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Tips for Buyers


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                             Tips for Buyers
Contained in this document are articles on the following:
    Is now the right time to buy a home in Texas?

    When viewing a home, leave your emotions behind.

    How much does that home really cost?

    Assess a home’s security.

    A Home Inspection is well worth the cost!

    What questions should I ask a mortgage lender?

    How to secure home financing the smart way.

    Four ways to fix bad credit.

    Homeowners insurance: 7 tips for Texans.

    Avoiding foreclosure: What every homebuyer should know.

    Welcome to Texas! Tips for newcomers to Texas.

                 This information is brought to you by proud members of the Texas Asso-
                   ciation of REALTORS®. Whenever you buy, sell, or lease real estate,
                                 make sure your agent is a REALTOR®.
                 830 905-7100 · MFRCanyonLake@gmail.com

    Is now the right time to buy a home in Texas?
          Buying a house is a big step. The right time to take this leap depends on your financial
          and personal situation as well as your goals. If you are considering buying a house
          now, here are some strong reasons why the timing could be right:

•   Housing prices in Texas have been steadily rising at a moderate pace for many years, even
    while other states have experienced wild price fluctuations.

                          •   If you’re a first-time buyer or if you have owned your home for
                          some time, you may qualify for a tax credit of up to $8,000. For more
             No           information visit http://www.irs.gov/pub/irs-pdf/p4819.pdf.
            Maybe         •
          I think so      •  Other Texas-specific programs can lower your interest rate or pro-
                          vide additional tax-credit incentives.

                          •   Interest rates are at or near record lows. Even small reductions in
                          the interest rate can significantly boost the purchase price you can af-
                          ford when buying a home.

•   Texas has one of the most affordable housing markets compared to household income, ac-
    cording to the Real Estate Center at Texas A&M University.

•   Our state’s economy is strong and diverse, and the population is expected to continue grow-
    ing steadily. These factors all point to continued health in the housing market.

                               As Texas REALTORS®, we can show you how our current hous-
                               ing-market conditions factor in to your goal of buying a home.
                               You can count on us to put your interests first while assisting you
                               during this exciting process.
                             830 905-7100 · MFRCanyonLake@gmail.com
        When viewing a home, leave your emotions behind.
Homebuyers often follow their hearts, and they should. Sometimes just going with a gut feeling is the best indicator. But
when it’s house-touring time, it’s important to set those emotions aside and replace them with clear-headed thinking and a
critical eye. Otherwise, your potential dream house might just turn into a money pit. Although you should always hire a pro-
fessional inspection before you complete the sale, you can spot the more obvious trouble signs early in the process simply by
knowing what to look for. You can quickly check five key areas to determine if the home has serious problems.

                                                Roof. A new roof can cost between $5,000 and $15,000 depending on the
                                                • A quick method to determine if the roof is leaking is to look in the attic.
                                                WARNING: Don’t climb into the attic yourself, unless you know how to walk on
                                                joists; you might step through the ceiling and injure yourself. Simply open the
                                                attic access panel and look inside.
                                                • With a flashlight, check the rafters. They should not show water stains,
                                                which indicate leaking.
                                                • With the flashlight off, look up at the roof. Any pinpoints of light shining
    through indicate a worn roof.

Foundation. A cracked foundation is a serious matter. It can cost tens of thousands of dollars to fix, and, in severe cases,
may not be fixable. Keep an eye out for these potential warning signs:
• V-shaped cracks (larger at the top than at the bottom) around the perimeter of the house.
• Cracks in interior walls near corners of doors or windows. Look at all the corners of windows and doors, and at joints
   where walls meet walls, ceilings, or doors for signs that they are pulling away from each other.
• Doors that stick and squeak.
• Leaks and cracks in and around the fireplace.
• Obvious cracks in brick and mortar.

Piping. Copper piping rarely corrodes and is the plumbing of choice these days, but many older homes have galvanized
steel plumbing. After 30 years or so it tends to rust out and leak. Replacing it can cost $5,000 or more, so it’s something you’ll
want to watch out for. Call a plumber if you have specific questions.

Flooding. If a house is poorly situated on its lot, flooding can occur under the house, which can seriously damage the home.
•   In the basement, check for water stains on the foundation indicating flooding during rainy periods. If you find these, call
    in a soils engineer to confirm the problem and suggest solutions.

Unapproved work. All improvements to the property should have been done with permits from the local building de-
partment. Work done without permit may be substandard and, if discovered later, may need to be ripped out.
• Go down to your local building department and request copies of permits for all work that was done at the property ad-
    dress. Compare these with any additions or replacements done by the seller. If work was not done by permit, you may
    ask the seller to obtain permits for the work and bring it up to building-code standards before you purchase.
                             830 905-7100 · MFRCanyonLake@gmail.com

                            How much does that home really cost?

                                   A $200,000 home costs more than a $185,000 home, right? Well, yes and no. Assuming the
                                   same type of financing for both homes, the $200,000 home does cost more initially. But
                                   many factors contribute to the overall long-term cost of a house. Here are some things to
                                   keep in mind when trying to determine the true cost of purchasing a particular home:

        •    Does it have a pool or hot tub that requires maintenance?

        •    How much yard maintenance is required and who will perform it?

        •    Are there trees that should be removed?

        • What are the utility costs? Although your usage won’t be exactly the same as the current owners, you may be
        able to get their utility bills for the past year from them or directly from the utility company.

        •    How soon will the roof need to be replaced?

        •    Does the house need repainting?

        •    Does the electrical system need upgrading to handle the load for your appliances and electronics?

        • Does the home have aluminum wiring, lead-based paint, or other safety or health hazards you will want to ad-

        •    Does the house need new carpeting or flooring?

        •    What remodeling projects do you see as a must?

        •    Will appliances need replacing? What items convey?

        •    What are the estimated property taxes for the property?

Also, be sure to get a professional inspection to identify other potentially costly problem areas.
                          830 905-7100 · MFRCanyonLake@gmail.com

      Assess a home’s security.

                                      Look at every home through the eyes of a burglar!
                                                 The Federal Bureau of Investigation reports that 2.1 million burglaries
                                                 were committed in 2004. Not all of these situations involved forced entry;
                                                 many were the result of unlocked doors and windows. Once you close that
                                                 loophole, though, how can you determine if one house is more vulnerable
                                                 than another? Well, a residence surrounded by a 15-foot electric fence and
                                                 patrolled by guard dogs might be a giveaway, but here are some more-
                                                 subtle ways to judge a house’s security.

Entrances should be visible and the exterior well-lit.
      Thieves don’t like to be seen. If a home’s doors and most-accessible windows are visible from the street or a
      neighbor’s house, they might look for another home. Most homes have outside lights; make sure those lights are po-
      sitioned correctly. Lighting up the front door and driveway is great, but what about the dark corner of the yard near
      the living-room window? Use motion-sensor lights in these areas.

Exterior doors must be metal or solid-core wood.
      A particle-board or similarly weak door will break long before most locks give out.

All exterior locks should have dead bolts with metal strike plates.
      Dead bolts alone don’t deter burglars. Without a heavy-duty metal strike plate screwed in the door frame to receive
      the lock, someone could break open the door by busting through the wood.

Watch for old sliding-glass doors.
      Old doors with worn-out rollers can be lifted off the track, bypassing any lock.

Any fence gates should have locks.
      Yes, burglars can climb over most fences, but they risk more exposure by scaling a fence instead of quickly walking
      through a gate.

Look for “painful” landscaping.
      A good way to discourage a thief from breaking in through a first-floor window is to install a rosebush or other thorn
      -covered plant under it.

 You can’t keep a determined, professional burglar out of a home. However, you can make it less
                                    appealing for him to try.
                            830 905-7100 · MFRCanyonLake@gmail.com
        A Home Inspection is well worth the cost!
                When buying a home, how do you know what you are getting?
Most people probably only think of one or two questions to ask a home inspector: “How much is your fee?” and “When can
you be there?” But these only scratch the surface.

Here’s a list of suggested questions you might ask:
        • What types of licenses do you hold
        • What kind of training do you have?
        • Do you belong to a professional inspectors’ association?
        • How long have you been licensed in Texas?
        • Are you a full-time home inspector?
        • How much do you charge?
        • Do you also perform repairs? (If the answer is yes, that may indi-
        cate a conflict of interest)
        • What will the inspection include? (Get specifics. It should include
        the electrical, heating, and central air-conditioning systems; interior
        plumbing; visible insulation; roof; walls; ceilings; floors; windows;
        doors; foundation; basement; and the visible structure of the house.)
        • Do you inspect gas lines, swimming pools, spas, septic systems,
        and wells? (You can identify other atypical systems or items.) Do you
        charge extra for these?
        • Do you charge extra based on the size of the home? Multiple AC
        units? Other items?
        • How much would you charge if I ask for a re-inspection after re-
        pairs are completed?
        • Will you supply a written report? (The inspector should.)
        • Can I attend the inspection? (The home inspection is an opportu-
        nity for you to learn about your new home and ask questions. If the inspector says no, find another inspector.)
        • Do you go up on the roof to inspect it?
        • How long will the inspection typically take? (Anything less than two hours is not long enough for a thorough in-
        • Can I call you with questions that come up later?
        • Can you give me names and phone numbers of three people for whom you’ve inspected homes recently?

The inspector may not inspect swimming pools, wells, septic tanks, and other systems and items, and many inspectors will
not conduct environmental tests or wood-destroying insect inspections. You will likely need to arrange for these inspections

You can find a blank copy of the standard inspector report form at www.trec.state.tx.us to give you an idea of what may or
may not be covered in the inspection.
                             830 905-7100 · MFRCanyonLake@gmail.com

        What questions should I ask a mortgage lender?

There is a lot more to the mortgage process than getting a
good rate. High costs in fees and poor service can come as
very unhappy surprises. Here’s a list of suggested ques-
tions you might ask a lender:
         • How large is your company, and how long has                                                                         it
              been in business?
         • Are you a licensed mortgage broker or loan                                                                          of-
              ficer in Texas?
         • Is your company a mortgage banker or a
              mortgage broker? (A banker lends its own
              funds; a broker searches mortgage sources
              and arranges for you to receive financing
              from the lending entity.)
         • What is the name, phone number, and e-mail                                                                          ad-
              dress of the person who will actually be processing my loan application? How accessible is that person?
         • Tell me about all loan fees. What fees must I pay up front? What fees will I have to pay at closing?
         • How can you assure me I won’t pay any unnecessary “add-on” fees?
         • Do the costs you are quoting include the lender origination fee?
         • Are there loans available with no origination fees? No closing costs? Reduced closing costs?
         • What are your interest rates?
         • Is there a fee to lock in my interest rate? How long can I lock in the rate? If interest rates go down, can I relock at
              the lower rate? If so, will there be a fee for that?
         • What information must I provide to get a mortgage loan?
         • What documentation will I have to provide?
         • Will you require current tax returns? (Take note of this especially between Jan. 1 and April 15 if you haven’t pre-
              pared your return yet.)
         • How long will it take to get complete and unequivocal loan approval and be ready to close?
         • I plan to stay in this house for ___ years. Can you show me the breakdown of any ARM loans you offer vs. fixed-
              rate loans to see which could save me the most money in my situation?
         • What is private mortgage insurance? Other than a 20% down payment, how can I avoid the private mortgage
         • In the last three months, how many loan applications have you taken and how many have you been unable to
         • Can you give me names and phone numbers of two or three people for whom you’ve funded loans in the last two

Currently, Texas-licensed mortgage brokers must use the standard Conditional Qualification and Conditional Approval letters
when representing that an applicant is prequalified or preapproved for a mortgage loan. Mortgage bankers may be required
to do so in the future.
                             830 905-7100 · MFRCanyonLake@gmail.com

        How to secure home financing the smart way.
Three elements are crucial to the purchase of a home—the down payment, closing costs, and qualifying for a mortgage. Here
is a quick rundown of what you should know:

                                          Down payment
                                          Typically, conventional lenders will require a 20% down payment, although you
                                          may be able to find loans with down payments of as little as 5% (perhaps less in
                                          some cases). With down payments less than 20%, you likely will have to pay pri-
                                          vate mortgage insurance, which guarantees the lender will be repaid in case of de-

                                          Mortgages insured by the Federal Housing Administration (FHA) and those avail-
                                          able to U.S. veterans often require very low down payments. Ask your lender if you
                                          can qualify for one of these loans.

                                           If you are having trouble coming up with the down payment, here are some tips to
                                          ease the burden:
                                          • Consider down payment assistance programs. The Texas Department of Hous-
                                          ing & Community Affairs offers down payment assistance as well as low-cost mort-
                                          gages for first-time buyers. For more information, visit MyFirstTexasHome.org.
                                          • Start early. Begin saving for a down payment as soon as possible. After a few
                                          years, it adds up.
                                          • Ask for a My Community Mortgage. A Fannie Mae product, the My Community
                                          Mortgage offers many advantages for buyers, including the ability to use non-
                                          traditional forms of credit for loan qualification purposes.
                                          • Convert stocks. Consider selling stock for the down payment. The housing mar-
                                          ket often is a better investment anyway.
                                          • Sell an asset. If you have “toys” such as a boat, extra car, or other asset, con-
                                          sider selling it for the down payment.
                                          • Borrow from relatives. Today lenders will allow you to use money borrowed
                                          from relatives as the down payment. In many cases the relatives do not need to co-
                                          sign the mortgage. Check with your lender for restrictions.

Closing costs
No matter what home you buy, there will be closing costs. These can include: discount points, title insurance, escrow fees,
attorney fees, termite report, recording fees, appraisal fees, document preparation fees, notary fees, and a loan underwriting
fee. Usually these are due in cash, but sometimes they can be folded into the mortgage.

Loan qualification
The size of the mortgage you qualify for is based mainly on the interest rate offered and your income. The higher the interest
rate, the higher the monthly payment. And, the higher the monthly payment, the more income you will need to qualify for the

Contacting a lender before you’re actually ready to make an offer on a house can be a good idea. This head start gives you a
chance to work out any problems that may arise without the pressure of contract deadlines.
                             830 905-7100 · MFRCanyonLake@gmail.com

        .   Four ways to fix bad credit.
Credit problems can seem like an insurmountable barrier to getting a home loan. It’s not an easy task, but with patience and
some insight you can turn things around. Here are four ways you can get on the road to credit repair—and put yourself in a
better position for homeownership.

1. Develop a budget
Stop all credit transactions right now. It might sound harsh, but
you should hide or destroy all of your cards if necessary! Now
you can manage your inflow of cash and, more importantly, your
outflow—money in and money out.

Develop a flexible budget. Consider all necessary expenses such
as housing, food, and healthcare. Then, eliminate expenses that
can be trimmed such as entertainment and dining out. For more
help, contact a nonprofit credit counseling agency, such as the
TCA at 866/528-0588 or takechargeamerica.org.

2. Contact your creditors
If you aren’t making timely payments, don’t wait for your ac-
count to be turned over to collectors. Your creditors may be able
to help you get on a lower-interest payment plan or agree to a

A helpful tip: If your balance is unmanageable, offer a 30% set-
tlement payment first. Some creditors will take payments of 30%-40% rather than have you default. Make sure to get the
agreement in writing. Once you’ve paid in full, send the settlement letter to each of the credit bureaus (Equifax, Trans Union,
and Experian/TRW) for reference so they will update your credit report.

3. Consolidate your debt
Another approach to consider is acquiring a debt consolidation loan. This type of loan will allow you to pay off your out-
standing balances with one, lower-interest monthly payment. A home equity loan for debt consolidation could allow the in-
terest you pay to become tax-deductible.

4. Avoid bankruptcy if you can
A last resort is bankruptcy because of its long-lasting effects. Bankruptcy can make it difficult to attain future credit, life in-
surance, and sometimes even a job. It does, however, offer a new start. The primary types of personal bankruptcy are Chap-
ter 13 and Chapter 7. Chapter 13 allows you to keep property that you would otherwise lose, but pay off a default amount
during a three-to five-year
period. Chapter 7 (straight bankruptcy) liquidates all of your assets that are not exempt. Property is turned over to creditors
or sold by a court-appointed official.

Help for homeownership is out there
There are lots of programs to help first-time and low-income homeowners, and even those with spotty credit histories who
want to realize the American dream of homeownership. One is the Texas First Time Homebuyer Program. For more informa-
tion, visit MyFirstTexasHome.org or ask your Texas REALTOR®.
                             830 905-7100 · MFRCanyonLake@gmail.com

        Homeowners insurance: 7 tips for Texans
Save on homeowners insurance
Here are seven ways to cut the cost of your home insurance from helpinsure.com, a Texas consumer-friendly Internet site:

1. Shop around – and do it early!
Check with several different home insurance companies to get rate
quotes. (An independent insurance agent can provide rate quotes
from a variety of companies.) And definitely do it well before your
policy expires, just in case you run into any snags along the way.

2. Raise your deductible
The deductible is the amount of money you have to pay toward a loss
before your insurance kicks in. Home insurance deductibles usually
start around $250. However, if you increase your deductible to:
         $500, you’ll save up to 12% on your premiums
         $1,000? Save up to 24%
         $2,500? Save up to 30%
         $5,000? Save up to 37%

3. Buy your home and auto policies from the same company
Many companies will give what’s called a “multi-line” discount if you
buy both home insurance and auto coverage from them.

4. Don’t skimp when buying a home
If you’re looking at buying a home, think about the cost of insuring the
home. A newer home’s electrical, heating, and plumbing systems and
overall structure are likely to be in better condition than those of an
older home – and can lead to a discount on your premiums.

5. Insure your home, not the land
While your home and its contents are at risk from fire, theft, windstorms, and other perils, the land your home sits on is not.
Don’t include the value of the land in deciding how much home insurance you need to buy.

6. Improve security and safety
Items such as dead-bolt locks, burglar alarms, and smoke detectors can usually bring discounts of 5% each. Your insurance
company may also offer a significant discount of 15% or sometimes even 20% if you install a sophisticated home-security

7. Check your policy annually
Your policy should reflect the value of your home and belongings. If you review your policy every year, you can easily make
the necessary adjustments. If, for example, you just sold a valuable painting, you won’t need the same amount of personal
property coverage. But if you’ve added a garage or other addition, you’ll need to increase your dwelling coverage.
                            830 905-7100 · MFRCanyonLake@gmail.com

        Avoiding foreclosure: What every homebuyer should know.
No one buys a home hoping to get behind on payments and have the bank foreclose on it. Here are a few
tips to avoid this problem altogether, and what to do if it does occur.

Don’t set yourself up for failure
There are two main ways to avoid foreclosure:

        Don’t put yourself in a situation where you won’t
        be able to afford your mortgage.
                Know how much you can really afford before you start
                shopping for a home and stick to that price range. Of-
                ten, people over-extend themselves financially when in
                reality they don’t and won’t have the means to pay
                their mortgage payment. Just because the mortgage
                lender approves you for a loan at a certain amount
                doesn’t mean you can actually afford the payments on
                that loan.
        Understand your loan.
                Many people get into trouble because they don’t under-
                stand their responsibilities regarding their home loan. There are many types of loans where the payments
                for the first year or first few years are much lower than the amount you will pay in the following years. Talk
                with your lender about various loans and make sure you understand how much your payment will be at the
                beginning as well as what your payment might be in the future.

What to do if you think you’re heading toward foreclosure.
        Do not be embarrassed. Instead, contact your lender as soon as you’re aware that your payment will be late. Also,
        never ignore your lender’s phone calls or letters. If you act uninterested in the fate of your home, your lender will be
        less willing to work with you in remedying the problem.

        If you don’t want to speak to your lender first, you can contact a HUD-approved counseling agency that will work
        with you and your lender to negotiate a repayment plan. You can call 800/569-4287 for the counseling agency near-
        est you.

        Another source, the National Foundation for Credit Counseling, can help you locate a nonprofit agency that could
        help you reduce your monthly payments by lowering interest rates or extending repayment periods. Stay away from
        companies that promise you swift, effortless results by paying them a large fee—this is usually evidence of a scam.

      You can also speak to your Texas REALTOR®. Your REALTOR® understands the entire
                  home-buying process and can discuss options available to you.
                                  830 905-7100 · MFRCanyonLake@gmail.com

                                 Welcome to Texas!
                                          If you just moved to Texas, you’ll soon learn plenty about the culture,
                                          customs, and history of the state. In the meantime, here are a few
                                          items to consider as you get acclimated.

Get legal on the road
      As a new Texas resident, you have 30 days to register your vehicle and get your driver’s license. Before you register
      your vehicle, though, it must pass the state inspection process. In order, here are the three steps to follow:
      1. Take your vehicle to a state inspection station. You can find a list of what types of inspections are required in
          your county and an inspections-station locator at www.txdps.state.tx.us/vi. When you go, make sure you take
          your driver’s license and proof of insurance. If your insurance policy wasn’t issued in Texas, you may need to
          show proof that you carry the minimum coverage required by the state: $20,000 bodily injury or death to one
          person; $40,000 bodily injury or death to two or more persons; and $15,000 injury or destruction to other prop-
      2. When your vehicle passes inspection, the inspection station will give you a verification form to bring to the
          county tax assessor-collector’s office. This is where you obtain a Texas vehicle registration sticker and license
          plates. You’ll need proof of ownership, such as registration or title from your previous home state, as well as
          proof of insurance. Again, you may need to show that you carry minimum coverage amounts.
      3. Apply for a Texas driver’s license at the Texas Department of Public Safety (DPS) office in your area. To find the
          location nearest you, visit www.txdps.state.tx.us. Bring an ID, proof of Social Security number, proof of liability
          insurance, and proof of Texas vehicle registration. Expect to provide a thumbprint and surrender any valid out-
          of-state license you currently have.

Register to vote
      While at the driver’s license office, you can register to vote—or you can pick up a voter-registration application from
      the county voter registrar’s office, a library, post office, or from the secretary of state’s Web site, www.sos.state.tx.us.
      The application must be received 30 days before an election to vote in that election.

Go online
      You can find a wealth of information about the state at www.TexasOnline.com. You can also search here for links to
      Web sites for counties, cities, chambers of commerce, schools, and libraries. If you’re looking for answers to ques-
      tions about state laws, required business licenses, taxes, and more, you may also find that information here.

Don’t fall for misleading solicitations to file your homestead exemption
      There is no fee to file a property-tax homestead exemption. You might receive letters, though, on official-looking sta-
      tionery offering to file your homestead exemption for you for a fee. Even some people who have lived in Texas their
      entire lives confuse these letters as a form from a state agency requiring a mandatory fee. Don’t fall for it. The proc-
      ess is simple and costs nothing. You can download the application from www.window.state.tx.us/taxinfo/
      taxforms/50-114.pdf, fill out the form, and send it in to your appraisal district.

                     If you have other questions, please feel free to get in touch with us.
                                        Welcome to your new home!

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