Genine Gilbert - SIMPLIFYING YOUR FIRST HOME PURCHASE

SIMPLIFYING YOUR FIRST HOME PURCHASE

Genine Gilbert

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

A Trusted Agent ed Agent Her journey in the real estate industry blossomed when she recognized her talent for understanding her clients' needs and desires. Realizing quickly, that "life" does not mirror an episode of HGTV, she set out to make the process of buying or selling a home as smooth and stress-free as possible. Over the years, she has honed her skills, keeping herself up to date with the latest trends, market fluctuations, and legalities. Her dedication to continuous learning and professional development ensures that she can provide her clients with the highest level of service and expertise. She understands that purchasing or selling a home is one of the most significant decisions in someone's life. With compassion and empathy she takes the time to listen attentively to her clients. Understanding their unique circumstances and goals, allows her to tailor her approach and provide personalized solutions. Whether assisting first-time homebuyers, growing families, or investors, she remains committed to delivering outstanding results. Her negotiation skills, attention to detail, and strategic thinking empower her to secure the best deals for her clients, ensuring their satisfaction and long-term success. With a remarkable blend of professionalism, expertise, and genuine care, she is the ideal partner for anyone seeking to navigate the real estate market. Her unwavering commitment to excellence and her clients' satisfaction sets her apart and makes her a trusted ally throughout the entire real estate journey.

Preface Hello ~ I'm so delighted you are here! If you’ve received this book, it’s probably because you’re thinking about buying a home. And if you’re like most home buyers, you may be a bit nervous about the entire process. But that’s why I’m here! As a licensed real estate agent, my top priority is to make your home-buying experience as seamless and rewarding as possible. With my in-depth market knowledge, cutting-edge technology, and a dedicated team of professionals by my side, I'm here to help you find a home that aligns perfectly with your lifestyle and budget. Now, you have all the tools and support you need-right at your fingertips.

In this book, you’ll find:

• An overview of the buying process • How to determine your wants vs. needs in your next home • Information on securing a home loan • Common mistakes to avoid • A negotiation guide to save money on your purchase • And much, much more While you can certainly try to use these strategies on your own, it's important to understand the value of working with an agent who's dedicated to serving buyers. The right agent can make a significant difference-potentially saving you thousands of dollars and making the entire experience much smoother and more positive.

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Testimonials and Reviews for Genine Gilbert.

Curious what it's like to work with me? Don't just take my word for it (wink!); see what others' have to say about my dedication and service.

We were tough clients! We were moving to Manhattan and didn’t have a lot of time to look at homes. 3 small children and 2 dogs created challenges, oh so many challenges. But, Genine Gilbert went above and beyond to help us. She kept us calm and kept our eye on the prize. Even now, two years after the sale closed, I can still call Genine for business and service recommendations in the area. She is always very happy to help. A.C. I’ve used Genine Gilbert twice so far, and I was impressed both times. I bought my first home with her 3 years ago. She worked long and hard to find me the perfect starter home. She just recently sold that home for me, as college was over and I was off to change the world! Everything went quickly and smoothly, I would definitely recommend her for buying or selling! C.F. Genine Gilberts perseverance and outside thinking got me the house and a loan I could live with! J.B. My experience with Genine Gilbert during the entire home- buying process, from start to finish, has been nothing short of exceptional. I have a unique work structure, and because of this, it was very difficult to find mortgage lenders that would approve me for a home. I was very frustrated and on the verge of giving up, but Genine assured me - we should stay the course. Not only did we find a mortgage lender but also a mortgage that I felt great about. Her confidence and guidance is the reason I am ix

now a homeowner. She is professional, punctual, easy to work with and funny! With the highest regard, I will recommend her to all my friends and family. M.P.

Very attentive to concerns, details, and negotiations. B.A.

Every house I wanted to see, I got there and didn’t love it. She was busy taking note of my likes and dislikes and suggested we go see a home, not on my list...it turned out to be the ONE! I went back 4 or 5 times to show other members of my family, and she accommodated me without complaint. I was a first-time homebuyer, and she walked me through the steps of everything, gave me advice, and constantly followed up to make sure I was doing OK. With her help, I was able to close on the house early, right before I started my new job. I would recommend Genine Gilbert to ANYONE, buying or selling. C.C. Genine made it so so easy. She guided us through the entire process. She recommended great people to work with every step of the way. She made herself available outside of business hours to answer any questions we may have had. With her high standards, vast knowledge, and patience, we would recommend her as a agent to anyone looking! Genine was amazing! L.B. Genine Gilbert was fantastic. In addition to being highly knowledgeable about the real estate market, she is very professional while remaining laid back and easy to work with. She gave me very good advice about preparing my house for sale and was very responsive during the entire process. I would work with her again in a heartbeat. She's that good. P.V.

Genine Gilbert is the first agent I would call. One and Done! P.B.

Genine helped us buy our home and it was a great experience. So when it was time to leave Fort Riley, she was the first person we called. Genine was able to list, show and sell our home

without issue. Being an expert in real estate, she was spot on with her pricing and we were under contract in 1 day! Overall, we were extremely satisfied and highly recommend her for buying or selling. J.B. Genine kept us calm throughout the process and made us laugh! V.P. Genine Gilbert always made herself available to answer all of our questions. She worked hard to find a home that best fit our growing family. She and her team worked with us through the entire process and kept us calm when we got anxious. (Which was frequent HA!) T.S.

I am 100 percent satisfied!! Would use again. D.D.

Genine is professional, knowledgeable and trustworthy. I would definitely recommend her to anyone. Very smooth transaction from start to finish. I felt confident in her abilities every step of the way. N.M. Genine found us our first home. We are over the moon! Call her! D.C. Genine Gilbert was very efficient and helped us find our new home within a few short months. She was able to negotiate the price that we wanted and helped us get through inspections. Overall, I would look for her again to help us look for a house if need be in the future. Thank you so much! J.D.

Kept us in the loop and well informed every step of the way. J.F.

Genine was very helpful when buying our condo. She kept us informed through text and email as my wife was always teaching and I was always farming. She met us on weekends and evenings to show us options. We are very satisfied and love our

condo with the pool and gym! We never miss a KSU game! E.E.

Genine Gilbert is great and has the expertise to get your house sold. The communications throughout our sale (from beginning to end) has been outstanding. She understands the stress involved in selling your house, and she updated our family consistently! This made us feel we were in good hands. I have worked with numerous agents, and I highly recommend Genine to represent you when it comes time to sell your home. R.K.

Excellent experience; a strong negotiator and a good communicator. K.B.

Very happy all around, not only knowledgeable but patient and with a very personal touch. I felt like family throughout the entire process. She always took her time; I never felt rushed. I bought with her and if I ever sell, I will call her again. I had so many questions and she gladly answered them all. Her sense of humor helped with the stress and her closing gift was truly heartwarming. I so appreciate her and have already recommended Genine to a dear friend! D.Y. Genine Gilbert was fabulous to work with. Professional, responsive, efficient, and my moral support when in time of need...unfortunately for her. We found a home quickly and closed on time! What else can you ask for? Grateful, grateful, grateful!!! S.J.

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Local Professional Services List essional Services List Purchasing a home can be a stressful journey, even with the guidance of a trusted real estate agent like myself. Along the way, you may need to bring in different professionals- whether to handle repairs from the home inspection or to help you customize the space and make it truly your own. I’ve experienced firsthand the work of numerous local contractors and professionals. Because I want my clients to have the most successful buying experience possible, I’ve provided you with a list of resources, along with a brief explanation of how each one can help you have the ultimate home-buying experience.

Electrical Issues Can Ruin Deals

Electrical issues are some of the most costly — and potentially dangerous — issues uncovered in any home inspection. In fact, the American Society of Home Inspectors counts electrical issues as one of the top deal-killers in the home-buying process. Some of the most frequent electrical issues found include:

• Undergrounded three-prong plugs • Painted outlets • Double tapping of circuit breakers • Reversed polarity • Improperly modified electrical panels • Knob and tube wiring

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• Aluminum wiring • Federal Pacific breaker panels • No GFCI protection

Unless the extent of your electrical issues is a burned-out lightbulb, it's recommended that all electrical work should be handled by a licensed professional. Licensed electricians perform top-quality work, ranging from fixing faulty outlets to completely rewiring older homes. Raybern Electric Affordable Electric Jerry's Electric 785-410-8894 785-537-2771 785-238-4362 Choosing Floors for Your New Home With so many flooring options available today, it's important to choose one that fits your lifestyle, aligns with your budget and suits your family - whether that includes kids, pets, or future plans for either. Floors have the power to completely transform the look and feel of your new home. Take your time when choosing, as they will play a major role in your overall design for years to come. Professionals can help you with all of your flooring needs, from material selection to quick and professional-quality installation.

Jerry's Flooring 785-565-9322

Canterbury Floor and Home

785-214-3773

Get a Handyman on Your Side

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When you finally make an offer on a home, you may think the hard work is over. But unfortunately, that’s not always the case. Once you order an inspection of your new home, chances are the inspector is going to come back with a list of defects, typically ranging from minor to major. It is important to note that inspectors will turn up some things even in brand new homes. You will need to determine which items you can live with and which defects, if left unrepaired, would be considered a deal breaker. You may be able to negotiate with the sellers and ask them to remediate certain problems, but they are under no obligation to do so. A real estate professional is extremely helpful at this very important juncture. They will be able to help you determine, which of these defects can be handled by a handyman and which will, most likely, require licensed professionals. A reliable handyman and a trusted contractor are both valuable resources during home ownership.

Murdocks' Fixins 785-375-0219

Alvaro Porras D & I Repair 785-320-3583 785-587-1922 785-587-1922

Customizing Your Space Whether it's your kitchen, bathrooms or outdoor spaces, over time, you may find you want to recreate these areas to reflect your personal design choices and truly make your home your own.

Local professionals can turn your dreams into reality.

Whiteaker's Paints and Stains Justin Cramer -Painter 785-224-1433 785-307-3099

C & C Painting 785-320-0870

Casey Maransani - Contractor

620-232-0822

Ben Kitchens - Contractor

J & J Contracting 785-375-3052

7854-375-3288

Don Holmes 785-776-3851

Paco Carpet Cleaning

785-410-1181

Blueville Nursery Master Landscaper Taussig Landscape 785-539-2217 785-539-2842 785-564-1727

How to Get the Best Mortgage for Your Home Purchase

What would be the best mortgage for your home purchase? Would it have the following: • The best possible interest rate? • The best possible loan terms? • A low down payment — if that’s what you want? • An easy, stress-free closing? Would you like to be able to make your offer “as good as cash” so you can negotiate the best price and terms? There are many different loan programs available for home buyers. Here are just a few: • Conventional—A conventional mortgage can lead to a low fixed rate or adjustable rate for your primary home, secondary home, or investment property.

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• FHA—An FHA mortgage is a great program for buyers. Its advantages are a low down payment without private mortgage insurance. The lender process can be streamlined, with no appraisal and reduced loan documentation to qualified applicants. • VA—A VA Mortgage offers many benefits, including no down payment and lower interest rates. • USDA—These are only available in certain areas deemed “rural” by the United States Department of Agriculture. Surprisingly, many properties on the outskirts of a metro area will qualify for these loan programs. The advantages of a USDA Mortgage are lower interest rates and zero down payment. Knowing which program to choose can be daunting. Because mortgage lenders are familiar with all of these different programs, they can explain your options and help you pick the best one for your needs. Once pre-approved, they can issue you a letter showing the seller, you are a qualified buyer for their home. Being pre- approved is not an option, it is your ticket to get into the game. This is a free service. At no time are you under any obligation to use that lender for your mortgage. Mortgage lenders fees and rates will vary and you can "shop" for options.

Union Home Mortgage Michael Humphrey

Landmark National Bank

Ricky Marquez 785-587-5261

913-538-4438

Fairway Independent Mortgage Prime Lending - MHK Lynn Devine Susanna Ruder 785-375-6432 785-560-3011

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Need Help Moving?

You’ve finally reached the finish line of your home search. You found the perfect home, got a great deal, and you can’t wait to move in. But sometimes, the actual move can bring a whole new level of stress, especially if you’re moving to a new area and have minimal help from friends and family. Moving companies vary greatly in what the offer and what they cost. I highly recommend checking out more than one option and reading the fine print carefully. Ask questions and get everything in writing.

Flint Hills Moving

Moving Made Awesome

785-410-5766

785-317-4091

Leaking Faucet? Leaky Roof?

At some point you will, no doubt, find yourself in need of a plumber, roofer or other repair service.

Bob's Plumbing 785-539-4155 Small's Plumbing 785-762-5686

Standard Plumbing

785-776-5012

Sunset Plumbing 785-375-5755

Central Roofing-Tino Gamec 785-861-9461/785-806-2560

Weddle and Sons Roofing

785-532-8347

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Closing on Your Home

Here are a few things title companies can do to help you over the finish line, as seamlessly as possible. • Solid Communication. They keep you updated on what’s happening at all times and respond to your inquiries in a timely manner. • No surprises. They work hard to get everything lined up properly early on in the transaction, so there are no surprises later. • Convenient closings. They work hard to close at a time that is convenient to your schedule. If you can’t make it to the closing, they’ll handle it with a convenient “mail- away” closing. • Competitive Rates. They work hard to offer their services at a competitive, affordable price. • Knowledgeable. They understand that real estate is a complicated industry. If you have any questions throughout the process, they’ll answer them for you. Here’s the first step to get started on your stress-free, no-hassle closing. Find Out Exactly How Much Money you will need to "close" on your new home. Title companies will put together a free, no-obligation closing cost estimate to show how much money you will need to bring to the "table" on closing day. This free estimate will itemize all of

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your projected closings costs and fees.

Collaborative Title Services

Charlson and Wilson Title Co

785-260-2557

785-537-2900

Feeling overwhelmed? As a licensed agent, I take care of most of these things FOR you and so much more!

CHAPTER 1 Owning vs. Renting

The largest investment most people make is their home. That makes buying a home—whether it’s a single-family residence, duplex, or condominium—the single largest, most complex transaction a person will ever undertake. It involves new terms and concepts, financial acumen, and larger figures than normally dealt with. 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 growing a family. Less than 40% of people under 35 years old own homes, 60% of people over 35 years old own homes, and more than 80% of people 65 years old or over own homes. Interestingly, for the millennial generation, the primary reason for buying a home? Owning a dog.

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 as opposed to rental living better accommodates their growing family needs. At the other end of the age spectrum are homeowners nearing retirement who may now desire to sell their homes, downsize, avoid the maintenance and other obligations, and go back to 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. • What will be the duration of your 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? Many Americans see their homes as a valuable asset, often integral to their retirement

strategy. Real estate is commonly regarded as a solid long-term investment, frequently favored over other options like stocks, gold, or savings accounts. Its appeal lies in the potential for value appreciation over time. However, it's wise to remember that the real estate market is subject to fluctuations. Property values can both increase and decrease, influenced by various market and economic factors. This reality highlights the importance of considering real estate as one component of a diversified investment portfolio, recognizing both its potential benefits and inherent risks. • 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 (HOA) fees, and ongoing 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 a choice, take a gift rather than a loan because

lenders will add that loan 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're ready.

ADVANTAGES OF BUYING YOUR HOME

• Control over housing expense. 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 (what the house could be sold for versus what is owed on it). Discounting certain blip periods, home prices in the U.S. appreciate nationally at an average annual rate between 3% and 5%. Remember, though, 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 appeal, while potentially boosting its

value. • Tax advantages of homeownership. There are significant tax benefits associated with buying a house, both at the time of purchase and for the duration of time 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, 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’s an intangible pleasant feeling attached to owning your own house — a sense of freedom and do what you want with it. You aren’t daunted about increases in rent or losing the lease. You’re 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 need to worry about a notice from the landlord to vacate your rented house or apartment for 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 a repair person — you just call your landlord or superintendent. Renters in condos, townhomes, or apartments do not have lawn and grounds care obligations. • 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 might just be the homeowner's major disadvantage. While insurance is available to protect against expense from major catastrophes, usual 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 1% 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 building. 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 and done, the decision to buy or rent depends on the prospective home buyer’s circumstances. There’s no denying, though, that a home of your own is a good financial and a great emotional investment. An investment in a home can also mean an investment in your future. 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.

CHAPTER 2 Needs and Desires Once you've decided to buy a home, the next step is determining what type of home you want. 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. Perhaps you envision a home on the beach or in the woods, a gourmet kitchen, a four season sun room, a screened in porch or an Olympic-sized swimming pool with a hot tub and sauna. Your priority in any home purchase should be ensuring all of your needs are met. Sometimes, you won’t find everything you desire in a home and if you do, you may not be able to afford it. It’s important to prioritize the things you want in a home by how important they are in your search.

Decide your needs vs. your 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? • 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 (like the sauna).

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, figuring that all needs must be met in any house under consideration. This will make the search easier and help weed out the ones that don’t meet the basics. Realize, however, that it’s nearly impossible to find a home that meets all requirements. 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. 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 and make the process smoother. Regardless, buying a house is not a simple process. Much of the planning should be done well in advance of looking at homes with your real estate agent. 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. No matter how many desires you have unfulfilled now, they can be worked on later. A garage can be added and paint colors can always be changed.

A NOTE ABOUT PETS

Consider your pets when home-shopping. Home buyers who are pet owners have specific requirements — they must provide for their pets. A third (33%) of millennial-aged Americans (born between 1981 and 1996) 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 has no restrictions on pets — or livestock, if that’s something you desire. Do you raise American Staffordshire Terriers, also known as pit bulls? There are neighborhoods that ban this breed. What about goats? Have you always wanted fresh eggs from your own chickens? Include your animals in location planning, or be prepared to may compromises in your pet choices. A properly sized fenced backyard is often on the "needs" list for many pet-owning homebuyers. In most areas, there are companies that offer temporary fence rentals, which can be especially helpful while waiting for a permanent fence installation.

Additionally, neighborhood traffic levels may be another important factor to consider. When pet services such as veterinary, grooming, and exercising are conveniently accessible nearby, that is a bonus!

LOCATION, LOCATION, LOCATION!

Ideally, you should limit your search to a neighborhood that offers the closest possible match to the kind of lifestyle that you like and want to live. Recent studies and surveys found 84% of Americans said the neighborhood would be equally important to — or more important than — the house itself, if they were searching for a new home. In fact, it has also been determined that location is so important that people are willing to give up “must-have” features to buy into their desired neighborhood — 72% would forget about a pool, 55% would lose a finished basement, and 33% would accept less square footage. You can’t start shopping for a home without first deciding where you want to live - location is arguably the most important factor when buying a home. Location influences nearly every part of your everyday life. Before you start your home search, take time to research the area thoroughly. Drive through the neighborhood to get a feel for the surroundings-check if the stores, activities, and amenities you value are nearby. Try dining at local restaurants and take a walk through a nearby park. Remember, home prices are largely influenced by location and property condition. When house hunting, it's essential to consider how close the area is to schools, shopping centers and

other important facilities. A home should offer comfort, and true comfort begins with the right location.

CHAPTER 3 Getting That First Home Loan

Navigating the housing market can feel daunting-especially for those who've faced challenges with mortgages in the past. Stricter lending standards, introduced in response to past lender practices, have made qualifying for a mortgage more difficult in recent years. However, the landscape is beginning to shift. Signs of improvement are emerging as banks ease some of their stricter requirements, and lenders begin offering mortgage options with lower down payment thresholds. With the housing market gaining momentum and more buyers entering the scene, now may be a promising time to take the leap. If homeownership is your goal, this could be the perfect moment to start preparing for the journey ahead.

THE CRITICAL IMPORTANCE OF A GOOD CREDIT SCORE

Your credit health is the most important factor in deciding what interest rate you will pay on your mortgage, and the difference could be substantial. Your credit rating’s impact is so significant that the difference could be in the thousands of dollars, just from a few points on your credit score. Consider this example. Let us take $178,500 as the price of a home. Two buyers buy at that price and both take a 30-year fixed mortgage. They both put 20% down. One buyer has a low credit score of 620, while the other has a higher score of 760. The one with the lower credit score will end up paying an interest rate as much as 3.5% to 5% higher. This difference could translate into 18

hundreds of dollars per month in mortgage interest payments.

The factors used to calculate an individual’s credit score are credit payment history, current debts, length of credit history, credit type mix, and frequency of applications for new credit. The different scoring systems are based on different criteria, weighted differently, so the three major credit bureaus in the U.S. (Equifax, TransUnion, and Experian) may produce different scores for an individual, even though the scores are based on the same credit report information. Your current credit score is a huge issue in determining if now is a good time to house hunt. Having a good credit score before you take on a mortgage is an important factor. Turn to a professional to determine your true "mortgage" credit score.

A SHORT GUIDE TO CREDIT HEAL IT HEALTH

We are increasingly dependent on credit; therefore, it is necessary that you have a good understanding of personal credit reports and your credit score before beginning the process of buying a home. When you apply for credit (i.e., a mortgage, credit card, or utility service), your credit score is checked. A credit score in the 500s is considered poor, while one in the 800s is considered excellent. Depending on your credit score, lenders will determine what risk you pose. Increased credit risk as shown by a low credit score means that a risk factor is added to the price at which money is lent. If you have a poorer credit score, lenders will lend you money at a higher interest rate than one paid by someone with a better credit score. Below a certain score, lenders will not even deal with you. Here is a short guide to help ensure that your credit is in good shape before you jump into the mortgage market.

• Monitor and analyze your credit history. With your credit score being such a crucial aspect of the final approval on a mortgage, it is important to have a current idea of how your score is going to affect you. Keep a tab on your score well in advance. This will help you to have an accurate estimate of the rate that you can expect. If your credit score is good, it will help you get approval. Take this opportunity to find out areas where your credit history could use improvement, and take steps to make sure those improvements happen. • Report errors and inconsistencies. A study by the Federal Trade Commission (FTC) stated that one out of every four consumers had errors in their credit reports that were significantly affecting their scores. It also revealed that 5% of consumers found errors that — if left unresolved — would have led them to pay significantly higher amounts for mortgages and loans. Do not let errors on your report make you pay more than you should. Make sure you pull and carefully check the three credit bureau reports, and be sure to dispute any errors that would affect your score such as wrong credit limits or incorrect accounts. • Pay off outstanding accounts. Lenders and underwriters of your mortgage will want some certainty that you are a trustworthy buyer who will be able to make payments on time. This means that having any delinquent accounts or outstanding discrepancies on your credit report may hurt your chances of approval at the best interest rates. My best advice is to review your credit report with a professional who can advise you on what to pay and

when. Completely paid off credit cards can actually deliver a lower score than someone who uses their credit regularly and maintains a timely payment history. There are many nuances that play a role, so again, seek professional advice. • Decrease the percentage of your income that goes into paying debts (your debt-to-income ratio). According to Bank of America, keeping your debt at a manageable level is a requirement of good financial health. Your debt-to- income ratio compares your monthly debt expenses to your monthly gross income. To calculate your ratio, add up the payments you make toward debt during a month. That includes your monthly credit card payments, car loans, other debts (such as payday loans or investment loans) and housing expenses — either rent or the costs for your mortgage principal, plus interest, property taxes and insurance (PITI — Principal, Interest, Tax, and Insurance) and any homeowner association fees. Next, divide your monthly debt payments by your monthly gross income — your income before taxes are deducted — to get your ratio. (Your ratio is often multiplied by 100 to show it as a percentage.) For example, if you pay $400 on credit cards, $200 on car loans and $7,400 in rent, your total monthly debt commitment is $8,000. If you make $300,000 a year, your monthly gross income is $300,000 divided by 12 months, or $25,000. Your debt-to- income ratio is $8,000 divided by $25,000, which works out to 0.32, or 32 percent. While the preferred maximum varies from lender to lender, it’s often around 36 percent. • Beware of applying for credit. You want your credit score as high as possible when applying for a mortgage. Thus,

you should try to avoid getting more credit, especially when your underwriter is deciding on your mortgage. Every credit application you fill out during this time could lead to an inquiry that might significantly decrease your score. • Keep your credit clean before purchasing a home. When it comes to your credit and purchasing a home, you must be extremely careful how you handle your money. One wrong move and you can wave goodbye to your new home. In the case of purchasing a new home through an application for a mortgage, it’s best to wait before taking out any credit cards or applying for car loans. If it’s impossible to wait, make sure you speak to your loan officer or mortgage broker for some advice. You do not want to risk losing your home loan.

TIPS TO BE PREPARED

When it comes to taking out a home loan with a mortgage broker, you are going to need to be prepared. This means you will need to produce many documents, beginning with tax returns from at least two-three years before. Lenders will also want to see monthly bank statements, as well as proof of your income and all debts you may have. It’s also a good idea to have sources for any big ongoing deposits you may have. If you have family or friends making a down payment for you, it is important to have a written “gift letter” to document such information for your lender. Otherwise, the amount will be considered a loan and included in your financial analysis. You will need money for the down payment, closing costs, at least a year’s worth of taxes, and insurance payments. It is also recommended that you have extra cash because mortgage lenders 22

will want to ensure that you have an adequate reserve. This is in case something in the home breaks and needs to be replaced, or if you lose your job and need money to make payments while you look for new employment. Multiple financial experts have agreed the general rule of thumb for a down payment is around 20%, but you are able to do it with as little as 3.5% in the case of Federal Housing Administration mortgages. These are constantly undergoing change, so get the most up to date information from your lender. Keep in mind that if you are paying less on the down payment, you will be paying more monthly. This also includes the private mortgage insurance you will need to pay, which is known as the mortgage insurance premium. The mortgage insurance premium only applies, however, if your down payment is less than 20%. Improving your credit score does not happen overnight - it takes time and consistency. That's why it's important to start monitoring your credit as soon as you begin thinking about buying a home. By keeping your credit score in good shape early on, you can avoid paying higher interest rates and save significantly over the life of your mortgage.

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