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Tip #2: Make A Plan And Get Pre-Qualified
Every important decision needs
to be clearly thought out. Developing a Santa Monica home buying plan can help
you focus on the important factors and organize the entire process.
You may even want to use a binder with sections on house hunting, Santa Monica home
financing, service providers, etc. Loan pre-qualifying helps you determine
the home price you can afford and presents you as a genuine prospect
to the seller. A lender typically uses the 28% formula (your
monthly mortgage can't exceed 28% of your monthly income) in approving
your loan. Planning your actions and getting pre-qualified will
keep you out of the panic mode and allow you to take advantage of opportunities.
A thorough plan will save both time and money!
Tip #3: Value, Value, Value
The days of 10-30% annual appreciation
still exist. Home buyers in the 1990's benefited tremendously from
what seemed like ever appreciating home prices, now we are seeing growth
along the same line. Nowadays, you're looking at stable growth while
guarding against the possibilities of falling prices, low interest rates
and corporate layoffs that can dramatically affect your home values.
The classic rule of buying the worst house in the best neighborhood
still applies. If you buy with an eye towards improvement, you can customize
the Santa Monica home to fit your needs. The saying, "make money buying a
Santa Monica home, not
selling one," should keep you focused on the long-term importance of
the purchasing price.
Tip #4: List Your Top 10 Amenities
It's good home buying practice
to know what you want in a home before you go shopping. List the
features that are most important to you in deciding on which home to
buy (central air conditioning, fenced-in yard, new appliances, RV parking
space, fireplaces, etc.). Attempt to establish "your criteria"
early on. This will save you time shopping for inappropriate homes and
may keep you from buying a Santa Monica home on a whim. For example, a circular stairwell
may not meet your specific needs. As detailed in Tip #3, your top reason
for buying a Santa Monica home should be the value you are getting. Some of your
top 10 amenities should logically be sacrificed if an incredible real
estate deal is available.
Tip #5: Fixed vs. Adjustable Rate Mortgages
Which type of loan fits your
particular needs? If this will be your first home or a "transitional
home" -- one you plan to own for a short time, an ARM may be the best
type of loan. If it's going to be your dream home or one you plan to
raise a family in, then you may want the stability of a fixed rate mortgage.
If you choose an ARM, the index should be based on the Cost of Funds
Index if rates are increasing, and Treasury Bills if they are decreasing.
The COFI's are less volatile over time than T-Bills; make sure the teaser
rate is understood and what the real rate would be.
Whichever loan you choose,
make sure that you scrutinize all the closing costs. If you are
required to have a mortgage escrow account and private mortgage insurance,
make sure you understand the terms and cancellation procedures. Also,
make sure there are no prepayment penalties so that you can utilize
an accelerated mortgage plan. A good mortgage reduction plan can save
you tens of thousands in interest costs, and shorten your loan term,
with only small extra principal payments. If you experience negative
changes in your job, health, or marital status, you can revert to the
standard payments in your mortgage contract.
View Santa Monica Homes for Sale with Photos
Tip #6: Sign A Contract That Protects You
Make sure that the contract
you put on a house allows you to arrange financing, inspect the Santa Monica home
and negotiate any problems that you uncover. Ensuring that the contract
you sign will minimize potential legal battles will let you swim in
your new pool with your family and neighbors instead of with the sharks.
Tip #7: Put Yourself In The Seller's Shoes
You are about to make one of the
most important decisions that will affect both your life and the life
of the seller. If you take time to understand the reasons the seller
bought the Santa Monica home, their reasons for selling, and the home improvements
they have or have not made, you'll be in a better position to evaluate
the home and negotiate a better deal. In the end, the home buying
process excludes the professionals and comes down to the individuals
buying and selling the home. A closer look at the seller may help you
in deciding whether and for how much to buy a particular Santa Monica home.
Tip #8: Develop A Mortgage Shopping Chart
One of the biggest decisions to
make before putting a contract on a Santa Monica home is how to finance the purchase.
There are 10,000 lenders competing for your mortgage business. The days
of simply walking into the community bank and negotiating with the loan
department manager are over. Today, you can apply for a loan over the
Internet or even use a mortgage broker to shop for your loan with hundreds
of lenders. When choosing a lender, you want to avoid apples to oranges
contrasts by comparing fixed rates to fixed rates, not fixed to ARM's.
Create a chart that lists different types of loans, fees, and at least
five mortgage providers (including a mortgage broker).
Tip #9: Get A Quality Home Inspection
Although it is hard to believe,
more people pay for inspections before buying used cars than when making
the biggest investment of their lives -- their homes. Paying for
a qualified home inspection before you buy a Santa Monica home isn't just spending
"a little extra" for peace of mind; it's absolutely essential for anyone
who doesn't want to spend thousands of dollars for repairs.
Tip#10:
Peace of Mind: Santa Monica home Protection Plans
To protect both yourself as a
buyer, and well as the seller, it is a good idea to purchase a Santa Monica home
protection plan.
What exactly is it? A home warranty, or home protection
plan, is a service contract, normally for one year, which protects
homeowners against the cost of unexpected repairs or replacement on
their major systems and appliances that break down due to normal wear
and tear. A negotiable contract between the buyers and sellers
which do not overlap or replace Santa Monica homeowner's insurance policy, this type
of warranty can save the new Santa Monica homeowner lots of headaches, as well as
put seller's fears to rest. The warranty covers mechanical breakdowns,
while insurance typically repairs the related damage, for example: if
a hot water heater burst and destroyed a wall in your home, the warranty
would repair the water heater and your insurance would pay to fix the
wall.
Information provided by The American Homeowners Association, Copyright©
2003
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