Home Buying Kit For Dummies

Title Page
Copyright Page
Table of Contents
Introduction
About This Book: The Eric Tyson/Ray Brown Difference
Icons Used in This Book
Beyond the Book
Where to Go from Here
Part 1 Getting Started with Buying a Home
Chapter 1 Deciding Whether to Buy
Weighing the Advantages of Owning versus Renting
Ownership advantages
Renting advantages
The Pitfalls of the Rent-versus-Buy Decision
Renting because it seems cheaper
Fretting too much over job security
Buying when you expect to move soon
Succumbing to pushy salespeople
Ignoring logistics
Overbuying
Underbuying
Buying because it’s a grown-up thing to do
Buying because you’re afraid that escalating prices will lock you out
Misunderstanding what you can afford
Chapter 2 Getting Your Financial House in Order
Surveying Your Spending
Gathering the data
Analyzing your spending numbers
Reckoning Your Savings Requirements
Setting some goals
Retirement-savings accounts and a dilemma
Other reasons to save
Protecting Yourself, Your Dependents, and Your Assets
Insuring yourself
Insuring your assets
Invest in Yourself
Chapter 3 What Can You Afford to Buy?
Lenders Can’t Tell You What You Can Afford
The Cost of Buying and Owning a Home
Mortgage payments
Property taxes
Insurance
Maintenance and other costs
The tax benefits of homeownership
Closing Costs
Accumulating the Down Payment
The 20 percent solution
Ways to buy with less money down
Where to invest the down payment
Chapter 4 Why Home Prices Rise and Fall
What Drives Real Estate Markets and Prices?
Jobs, glorious jobs
Available housing
Inventory of homes for sale and actual sales
The rental market
Tax rules and changes
How to Get a Good Buy in Any Market
Seek hidden opportunities to add value
Buy when others are scared to buy
Find a motivated seller
Buy during slow periods
Become a great negotiator
Buy in a good neighborhood
Part 2 Financing 101
Chapter 5 Understanding and Improving Your Credit Score
The Record You Can’t Ignore: Your Credit Report
What your credit history comprises
What goes into your credit report
Why you should check your credit report
The Most Popular Kid on the Block: FICO Scores
How scores work — the short version
How a FICO score assesses your credit history — the long version
What FICO scores ignore
Why your score is what it is
Getting Hold of Your Report and Score
Chapter 6 Selecting a Mortgage
Getting a Grasp on Mortgage Basics
Fixed or Adjustable? That Is the Interest(ing) Question
Distinguishing fixed-rate mortgages from adjustables
Looking at hybrid loans
Starting out risky: Interest-only mortgages
Making the fixed/adjustable decision
Deciding on your loan’s life: 15 years or 30?
Finding a Fixed-Rate Mortgage
The all-important interest rate
The finer points of points
Other lender fees
Arriving at the Absolute Best Adjustable
Where an ARM’s interest rate comes from
How often does the interest rate adjust?
Limits on interest-rate adjustments
Locating the Best, Lowest-Cost Lenders
Shopping on your own
Working with a mortgage broker
Chapter 7 Mortgage Quandaries, Conundrums, and Forms
Overcoming Common Mortgage Problems
Insufficient income
Debt and credit problems
Dealing with Appraisal Problems
You’ve overpaid
The appraiser doesn’t know your area
The appraiser/lender is sandbagging you
Those Darn Mortgage Forms
The laundry list of required documents
Permissions to inspect your finances
The Uniform Residential Loan Application
I. Borrower information
II. Financial information — Assets and liabilities
III. Financial information — Real estate
IV. Loan and property information
V. Declarations
VI. Acknowledgments and agreements
VII. Demographic information
Other typical documents
Part 3 Property, Players, and Prices
Chapter 8 Where and What to Buy
Location, Location, Value
Characteristics of good neighborhoods
Selecting your best neighborhood
Fundamental Principles for Selecting Your Home
The principle of progression: Why to buy one of the cheaper homes on the block
The principle of regression: Why not to buy the most expensive house on the block
The principle of conformity: Why unusual is usually costly
Defining Home Sweet Home
Detached residences
Attached residences
Finding a Great Deal
Finding a fixer-upper
Taking over a foreclosure
Seeking a short sale
Pooling Your Resources: Ad Hoc Partnerships
Types of residential co-ownership
Structuring a successful co-ownership
Chapter 9 Assembling an All-Star Real Estate Team
The Team Concept
Lining up the players
Avoiding gratuitous advice
Reeling in a Real Estate Agent
Types of agent relationships
How agents get paid
Characteristics of good agents
Selecting your agent
Getting the most from your agent
Bagging a Broker
Landing a Lender
Procuring Property Inspectors
Electing an Escrow Officer
Finding (or Forgoing) Financial and Tax Advisors
Looking for Lawyers
Selecting your lawyer
Getting the most out of a lawyer
Chapter 10 What’s It Worth?
Preparing to Tour an Endless Parade of Homes
The Three Elusive Components of Worth
Value is a moving target
Cost is yesterday
Price is what it’s worth today
Fair Market Value
When fair market value isn’t fair — need-based pricing
Median home prices versus fair market value
Determining Fair Market Value: Comparable Market Analysis
The basics of a helpful CMA
The flaws of CMAs
Getting a Second Opinion: Appraisals versus CMAs
Why Buyers and Sellers Often Start Far Apart
Inept agents
Unrealistic sellers
Chapter 11 Tapping the Internet’s Best Resources
Finding Useful Information
Get your feet wet at Realtor.com
Discover more at these sites
Doing Some Preliminary Shopping
Surveying homes for sale
Watching out for sites promoting foreclosures
Sifting through school information
Perusing “best places” to live
Familiarizing yourself with financing options
The Drawbacks of Searching for Houses in Cyberspace
Conflicts of interest
Bankruptcies
Misleading home-valuation tools
Untrustworthy mortgage calculators
Part 4 Making the Deal
Chapter 12 Negotiating Your Best Deal
Understanding and Coping with Your Emotions
Examining the violent forces at work
Controlling yourself
The Art of Negotiating
Being realistic
Examining your negotiating style
Negotiating with finesse
The Negotiating Process
Making an offer to purchase
Leaving an escape hatch: Contingencies
Getting a counteroffer
The Finer Points of Negotiating
Negotiating when the playing field isn’t level
Spotting fake sellers
Lowballing
Negotiating credits in escrow
Chapter 13 Inspecting and Protecting Your Home
Conducting Thorough Inspections
All properties should be inspected
The two types of defects: Patent and latent
Patent defect red flags
Types of property inspections
Inspecting inspectors
Insuring Your Home
Homeowners insurance
Title insurance
Chapter 14 It Ain’t Over till the Weight-Challenged Escrow Officer Sings
An Escrow Is a Good Thing
Know thy escrow officer
Cover all the bases
’Tis the season: December escrows
Follow through
How You Take Title Is Vital
Joint tenancy
Community property
Tenants-in-common
Getting help drafting an agreement
Getting Possessive
Moving day
Final verification of condition
Coping with Buyer’s Remorse
Part 5 The Part of Tens
Chapter 15 Ten Financial “To Do’s” After You Buy
Stay on Top of Your Spending and Saving
Consider Electronic Mortgage Payments
Rebuild Your Emergency Reserve
Ignore Solicitations for Mortgage Insurance
Ignore Solicitations for Faster Payoff
Consider Protesting Your Tax Assessment
Refinance if Interest Rates Fall
Keep Receipts for All Improvements
Ignore Solicitations to Homestead
Take Time to Smell the Roses
Chapter 16 Ten Things to Know When Investing in Real Estate
Real Estate Is a Solid Long-Term Investment
Real Estate Investing Isn’t for Everyone
REITs Are Good if You Loathe Being a Landlord
Don’t Invest in Limited Partnerships
Avoid Timeshare Condos and Vacation Homes
Residential Properties Are Your Best Investment Option
Consider Fixer-Upper Income Property
Consider Converting Small Apartment Buildings to Condos
Consider the Property’s Cash Flow
Your Rental Losses Are Limited for Tax Purposes
Chapter 17 Ten Things to Consider When Selling Your House
Why Are You Selling?
Can You Afford to Buy the Next Home?
What’s It Worth?
Have You Done Your Homework to Find a Good Real Estate Agent?
Do You Have the Skills to Sell the House Yourself?
Have You Properly Prepared the House for Sale?
Do You Understand the House’s Hot Buttons?
What Are the Financial Ramifications of Selling?
Do You Know the Rules for Capital-Gains Taxes on the Sale of a House?
Part 6 Appendixes
Appendix A Sample Real Estate Purchase Contract
Appendix B Sample Short-Sale Addendum plus Short-Sale Information and Advisory
Appendix C Example of a Good Inspection Report
Appendix D Glossary
Index
EULA