Oltersdorf Realty, LLC

Home Buying Guide

Buying A Home

• In this presentation we’ll talk about some common fears and helpful facts about buying a home.

• We will look at where the Traverse City real estate market has been and where it’s headed.

• We’ll also discuss eight simple steps to successful home ownership.

Did you know that 28% of houses sold during 2009 in Leelanau and Grand Traverse County were bank owned foreclosures (363 out of 1296) ?

Fears and Facts About Buying a Home

• Fear: I can’t afford to buy a home right now.

• Fact: Actually, you can’t afford not to buy a home right now …

• $8,000 TAX CREDIT FOR FIRST-TIME BUYERS! $6,500 CREDIT FOR MOVE-UP BUYERS!

• Traverse City Area Home Prices are the lowest they have been in years!

• Interest rates are near record lows!

$8,000 Tax Credit for First-Time Buyers!• To stimulate the economy, Congress has

extended a tax credit of up to $8,000 for first-time buyers who purchase a primary residence.

• Overview:• The tax credit is equal to 10 percent of the

home’s purchase price up to a maximum of $8,000.

• Example: Homes costing $80,000 and above would yield a maximum tax credit of $8,000 for the buyers.

$8,000 Tax Credit for First-Time Buyers!• Overview:

• The tax credit does not have to be repaid. It is a credit and will show up as a refund for most people.

• Example: You paid $10,000 in taxes this year and after completing your taxes figured out the IRS owed you a $500 refund. You would now get the $500 refund plus the $8,000 credit or $8,500 total refund.

• Note: Check details with an accountant.

$8,000 Tax Credit for First-Time Buyers!• Requirements:

• Home purchase must be under contract by April 30, 2010 and closed by June 30, 2010.

• Buyers must live in the home for 3 years or they will have to pay back the tax refund.

• Single taxpayers with income up to $125,000 and married couples with incomes up to $225,000 qualify for the full $8,000 tax credit.

• If you have lived in your house for 5 of the last 8 years you could be eligible for the $6,500 move-up credit if you purchase during the same time period!

Fears and Facts About Buying a Home

• Fear: I should wait until the real estate market gets better.

• Fact: There is never a wrong time to buy the right home.

Buy Now or Wait?

$150,000 Mortgage

5.5% Interest Rate

=$852.00 Payment

Note: Payment amounts do not include taxes and insurance

Scenario 2

$142,500 Mortgage (-5%)

6.0% Interest Rate (+.5%)

=$850.00 Payment

Scenario 3

$135,000 Mortgage (-10%)

6.5% Interest Rate (+1%)

=$853.00 Payment

Fears and Facts About Buying a Home

• Fear: I don’t have the money for the down payment.

• Fact: There are a variety of down payment options available to you.

Fears and Facts About Buying a Home

• Fear: I can’t afford to buy my dream home.

• Fact: The best way to get closer to buying your dream home is to buy your first home.

Steps to Home Ownership1. Decide to buy.2. Find a licensed and educated agent.3. Secure financing.4. Find your home.5. Make an offer.6. Perform due diligence. 7. Close.8. Protect your investment.

Decide to Buy• Financial net worth comparison,

according to the U.S. Federal Reserve Board of Consumer Finance:• Average net worth of renters = $4,000• Average net worth of home owners =

$184,400

• A home is the largest financial asset most people have due to equity and appreciation over time. • Average annual appreciation rate nationally is 4

to 6 percent since 1977. (Note: Local appreciation rates vary greatly.)

• At 3% annual appreciation, a home purchased for $150,000 would grow to $364,000 in 30 years.

• Even at 1.5% annual appreciation, this same home would still grow from $150,000 to $234,462 in 30 years.

Decide to Buy

Stop Renting

• The true cost of renting• If your rent is $800 / month, with an average

of 6% rent increase per year, you will pay $126,536 over a 10 year period and have ZERO ownership of the property and ZERO interest tax deduction!

Decide to Buy

• Buying your first home is an emotional decision—“Home is where the heart is.” • A home represents your personal tastes

and provides a haven of stability and security for both you and your loved ones.

• Provides a pride of home ownership, because it’s yours.

Decide to Buy

• It’s also a rational decision—“Home is where your wealth is.”• Grow wealth via equity buildup, debt pay

down, and value appreciation.• In the United States, you can take

advantage of tax-deductible benefits such as property and mortgage interest write-offs.

Decide to Buy• “Home is where your wealth is.”

(continued)• A home is an “accidental” investment that

creates leverage opportunities. • Examples:

• In a few years, you can use your equity to trade up to a better home.

• Or, you might consider using some of your home equity to invest in a rental property or a second home in the future.

Find Your Agent

• Real estate agents perform 7 main roles:1. Educate you about the market2. Analyze your wants and needs3. Steer you to homes that fit your criteria4. Coordinate the work of other needed

professionals5. Negotiate on your behalf6. Review paperwork and deadlines7. Solve any problems that may arise

Find Your Agent

• A knowledgeable agent can save you endless amounts of time, money, and frustration!

• A recent survey by the National Association of Realtors determined that TRUST is the #1 attribute purchasers looked for in an agent!

• A knowledgeable agent can assist you in purchasing ANY home, even if it is listed by another agent or is being sold directly by owner!

• Buyers Agents will represent you at NO CHARGE TO YOU, we only ask that you remain loyal to your agent for their hard work!

Secure Financing• Six steps to financing a home:

1. Choose a loan officer (or mortgage specialist).

2. Make a loan application and get preapproved.

3. Determine what you want to pay and select a loan option.

4. Submit to the lender an accepted purchase offer contract.

5. Get an appraisal and title commitment.6. Obtain funding at closing.

Secure Financing

• Know your mortgage options.• Four basic factors:1. Down payment2. Interest rate3. Term4. Closing Costs

Secure Financing• Understanding your monthly

payment:• Principal• Interest• Taxes• Insurance

Secure Financing

• Prequalification vs. preapproval• Prequalification is simply a rough

estimate of how much you can borrow.• Preapproval involves a formal

application process and provides you with a formal commitment from a lender stating how much you can borrow and at what interest rate.

Find Your Home• Define your home criteria—analyze your

values, needs, and wants.• Consult with your agent to understand the

rules and trends of your market.• Every market is different and changes

frequently!

Find Your Home• When viewing a home, what do you need

to look for?• You’ll want to look for…

• Layout, space, a sense of value, convenience of location to work and schools, maintenance, layout, and features and amenities.

• Your agent will look for…• How the home compares in terms of size,

layout, and value to other recent available and sold homes in the area. Is it worth what they are asking?

Make an Offer• Three components of an offer

• Price—offer must reflect true market value of the home.

• Terms—address timing and financial considerations.

• Contingencies—often referred to as “conditions” that allow you to opt out of a deal if the home has a problem.

Perform Due Diligence

• Property inspection—exposes any structural or hidden issues.

• Review title work- Check for liens, easements and history of the property

• Home owner’s insurance policy—protects against loss or damage.

Perform Due Diligence

• In your inspection, it’s the big stuff that really matters.• Cracks or crumbling in the foundation• Cracks inside the house over windows• Water stains in ceilings, floors, or walls• Mold issues • Title issues• Major electrical and plumbing issues

Close• Preclosing responsibilities include:

• Appraisal, survey, title search, and title insurance.

• Keeping yourself mortgage worthy!• Doing a final walk-through of home.

• Countdown to closing includes:• Getting your settlement statement,

certified funds, evidence of insurance, and transfer of clear title.

Protect Your Investment• Two keys to good home habits:

1. Keep it clean. •Perform routine maintenance on your

home’s systems, depending on their age and style.

2. Keep an eye on it.•Watch for signs of leaks, damage, and

wear. Fixing small problems early can save you big money later.

Tip: Keep a file of receipts for your repairs.

Contact InformationJonathan Oltersdorf

Vicky Oltersdorf

Oltersdorf Realty, LLC231-271-7777

Email : RealEstate@Oltersdorf.comWebsite: http://www.Oltersdorf.com