KEYSHOMEOWNERSHIP

Tips for the homebuying process, from house hunting

all the way to the final closing.

to

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Looking for a new home can be exciting, but the buying process also can be overwhelming if you’re a first-timer. You’ll face many important decisions, plus a home is likely the biggest purchase you have ever made. From the time you start looking at real estate listings to the exciting moment you close on your home sweet home, there are a number of important things you may want to keep in mind.

AFFORDING A HOME

CHOOSING THE RIGHT NEIGHBORHOOD

NEGOTIATING

HOME INSPECTION

BEFORE YOU CLOSE

HOMEOWNERS INSURANCE

INTRODUCTION

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AFFORDING A HOMEHints to help you budget for your first home

In addition to consulting with your mortgage lender to determine how much you can afford to pay for a home, there are a number of other financial considerations to keep in mind before, during and after your big move. The following are some of the costs you may want to factor into your budget.

Before You Make an Offer You’ll want to consider how this purchase will affect your monthly bills. You may incur new or higher costs, such as:

• Utilities including electricity, gas and water, especially if you’re moving from an apartment to a larger home

• Homeowners insurance, which is often required for loans

• The cost to furnish and decorate your new home

• Your long-term saving plans and your ability to pay your new mortgage as well as contribute to any college, retirement or savings plans you have

• Property taxes and other expenses, such as mortgage interest and insurance.

Before You CLOSE These are a few costs you may encounter before you close on your new home:

• An appraisal by a licensed professional is often required by the lending company if you’re applying for a mortgage.

• A home inspection report from a licensed home inspector can help identify problems or concerns about the home.

• You may want to retain a real estate attorney to review your contracts.

• Closing costs can also add 3 percent to 5 percent to the sale price.

Before You MOVE Moving costs can really stack up. You may want to budget for these expenses:

• Packing and storing your belongings

• Moving truck rental

• Professional moving fees

Sources: • http://www.zillow.com/wikipages/List-of-Closing-Costs-and-Fees/• http://www.trulia.com/blog/10-budget-mistakes-new-homeowners-make/• http://blog.allstate.com/save-money-when-moving-on-a-budget

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CHOOSING THE RIGHT NEIGHBORHOOD Tips for finding the area that’s right for you

When you’re house hunting, it’s important to look past the four walls and observe the surrounding area. Before you make an offer on that home, you may want to get to know the neighborhood a little better.

Give your commute a practice run Test your morning and evening commute at the times you’ll be driv-ing to gauge traffic patterns and determine how long it may take to get to and from work.

Scope out the schools Regardless of whether you have chil-dren, you may want to take a look at the local school system. Strong school systems often have a positive effect on property values. If you have children, consider the home’s proximity to schools and whether your kids would walk or take a bus.

Investigate crime statistics Is your potential neighborhood safe? The local police department can provide recent crime statistics for the area. In addition, you may want to look for empty buildings, vandalism or graffiti in the neigh-borhood that may indicate neglect or potential problems.

Nose around the neighborhood at different times By visiting the neighborhood at various times during the day, night and weekend, you’ll be able to gauge how lively, noisy or quiet you can expect things to be.

Find out what’s on the drawing board Be sure to check with the municipality to learn of any improvements or construction projects the town may have planned. Changes could potentially affect your new living situation and the value of your home.

Sources: • http://www.realestate.com/advice/consider-your-commute-when-buying-a-house/• http://www.frontdoor.com/real-estate/how-to-choose-a-neighborhood• http://blog.allstate.com/5-things-to-know-about-a-neighborhood-before-you-buy-a-home/• http://homeguides.sfgate.com/look-buying-real-estate-51950.html• http://www.thenewhomemaker.com/choosing-the-right-neighborhood

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NEGOTIATING A PRICETips for coming to an agreeable price

The negotiating phase of the homebuying process may seem daunting. After all, a home is likely the most expensive purchase you’ve ever made. These tips may help you as you try to negotiate a sale price for your first home.

Make a fair offer Make sure your first offer is rea-sonable. Before you make a bid, consider the state of the real estate market, how much other homes in the neighborhood have recently sold for and how much you think the home is worth. Your real estate agent can provide guidance in these areas.

Minimize contingencies If you’re willing to accommodate the seller’s desired moving date or allow the previous owner to leave some belongings behind, it could work to your benefit.

Identify flaws Is there something that might soon require a costly repair? Pointing out shortcomings may give you some leverage as you negotiate.

Ask for incentives The seller may be willing to include a piece of furniture or pay for specific repairs. You won’t know unless you ask.

Mention competition Are there other homes you’re willing to buy instead? If your agent conveys to the seller that you’re considering other homes, they may be more willing to negotiate with you.

Research taxes Is the seller up-to-date with their property tax payments? Check with the county clerk’s office to learn if payments are current. If the seller is behind in payments, they may be more likely to negotiate with you so they can complete a sale.

Sources: • http://money.usnews.com/money/personal-finance/articles/2014/07/11/12-negotiating-tips-every-homebuyer-should-know?page=2 • http://www.hgtv.com/design/decorating/clean-and-organize/10-best-kept-secrets-for-buying-a-home• http://www.money-zine.com/financial-planning/buying-a-home/negotiating-with-sellers-of-homes/

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HOME INSPECTIONTips to help ensure your home is healthy

After your offer has been accepted, it’s time for a home inspector to check out your future home from top to bottom. Typically, an inspector will provide you with a detailed report, as well as photos and possibly even video of his findings. You may want to prepare for a few things before, during and after the inspection:

inspector credentials It’s important that your inspector is qualified and licensed in your state. The American Society of Home In-spectors (ASHI) and National Asso-ciation of Home Inspectors (NAHI) can help you locate inspectors in your area. You’ll also want to make sure your inspector is insured.

Attend the inspection This will allow you to ask questions about any suggestions the inspector makes about your future home. Your inspector may make recommenda-tions about maintenance, point out minor imperfections and outline the anticipated life expectancies for various systems and components.

common problems Be aware of common problems revealed by an inspection.For instance:• Major defects, such as structural

or foundation issues• Small defects, like a roof-flashing

leak, that may lead to a major problem

• Safety hazards, such as wiring that isn’t up to code

specialists Be prepared to call in specialists if problems are identified. Your inspection report may reveal prob-lems related to pests or the home’s structure or foundation that may war-rant further inspection by a specialist.

cost to maintain Use the inspection report to deter-mine how much the home may cost to maintain. For instance, if the fur-nace or air conditioner is approach-ing the end of its expected lifespan, you may want to factor in cost of replacing it in the near future.

further negotiating Consider further negotiating or withdrawing from your purchase agreement, if the inspection report reveals defects not disclosed by the seller. Often, these types of contin-gencies are written into the original purchase agreement in the event that any major flaws are found.

Sources: • http://couplemoney.com/real-estate/buying-a-house-get-a-home-inspection/• http://www.forbes.com/sites/zillow/2013/06/07/how-to-get-the-most-value-out-of-your-home-inspection/• http://www.nerdwallet.com/blog/finance/money-nerd/home-ownership/home-inspection-dos-donts-homebuyers/• http://www.nachi.org/what_really_matters.htm• http://www.nachi.org/seven-ways-inspection-report.htm

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BEFORE YOU CLOSEConsiderations before you finalize the purchase

You’re in the home stretch! But before you start ordering curtains and picking out carpeting, there are some important things to think about as you approach the closing.

financial factors Be aware of financial factors that could affect the clos-ing. Mortgage lenders will likely reassess your credit to make sure nothing has changed between the time your loan was approved and when your final paperwork is signed. It’s important that you maintain your credit and try to avoid the following:• Changing your job or your bank. You’ll want to dis-

play financial stability to your lender

• Increasing your debt-to-income ratio by, for example, financing a car or making large purchases on credit

• Paying your credit card bills late; this could negative-ly impact your credit score

• Apply for new credit cards; this could affect your credit rating

Attend the final walk-through This is usually done within 24 hours of closing. It’s your chance to ensure the property is in the same condition it was when you made your offer. It can also help you identify any last-minute problems that need to be re-solved before the closing.

During the final walk-through you may want to:• Make sure all major appliances are in working condition.

• Confirm that any fixtures the seller agreed to leave behind are there.

• Ensure any previously agreed-upon repairs have been made.

• Check the general condition of the property, inside and out.

time to secure moneY Ensure you allow time to secure money for your down payment and closing. Sometimes delays can occur when transferring funds, so be sure to allow a little extra time so you can close on schedule.

Allot ample time for the actual closing process Closings often take hours to com-plete, so don’t plan on squeezing it in during your lunch break. In the event that there are any issues, you’ll want enough time to properly deal with them.

Sources: • http://www.trulia.com/guide/home_buying/close_the_purchase/things_not_to_do_before_closing_escrow/• http://blog.allstate.com/final-walk-through-home/• http://www.zillow.com/home-buying-guide/closing-issues/

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HOMEOWNERS INSURANCETips for securing protection and peace of mind for your big investment

Lenders often require that you have homeowners insurance to obtain a mortgage loan. You’ll want to obtain insurance within the lender’s time frame and bring proof of homeowners insurance to the closing. Insurance can also provide you with peace of mind that comes with knowing protections are in place for your new home and your belongings. A homeowners insurance policy typically includes:

Sources: • https://www.allstate.com/tools-and-resources/home-insurance/buy-a-policy-for-new-home.aspx• https://www.allstate.com/tools-and-resources/home-insurance/covered-in-homeowners-policy.aspx• https://www.allstate.com/tools-and-resources/home-insurance/what-does-home-liability-cover.aspx

Personal property protection This coverage helps protect your belongings in case they are damaged or destroyed due to a covered peril, such as fire or theft. You may be able to purchase addi-tional coverage for specific high-value items, such as jewelry or artwork.

Liability coverage This coverage can help protect you from financial loss if you’re legally obligated to pay for another person’s injuries or damage to another person’s property. For instance, if you’re found liable after a visitor falls over a broken step, liability coverage can help protect you from having to pay out of pocket if you’re sued or help you pay for the injured party’s medical bills.

property coverage Most policies offer dwelling protection, which helps protect your home as well as other structures that are attached to it, like a garage or deck, from covered perils.

other structure protection This coverage may help protect structures on your property that are separate from your home, such as a detached garage, tool shed or fence, from covered perils.

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CHECKLISTUse this checklist to help you navigate the costs and tasks associated with the homebuying process.

These are meant as helpful tips for you to consider when preparing to buy a home. The list is not exhaustive. You may want to consult with your local real estate, legal or financial representative for guidance or more information.

AFFORDING A HOME ❏ $ _____ Appraisal❏ $ _____ Home inspection❏ $ _____ Real estate attorney❏ $ _____ Closing costs Moving costs❏ $ _____ Packing and storing ______ items❏ $ _____ Moving truck rental❏ $ _____ Professional moving ______ expenses Anticipated monthly expenses❏ $ _____ Mortgage❏ $ _____ Property taxes❏ $ _____ Homeowners association ______ fees (if applicable)❏ $ _____ Utilities❏ $ _____ Homeowners insurance ______ premiums❏ $ _____ Home furnishings and ______ improvements❏ $ _____ Groceries❏ $ _____ Car payments and auto ______ insurance❏ $ _____ Savings❏ $ _____ Discretionary❏ $ _____ Other

CHOOSING THE RIGHT NEIGHBORHOOD ❏ Test your commute.❏ Evaluate the schools.❏ Research crime statistics.❏ Visit the neighborhood at different times.❏ Find out about future improve- ment/construction projects.

NEGOTIATING ❏ Consider flexibility with your terms.❏ Identify flaws as a tool for negotiation.❏ Find out whether the seller’s property taxes are up-to-date.❏ Mention if you’re considering other homes.❏ Make an educated offer.

HOME INSPECTION ❏ Check the inspector’s credentials.❏ Attend the inspection.❏ Review the inspector’s report.❏ Be prepared to call in specialists, if warranted.❏ Use the inspection report to calcu- late potential maintenance costs.❏ Consider negotiating further or ending your purchase agreement if undisclosed defects are found.

MAINTAIN YOUR CREDIT To maintain your credit profile prior to closing when mortgage lenders are re-assessing your credit:❏ Don’t change your job or your bank.❏ Don’t finance a car or co-sign a loan.❏ Don’t be late on credit payments or make large purchases on credit.❏ Don’t apply for any new credit cards.

BEFORE YOU CLOSE ❏ Attend the walk-through.❏ Transfer necessary funds in advance of your closing date.❏ Allow several hours for the closing.

INSURANCE ❏ Purchase a homeowners insurance policy.❏ Contact you insurance agent to make sure you understand what your policy covers.❏ Consider purchasing coverage for specific items, like artwork or jewelry.