The DeLois Smith All Star Team

The Home of the Future

Reprinted from The Residential Specialist, July/August 2007 issue. Visit online at www.crs.com.

What will new homes look like in 2015? For starters, they'll be slightly smaller than they are today, according to architects, designers, and manufacturers surveyed by the National Associaton of Home Builders. The average size of a new home will be 2,300 to 2,500 square feet, slightly less than the 2,459 average for the first three quarters of 2006. Higher ceilings and upscale amenities will also become more common.

Issues driving the changes include accessibility for aging baby boomers, technological advances, green construction materials and environmental concerns. Other trends:

• Formal living rooms will shrink or vanish altogether, while family rooms will get larger.
• Ceilings in the average home will be nine to 10 feet; some luxury homes will have 12-foot ceilings.
• The family room will be the most important feature in the average home, followed by low-maintenance exteriors, design, location and two-car garages. In luxury homes, design will be the most important feature.
• Outdoor kitchens and second master bedroom suites will become more common in luxury homes.
• The average home will have two and a half to three and a half bathrooms.
• Recessed lighting and bold colors will be more common in both luxury and average homes.
• Demand for energy-efficient appliances, mechanical equipment and windows, and environmentally friendly green products will increase.
• Programmable thermostats, structured wiring systems and mult-line phone systems will be standard in the average home, while luxury homes will include just about every electronic feature that is available.

SOURCE: NATIONAL ASSOCIATION OF HOME BUILDERS

Eight Steps to Home Ownership

We've started a new series of posts entitled "Eight Steps to Home Ownership."  These are eight useful and systematic steps to help you purchase your home. This week we focus on Step Two: Obtain Loan Preapproval. To read our first post, click here.

Few people can buy a home for cash. According to the National Association of REALTORS (NAR), nearly nine of out 10 buyers in 1999 financed their purchase, which meant that virtually all buyers - especially first-time purchasers - require a loan.

The real issue with real estate financing is not getting a loan. Virtually anyone willing to pay lofty interest rates can find a mortgage. Instead, the idea is to get the loan that's right for you - the mortgage with the lowest costs and best terms.

REALTORS routinely suggest that consumers start the mortgage process well before bidding on a home. Many lenders (the sources of money) and programs, for example, are available through recommendations from The DeLois Smith All Star Team/Keller Williams. By meeting with lenders, either online or face to face, and looking at local options, you will find which programs best meet your needs and how much you can afford.

What is it?

"Preapproval" means that you have met with a loan officer, your credit files have been reviewed, and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a preapproval letter, which shows your borrowing power. You can visit as many lenders as you like and get several preapprovals, but keep in mind that each one carries with it a new credit check which will show up on future credit reports.

Although not a final loan commitment, the preapproval letter can be shown to listing brokers when bidding on a home. It demonstrates your financial strength and shows that you have the ability to go through with a purchase. This information is important to owners since they do not want to accept an offer that is likely to fail due to financing.

How do you get approval?

Real estate financing is available from numerous sources, including lenders in local banks and mortgage companies. We may suggest one or more lenders with a history of offering competitive programs and delivering promised rates and terms.

The loan officer will carefully review your financial situation, including your credit report and other information. The lender will then suggest programs which most closely met your needs. For instance, a first-time buyer may qualify for state-backed mortgage programs with little money down and low interest rates, while a repeat purchaser (someone who has purchased a home before) with more equity (money invested in the home) might want to get a 15-year loan and the lower overall interest costs it represents. Typically, first-time buyers opt for the traditional 30-year loan, with either a floating interest rate or a fixed rate of interest over the lifespan of the loan.

If you haven't done so already, read our closing coordinator's article where she gives great advice on choosing a lender. Click here to see what Amelia Watkins has to say.

Eight Steps to Home Ownership

We're starting a new series of posts entitled "Eight Steps to Home Ownership."  These are eight useful and systematic steps to help you purchase your home. This week we focus on Step One: Choose a REALTOR®.

Step One: Choose a REALTOR®

The services of a REALTOR®  are priceless in a real estate transaction. We're not writing this because we're REALTORS® and we want your business; we're writing it because it's true! Your real estate agent is required to represent you, the buyer, in the transaction and will guide you along in the process. REALTORS® can show you any home in the Multiple Listing Service in addition to their own office listings. They will help you negotiate your offer and see you through to the completion of the sale. For the most success, pick one buyer specialist and stick with him or her. Don't hop around from REALTOR® to REALTOR®. A highly trained buyer specialist can show you any property. Finding a reliable, qualifed REALTOR® to represent you is the first and most important step in searching for a new home.

Check back next week as we discuss Step Two: Obtain a Loan Preapproval.

Four Tips for Purchasing Your First Home

Purchasing your first home can often be a daunting and stressful task. Most likely this will be your first large investment, so use the following tips to save you any worries in the future.

1. Set up an appointment with a local lender.

Meeting with a lender before you actually start your search is one of teh smartest things to do. A competent loan officer can help you determine what you can afford based on your income, and what the various payments would be at various loan levels. Knowing this at the beginning of your search will help you narrow your criteria and avoid wasting time on properties that are not suitable. It is also good to use a local lender with whom you can meet face-to-face, rather than just using an internet prequalification.

2. Maintain good, stable credit history.

First of all, pay your bills on time! It is surprising how many potential homeowners allow payments to slip while they are in the process of buying a home, which can create major problems in obtaining financing from a lender. Also, avoid opening any new credit lines, such as credit cards or car loans. New credit can often decrease your credit score, so wait until after you buy your home before making new purchases on credit. You might also want to review your credit information FREE at www.annualcreditreport.com.

3. Save for a down payment and closing costs.

Some loan programs do not require any down payment, but closing costs are part of any loan. The seller may be willing to pay a portion of the closing costs, but you must negotiate with them when you make your offer to purchase. Typical closing closts vary by area, but in general expect 2-3% of your loan amount in closing costs. Also, the more down payment you can make, the more favorable your loan terms. A 20% down payment is ideal, but aim for 5% to get the standard interest rate. Less down payment usually equals a higher interest rate.

4. Find a reliable, qualified REALTOR® to represent you.

The services of a REALTOR® are priceless in a real estate transaction, especially if this purchase is your first one. Your real estate agent is required to represent you, the buyer, in the transaction and will guide you along in the process. REALTORS® can show you any home in the Multiple Listing System in addition to their own office listings. They will help you negotiate your offer and see you through to the completion of the sale.