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The Homebuying Process

Follow these Steps:

Get prequalified – Your lender will look at your income, credit scores, revolving debts, obligations such as child support as
well as the type of loan you choose. Other factors that impact how much home you can buy is the down payment; smaller
down payments mean higher monthly payments. Last, the interest rate and terms (30-year, fixed or adjustable rate) will
determine what you can afford in monthly payments.

Make your wish list – Decide where you want to live and how many bedrooms and baths you’ll need. Consider lifestyle –
condominiums offer shared amenities, with little responsibility. Single-family homes offer more space and privacy, but
much more exterior and yard maintenance.

Hire a real estate professional – Your real estate professional should be expert in the area where you want to live and
familiar with the type of home you want to buy. Your agent has house-by-house experience in your neighborhood and can
offer the best advice on homes in your range.

Select your home – No home is perfect, so don’t let minor flaws influence you. Think long-term. Which home best suits the
activities and needs of your household now and in the years ahead? Don’t buy more than you need or can comfortably

Make an offer – Your offer depends on the current market. If a home has been on the market a long time, you can ask the
seller for a price reduction, but if it’s new on the market, the seller is unlikely to accept a low offer. Ask your real estate
professional for advice.

Get an inspection – A home inspection is a professional third-party opinion of the home’s condition. The inspector will
point out the age of systems, and large and small repairs that are needed, so you’ll know what you’re facing as the next

Get an appraisal – The bank appraisal determines market value. If the home doesn’t appraise for the purchase price, the
bank will refuse to make the loan unless you renegotiate with the seller. If it appraises, the lender will move toward

Go to closing – Once final negotiations are complete, the parties to the transaction meet at the escrow office. This could
be a title company, real estate attorney, or whatever is customary in your area. All paperwork is signed by both parties. The
lender pays the seller, minus any liens against the home such as the seller’s mortgage. Once all the disbursements have
been made, you get the keys to your new home, according to your agreement. Congratulations! You’re ready to move into
your new home!

Why Buyers Need Their Own Real Estate Agent:

Buying a home is a complex process. There is a wealth of information at your fingertips to help you get started, including
homes for sale, market statistics, and how-to advice. When you add in the guidance and perspective of a seasoned
professional, you have the best chance for a smooth, relatively stress-free transaction.

To make the best possible home buying decisions, you should have the best guidance and information. An experienced
real estate agent can assist you through the search process, give you details on comparable recently sold homes, help you
craft an offer and negotiate successfully, and advise you through the inspection, repair, and appraisal processes. Your
agent can help you find the best value, neighborhood, and quality for your budget and requirements.

To simplify how commissions are routed, sales commissions are paid out of the seller’s proceeds, according to the terms
of the listing agreement and/or the sales contract. Thus, the buyers’ agent commission is paid by the sellers, as a portion
of their listing commission.

If you are at all tempted to go directly to the listing agent for a home that interests you, keep in mind that the listing agent
has a fiduciary duty to the seller. This means they are obligated to act in their clients’ best interests. If you try to use the
listing agent of a home to help you write an offer, they can only represent you if they act as ‘dual agent’ and get written
permission from the sellers to do so – and in that case, the agent can’t advise either side on price or negotiation strategy. If
they help you write the offer without acting as a dual agent, you have NO representation as a buyer, and no one to advise
you or look after your interests.

Homebuying Goals:

With the dramatic rise and fall of housing prices over the last decade, consumers have new respect for homes as
investments. But the flip side, is that your investment is still a home, one you’re likely to occupy for several years or more.

According to the annual Profile of Home Buyers and Sellers, compiled by the National Association of REALTORS®, the primary reason buyers cite for
purchasing a home is simply the desire to own, followed closely by the desire
for more space, and a change in the family situation.

For most people, buying a home is more about giving household members
more comfortable living arrangements and putting them closer to jobs,
favorite activities, other family and friends. What are your goals for buying a home?

You might want a better home and neighborhood. You might want a
different kind of living experience, such as moving from an apartment to a
single-family home with a private garage and yard. Your family may be
growing, so you have to think about school districts and proximity to parks
and other recreation.

If you’re not certain, you might think about what would change about your situation if you became a homeowner. You’lldefinitely be more established. If you’re like most homebuyers, you expect to stay in your new home about 10 years.

You’ll also build equity for yourself, instead of for someone else. Every payment you make, plus the rules of inflation will eventually allow you to recoup most if not all of your investment, or make a profit when you sell. Affordability may also be
an important factor for you. The combination of low interest rates and low prices allows you to buy more home for the money. Rents are rising, making ownership more affordable than renting in many areas, especially when you factor in tax
incentives such as mortgage interest deductions and property taxes allowable as deductions against your income.

When you buy, make your goals long-term. Choose the home you think will serve your household’s needs the best for the
longest period of time, as it’s been proven that the longer you own a home, the more equity you’ll build. Today’s market
conditions and affordability, make it more likely that you will reach your homebuying goals, no matter what they are.

Should You Wait:

What makes people want to buy a home? Space, privacy, proximity to family and friends, and a sense of community all contribute to the emotions of buying a home. Tax breaks, transportation, amenities, and the opportunity to build equity are also factors.

But the biggest reason cited by home buyers year after year is simply the
desire to own. According to the National Association of REALTORS®, 75% of
first-time buyers are former renters. They prefer to build equity for themselves
than for someone else. There’s always a risk that home prices will fall further,
but prices and mortgage interest rates have bounced along the bottom long
enough that sooner or later one or both will start rising again. That means the
risk is greater that prices and mortgage interest rates will rise, rather than fall.
Researchers at the Center for Economic and Policy Research studied 100
communities and found that affordability is a strong incentive to buy now.
You can build equity within four years, and take the money you’ve put in the
home back out again when you leave, which is not possible for renters.

So how do you know if it’s the right time to buy?

It’s affordable – Only you know if you’re in a position to buy a home. Your lender will let you know how much home you qualify to buy. Work
with your real estate professional to find neighborhoods and homes that are within your borrowing limits. Compare the
rent you’re paying now with the monthly payment you’ll be making including property taxes and hazard insurance.

The time is right – Buying a home is one of the greatest lifestyle changes you can make. It goes hand in hand with forming a family and
becoming a productive member of the community. If you want the amenities of home ownership, you will enjoy owning.

Incentives are huge – Mortgage money is the cheapest money you’ll ever borrow. Couple that with low prices that are sure to rise and you have
the makings of a great investment. Further, you can deduct your mortgage interest rate and property taxes from your
income taxes. And you can sell your home after two years and not pay capital gains on any profits. You can rent your
home to others and start building a portfolio of self-sustaining properties. Don’t worry about timing the market. Even the
smartest investors don’t wait for the bottom to buy – because you don’t know where the bottom is until it’s already passed
you b

Is Now the Right Time to Buy?

People choose to purchase a home for a variety of reasons. Space, privacy, proximity to family and friends, and a sense of
community can contribute to the decision to buy a home. Tax breaks, transportation, amenities, and the opportunity to
build equity are also factors. But the biggest reason cited by homebuyers is simply the desire to own. According to the
National Association of REALTORS®, 75% of first-time buyers are former renters. They prefer to build equity for
themselves rather than for someone else.

What are your goals for buying a home? You might want a better home and neighborhood. You might want a different kind
of living experience, such as moving from an apartment to a single-family home with a private garage and yard. Your
family may be growing, so you have to think about school districts and proximity to parks and other recreation.

Renting is a short-term convenience, and a great hedge when property prices are spiraling downward. But for long-term
gains, tax benefits and building equity, owning a home is better. So how do you know if it’s the right time to buy?

Only you know if you’re in the right position to buy a home. Your lender will let you know how much home you qualify to
buy. Your real estate professional can help you find neighborhoods and homes that are within your borrowing limits.
Compare the rent you’re paying now with the monthly payment you’ll be making including property taxes and hazard

Ultimately, you will know if it is the right time to buy if you can picture yourself living in your new home, comfortable with
your new neighborhood as well as with your mortgage payment.

Deciding Which Home to Buy?

Buying a home is a long-term commitment. The home you buy should fit your budget, yet offer the size, features, and amenities you and your family want.

Your monthly payments should be comfortable for you to handle, in relationship to your total obligations, about 28% of
gross monthly income. A good guideline is for your mortgage payment and your debts to not exceed 36% of your income,
including revolving credit, student loans, and child support.

You should also be in the correct loan for your needs. A fixed rate is more expensive, but offers more protection than an
adjustable rate mortgage that can reset to a higher amount, making your monthly payments higher.
Don’t forget to consider the monthly operating costs of the home as well, including utilities, HOA fees, landscaping,
commuting, and other costs.

Location is about convenience, and you’ll pay a premium to be closer to work centers, parks, shopping and transportation.
You can buy a smaller home or a home in need of updates to be closer. To get a larger home or more yard, you may have
to move further away from core city centers and compromise on commuting time.

When considering potential homes, it’s important to know the difference between what you need to have in your new
home, and what you want to have. Use the needs list to begin narrowing your choices. While a front porch, a two-car
garage, hardwood floors, and eat-in kitchen can add to the enjoyment of your home, they might be of lower importance to
you than a fenced backyard or an unfinished basement area that you can grow into. If you frequently work at home, you’ll
need a home office or at least a quiet designated workspace.

Just make sure the home you choose allows room for your family to grow.

Talk to your lender and see what you can qualify to buy, then talk with your real estate professional about the home you
have in mind. With professional guidance, you should be able to find and buy the home of your dreams, where you’ll be
happy for a long time to come.

Lower Price or Lower Interest Rate?

In a buyer’s market, buyers wait for signs that prices are going lower. In a seller’s market, buyers don’t wait because they’re afraid prices will go higher. Both markets move on the fear of paying too much.

Should you wait for lower prices or lower interest rates before you jump in?

Consider the following:
The price of a home is fixed. Buyers have figured out that interest rates can change, so they wait for prices to go lower, but
what they should consider is that prices have to drop significantly to equal a minor fluctuation in mortgage interest rates.

A quick visit to a mortgage calculator will show you the following:

• If you buy a home at $200,000 and a 30-year, fixed-rate mortgage at 4.5%, your monthly payment will be $1,013 and
you’ll pay $164,813 in interest over the life of the loan.
• The same home at 5% interest costs $1,073, a difference of $60 more per month and $186,511 in interest over the life
of the loan. The difference in interest payments alone is $21,698.
• If your home dropped 5% in value and you were able to buy it at $190,000 and 4.5% interest, your payment would be
$962, a difference of $50 per month, with $156,572 in interest over the life of the loan. You’d save $50 per month than
if you’d paid $200,000.
• At 5%, your $190,000 home costs $1019, or $53 more per month than if you’d gotten the loan at 4.5%. Your interest
payments would total $177,185 over the life of the loan. The difference in payments is $20,613.

Your Down Payment

The longest running myth in home buying is that you have to have 20% down and perfect credit to buy a home. Not true!

FHA has programs as low as 3.5 percent down for qualifying borrowers who buy within maximum loan limits. If you are a
veteran or active-duty military, loans are available with no down payment through the Veterans Administration.

Borrowers with less than perfect credit can get loans, as well. Higher credit scores help qualify borrowers for better rates.
For example, if you have a credit score of 500 or better, you can buy a home through FHA with 10% down.

The rule of thumb is simple – less money down requires a higher credit score and vice versa. A down payment is simply
your way of showing the lender that you are willing to risk your money to buy the home you want. The larger the down
payment, the more likely the lender is to make the loan.

Your credit score will tell you how much money you have to put down; it’s a factor in your interest rate. If you put 20
percent down, you can get a loan even if you have a low credit score. With a higher credit score, the lender will approve a
loan with less money down.

Where the down payment money is coming from is also important. Lenders expect first-time buyers to get help from
family to buy a home, so there may be limits to the size or percentage of the down payment gift that the lender will allow.
Check with your lender before a gift is given to ensure it is handed to you in an acceptable, trackable manner.
Talk to your lender before you make an offer. Get prequalified, and be up front about the source of your down payment
money. A good lender will explain the true costs of borrowing to you so you can comfortably afford the home you want as
well as the monthly payments.

Buying a Foreclosed Home

Every home buyer wants to get a great deal when they purchase their next home. Foreclosure listings provide a tempting
opportunity to buy a home for less than market value. However, keep in mind that this kind of purchase comes with some

Foreclosures can be bought either through an auction or on the open market. Once the foreclosure process has been
completed, the bank may offer the home at public auction. Auctions are announced in local newspapers, so you know
when a particular home will be put on the block.

Before the day of the auction, you will be able to drive by the home, and you will most likely not be allowed to view the
inside of the home unless public viewing times are scheduled. Auction properties are conveyed ‘as-is’, and without an
opportunity to inspect the home, you are at risk for whatever defects exist. You will also be responsible for any additional
claims that could come up on the title of the property. Your real estate agent can help you with your research and a plan
for maximum bid price.

At the auction, the home goes to the highest bidder. Be prepared to bid against other investors and pay cash if your bid is
accepted. For homes that don’t sell at auction, the bank takes the home back as a ‘real estate owned’ (REO) property. The
property is then typically turned over to an asset manager and listed for sale on the open market. It may take anywhere
from a few weeks to a few months before a foreclosed home shows up in the multiple listing service.
Once the REO is listed with a real estate broker, though, you can buy it just as you would any other listed property.
However, low-ball offers may not get a response at all, and the asset manager may be unwilling to negotiate on price, as
the goal is to get the highest return possible for the bank.

When you shop for an REO, consider the same things you would in any other home – location, condition, features and price.
Because REO properties are typically listed ‘as-is’, you want to do as much due diligence as possible to know what will
need to be repaired, replaced, and renovated in the home. Writing a home inspection clause into your contract to purchase,
even for informational purposes only, gives you a chance to assess how much work needs to be done, and to determine
how much time and money it will take.

The home may qualify for an FHA 203k home improvement loan. Guaranteed by the federal government, this kind of loan
allows you borrow funds to make the purchase and make the necessary improvements using licensed contractors.
Consult with your lender and your real estate agent for more details on the program’s guidelines.
No matter what kind of loan program you use, however, the process from contract to closing on an REO property is no
different than a traditional resale home. Once you’ve purchased the home and made whatever repairs are needed, you may
have created some equity in your new home right away.

What Buyers Should Expect in a Short Sale

A short sale is a transaction approved by a lender to clear the seller’s mortgage debt for less than what the seller owes.
Since a short sale means that a home is marketed below the seller’s purchase price, the next buyer could get a bargain if
they are able to purchase it below the market value.

Because it’s the lender who is taking the loss, short sales can take significantly longer than a typical home purchase and
may never happen. That uncertainly can be a problem for a homebuyer who has locked in a low interest rate, or who is
interested in moving into their new home within a certain timeframe.

To get a short sale approved, the seller must first prove financial distress to the lender, including W-2s, bank statements,
payroll stubs, termination letter, financial statements, a letter explaining the hardship, and more. The lender will then
substantiate the current market value of the home to verify that the seller can’t sell the home for enough money to clear
their debt and transaction fees.

Lenders also have to protect themselves from fraud, ensuring that a straw buyer can’t turn around and sell the home back
to the homeowner cheaply.

Before you make an offer on a home that is advertised as a short sale, talk to your real estate professional. They will help
you to:

• Verify that the seller has provided required short sale documentation to the lender.
• Verify that the seller’s lender has agreed to a short sale.
• Find out the amount remaining on the seller’s note and if there are any secondary notes owed.
• Verify market value as well as pending market value, especially if it is lower.
• Make your offer contingent upon the lender’s written acceptance of the short sale terms.

Keep in mind that a short sale is has its risks and rewards. While you may get a home for a lower price, you’ll have to be
patient for it to close

How Long Do You Plan to Stay?

Home transactions are expensive, totaling as much as 14 percent of the purchase price, by the time you buy and sell your
home. That means the length of time you live there has a lot to do with how you can sell your home at break-even or a
profit and buy another home.

Adjustable rate loans are ideal for short occupancy because they are often a point or two lower than fixed-rate loans, but
make sure the reset period is far enough away that you can sell the home before your payments increase.

If you’re planning to occupy the home for years to come, or turn it into a rental after a few years, a fixed-rate loan is much
better. While it costs more, your payments will always stay the same. (Keep in mind that hazard insurance and property
taxes can still change.) It may take living in the home two to four years or longer for you to break even at selling time. Your
lender can help you run the numbers.

You have three options once you own it – live in it, lease it as an investment, or sell it. The terms of your loan may dictate
what you can do and how soon you can do it.

Mortgage interest rates, property taxes and capital gains taxes are more favorable to owner-occupants than non-occupying owners or investors:
• To qualify for a homestead interest rate, you must occupy the home you are buying. Otherwise, non-occupying buyers
are required to put 25% down and pay a higher interest rate as investors.

• FHA loans require you to occupy your home on a continual basis for one year after closing. After that, you can rent or
sell it with no restrictions. The reason for the restriction is that low FHA rates are intended for homesteaders, not as a
subsidy for investors.

• If you have to move for any reason, you can rent your home or sell it at any time, but tax consequences may apply.
If you live in your residence for an aggregate of two years out of the last five, you are eligible to exclude up to $250,000 of
capital gain on the sale from your income as an individual ($500,000 for couples that file jointly), as long as you haven’t
excluded the gain from the sale of another home during the two year period before the sale of your home.

It takes time to build equity in a home. The longer you occupy your home, the more equity you will build. You’ll pay down
your mortgage, and over time, your home’s value should rise

Look Beyond the Staging

Falling in love with a beautifully staged home is easy, especially if it smells like freshly baked chocolate chip cookies.
Sellers utilizing staging to make their home as attractive as possible to buyers. They clean, declutter, depersonalize, and
redecorate so that potential buyers will be able to picture themselves living in the home.

There’s nothing wrong with a seller presenting their home at its best – sparkling clean and ready for viewing. But before
you let yourself be enchanted by the romantic table set for two, the aroma of cookies coming from the oven, or the spa
robe laid out by the bathtub, remember to focus on the size and layout of the rooms, and what changes you might need to
make after their furnishings are removed.

When you view homes for sale that are staged, ask yourself the following questions:
Does the staging make sense? Would you really put your own furniture as close to the fireplace or as far from the window?
An attractive but odd arrangement is a tipoff that the room is either not well designed or that a problem is being

Is the staging hiding outdated fixtures? Bathrooms and kitchens are the most expensive rooms to repair and update. Move
the bottle of bubble bath and look behind the shower curtain. Is the caulk fresh? Is the porcelain tub or sink stained? Is the
finish worn off of the fixtures?

Is the staging overdone? Candles burning in every room or tons of air freshener may be masking pet odors. Heavy drapes
may cover windows that are too small or with ugly views.

If you like the home well enough for another viewing and to make an offer, take measurements and make sure your things
will fit. Walk through the home with an eye on how it could look with your own furnishings in place.

Get a Home Inspection

A home inspection is designed to give buyers a better understanding of the systems and overall condition of the home
they’re buying. Depending on the current market conditions, you may be able to include a home inspection contingency as
part of your purchase contract, even if it’s just for informational purposes. You may be able to negotiate some repairs to
bring items up to code or to repair deficient problems.

A few things to keep in mind

No house is perfect.
A home inspection should point out questionable conditions, code violations, and/or potential safety-related concerns in
the home you want to buy. It should cover the exterior, porch, deck, foundation and walls, chimneys and roofs, windows
and doors, attics, electrical components, plumbing, appliances, central heating and air conditioning, basement/
crawlspaces, and garage.

You should attend the inspection.
Walk through the home with the inspector so he or she can point out conditions to you that will go into the written report
you will receive. Make your own notes so you can discuss the findings with your real estate agent.
A structural home inspection may not be enough.

Depending on what is covered in your home inspection, and what is customary in your area\ you may order several types
of inspections – structural, termite, and environmental.

Home inspectors may have differing qualifications.
Make sure your home inspector is an expert, with a background in plumbing, HVAC, electrical work or general contracting,
or is a member of a professional organization such as the National Association of Home Inspectors, Inc. (NAHI). Ask your
inspector for credentials and certifications.

Your inspector will give you a written report so that you can make informed decisions about what needs repair, and
whether you or the seller will be responsible for handling them.

Making an Offer

The most exciting (and potentially stressful) time in the home buying process is when you’ve found the home that you
want to buy, and you are putting together an offer that will both get you under contract and also ensure that you get a
good deal. Your agent will be your guide and your resource as you craft the offer, wade through the negotiations, and then
ultimately jump all the contractual hurdles to get to the closing table.

Your real estate professional will help you draft the offer with a price, your intended financing information, estimated
closing date and terms, including earnest money (a guarantee that you’ll perform as a buyer in good faith), and
contingencies for financing, appraisal, and inspections.

When deciding on an offer price, you should take into consideration the most recent market data for the surrounding
neighborhood and comparable homes. Your agent can give you the information you need to answer questions like, what
have other homes sold for, and how do they compare to the home you’ve chosen in terms of size, features, and amenities?
Are there other offers on the table that you are competing against? Depending on how active the market is and whether
there are competing buyers, you may structure your offer to entice the sellers to pick yours. If it’s more of a buyer’s market
you may be able to include concessions (like a closing cost credit) that will benefit you.

A pre-approval letter from your lender should accompany your offer, so that the sellers have confidence that your financing
is in order and you are capable of proceeding to closing on the house. When you write the offer, you’ll also include an
earnest money deposit, a percentage of the purchase price, as ‘consideration’. After you initial, sign and date your offer,
your agent will submit it to the sellers’ agent, who will in turn present it to the sellers.

The waiting is the hardest part. If you haven’t written in a deadline for response, the offer probably states that “time is of
the essence”. When you hear back from your agent, you may have more negotiations if the seller countered your offer.
When both sides have agreed to and signed off on all terms and details, the offer is considered ‘ratified’, and you have a
binding contract to purchase.

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Properties for Sale

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"He is a knowledgeable, reliable, and caring person.  He was always available to answer our questions and address our concerns.  His expertise and positive attitude eased the stress of buying a new home."
Dr. Anthony Ratkovic
by Dr. Ratkovic
"He is Honest, Trustworthy, Sincere, and Caring about helping others.  We would recommend him to anyone because he is knowledgeable and special to us."
Bill & Mae Rucker
by Mr. & Mrs. Rucker
"He really listens to what you say.  After being approved for a loan, Danny didn't waste our time showing us houses that we really couldn't afford.  Instead, he showed us houses that matched our requirements and were priced at an amount we were comfortable with.  Danny was also great at explaining paperwork and procedures along that way.  He really took the fear out of first-time buying."
James Genes
by Mr. & Mrs. Genes

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