I Have No Kids, So Schools Are Not Improtant- Right?

kids-walking-to-school70Schools are Important to First Time Homebuyers

If you have children and are moving into a new home, one of the things you are often most concerned about are the schools.  You will make it your business to find out about the schools and the school district.  You may even rule out certain homes based on the schools your children would go to.

Often first time homebuyer are young, and have no children.  Or, the first time homebuyers have young children that are not in school yet.   When this is the case, they assume that the  school district is not an important part of the process of locating a home.  This may not be true, especially for the first time home buyers. 

 Statistics say that a first time home buyer will purchase another home within 5 yrs.  So, resale value of the first home will be an important factor.  With this in mind school districts will matter to you whether or not you have children.  Finding out about the school district or districts in the area you are searching can be easy especially if you use local Realtor.   A local Realtor should have the names and contact information for all the school districts in the area that you are searching.  Or, the Realtor may have set up a website just to provide information about schools, like our http://www.FreeSchoolinfo.com

Contacting the school administration or at least looking at their websites will give you valuable information on test scores, school calendars and other vital statistics about the schools.  For example, Wake Count Public School System maintains http://www.WCPSS.net that will tell you everything about the schools .  Frequently, there will be more than one school district and they each will work differently.  For example, in the Triangle, Orange County has its own schools, Durham County has its own schools and Johnston County has its own schools.  So, if you want to live in Cary, check the Wake County schools for that area.

First Time Homebuyers Need Service Providers

inspector70Inspectors & Service Providers Make a Difference to First Time Homebuyers

As a first time home buyer, in particular, you might not have a clue where to start when choosing service providers.  Your Realtor is happy to provide you with contact information for various services. Often, a recommendation comes along with the name of a person the agent has worked with before and trusts.  Keep in mind that North Carolina law prohibits kickbacks and such for any referrals a real estate agent make for professional services, so you should feel comfortable with their recommendations.  However, some real estate firms do not like their agents to make recommendations for the various services you will need, as they have been sued when the agent is negligent in recommending a “less than wonderful” person.  Our team feels that is unfortunate, as it leaves first time homebuyers to fend for themselves in a field where they have no experience.  So, we recommend the best people we know to help our first time homebuyers.

Of course, you are free to choose any service provider you like.   You will need a wide range of services, starting with a lender to help you get the special first time homebuyer financing.   Once you get a contract to buy a home, you will need to select a closing attorney to research that title, get the title insurance,  get the loan documents so you can sign them, and record the documents in the official records to complete the sale.  In North Carolina, it is customary for the homebuyer to select  the closing attorney to close the sale.  Before you close the sale, you will need homeowners insurance, so you will need to find an insurance agent.

After signing a contract you will need a  home inspector to go through the property in detail to give you a report on any problems.  You will also hire a termite inspector to determine if the property has termites, or to certify that the property is free of termites.   If the property has a well and septic system, you may need inspectors for those features.  If the property has structural issues, you might need a structural engineer.    There are all sorts of other issues that may come up, so you may have even more professionals that you need to hire. 

Then there are utility services such as gas, electricity, water, trash, telephone, cable TV, and Internet. A first time homebuyer should have all these service accounts established prior to closing, so they are active upon moving.  Your Buyers Agent is happy to provide you with contact information for these services as well.

If you move from outside the Triangle, you had a network of stores and professionals to provide everything you needed from doctors to birthday cakes.  Feel free to ask about services like local banks, grocery stores, and restaurants too.  Part of what we do is to help you reestablish the network you had to provide all the services you need. 

There’s always the Yellow Pages and the Internet, but you may prefer a personal recommendation from your Realtor who should have learned what you value in someone who provides a service.   You need a lot of help, but with a good guide, you will get through it gracefully.

Do You Know Your Credit Score?

young-couple-credit-score70

Credit Score is Important to a First Time Homebuyer

Knowing your credit score is one of the easiest things you can do to help you buy your first home.  Credit scores are used by lenders to decide if you are likely to repay money they loan you.  Credit scores or FICO scores are assigned based on information in your credit report.  Everyone is entitled to one free credit report form each of the three major credit reporting agencies each year.  These agencies are Equifax, Experian and Trans Union.

Before you begin the Raleigh home buying process have your Realtor recommend a lender.  Then, meet with the lender to establish your purchasing power by getting preapproved for a loan.  As a part of this process, the lender will run your credit report and be able to discuss your credit score with you.  The lender cannot give you a copy of the credit report, but you can order your free one at that time.  By the way, Equifax is hard to deal with when you try to get a free credit report, so try the other two first. 

Getting a report from at least one of these credit reporting agencies is recommended for every first time homebuyer.  The mortgage company will use these reports and your credit score to decide if you are an acceptable risk for a mortgage.  Some first time homebuyer loan programs have cut off scores and anyone below that score are not considered. 

Any score over 680 is generally a good score for mortgage purposes.  

It used to be that any score over 620 was considered good, but lenders are being more strict with their approvals.  Scores less then that may still be eligible for a first time homebuyer loan, but may be considered “sub prime” and as such be charges a higher interest rate to offset the “risk” of a less then desirable credit history.

Knowing your score before you start can help you to avoid dissappointment when deciding to by a home.  A low score can be raised with some time and corrective credit behaviours.  So, even if you have a problem with your credit score, if you find out about it early, you can work to improve it. 

Talking to an experienced North Carolina Realtor and a knowledgeable lender can help you develop a plan to increase your credit score if needed.

Get started now investigating your credit score  if you want to buy a home in Raleigh before the December 1, 2009 deadline for the $8,000 incentive that is given to first time homebuyers.

Want to know more?  Ask questions, get educated – get in touch with us!

First Time Homebuyers Using the Internet

internet70First Time Homebuyers Can get Good, and Bad, Information on the Internet

After deciding that you are ready to buy a home the first place most of us turn to is the Internet. The Internet can be a very useful tool to help, especially for first time homebuyers. Home buying is a daunting task and one of the largest purchases most of will make. So, you are looking for answers to a large number of questions.

Almost all the information you can imagine is at our finger tips online. However, the Internet is full of misinformation and advice from people who do not know what they are talking about. Weeding through his information can be overwhelming so using a qualified Realtor to help you is the best and easiest way the slog through all the information out there. For example, your Realtor can recommend websites with accurate information that is organized in an easy to read manner.

For example, there are a number of lenders who operate online. Some of them will give you a pre-qualification letter to say that you are qualified for a loan with only the slightest amount of information. If you select a Realtor who is not fully aware of the problems that can be created by Internet lenders, you may proceed with a purchase thinking that you can get a certain kind of loan, when you cannot. You need to use lenders that have a proven track record of success, because there are few things worse than getting right up to the time of closing, with all your possessions on a moving van, only to find out that you are not buying anything or that your purchase may be substantially delayed until financing can be obtained.

Some of the best resources to use are mega sites like realtor.com to find homes that are listed on the MLS systems of all areas of the country. Also using a search engine, such as Google, can also be very helpful. If using a search engine be as specific as possible in your search. Decide exactly what information it is you want and use all the key words in your description. Another great resource is to use a Realtor’s website. Often you will need to give some information to access the full site, but a Realtor’s site like www.TeamForYOUrDreams.com , will contain links to every home that is available in the local MLS, and will usually contain other links to information about the area like schools, city and county websites, and many others. Using a site like this will also give you access to a Realtor in the area that will be able to help you answer any questions you may have about home buying in general and about the specific real estate market in the area you are searching.

First time homebuyers can find a great deal of information on the Internet. However, they need to be able to determine what information is reliable and what is not.

Referrals Benefit First Time Homebuyers

lighthouse70First time homebuyers get better agents from referrals

Referrals are the lifeblood of real estate agents. A referral is a recommendation, most valued when introduced by someone both the agent and client regard highly.  Since the majority of referrals come from clients that an agent has worked with before, this is highest form of flattery an agent can receive. Having never bought a home, first time homebuyers might be most comfortable with this process, because they can rely on the experiences of friends they trust to help them find the right agent. The next best thing is working with an agent who specializes in dealing with first time homebuyers, like our Team For YOUr Dreams. First time homebuyers take a lot more time, need many more questions answered, and require more care in making a decision, so it is important to find an agent who can provide this extra level of service.

Referrals also come from other agents. In this case, a referral fee is paid to the referring agent if the lead results in the sale of a property. This arrangement is often used when a client relocates from one region to another and asks their local agent for help with their impending move. Keep in mind, however, that North Carolina law restricts payment of a referral fee only to licensed real estate agents. 

However, there are some companies that have found a way to sully the process of getting referrals.  There are companies who generate leads for Realtors, then refer the clients to anyone who will pay the fee.  In the normal referral relationship, a Realtor finds a qualified agent in another area and confirms that their clients will be well cared for.  Unfortunately, in the lead generating process, the care in selection provided by your Realtor in your home town goes out the window, and you get stuck with anyone who can pay the fee.

If you are trying to find the right Realtor, ask a friend who has bought a house in Cary, Raleigh, Apex or anywhere else you want to live in the Triangle area of North Carolina.   If you are a first time homebuyer who is new to the area, find a team that specializes in first time homebuyers so they can give you the extra care you deserve.

First Time Homebuyers Shouldn’t Buy Without A Buyers Agent

protect70Buyers Agents protect first time homebuyers

Anyone who buys real estate should consider having the assistance of a real estate agent. This is especially important when you are buying your first home.  Actually, it is almost a necessity for a first time homebuyer, because they have no experience to guide them.  Contemporary real estate sales usually revolve around the efforts of Realtors—a Seller Agent, who represents the seller of a property; and the Buyer Agent, who represents the buyer of that property. While neither is mandatory, most buyers prefer to have expert representation because purchasing real estate is costly, mistakes can be extremely expensive and surprises can lead to a failed transaction or worse. Since the seller pays the commission, in most cases all the fees of a Buyer Agent are effectively paid for by the seller out of the commission paid by the seller.  So, being represented by a buyers agent costs the first time homebuyer nothing.  Not being represented by a buyers agent can cost the first time home buyer a great deal, because errors in judgment can lead to an expensive education.

Keep in mind that when a buyer enlists a real estate agent to help buy a property, they are really hiring a real estate firm along with all its agents. Of course, the buyer’s main contact is the specific agent they signed with, though other agents within the firm might help as needed. If a Buyer Agent is hired to represent you, they must…

• Promote your best interests
• Be loyal to you
• Follow your lawful instructions
• Provide you with all material facts that could influence your decisions
• Use reasonable skill, care and diligence
• Account for all monies they handle for you

As part of this agreement, a Buyer Agent cannot pass along any confidential information about you to sellers or their agents thereof without your permission—while they represent you. While it is possible to establish either oral or written Buyer Agency, an agent must have the agreement in writing before an offer can be made to purchase a property. If you decided not to sign the agreement then, however, the agent does not owe you a duty of loyalty and is not required to keep your personal information confidential. 

In North Carolina, a buyer should ALWAYS assume a real estate agent is working as a subagent of the seller; and NEVER tell a real estate agent anything personal or confidential until a buyer agency relationship has been established with that agent. 

If you sign a buyers agency agreement, your agent works for you.  If you do not sign a buyers agency agreement, the agent works for the seller.  Since you get all the benefits of full representation without any cost, signing a buyers agency agreement gives a first time homebuyer much better representation.  Also, an agent who knows the buyer is going to be loyal to them can concentrate more time and effort getting that first time homebuyer better properties on better terms.

Buyers agency is an amazing consulting relationship.  The buyers agent has to use every skill available to represent you, dig out all the material facts you might want to know, give you the best advice, and you do not get to pay the agent.  Just try to find that consulting relationship in any other field.

Warning to First Time Homebuyers: Don’t Make These Bad Moves!

Bad Location for Your First HomeWhile it is almost always true that owning a home is better for your financial health than renting, that is only true if you buy a home that can be sold again, when you choose to sell it. Some homes are a lot harder to sell than others. Here are some key things to avoid when selecting your first home – homes that may look like great deals but really are not.

1. Homes on busy roads. Keep in mind that traffic will likely increase, not decrease, and roads may need to be widened in the future. Many buyers will not consider homes directly on busy roads due to noise or safety concerns, and these homes will typically not appreciate as fast as similar homes nearby that are not affected by the traffic. Families with small children will not want their toddlers to be close to busy roads for fear of the little ones wandering into the street, so the house will go up in value much less than homes away from the traffic. The same is true for homes on the planned path for new roads – major interstates that may be extended years from now, but take its planned path into consideration.

2. Homes close to industrial or commercial facilities. Some are definitely worse than others – homes within walking distance of shopping may actually be a great investment. Being next to hazardous waste sites might be the worst. But having a great view of a water tower, a cell tower, a gas station, or dealing with constant large truck traffic such as from a quarry can be a real problem. So check out the surrounding area, don’t just look at the home.

3. Flood zones. It is not always obvious by looking at a home – have your Realtor confirm whether or not the home is in a flood zone. The Army Corps of Engineers has established flood zones that are shown on survey maps. If the zone is just a small part of the lot, that may not be a concern, but if the home itself likely to be invaded by flood waters, that will be a major issue.

4. Flat out ugly homes. I’m sorry, but we’ve all seen them. You look, and your first reaction is negative. You look again, and it’s still bad. If you can’t fix it with paint or landscaping, think a third time. If your reaction now is “what was the builder thinking?”, it probably won’t get more attractive, or easier to sell, with age.

5. Most expensive home in the neighborhood. This may not turn out to be a big problem if the neighborhood might catch up over time – people adding on or even tearing down and building new. But if the home you like is clearly going to overwhelm the neighbors for a long time, recognize that the sales price is determined by “location, location, location” (i.e., the neighborhood) as much as it is by the house. So, if you have the mansion in a neighborhood of tiny homes, the tiny homes will drag your value down

There are other issues that affect resale value that you and your Realtor should consider.  The ones mentioned hear are bad moves, so don’t do them.

Poor Location For Your First Home

Poor Location For Your First Home

First Time Homebuyer $8,000 Tax Credit

Tax Credit from Treasury

One of the many reasons why first time homebuyers should be looking to buy soon is this great tax credit. It does not apply to everybody, or every house, but it applies often enough that we certainly need to understand if it will work for us. Of course, you should contact the IRS or your tax advisor to be sure about the credit rules and your circumstances, but here are some of the basics.

1. You may qualify even if you have owned a home before. The rule is if you haven’t owned a home in the last 3 years, you too are a “first time homebuyer”.

2. The credit is 10% of the purchase price, up to $8,000. So if you buy a $60,000 home, the most you can receive is $6,000. Since most of the homes in the Triangle are over $80,000, most first time home buyers will get the full $8,000 credit.

3. This credit is available for home sales closed between Jan. 1 and Nov. 30, 2009 only. Who knows if something similar will be available afterwards. Buy now and avoid the risk!

4. This is only for personal residences, not rental or other investment property, not vacation homes. You have to live in it, for at least three years, or pay the credit back. So, if you sell it before three years, or if you convert it to a rental before three years, you have to pay back the credit.

5. If you are an individual with an Adjusted Gross Income of $75,000 or less, you can earn the whole credit. If you make more than that, the credit gets reduced based on how much more you earned, disappearing entirely at $95,000. Same deal for joint tax return filers but the reduction starting point is $150,000, and the credit is gone at $170,000.

6. Look at IRS Form 5405 to see the surprisingly simple form for figuring your credit. It is only 3 pages long, including instructions, but be careful. It covers both the $7500 repayable 2008 tax credit (really a loan) AND the 2009 $8000 tax credit (a gift!). So make sure you read the parts that apply to the 2009 gift, not the 2008 repayable loan.

7. And a neat trick: if you buy in 2009 you can amend your 2008 tax return, re-file, and get the credit quickly, rather than waiting until early 2010 to file for it on your 2009 return! See line C on Form 5405. Which can also make a difference if you made less than $75,000 in 2008 but think you will make more in 2009 (see point 5 above).

8. People who are married but file separately instead of jointly can each claim up to $4,000 if all of the above rules fit. What isn’t clear, to me, is what if one of this married couple qualifies under the rules but the other doesn’t. Can the one who qualifies claim the $4,000, or do they both have to qualify. For example: you two got married in 2007, and one of you owned a home and sold it just before the wedding so you two could move here. The other has never owned a home. Can you get half the credit? Not sure! Ask your tax advisor …

9. Can you get the money in time to use it for your downpayment? Or convince the lender to count it in your assets before you have it to improve your ratios? No.  It seems odd, since the whole point was to stimulate home purchases, but you have to be able to buy a home without the credit in order to get the credit. The credit comes after closing, probably a couple months after, not in time to help with the purchase. But it can still come in handy afterwards!

10. The credit is actually paid to you by the IRS.  For example, if you have had enough money withheld from your paycheck to exactly pay all the income taxes you owe, you will get a check from the IRS for $8,000.  Or, if you owe $1,000 on your taxes, you will get a check for $7,000.

10. What if you are buying a home, expect to close by Nov 30, but somebody moves slow and closing gets delayed to Dec. 1 or later. Can you still get the credit? No! You really must close by Nov. 30. That’s another good reason to use a Buyer’s Agent, someone who has been through the process many times and can help keep your purchase on schedule.

I had a closing last week where a first time homebuyer bought a home using a VA loan.  His total amount of cash to buy the home was just over $3,000.  He was going to file his tax return right away, and get $8,000 back.  There are not many better deals than to buy your first house, put in $3,000, then get all your money back plus an additional $5,000 bonus.

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