Tips for Today's Buyer

Through my REMAX website, a monthly newsletter is published. This article is from the July Real Estate Advisor.

With the recent shakeup in real estate markets across the country comes a new world - one that includes fewer exotic home loans, greater regulation, new pricing and different expectations of home appreciation. Ironically enough, the freshest advice for today's potential home buyers lies in sound fundamentals their grandparents may have used when purchasing their own homes decades ago.

Below are time-honored home buying essentials that apply now more than ever (with a new-school tip thrown in for good measure):

Save Up to Pay Down - The tradition of the down-payment is almost as old as real-estate itself, yet home loans with no money or very little money down became increasingly popular during the start of the decade. Changes in the credit market have made such arrangements all but nonexistent today, and in many cases buyers won't be considered for a loan without at least a 10% down payment waiting in the wings.

In reality, buyers who invest at least a 15% to 20% down payment will be rewarded as markets re-stabilize. A larger down payment provides the buyer with a lower interest rate, lower payments, higher equity and a stronger negotiating position when it comes to refinancing.

Borrow Smarter - Lenders will employ a variety of different metrics to determine how large of a loan and monthly payment you qualify for, but ultimately you must determine a realistic monthly budget. Qualifying for a home doesn't necessarily mean that you can truly afford the payments in the real world. Start the home buying process off right by determining exactly what kind of mortgage payment you can afford, leaving yourself enough buffer to deal with life's little surprises.

Focus on Your Market - It's easy to be distracted by national housing headlines, but real estate has always been centered on very specific local market conditions. What is true in one area is not the case in another, sometimes down to the street level. Rather than paying too much attention to trends in distant cities and markets, keep your eyes squarely on the dynamics close to home: local sales prices, average number of days on market, foreclosure rates, and the relative health of the job market in the area.

Buy the Home That Fits Your Life (Not Someone Else's) - It may seem rudimentary, but the purchase of a house is first and foremost a very personal process of choosing the place that you will call home. The unsustainable appreciation in previous years has caused many to focus on real estate as an investment, a commodity that must be purchased with an eye primarily on resale value. Put simply, we have collectively developed the mentality of "the flip."

The truth is that the home you buy is much more than an asset with four walls and a breakfast nook. There is no guarantee in any market that you will be able to turn around and sell your house for a handsome profit. By remembering that you are buying for your family and not the buyer three or five or seven years from now, you ensure that you end up with your home, not just a residence.

Make the Internet Work for You - Information has always been tantamount to power, but today information moves at a faster speed than ever before. If you aren't using the Internet as a major part of your buying strategy, you're already at a disadvantage to shrewd home buyers who use the power of the web to research and compare listings. Setting up online home searches, saved favorites or new listing email updates is easy, regardless of your computer know-how. The more knowledge you have at your fingertips, the better prepared you will be moving forward.

Jim Starwalt

Thinking of making a move? Log onto my website at www.StarHomeFinders.com and search the Multiple Listing Service from over 150,000 homes for sale. Registering is quick and easy!

Jim Starwalt, Broker Associate RE/MAX Center, Phone: 847-548-2625 Jim@StarHomeFinders.com