Eight "Sins" to Avoid When Buying
a Home in Chesterfield

• Failing to have a plan
• Thinking, "I can't afford a home"
• Failing to "properly" select your Realtor^®
• Failing to get pre-approved for a mortgage loan
• Choosing a loan based only on the interest rate
• Not obtaining a home inspection from a qualified inspector
• Not knowing your rights and obligations
• Not making your own inspection.

Avoid these "sins" or it could cost you thousands!

1. FAILING TO HAVE A PLAN: Deciding to buy a home is probably the biggest financial decision you'll ever make. It's an exciting decision, but it's serious business, too, and you deserve serious advice. Zig Zigler, a famous motivational speaker, once said that people don't plan to fail - they fail to plan. With a game plan, you will eliminate many of the headaches involved in this complicated transaction. You need a clear plan when deciding to buy a house. Evaluate your current situation Do you currently own a home? If so, will it be necessary to sell before making another purchase? Are you renting? How much time is left on your lease? Do you and your family plan to use the back yard? What is important about the location of your house? Do you want to live within 10 minutes or one hour from the office? Make a list of features which are important in your home. Write down desirable locations you would consider, an acceptable price range, number of bedrooms and bathrooms, and any other amenities. Be specific. It is unlikely that you will find a home that offers every feature you desire; however, without a wish list, it will be more difficult to recognize a home which meets your expectations. Provide the information to your Realtor^®. Your Realtor^® will look for homes that match your criteria. This will save you time - you won't need to look at homes that don't fit your needs and desires. A proper game plan will save you time and reduce the hassle of shopping for a home. Spend a little time in advance and save a lot of time and money in the future!

2. THINKING, "I CAN'T AFFORD A HOME": Many people feel that they can't afford a home, but affording a home has never been easier. Mortgage rates are more flexible today than ever, and the tax laws favor home ownership like no other tax shelter. Home ownership is a durable (real) investment. Although no one can say if a specific home will appreciate in value, generally speaking, the odds favor the home owner. Numerous unique tax advantages are available to home owners. The thousands of dollars you pay in mortgage interest is deductible. This tax deduction alone can sometimes make owning your own home cheaper than renting with after tax take home dollars. Check with your Accountant, see the dramatic difference that home ownership will make. Take a look at how you may qualify for a loan.

3. FAILING TO "PROPERLY" SELECT YOUR Realtor^®: It's likely that you don't often interview people. Yet, in order to find the Realtor^® who is right for you, you may need to interview several. The quality of your home buying experience is dependent upon your skill at selecting the best qualified agent(s). It's interesting that in the real estate business, someone with many successfully closed transactions usually costs the same as someone who is inexperienced. Bringing that experience to bear on your transaction could mean a lower price at the negotiating table, buying in less time, and with the minimal amount of hassles. Your agent should be a skilled win-win negotiator! Agents make it their business to provide every service connected with your home search, from expert advice in the early stages through careful monitoring of your closing. The more closely you work with your agent(s), the better your needs are known and the more effectively you can be served. Your agent(s) should have access to the MLS systems - a computerized system that will assist you in locating the home that fits your needs and desires. The purchase of your home could well be the most important financial transaction you have ever made. The agent(s) you select can make it a satisfying and profitable activity, or a terrible experience. It's your home. It's your money.  Take a look at some of the criteria you should consider when you are Selecting an Agent and see what our clients say about us.

4. FAILING TO GET PRE-APPROVED FOR A MORTGAGE LOAN: Don't waste hours searching for a home that is not in your price range! Looking at homes above your price range can ruin your appreciation for your new home because it suffers by comparison to the home that may be your move up home of the future. Save time and money by pre-qualifying for a loan. Before you go shopping for a home, you need to determine how much you can afford. Once you are pre-qualified for a mortgage, you will know what your buying power is - you will save time by looking only in your price range. This process is simple. A lender will ask you basic questions concerning your history, run a credit report, and determine your buying power. You can even get pre-approved for a loan! Imagine for a moment, if, when you and your Realtor^® initially draft your offer for the home you select, you are already approved for the loan - IN ADVANCE... No stress, no worrying about qualifying, no concern whatsoever about your ability to qualify would stand between you and the home of your dreams. In today's market, a pre-approval can be a powerful negotiating tool. If your purchase offer is presented at the same time as another offer, loan preapproval may be the deciding factor that pushes the seller to accept your offer. The old system saw the buyer spending many hours locating the perfect home, carefully drafting an offer, awaiting acceptance of the offer, consulting a loan officer, filing the multitude of forms and applications, and often this was all a waste because, for whatever reason, he was turned down for the loan. You deserve peace of mind and negotiating power by getting a pre-approved loan before you make an offer.

5. CHOOSING A LOAN BASED ONLY ON THE INTEREST RATE: We've been told that a fixed rate mortgage at today's rate is the best mortgage loan. Many different types of loan programs are available. It is a mistake to think that just because Uncle Harry got an 8.5 percent 30-year fixed rate you should get the same loan. You should get together with an expert who can explain the many different types of loan programs. Each program may have its own series of special benefits for you and your specific needs. When considering such an important decision, it is best to explore all possibilities. It may well be that a fixed rate is the best type of loan program. It may also be that you can save a significant amount of money by exploring alternative adjustable programs. A full service lender with relationships throughout the mortgage industry is a must in today's market. Lenders need the flexibility of the small business owner with the clout of a large company. Today there are almost as many different loan programs as there are housing options. A few considerations are anticipated time in the home, available asset base, current income situation vs. future income situation, etc. It is wise to pick a program that fits YOUR lifestyle. Example: If you pay off a loan in fifteen years versus thirty years you will obviously save a lot of money in interest expense. It is important to note that this savings is due to repaying the loan in half the time. The savings is not due to a significant savings in interest rates. You would expect that there would be a much lower interest rate since the loan has a quicker repayment and, therefore, a loan with less risk. The difference in interest rate is not that significant. Rates on 15 year loans may be 1/4 percent to 3/8 percent better than 30 year rates. Payments on 15 year loans will be approximately 25 percent higher on a monthly basis. MYTH: I should go to my bank to get the best loan at the cheapest interest rate. Typically a commercial bank will own a separate business entity which shares the bank's name and happens to offer mortgage financing. But, this does not mean that you will get a special deal just because you are the bank's client. The bank's mortgage subsidiary has no special access to your financial records as you might expect. The bank's mortgage subsidiary must request your financial records from the bank just as any other mortgage company. Your mortgage loan process will not be simplified or viewed differently from any other applicant making a request. The perception of most people who go to their bank's mortgage subsidiary is that their loan payments will always be made to their bank; thus, all of the individual's banking needs will be under one roof. Most mortgage subsidiaries sell their loans on the secondary market and may sell the loan servicing just as any other mortgage company will. Another important consideration is that a typical bank mortgage subsidiary works with a small number of mortgage products. You may not find a wide variety of loan programs and your loan officer may not have a good comprehension of all the different programs offered. It is doubtful that they can adequately advise you as to the best program for your needs. It is possible that you, or the property you are buying, may need to have special underwriting to approve your loan application. Just as you should interview your Realtor^®, you should also interview your lender. Compare rates and loan fees. Some rates can look very attractive but the fees and closing costs are astronomical! Get the lender to provide a Truth in Lending Disclosure Statement to show APR (Annual Percentage Rate of the first year of your loan that factors in the loan rate in addition to all the closing costs). Not all lenders look after your needs. Select a lender who is willing to discuss your needs and help you choose the loan program that is best for your situation, not the best for the Lender!

6. NOT OBTAINING A HOME INSPECTION FROM A QUALIFIED INSPECTOR: A home inspection reports on the structural and mechanical condition of the home. After the inspection, you will have the facts you need to make a decision about buying your home. A well-qualified building inspector who has adhered to federal licensing standards and is ASHI certified, can spot problems that you might not be able to see. Expect problems to be clearly explained, and a written report delivered within a day or two. Most contracts are written conditional on the outcome of several inspections. These inspections may include several items, including inspection for wood boring insects, excessive amounts of radon gas, structural soundness, and the condition of the heating, wiring and plumbing.

7. NOT KNOWING YOUR RIGHTS AND OBLIGATIONS: Real estate law is extensive and complex; the contract for sale and purchase is a legally binding document. An improperly written contract can cause the sale to fall through or cost you thousands of dollars for repairs, inspections, and remedies for title defects. You must be certain which repairs and closing costs are your responsibility. You must know whether the property can legally be sold "as is" and how deed restrictions and local zoning will affect the transaction. If there are defects in the title, or if the property is in conflict with local restrictions, you or your Realtor^® must remedy them. Otherwise, you could lose thousands! We will assist you! We will make sure you understand all the technical lingo in the sale of your home. A commercial for a local vendor states that "Our best customer is an educated consumer". How true! It is our job to know the laws governing real estate transactions. We are involved in an on-going training program to keep up-to-date with these laws. You deserve to have an agent who is not only knowledgeable about the transaction but is also willing to educate you throughout the process so you will feel more comfortable.

8. NOT MAKING YOUR OWN INSPECTION: You probably would not want to rely on the seller to point out defects in a house he is attempting to sell. There may even be hidden problems of which he is unaware. If a major defect is found, you have the option to cancel the contract and have your deposit returned, bargain for a lower price to compensate for the cost of repairing the problem, or have the owner make needed repairs before the sale. Even before you get to the point of a contract and having a professional inspector look at the house, there are many items you can check yourself as you are shopping for a home. Structure - Basement, check the foundation for cracks or water marks. Floors, are they level? Does the roof sag? Water damage - Look for unevenly painted ceiling or wall; mildew odor in basement; signs of re-plastering or re-tiling in just one area of a room. Water pressure - Flush toilet and turn on both hot and cold water faucets at the same time to test. Plumbing - Ask what type pipes are installed and their age. If applicable, ask when the septic system was last inspected and cleaned. Stand near the tank to detect odor or soggy ground. Wiring - A 100-amp system is typical in modern construction and uses a one-inch main line; this can be seen leading to the electrical panel. Appliances such as dryer or range require a 220-amp line. Notice if lights flicker or don't work. Check for electrical outlets . . . usually at least 2 in each room. Energy efficiency - Ask to check last year's heating and cooling bills. Pests - Be alert for small accumulations of sawdust in the basement. This might indicate an insect problem. Ask to see the seller's survey made when the seller bought the house. Avoid "surprises" by keeping your eyes open. Be certain that you are clear on items which convey with the property and repairs which the seller agrees to make. Have this list with you when you go for your walk-through. You can be successful in the home buying process. During the entire process you should remember to buy with "resale" in mind. In short, be alert! Be curious!

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