Tips for Buyers

• Get an expert. Less than 20% of real estate agents do over 80% of the business, in some areas it is 5% doing 95%. The Real Estate business is full of nice people that just do not have what it takes to get the job done! Good Realtors, like all great professionals, get most of their business from referrals; the news of a satisfied customer travels fast.
• Work with only one REALTORŪ. You will find that by working exclusively with one REALTORŪ, that REALTORŪ will be more encouraged to invest time and energy on your behalf.
• Give your expert as much information in as simple and organized format as possible. Sometimes the best of them have to be reminded get back in contact.
• A pre-qualification document (90% letter) from a mortgage broker may encourage the seller to take your offer instead of another that may even be higher. This letter indicates that, given the preliminary financial information you have provided, you qualify for a loan of a given amount. A pre-approval letter is even better. This letter indicates that you have been officially approved for a loan, pending only an appraisal on the property you have chosen.
• A conservative estimate for closing costs can be a $100 to fees of 5% or more of the loan amount. For example, closing costs and fees on a mortgage of $150,000 are approximately $7,500
• Lenders limit the amount of your gross monthly income that may be dedicated to your monthly mortgage payment, also known as "PITI." PITI includes Principal, Interest, Taxes and Insurance. Typically, PITI cannot exceed 28% to 29% of your gross monthly income. Furthermore, PITI plus other long term debts cannot exceed 36% to 41 % of your gross monthly income. These numbers get stretched and squeezed. With all the different programs, markets and areas, only a local expert can give the best advice at any particular time.
• You need not pay off all of your long term debts before applying for a mortgage loan. If the lender's long term debt ratio is 36%, and the lender's housing expense ratio is 28%, then long term debts, such as car payments and credit card balances, can equal up to 8% (36% minus 28%) of your gross monthly income before negatively impacting the loan amount for which you qualify.
• The Loan to Value (LTV) ratio is the ratio of the mortgage loan to the contract price of the home. If your LTV ratio exceeds 80%, most mortgage companies require Private Mortgage Insurance (PMI). This PMI insures the lender against possible losses should you default on the loan.
• For a loan program with down payment requirements less than those required for a Conventional loan, consider a Federal Housing Administration (FHA) loan.
• New-home builders will often not negotiate on the base price of a home, because the base price will impact the appraisal value of subsequent homes the builder sells. But the builder often has room for negotiating the options and amenities that are included in the base price.
• A home sold without a REALTORŪ may not be lower in price. Sellers taking on the difficult task of marketing their own home are usually trying to save the cost of the commission for themselves, not for a buyer.
• Talk to your Realtor about owner financing and creative financing.
• Pre-pay principal on a loan to reduce the total amount of interest due. If you wanted to pay off your loan in 15 years instead of 30, simply add one extra principal payment per month with your usual mortgage payment. This strategy can ultimately save you many thousands of dollars of interest over the life of the loan.
• Verbal agreements are invalid in a real estate transaction. Put everything in writing.
• Three housing costs are tax deductible  (USA Only) in the year of purchase:
• Discount points (even if paid by the seller).
• Mortgage Interest.
• Property Taxes.

• Useful equations to help you calculate the adjusted basis and gain on the sale or purchase of a home.  
  • Basis = purchase price + purchasing expenses.
  • Adjusted Basis = basis + adjustments - deferred gain on sale of previous residence.
  • Amount Realized = sales price - selling expenses.
  • Adjusted Sales Price = amount realized - fix-up costs.
  • Gain = amount realized - adjusted basis.

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