Buying Real Estate

You can do your own search on our website or alternatively call JoAnn at 429-2345 and have her set you up on a similar but a bit more comprehensive computer search.  JoAnn will as you several question, such as;

• What is you lowest price range that you would like to look th
• At is the highest price range that you would like to look at? 
• Do you want to look in Canon City, Penrose, Florence, Williamsburg, Rockvale, Colecreek and Wetmore?  
• Do you want to look at all ages of houses or do you only want to look at a certain age and newer, such as 1950’s or 1980’s and newer? 
• Do you need to have a minimum number of square feet?  
• Do you need a certain number of bedrooms?

As she asks these questions, she will do her best to get a feel for what you are really looking for.  The concept is to start with a fairly large list and gradually hone in on the home that makes sense.

Once JoAnn sends you the 1st list of homes by email, you will continue to get new listings or price reductions sent to you.  Sometimes you may get a house everyday or other times you may only get a house sent to you every 3 or 4 days.  This is a wonderful way to get acquainted with the prices and areas of town.  When JoAnn sends you this list, you can drive past the homes.  If you like the way they look and you like the neighborhood, then JoAnn can show you the insides of the houses.  It doesn’t matter if the house is listed with her or any other real estate company in town, they can all be looked at with JoAnn.    Research is very important and will make your home shopping much easier than driving around seeing signs or reading ads and taking a hit and miss approach. 

• Be realistic. It’s OK to be picky, but don’t be unrealistic with your expectations. There’s no such thing as a perfect home. Use your list of priorities as a guide to evaluate each property.
• Get your finances in order.  Talk to a lender and get prequalified for a mortgage.  They will review your credit report and be sure you have enough money to cover your down payment and closing costs. This will save you the heartache later of falling in love with a house you can’t afford.  Also you CAN NOT submit an offer on many of the bank owned Repos unless you have a prequalification letter, so get prequalified before you start looking for a home. 
• Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion, but be ready to make the final decision on your own.
• Decide your moving timeline. When is your lease up?  How tight is the rental market in your area? All of these factors will help you determine when you should move.  Do you want to move during the school year or after school has started.
• Think long term. Are you looking for a starter house with plans to move up in a few years, or do you hope to stay in this home for a longer period? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that will best suit you.
• Insist on a home inspection.  JoAnn will almost insist that you get a home inspection, so ask her about what they cost and what they will do during a home inspection, so you understand the process.
• Get help from JoAnn.  With over 30 years of selling and listing homes she know so much information that only her years of experience could have taught her.  She will help you every step of the way.

Using an inexperienced real estate agent who is a friend of a friend, a relative, or someone at their own place of business.  There are generally between 150 and 200 real estate agents in our area and many do little if any business.   JoAnn has spent a career cleaning up messes made by inexperienced real estate agents.

It takes more than a license to work as a realtor.  It is not uncommon for an inexperienced agent to write up a contract that works against their own client.   JoAnn has a reputation for honestly and patience in explaining everything along the way.

If you are pre-qualified before you start shopping for your home, you will know your shopping price range.  When you see a house that you want to make an offer on, you can act quickly.  You will know what type of loan you will be getting AND how much home you can afford. 

Buyers often don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.  JoAnn will help you find a home that will be salable down the road.  Over the 30 years that JoAnn has been in business you can imagine how many homes JoAnn has resold for her buyers, she has the experience that it takes to assist you with your purchase. 

Making a standard "low-ball offer" even when some homes are priced exceptionally well can be counter productive.  Some homes on the market are overpriced but some are even under priced.  Assuming that you should offer 20% under the asking price may not lead to the home with the best value and the one best suited to your needs.   Thomas Jefferson had a saying "don't buy something just because it is cheap".  Buy what is the best home for your situation.

Don't get caught purchasing a home that needs many repairs, thinking that you will do these themselves. Good intentions don't do home repairs, and it is not uncommon for repairs to not get done or done poorly.  It is often times better (and cheaper) to purchase a home that is in good condition, even if it cost a little more up front, then you don’t have to make costly repairs.

Using a lender that you find on the internet or from a TV ad can turn into be a disaster. There is nothing worse than having a mover show up when the loan documents are not complete or done incorrectly.   JoAnn would like you to use someone who knows what they are doing, not a person with no knowledge or real interest in you or our area.
   

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:

Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.

How much you owe.  If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.

The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time and only one in 20 consumers have credit histories shorter than 2 years.

How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.

The types of credit you use. Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.

Contact JoAnn and she will give you the name of an honest local mortgage company who can run a credit report.  They will go over the report with you.  This is a VERY important step even if the lender finds information that needs to be corrected.  This knowledge will allow you to correct problems so you will be ready to buy a home when the time comes.  Sometimes problems are easy to correct or it is not uncommon to catch mistakes made by someone else.

Credit scores, along with your overall income and debt, are big factors in determining whether you’ll qualify for a loan and what your loan terms will be. So, keep your credit score high by doing the following:

1. Check for and correct any errors in your credit report. Mistakes happen, and you could be paying for someone else’s poor financial management.

2. Pay down credit card bills. If possible, pay off the entire balance every month. Transferring credit card debt from one card to another could lower your score.

3. Don’t charge your credit cards to the maximum limit.

4. Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less for problems after a year.

5. Don’t order items for your new home on credit — such as appliances and furniture — until after the loan is approved. The amounts will add to your debt.

6. Don’t open new credit card accounts before applying for a mortgage. Too much available credit can lower your score.

7. Shop for mortgage rates selectively. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.

8. Avoid finance companies. Even if you pay the loan on time, the interest is commonly high and it will probably be considered a sign of poor credit management.

Exclusions to coverage. For example, most insurance policies do not cover flood damage as a standard item. Those types of coverage are generally bought separately.

Dollar limitations on claims. Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.

Replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.

Actual cash value of your home. If you chose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value.

The liability amount. Generally your homeowner’s insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have significant assets.

If you would like JoAnn to contact an insurance agent she will be happy to assist you. 

Buying a home should be fun, not stressful. As you look for your dream home, keep in mind these tips for making the process as peaceful as possible.

Find a professional and experienced real estate agent. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the REALTOR® you chose is both highly skilled and a good fit with your personality.  JoAnn has been selling real estate full time for over 30 years and will work hard to assist you in finding the right home.  She has an outstanding reputation for being honest, trustworthy and being a hard worker who will get the job done.  

Remember, there’s no “right” time to buy, just as there’s no perfect time to sell. If you find a home now, don’t try to second-guess interest rates or the housing market by waiting longer — you risk losing out on the home of your dreams. If you are seriously looking, the housing market usually doesn’t change fast enough to make that much difference in price.

Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of your immediate family — the people who will be living in the home.

Accept that no house is ever perfect. If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you.  Work on the minor ones over time.

Don’t try to be a killer negotiator. JoAnn will work to get you the best possible terms in a manner that results in the deal being completed. As a buyer please recognize that negotiation is a part of the real estate process. If your main priority is to “win” and wanting someone else to lose may lead you on a path toward something you may actually not want or lose the home you want.  Negotiation is give and take and involves reasonableness from all involved parties.

Remember the home you are looking at doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself — room size, kitchen, etc. — that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.

Plan ahead. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate home insurance, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.

Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be costs. Don’t leave yourself short and let your home deteriorate.

Buying a home, especially for the first time, is a big financial commitment. It might be a bit stressful but it also yields big benefits.  Owning a home is a whole different feeling and status level in your community.

Condominiums and townhouses offer an affordable option to single-family homes in many markets, and they’re ideal for those who appreciate a maintenance-free lifestyle. But before you buy, make sure you do your legwork. These are some of the important elements to consider:

• Outdoor space. Yards and outdoor areas are usually smaller in condos, so if you like to garden or entertain outdoors this may not be a good fit. However, if you dread yard work this may be the perfect option for you.
• Maintenance.  Many condos have a monthly fee that covers the exterior maintenance in the common areas and on the exterior of the townhouse.  Fees in Canon City typically run from about $100 to $175 per month.  You should also make sure if the homeowners insurance is included in this amount or if you pay it in addition to the monthly fee.    JoAnn will provide you with the financial statement, bylaws, minutes from meeting and other information on the homeowners association when you need them. 
• Reserve funds and association fees. Although fees generally help pay for amenities and provide savings for future repairs, you will have to pay the fees decided by the condo board, whether or not you’re interested in the amenity.   You will also want to make sure that the association has enough money to make improvements when they are needed, such as new roofs, new driveways, painting the exteriors. 
• Resale. The ease of selling your unit may be dependent on what else is for sale in your complex.  Buyers generally look at all of the units and choose the best priced home with the most amenities and the best condition. 
• Condo rules. Although you have a vote, the rules of the condo association can affect your ability to use your property.   For example, some condos prohibit you to rent the unit.  Others prohibit the size or number of pets, or have age restrictions.  Read the covenants, restrictions, and bylaws of the condo carefully before you make an offer.
• Neighbors. You’re much closer to your neighbors in a condo or town home. If possible, try to meet your closest prospective neighbors.

Develop a household budget. Instead of creating a budget of what you’d like to spend, use receipts to create a budget that reflects your actual spending habits over the last several months. This approach will factor in unexpected expenses, such as car repairs, as well as predictable costs such as rent, utility bills, and groceries.

Reduce your debt. Lenders generally look for a total debt load of no more than 36 percent of income. This figure includes your mortgage, which typically ranges between 25 and 28 percent of your net household income. So you need to get monthly payments on the rest of your installment debt — car loans, student loans, and revolving balances on credit cards — down to between 8 and 10 percent of your net monthly income.

Look for ways to save. You probably know how much you spend on rent and utilities, but little expenses add up, too. Try writing down everything you spend for one month. You’ll probably spot some great ways to save, whether it’s cutting out that morning trip to Starbucks or eating dinner at home more often.  If you don’t need it, don’t buy it!

Increase your income. That’s easier said than done but some bosses may be sympathetic to your interest in buying your own home. It shows a level of maturity that some “smart bosses” are savvy to.   Home owners are often more stable employees. 

Save for a down payment. Designate a certain amount of money each month to put away in your savings account. Although it’s possible to get a mortgage with only 5 percent down, or even less, you can usually get a better rate if you put down a larger percentage of the total purchase. Aim for a 20 percent down payment if you want to avoid such things as PMI insurance (ask me) or get lower interest rates. 

Keep your job. While you don’t need to be in the same job forever to qualify for a home loan, having a job for less than two years may mean you have to pay a higher interest rate.

Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills, too. Pay off the entire balance promptly.

Lender Checklist: What a Mortgage Company typically asks for.

• W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for every person signing the loan.
• Copies of at least one pay stub for each person signing the loan.
• Account numbers of all your credit cards and the amounts for any outstanding balances.
• Copies of two to four months of bank or credit union statements for both checking and savings accounts.
• Lender, loan number, and amount owed on other installment loans, such as student loans and
  car loans.
• Addresses where you’ve lived for the last five to seven years, with names of landlords if appropriate.
• Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, such as a boat, RV, or stocks or bonds not held in a brokerage account.
• Copies of your most recent 401(k) or other retirement account statement.
• Documentation to verify additional income, such as child support or a pension.
• Copies of personal tax forms for the last two to three years.

If you have all this information with you the 1^st time you go and see the lender it will really help you get a great start on getting prequalified for your loan.  Work with someone who truly knows their business and is a good lender to work with.  Ask JoAnn if you have questions.

Questions to Ask Your Lender

What are the most popular mortgages you offer? Why are they so popular?

Which type of mortgage plan do you think would be best for me? Why?

Are your rates, terms, fees, and closing costs negotiable?

Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required? (NOTE: Private mortgage insurance is usually required if your down payment is less than 20 percent. However, most lenders will let you discontinue PMI when you’ve acquired a certain amount of equity by paying down the loan.)

Who will service the loan — your bank or another company?

What escrow requirements do you have?

How long will this loan be in a lock-in period (in other words, the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if it drops during this period?

How long will the loan approval process take?

How long will it take to close the loan?

Are there any charges or penalties for prepaying the loan?

Loans

Brush up on these mortgage basics to help you determine the loan that will best suit your needs.

• Mortgage terms. Mortgages are generally available at 15-, 20-, or 30-year terms. In general, the longer the term, the lower the monthly payment. However, you pay more interest overall if you borrow for a longer term.
• Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate as long as you hold the mortgage and, in general, is usually a good choice if interest rates are low. An adjustable-rate mortgage is designed so that your loan’s interest rate will rise as market interest rates increase. ARMs usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised.
• Balloon mortgages. These mortgages offer very low interest rates for a short period of time — often three to seven years. Payments usually cover only the interest so the principal owed is not reduced.
• Government-backed loans. These loans are sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the Department of Veterans Affairs (www.va.gov) and offer special terms, including lower down payments or reduced interest rates to qualified buyers.

Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment. For help in determining how much your monthly payment will be for various loan amounts, use our mortgage calculators, provided by Zillow.