement and unwavering patience! We have never felt even the least bit of pressure from her! She wants us to be 100% confident before making our purchase! I highly recommend her and her expertise! Mrs Sinistropheles From before my clients saw the listing to after the closing, Kristin was great at communicating! She was always so responsive and great to work with. It felt that we were truly working with each other to help each of our clients, rather than against. It was my pleasure working with you! Cheyanne Renne- Edwards Realty Trust Corporation The home buying experience with Kristin was very easy and surprisingly fast. She listed the house we we’re selling and it sold

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in a matter of days. Then she got us into a new home that we simply love! We couldn't be happier. pencilartist51 She was very clear and answered all of our questions. She was easy to work with and reaching her was never an issue. She had a lot of helpful materials and the open houses were well executed. Alissa polley Bring in the closer. She got the job done. She knows her stuff. Lonard Cox Kristin helped us find our dream home. She never rushed the process. It took us several months to find the right house and Kristen was patient. She gave great advice and is very knowledgeable. I highly recommend her to help you find your perfect home. Thank you Kristin. John Spurr Kristin did a great job helping me sell my home and buy another. She was very generous with her time in staging, showing and all of the follow up required once it sold. She was Johnny on the spot through the entire process. Betty Blais

Kristin was very helpful and great to work with. Alison & Anthony Stanko

I can't say enough good things about Kristin! She is wonderful, kind, patient and with her we really felt like we had an advocate that had our best interests at heart. Kristin stuck with us in a seller's market to help us find our first home. Even though we had a strong conventional loan we were still up against all cash offers at times, but she stayed level-headed and made sure we didn't buy a house for more than it would appraise for. We ended up getting a house in the school district of our dreams for

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our son and growing family. Jon & Frances Pimentel

Kristin rocked it. She is a go-getter and marketed our property like it was her own. She always kept us informed, was very responsive to all our requests and questions, and handled all of the details w/the buyers' agents and vendors. If she didn't know the answer to a question she would find it. We had an unexpected sewer issue reported by an inspector and Kristin went above and beyond to get validation from the county - they confirmed no issue and the sale was able proceed on time. She is our hero. Would highly recommend her and will be working with her again. Trina Brown (Bethany Ventures, Inc) Kristin is absolutely amazing. I was looking for a rural secondary home last year. I didn’t know exactly WHAT I wanted, I just knew what I DIDN’T want. She was careful to really listen, ask the right questions, and narrow the search in the parameters needed for the right property. She spent the entire day with me sunrise to sunset going from several different beach towns showing me different places that fit in the parameters we had set. She also met me in Rainer of all places on another day for a lead on a great deal. The thing that impressed me the most was that there was absolutely NO pressure. Her goal was be a conduit to find the right place and the right fit, not push a sale on me regardless. I had a resistance using a realtor because I didn’t want to be talked into buying something or fearing they would be upset for time spent without a sale if I didn’t find the right one. At one point she said, “You need to feel good about the purchase. If not you should question if it’s the right one.” Wow! She totally nailed it for me. Another thing that really impressed me was every house we viewed and entered, she was very careful and respectful of the property and the owner and took great care to follow any instructions, take shoes off when there was carpet, etc. Unbeknownst to her I took

mental note that when selling my property, I would trust her as the selling agent as well. Fabulous energy, determined work ethic, sharp mind, and honest integrity. I can’t say enough positive things about my experience in working with her!” Dondi Kathman Kristin Garnett is an excellent choice for anyone looking for a home, she is truly a professional and very diligent in all business ventures, she is reliable, and you can trust that she will be there to help assist you in finding your perfect home. Lisa Holt Kristin was amazing. We were interested in buying a property in Portland for our 2nd home investment. With Portland housing market on the rise, she was able to guide us with her deep knowledge and understanding and while provided us with great advice. She is responsive, a go-getter and always ready to go an extra mile. She always took the time to explain every step of the process. We really enjoyed working with her. We would recommend Kristin to anyone that is currently looking to purchase a home. Jay Ting & Cassandra Lu Kristin Garnett I would like to thank you very much for getting my house sold. You have been so understanding of my circumstances and taken all of my concerns seriously. You were always fair and up front with me. You we're able to get the absolute best price removed all of the obstacles that came up. I highly recommend Kristen to anyone looking to sell their home and wants to work with someone they can trust to always have your best interest in mind. Kay Schultz We love working with Kristin. She is friendly, professional, and insightful. Thank you, Kristin! David & Kellie Kent

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Kristin is one of the best Realtors in town! I have thoroughly enjoyed working with her on many ventures and plan to use her exclusively with my future investments. She has many contacts all over the Portland area and has always found exactly what has been searched for. You would think that she had been in the industry for decades, as her passion and love of people makes her extremely effective. Lynda Greene I was lucky to have Kristin serve as my realtor earlier this year when we sold my home in Troutdale. I travel a lot for my job so communication and managing schedules was not an easy task. She was so easy to work with and handled everything form beginning to end! The open house she held was well advertised, attended and yielded multiple very nice offers! She made closing a breeze guided me through the whole process. I would highly recommend her service to anyone looking at buying or selling a new home! Thank you so much for all of your hard work Kristin and once again, GREAT JOB!!! Mike Schultz Kristin was great, was patient with us, helped us find the perfect house in our price range, and helped find a no-hassle lender. She was helpful through all steps of the process and made sure our contingencies were met and really went to bat for us to ensure that we got a fair deal on our home purchase, working with the seller's agent and communicating our needs very well. She made herself available for all our needs, always responded to phone calls or text messages, even on weekends. Overall a great experience. She really made the whole process very easy for us. Justin & Karen Dow This is for all of my friends and family: My friend Kristin Garnett is a realtor so if anyone is looking for a house she’s the one to call!

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Tyrone Hayes

I worked with Kristin at Summa Real Estate Group. She cares so much about her clients and a great person! Hard worker, honest!!! I'd work with her any day. Janae Allen

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CHAPTER 1 Owning vs. Renting

Owning your own home may be one of the defining qualities of the American Dream, the set of ideals that includes opportunity for prosperity and success, and an upward social mobility for the family and children, achieved through hard work. Homeownership has long been considered one of the strongest representations of that vision — 66% of Americans own their own home, and many more hope they will or wish they did. Something about homeownership plucks a strong chord with Americans. Financial security, permanency, status, or pride; whatever the reason for wanting to own your own home, there has never been a time in recent memory when the health of our credit reports has meant so much as when we decide to buy a home of our own. Lifestyle plays a big role in the decision to own versus rent. Home-buying is most often driven by household formation, such as marriage and childbirth, but not always: for the millennial generation, the primary reported reason for buying a home is owning a dog. Age is also a major factor in general: less than 40% of people under 35 years old own homes, while 60% of people over 35 years old own homes, and more than 80% of people 65 years old or older own homes. The U.S. homeownership rate has fluctuated between 62% and 70% since the 1950s. Most young people begin their independent lives renting an apartment, maximizing lifestyle flexibility and minimizing the hefty upfront costs associated with purchasing a home. As they build careers, save money, and start families, many choose to buy a home, recognizing that homeownership 1

as opposed to rental living better accommodates their growing family needs. Their needs may be better filled by a single-family house, condominium, townhouse, or duplex of their own. At the other end of the age spectrum are homeowners nearing retirement who may now desire to sell their homes, downsizing and avoiding the maintenance and other obligations of homeownership by renting.

WHICH IS BEST?

Is it better to rent or buy a home? Virtually all adults ask themselves this at some point as they form their goals and plan for the years ahead. Owning and renting each have their advantages, but what is best for you depends on your circumstances. Before you decide, here are some things to ask yourself. • How long will you stay in the home? Each market is different, but whether the time you plan to spend in the house warrants its purchase can be predicted. In general terms, it takes four to seven years to break even on a home (i.e., where there has been enough appreciation to pay back the cost of the transaction and cost of ownership). If you are thinking about buying a home and selling it in two years, it is very unlikely that buying will be cheaper than renting. • Do you think of or need your house as an investment in your retirement plan? Americans are used to their homes being a store for wealth they can liquidate in retirement as part of downsizing their lifestyle. In 2015, Gallop reported for the second straight year that more Americans named real estate as the best long-term

investment, over stocks, gold, savings accounts/CDs, and bonds. Real estate leads with 31% of Americans choosing it, followed by stocks/mutual funds, at 25%. A cautionary note though — although home prices have recovered from their pre-2007 market slump and continue to rise, the price of your home can still fall. • Are you financially ready? Owning a home is a financial commitment that requires planning how homeownership will fit into where your life is headed. Ask yourself what your budget is and if either buying or renting would require you to stretch your finances. Crunch all the numbers. A frequent mistake of first-time homebuyers is comparing a month’s rent to a month’s mortgage payment. There are many additional fees necessary to include to make a fair comparison: principal interest, property taxes, property insurance, homeowners’ association fees, and maintenance. • Are you prepared for the down payment? This is the lump sum payment that funds your equity in the property (how much of the property you actually own). Down payments vary; 20% is preferred and gets the best rates. There are some loans that allow down payments as low as 3%. Sometimes, relatives contribute to the down payment. If you have an opportunity, take a gift rather than a loan because lenders will add that debt to other monthly obligations and potential mortgage payments to determine your debt-to-income ratio, which generally can’t top 43% to qualify for a home loan. • Can you afford the monthly mortgage and its components? Generally, a mortgage includes loan principal and interest (both amortized over the life of the

loan) plus homeowner’s insurance and property taxes (which are pro-rated). These items can affect the monthly loan-only payment by several hundred dollars. • Are you emotionally ready? Can you handle the stress? A big factor to consider when buying a home is stress. The Holmes and Rahe Stress Scale, a landmark stress study, ranks many events that go along with buying a home in the top 43 most stressful circumstances in life. Four events are specifically home-related: change in financial state (No. 16), large mortgage or loan (No. 20), change in living conditions (No. 28) and change in residence (No. 32). If someone has recently made other life changes such as marriage (No. 7), switching careers (No. 18) or having a child (No. 14), it might be wise to postpone buying a home. Stress overload can lead to missed payments, which can destroy your credit or even make you lose your home. It’s better to rent if your life is in flux, and then buy when your stress levels are lower. • Are you ready for commitment? Are you ready to make lots of decisions, from picking a real estate agent to picking paint colors? Are you confident enough to choose a neighborhood where you believe home values will continue to appreciate in value and that will serve your needs (e.g., proximity to schools, shopping, recreation, etc.)? Are you ready to devote the time and attention to maintain a home (e.g., leaf-raking, grass-cutting, appliance maintenance and repair, etc.)? Taking care of your investment can be gratifying, but only if you are prepared.

ADVANTAGES OF BUYING YOUR HOME

• Control over housing expenses. By selecting a fixed-rate 15-, 20-, or 30-year mortgage, the homeowner has assurance that housing costs will not increase over the period, and, in fact, will be eliminated at the end of the term (subject to refinancing). • You build equity. Some of each monthly mortgage payment goes toward the loan’s interest. Other portions may go to homeowner’s insurance and county taxes. The remainder pays down the loan principal. Every dollar put toward your loan’s principal represents a dollar of equity — actual ownership of the property. Further, the property should appreciate in value each year, adding to equity (the difference between the current fair market value of a property and the amount of debt owed against it). With certain blip periods such as the 2007 housing bubble burst, home prices in the US appreciate nationally at an average annual rate between three and five percent (home value appreciation in different metro areas can appreciate at markedly different rates than the national average). • Improvements increase your home’s value. A homeowner can also increase a home’s value through home improvements, thus both making your home more comfortable and enjoyable while growing its loan-to- value (LTV) ratio. For instance, adding a bathroom or finishing a basement substantially increases the property’s functionality and curb appeal, while potentially boosting its value. • Tax advantages of homeownership. You qualify for major tax benefits when you buy a house, both at the time of purchase and for the remainder of period you own the

home. >Homestead exemption. Many states exempt any and all owner-occupied homes (homesteads) from a portion of the property tax amount that would normally accrue. For instance, Louisiana exempts the first $75,000 of a home’s value from property tax assessments, such that a $200,000 home in New Orleans is taxed as if it were only worth $125,000. >Federal tax deductions. Property taxes and interest paid on your mortgage can be deducted if you itemize your federal income taxes, reducing your income tax burden. Additionally, discount points can be claimed on the loan. Mortgage points are generally of two types: discount points and origination points. Each of these points is equivalent to 1% of your mortgage. Discount points involve prepaid interest, are tax deductible, and can reduce your total mortgage payment. The interest rate on your mortgage typically lowers by 0.25% per point you buy. • Current mortgage rates are relatively low. Interest rates rise and fall through the years. Several years ago, interest rates were higher, and it was more expensive to obtain a mortgage. Since these costs have been reduced, it is now easier and less expensive to own a house. • Ownership rights and creative freedom. Your decorating and home improvement choices are just that — yours, provided they don’t break building codes or violate homeowners’ association rules. You can paint walls any which way, add fixtures, update or finish your basement, or build a patio or deck. Changing your environment to suit your whims is a freeing aspect of homeownership. • A sense of belonging to the community. Homeowners tend to stay in homes for longer than renters and are

more likely to grow roots. They might join a neighborhood association, sponsor block parties or National Nights Out, volunteer at a nearby community center, join a school group, or align with a business improvement district. Renters might not do any of those things, particularly if they know their lease is up in a year and they might move. There is an intangible pleasure attached to owning your own house, a sense of freedom and independence. The home you live in belongs to you and only you (and, perhaps, your spouse), and you can do what you want with it. You are not daunted by increases in rent or the risk of losing your lease. You are free to make improvements and changes. Also, owning your home gives your children the guarantee of attending the schools in the area on a more permanent basis; you never have to worry about a notice from the landlord to vacate your rented house or apartment for any of a variety of reasons over which you have no control.

ADVANTAGES OF RENTING

It seems a shorter list, but one man’s pro is another man’s con, and there are definitely advantages to renting you should factor into your buy-rent decision. • No responsibility for maintenance. Admittedly, this is a big one. As a renter, you’re not responsible for home maintenance or repair costs. If a toilet backs up, a pipe bursts, or an appliance stops working, you don’t have to call an expensive repair person — you just call your landlord or superintendent. Renters in condos, townhomes, or apartments do not have lawn and grounds care obligations. 7

• Relocating is easier. When renting, relocating for work is easier. Though a sudden move may require you to break your lease, you can partially offset the cost by subletting your apartment or talking with your landlord. On the other hand, selling a home takes time and effort. If you have a short timeline to sell your home, you may be forced to accept a lower price and lose some of your investment. • No real estate market exposure. Home values fluctuate and can decline over time. If you’re a renter, that’s not your problem. If you’re an owner trying to sell — it is.

DISADVANTAGES OF OWNING

• Maintenance. The renter’s largest advantage may be the homeowner’s largest disadvantage. While insurance is available to protect against expenses from major catastrophes, everyday maintenance items are on the homeowner’s dime. Maintenance and repair can be as simple as repainting the baseboards or as extensive and expensive as replacing an H/VAC system or sewer pipe. The expense will vary from year-to-year; however, you can expect to pay about one percent of the value of your home annually toward these expenses. If you live in a $300,000 home for 10 years, that’s $30,000 over the period, and possibly more if you must replace a costly, long-lived mechanical item, such as a furnace. Keep in mind the usual homeowner’s chores of lawn care, snow removal, gutter cleaning, and other regular home maintenance needs. • Upfront & closing costs. Buying a home entails numerous

upfront costs. Some are paid out-of-pocket after the seller accepts your purchase offer, while others are paid at closing. These include earnest money, down payment (typically ranges from 3.5% — chiefly for Federal Housing Administration (FHA) loans — to over 20% of the purchase price), home appraisal, home inspection, property taxes, and first year’s homeowner’s insurance. • Loss of relocation flexibility. It is much easier to break a lease and move out of town than to arrange for the sale of a residence. Selling the home from out of town involves its own special logistical and financial problems, such as dealing with the mortgage while the home is on the market. • Financial loss potential. Homeownership builds equity over time; however, equity doesn’t equal profit. If home values in your area go down or remain stagnant during your time as a homeowner, the appraised value of your home could decrease, putting you at risk of a financial loss when you sell.

DISADVANTAGES OF RENTING

• No equity. The monthly rent you pay goes to the landlord. It represents the fee you pay for using the property. You gain no ownership in the property, no matter how long you live there. • No tax benefits. While homeowners can deduct property taxes and mortgage interest on their tax returns, renters aren’t eligible for housing-related federal tax credits or deductions. • Home improvements go to the landlord. Any structural

or decorative home improvements renters make belong to the building owner and will have to stay behind when you move to a different place. Additionally, approval will be necessary for any major redecoration. After all is said, the decision to buy or rent depends on the prospective homebuyer’s circumstances. There is no denying, though, that a home of your own is a good financial and emotional investment. An investment in a home can also mean an investment in the future of your children. There can be nothing better than leaving a home behind as a legacy for your children to enjoy. There is much to consider when you want to buy a home. Switching from renting to homeownership is highly challenging, but an exciting and amazing decision to make. Owning your first house is the first real step toward the perfect home you’ve been dreaming of. Because, at the end of the day, as we all know, there really is no place like home.

CHAPTER 2 Needs and Desires

After the decision is made to buy a home, what sort of home it is to be is the next decision point. Imagine your dream house. It fulfills both your needs and desires. It fits the need for a good roof over your head, a sturdy structure, modern fixtures and appliances, living space (e.g., bedrooms, living room) and function rooms (e.g., kitchen, bathrooms). Your needs fulfilled, you turn to your desires. A home on the beach or in the woods, a gourmet kitchen, a wood-paneled den, crystal chandeliers hanging over a banquet table in the manor- sized dining room and an Olympic-sized swimming pool with a hot tub and sauna. In your first home, you must ensure all needs are met; however, there are probably going to be some desires that you will have to let go for now due to affordability issues.

Decide which qualities are your needs and which are only desires.

• Would you like a swimming pool? Enough that a home without one is not worth looking at? • In what areas or neighborhoods might the home be located? Where do you want to live? Where might you have to live for work commute or home price reasons? • What features would make it special and which ones matter most? • What can you afford and what is out of your budget? Budget usually constrains us most in selecting a home. While some things are necessary for any home (as mentioned, a good

roof, a working furnace, a solid frame), others will just have to stay on the list of desires for now (the sauna, or that Beverly Hills address).

MAKE A LIST. CHECK IT T . CHECK IT TWICE.

You may have an existing impression of what you want from your new home. Putting that to paper and having a complete checklist can prove useful. Before starting your hunt for a new home, it is advisable to make a list of all your basic needs and desires, then rank the desires by priority, assuming that all needs must be met for a house to merit consideration in the first place. This will make the search easier. Realize that it is nearly impossible to find a home that meets all requirements at once in both needs and desires, though. Compromises will be necessary. It is a good idea to work in order from outside-the-house factors to inside-the-house. For example, location is perhaps the primary concern and both “need” factors and “desire” factors might be involved. A “need” would be “must be within 25 miles of work.” A desire might be, “would like Westwood” (a favored neighborhood), while a need might be “on west side of city,” (because work, family, friends, and recreation activities are all located there). Location needs may include proximity to schools, frequently used recreation facilities, or mode of transportation (bus or suburban rail access). Whether an item is a need or a desire depends on circumstance. Closeness to family might be a need for a couple with young children or elderly parents to care for, or a desire if those factors are not involved. It is items like these that make a checklist helpful.

After location needs and desires are compiled, housing factors

can be considered. Needs include having all essential house structures and systems in good working order. Accepting a house that needs a new roof because the owner is willing to knock $7,000 off the listing price is not a sensible deal when it will cost $10,000 to replace the roof in two years. Needs might include a minimum number of bedrooms and bathrooms, no steps, fenced yard (for pet owners or simply for privacy), perhaps a first-floor laundry facility, and any feature the prospective buyers have decided they cannot accept a home without. Desires are features that make the home more attractive or enjoyable — an upgraded kitchen, walk-in closets, a master bedroom suite. Of course, one buyer’s need is another buyer’s desire. The point is to know your own needs and desires so you can easily assess potential properties. Buying a house is not a simple process. Much of the planning should be done well in advance of contacting a real estate agent or looking at houses. Work out the costs and decide your budget. Choose a general location. Contact lenders well ahead of home shopping so your offers are not tied up in getting financial approval. Having the image of your dream home is reality married with imagination. In fact, you may find that some aspects of the house you intend to buy are different. It’s not the same as what your dreams would have told you. Different people have different requirements. It depends on your thought processes and personality. We understand important things and potential compromises differently. Needs are basic requirements that cannot be ignored or compromised. Desires, on the other hand, can be left behind if the situation demands. You need to make a clear distinction between what your necessities are and which items you would be better off classifying as desires.

Remember, no matter how many desires you leave unfulfilled now, they can be worked on later. A pool can be added after a promotion or two. Maybe you don’t like the color of the walls or the window frames; renovation may be a hassle, but it’s always an option for later. Paint color is rarely a need, but having a garage if you plan to run an auto-mechanic business out of it is.

A NOTE ABOUT PETS

Consider your pets when home-shopping. Homebuyers who are pet owners have special requirements they must meet for their pets. A third (33%) of millennial-aged Americans (ages 18 to 36) who purchased their first home say the desire to have a better space or yard for a dog influenced their decision to purchase their first home, according to a survey conducted online by Harris Poll on behalf of SunTrust Mortgage. Dogs ranked among the top three motivators for first-time home purchasers and were cited by more millennials than marriage/upcoming marriage (25%), or the birth/expected birth of a child (19%). It is essential that the neighborhood in which you are going to buy a house have no restrictions on pets. Do you raise American Staffordshire Terriers? There are cities that ban this breed — they’re better known as pit bulls. Goats? Vietnamese pigs? Do you love to always have fresh eggs from your own chickens? Include your animals in location planning. Some pet owners prioritize wood or other durable flooring, not wanting to risk pet damage or odors that might be a greater risk with carpeting. A fenced backyard of appropriate size is on the needs list for many pet-owning house buyers. Consider the arrangement of rooms and the structure of the house as well to make sure it is suitable for your pets. Traffic in the area may be another checklist

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