Typical Mistakes made by First Time Homebuyers

With the real estate market in a definite time to buy mode, many times we can get caught up in the activity of having to buy right now, at this moment. All buyers, specifically first time home buyers, should take a deep breath and follow the advice noted below.

1st. Know how much house you can afford. Most first time home buyers and novice home buyers spend an enormous amount of time researching homes. However, they spend very little time researching financing options. Before you begin to search for a home, you should call a Prosperity Mortgage representative, and schedule an appointment to go over your income and credit loads. Some lenders do a pre-qualification and others do a pre-approval. I pre-approve clients rather than pre-qualifying them. A pre-approval is much stronger since it tells the seller that you have truly had a person analyze your income records, tax returns, bank statements and credit report.

2nd. Don't assume a foreclosure is a great deal. If a homeowner lost their home and paid $350,000.00 for it, that does not mean it is worth that amount today. Home values have declined, though not nearly as much as other parts of the country, and inventories here in the New River Valley are large. It is certainly a great time to buy. A foreclosure needs to be looked at very carefully. It is to your advantage to have a home inspector or contractor go with you and your REALTOR to preview a property that you have zeroed in on as a potential buy. Many foreclosed properties have sat vacant for many months, with the electricity and water turned off, so you want to insist that the property have its utilities turned on as a requirement of the contract. This is the only way to determine if you are buying a money pit, even at a great purchase deal. Unforeseen problems can push you at or above the initial purchase price, so do your homework on foreclosed properties.

3rd. Do not let your true feelings show. No matter how much you love the house, do not let the sellers agent catch wind of it. Doing so allows the sellers to gain the upper hand and removes your negotiation power.

4th. Find a fantastic buyers agent. Look for agents that make it a practice to work with first time home buyers. These people have a very good working knowledge of what to expect with their clients, and typically are familiar with lending institutions, like Dave Shelor with Prosperity Mortgage, who pride themselves in helping first time home buyers.

5th. Make sure when you talk with a mortgage lender that you leave their office with a very clear understanding of the costs of home ownership. You have to factor real estate taxes, home owners insurance as well as anticipated home maintenance and repairs. All of these things, and then some, are costs to owning a home.

6th. Do not assume that your first offer will be accepted. With large inventories, more and more people are in your position. Look for a deal, and write your offer accordingly. If your offer is unrealistic, even in today's market, it will not be accepted and sometimes, even reviewed. Trust your REALTOR and ask for their guidance in structuring an offer. They are the professionals and can help you write a strong offer.

7th. Don't skip the home inspection. It typically costs about $300.00 give or take, and is well worth the money. Other inspections geared toward radon and structural add a little more, but for a good general home inspection, ask your REALTOR for any referrals. It usually takes a few hours and is one of the most in depth reports that you will receive on your home.

If you are in the market and have not found a good real estate professional to help you find a home, give me a call. After we pre-approve you for purchase, I can help you find someone that will write that offer. I work with some of the best REALTORS in the New River Valley, and would enjoy helping you get into that new home quickly, easily and with great care. Call me today.

Opening bell this morning may lower rates

Mortgage bond prices opened higher Monday morning adding to the small gains seen Friday afternoon. Rates are finding support from weak stock futures, an indication the DOW Jones index will open lower.

This week promises to be action packed with the Treasury set to auction 101B in 2, 5 and 7-year notes. The new supply of debt competes for available investment dollars; therefore it would not uncommon to see rates come under pressure ahead of the auction as trading desks prepare for the new issue. If the auction is well received, rates typically improve somewhat and vice verse.

The results of the 2-year auction are expected around 1:30 pm ET today. As if a credit crisis, housing slump and massive unemployment around the globe is not enough; FEAR (capitalized for emphasis) of a pandemic from the swine flu is gripping the world.

Traders are dumping airline, hotel and travel relates sharers as more is learned about the spread of the flu. Students in Universities around the globe will be studying these times for generations to come.

Hang on, it will likely be a volatile day today.

Mortgage bond prices opened lower in volatile trade following the release of the jobs report.

In news released this morning, the unemployment rate stood at 8.5% and non-farm payrolls fell 663K. Analysts were expecting unemployment to stand at 8.5% and for the loss of 658,000 jobs. Following the ADP payroll report on Wednesday, which showed a job loss or almost 750,000, traders were braced for a much worse report. Bond traders don’t like to be surprised.

Traders will spend the morning mulling over the data as the wait for stocks to begin trade at 9:30 am ET.

Mortgage Data for April 2, 2009

Mortgage bond prices opened lower erasing the small gains seen yesterday afternoon and more.

Rates are under pressure from strong stock futures, an indication the DOW Jones index will open higher. Stocks and bonds compete for investors’ funds, when stocks are rising in value trades sell bonds (prices fall/rates rise) to buy stocks and vice verse.

In news released this morning, weekly jobless claims stood at 669,00 higher than expectations of 650,000. This data coupled with the ADP payroll report yesterday raises the bar for the jobs report tomorrow. Traders are now waiting for stocks to begin trade at 9:30 am ET and for the release of factory orders at 10:00 am ET.

This afternoon traders will begin preparing for the jobs report tomorrow. Following the ADP payroll report and jobless claims data, traders are looking for a horrible number. Current expectations are for the jobless rate to jump .4% to 8.5% and for the loss of 665,000 jobs.