Table of Contents

Preface xiii

Acknowledgments xix

Foreword xxi

Chapter 1 Introduction to Homeownership 1

Personal and Financial Advantages 1

Fixed Mortgage Payments 3

House Value Increases 4

Tax Benefits 4

Your House as your Savings Account 4

Other Advantages 5

Ready or Not? 6

Are you Financially Ready? 6

Create a Budget 6

Track Non-Housing Expenses 7

Track Monthly Expenses 8

Monthly Expense Tracking Worksheet 9

Analyze your Monthly Income 10

Monthly Income Worksheet 11

Chapter 2 What Does it Cost to Buy a Home? 15

Where will all that money come from? 15

Financing Options 16

Upfront Costs 16

The Down Payment 16

Low Down Payment Mortgage Solutions 17

Government Agencies 18

HUD/FHA 18

Ginnie Mae 19

Department Of Veterans Affairs 19

Closing Costs 21

Settling-In Costs 21

Ongoing Costs 22

Ready or Not? 22

Chapter 3 It's Time to Get Pre-Approved 25

What do I do now? 25

Pre-approve or Pre-qualify? 26

Lending Professionals 27

Lender 27

Mortgage Broker 27

Internet Banking 28

Qualifying Guidelines 28

What Lenders Look For 29

Income 29

Employment History 30

Interest Rates/Terms 33

Debt 34

Credit History 36

Your Credit Report Can Be Decisive! 37

If Your Credit Report Is Favorable 38

If Your Credit Report Is Unfavorable 38

If Your Credit Report Is Wrong 39

More Credit Information is Available 39

Non-Traditional Credit History 39

Savings Accounts 40

What's Next? 41

Pre-Approval Checklist 42

Chapter 4 What Do You Want In a Home? 43

Decisions… Decisions… 43

Do You Know What You're Looking For? 44

Lifestyle Features 45

New House or Old? 45

Location 46

Size 47

Types of Homes 48

Single-Family Detached 48

Condominium 49

Townhouse 50

Co-op 50

Duplex 51

Style, Construction Material, and More 52

Develop a Wish List 52

New Home Wish List 53

Chapter 5 How to Find an Agent 55

I need a Real Estate Professional! 55

Experience Counts 56

Qualities of a Good Agent 57

Who Pays Your Agent? 58

Types of Agents 59

Broker/Salesperson 59

Agents 59

Realtor 60

Part/Full Time Agents 60

Commit to your Agent 60

Chapter 6 Looking For a Home 63

Expect to Make Compromises 63

Locating Homes For Sale 65

Classified Ads 65

Word of Mouth 66

For Sale Signs 66

New Construction 68

Record Keeping 69

Gift Programs 71

Chapter 7 Negotiating the Purchase 73

Decision Making Factors 73

Considerations 74

Local Market Value 74

Condition of the Property 76

Sellers Circumstances 77

Price You Can Afford 78

Seller's Contribution 78

Strategize your Negotiation 79

Local Market Conditions 80

Condition of the Property 80

Sellers Circumstances 80

Price you can Afford 81

How much is your down payment? 81

Is this Property Affordable? 81

Negotiating the Purchase Offer 83

Pricing the Offer 84

Submitting the Offer 85

The Purchase and Sale Agreement 86

Legal Description 86

Earnest Money 87

Offer Price 87

Down Payment 88

Financing Terms 88

Personal Property 88

Closing and Occupancy Dates 88

Expiration Date of the Offer 89

Contingency Requirements 89

Financing Contingency 89

Inspection Contingencies 90

Appraisal Contingency 91

Clear Title 91

Other Provisions 91

Repair Work 91

Walk-through Inspection 92

Negotiating the Counteroffer 92

You Have a Deal 93

Chapter 8 Disclosure and Home Inspections 95

The Real Estate Transfer Disclosure Statement 95

When State Law does not require Disclosure 96

Disclosure and Government Loans 96

The Disclosure Form 96

The Home Inspection 97

The Preliminary Home Inspection 98

Step 1 ? Interview 98

Step 2 ? Examine 99

Step 3 ? Analyze 100

The Professional Home Inspection 101

Choosing your Inspector 102

Scope of the Inspection 103

Insurance Coverage 103

Your Role 104

Outcome of the Home Inspection 104

Chapter 9 Obtain a Mortgage 107

Shopping, Comparing and Negotiating 107

Mortgage Lender or a Mortgage Broker? 109

Mortgage Banker 112

Mortgage Broker 112

Fixed Rate or Adjustable Rate Mortgage? 113

Discount Points 115

Loan Origination Fees 115

Interest rate 115

Transaction, Settlement or Closing Costs 116

Mortgage Insurance 116

Private Mortgage Insurance 117

Mortgage Insurance Premiums 117

The "1003" Application 122

Disclosures 123

Title Search and Title Insurance 125

Property Insurance 125

Underwriting 125

Chapter 10 Close the Deal 127

The Real Estate Settlement Process 127

Itemized Settlement Costs 130

Appendix A How to Contact Credit Reporting Agencies 137

Appendix B Federal Programs 147

Appendix C Good Faith Estimate Settlement Statement 153

Appendix D Residential Sales Contract 161

Appendix E State Housing Finance Agencies 175

Appendix F Key Internet Information Resources 181

Glossary 183

Index 219