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Home Buying

My sister is a first time home buyer. Any advice from the experts?
  • March 30 2011 - Lisle
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Answers (3)

Profile picture for the_country_hick
She needs to do a tremendous amount of research. It is not just how much house can I afford and how much do houses cost. We had a housing bubble and prices are still dropping in most of the nation.

Another poster here Padadenan posted this earlier. It makes a lot of sense.

"The most accurate short-delay indicators of where the market values are headed are numbers that can possibly be extracted from the multiple listings, but are not tracked by most Realtors® (though Azrob does), and are not tracked by Zillow:

1) Average total days on market of present listings
2) Average total days on market for escrows closed the previous month.
3) Ratio of "distressed" listings to "total listings".
4) Ratio of listings to seasonally adjusted annual sales
5) % of total housing inventory on the market
6) % of total housing inventory that is foreclosures, REO's, and "short sales".
7) Ratio of present months sales to total listings.
8) Price to rent ratios (for same size, ammonites, and neighborhood...)

It is important to track the trend changes in these over time if you really want to see "market changes" and you want to know what kind of market changes to expect in a given time frame."


Find out those things. Your sister does not want to overpay for a house right?

She also should make sure that financially buying is the right thing to do. The blog below shows how to determine that.
"Does it make more sense to buy, or to rent? Here is the way to find out for sure."

For a very different perspective read below. I am not saying renting is always best. I am only saying to consider well before making a choice.
"Why rent if you could buy for less money? Valid reasons inside."

Read this. You may find it shocking what slightly higher interest rates can do to house affordability.
"Do low interest rates really make it a good time to buy a house?"

This covers the basics of buying a house.
"Its your first home and you are looking for something but are not sure where to start to look or about loans."

If those were helpful look at my zillow profile for more helpful blogs.


Look at the site below. It is a house price prediction site. It appears all the major cities will lose value this year.
Illinois

Troubled by a state economy on the edge, lingering high unemployment and a foreclosure crisis that rivals the most devastated areas in the nation, Illinois is losing residents as they flee high state income and property taxes for greener pastures. The uncertainty of the Illinois economy signals a housing market that has made little progress in recovering from the worst real estate crash in U.S. history.

Home sales are declining and few areas of the state have seen any sort of appreciation in home values as a result of the exodus, despite near all-time record low mortgage rates and a pent up supply of homes on the market.
  • March 30 2011
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In addition to being a practicing real estate agent I am also a licensed and practicing Investment Advisor so when I work with first time buyers (and I work with a lot of them) we walk through the entire buying process from a financial standpoint so that my clients understand how to best structure financing for their situation...what will be their beginning and ending cash balance position and what the monthly payments will be.  I also show them what to expect when they file their taxes and how much they can save versus renting (about 25 - 30% today).  Then it really does not matter which house we find because we already know how we will write the offer to include their optimum financing. 

I also like to make sure that my clients have 4 - 6 months of payments in the form of cash on hand to make sure they can pay the mortgage if anyting happens.  FHA loans are often the best choice so that the home buyer can conserve cash...remember you can always pay down the loan in the future.  Getting money into a house is much easier than getting it back out in the form of cash.  It is also important to think about things like life and disability insurance and factor in costs for coverage if appropriate. 

Even through these turbuent times I have not had a client lose a home and like to think that it has a lot to do with this planning process.  A home is a big investment decision (sometimes the biggest for many people) so it is really very critical to understand the financial aspects just as much as the quality of life considerations.

Hope this helps.
  • March 30 2011
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First speak with at least one lender to see what you are qualified for then decide how much of that you actually want to use to buy something. You are not commited to that lender and in this rather difficult mortgage market it might be better to speak with more than one of them.
Then take your time looking at property. The more you see the more you learn and the more familiar you become with the areas and condition of the property you qualify for. In time you will find what you like.
  • March 30 2011
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