Ian Moore - Senior Mortgage Advisor - THE HOME BUYER’S GUIDE

THE HOME BUYER’S GUIDE

THE HOME BUYER’S GUIDE ’S GUIDE

Ian Moore - Senior e - Senior Mortgage Advisor

Table Of Contents

The Easiest Way to Protect Yourself from Bad Lenders

Owning vs. Renting

Buyers' Needs and Desires

Real Estate Horror Stories To Learn From 24

Searching for the Right Home

Buying a House: Negotiation Dos and Don'ts 42

What to Know About Home Inspections

Shopping for a Home Loan

Programs For Home Buyers

10. The Closing Process

11. Organizing Your Move

Preface Hi there! It’s nice to meet you. If you’ve received this book, it’s probably because you’re thinking about buying a home. And if you’re like most home buyers, you may be nervous about the entire process. But that’s why I’m here! My job is to make your job as a buyer as easy and seamless as possible. Throughout my years of experience in the real estate industry, I’ve amassed insider knowledge to help home buyers get great deals on their home purchases. And now, you’ve got all of that information at your fingertips. • An overview of the buying process • How to determine your wants vs. needs in your next home • Information on securing a home loan • Common mistakes to avoid • A negotiation guide to save money on your purchase • And much, much more Sure, you can try to employ these strategies yourself, but you should know that an agent focused on serving buyers’ needs can make a huge difference in finding your dream home. Yes, buying a home can be stressful, but with this book (and my help!) , we can make the process as seamless as possible. In this book, you’ll find:

Ian E. Moore CMG Home Loans IAN@CMGhomeloans.com (207) 233-4195

About IAN I was raised in Bedford, NH with 1 older brother named Chris, who is about 4 years older than I am. We had both parents as kids & lived a fairly average life in a middle-class family home. I lost my Dad in December of 2012 to a long, hard-fought battle with Stage 4 Colon Cancer, and that was a blow that was not easy to bounce back from. My Father was never the nicest man, but he was one hell of a Dad when it came to preparing my brother & I on how to be men, and how when we say we're going to do something, make sure we do it. He raised my brother & I in such a way that, granted we didn't have a whole lot of affection or love as kids, it was mostly criticism & not so much constructively, he nonetheless built us into strong young men who weren't afraid of a little hard work, & who wouldn't delay even for a second, risking our own lives to help save another. For that, I will always be grateful to my Father, RIP. Growing up, I had aspirations of being in the Finance industry & helping folks live a more comfortable life with regard to their income & assets. I never knew which field I would wind up in within the finance industry, however it didn't take long for me to stumble into the real estate world after College. You can’t always predict where or when you’ll discover what you’re meant to do in life, but sometimes your calling finds you! That is precisely what happened with myself when I landed at The Mortgage Specialists shortly after graduating College from Southern NH University , after a years' stint at Franklin Pierce & another year at The University of Southern Maine, studying Finance at each for my Major. My Father taught me at a young age that if you want something in life, you have to work for it, & work hard. So that’s what I did, and I worked extremely hard for a long time, and still do!

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As the years went by, I worked my way from being a Loan Officer's assistant at The Mortgage Specialists to a full time Loan Officer with Envoy Mortgage , never wavering in my resolve to become the best version of myself with each career move. Finally after 4 years learning how to be the best Loan Officer I could be, I left Envoy for Premier Mortgage Lending in April of 2019. It was one of the hardest decisions in my career to date, but ended up being one of my best decisions ever - and led me to where I am now in my career. Initially, I got into the real estate & mortgage lending industry after College because I kept encountering peers, friends, colleagues, etc. who were thinking of buying a home but didn't know where to begin. After thinking about this a while, I took it upon myself to find out where they need to start & after finding that the majority of answers didn't align & that there really wasn't a clear cut answer to this question. I realized that I was going to aim to be that starting point for buyers! The person who people go to when starting the process of buying a new home, that was where I wanted to be & who I wanted to be. So I set out to become the best Loan Officer in the business & someone who would be recognized as a knowledgeable, influential, approachable, & positive Mortgage Loan Officer who helps folks get onto the right path to successful homeownership - and eventually a leader in the industry. As my career advanced, I found my stride working with residential homebuyers, in particularly 1st Time Homebuyers & 2nd home/investment property buyers all throughout Massachusetts, New Hampshire, & Maine. I have become an expert in all things mortgage-related. Conforming Conventional Loans to Government loans like FHA, USDA & specifically VA, I love working with Veterans &

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Active Military members & helping them utilize their VA Benefits that they have rightfully earned. To Debt Service Coverage Ratio products (DSCR) for Investment buyers. I have ample experience with all the residential loan programs & have serviced countless home loans for buyers throughout all of New England. My constant communication & customer service skills set me apart from other Local Lending Teams & Loan Officers. I take accountability on every single loan that my team & I originate & we pride ourselves on our ability to get loans clear to close faster than anyone else in the business, with interest rates better than the majority of our competitors. Throughout my career so far which is still early-on, I have earned numerous accolades, including: • Top 20 Purchase Loan Officer (2020, 2021, 2022, 2023) r (2020, 2021, 2022, 2023) • Top 1% Certified Partner of UWM (2019, 2020, 2021, f UWM (2019, 2020, 2021, 2022) I currently reside in Bedford, NH with my wife Kelly who I'll be celebrating our 1-year Wedding Anniversary with this evening actually (July 29th, 2024) , my 11 year old step daughter Jocelyn & 3 year old son named Colton. We also have a 6 year old Husky girl named Jada who Jocelyn & Colton call their 3rd sibling. • Fastest Closer Award (2021, 2023) d (2021, 2023) • Fastest Growing Loan Officer (2019) r (2019) In my free time, I enjoy going to the lake & beach with my family, traveling & seeing new places, watching & playing sports, I am an avid runner, and I enjoy the occasional round of golf (as I'd rather be with my family & kids when I do have free time). Ian aims to provide the highest level of service to his clients and takes deep pride in helping them achieve their real estate & mortgage financing goals. To sit-down with Ian for a totally free

Homebuying Consultation, simply call or text him directly on his cell: (207) 233-4195, or email him at: IMoore@CMGhomeloans.com.

CHAPTER 1 The Easiest Way to Protect Yourself ourself from Bad Lenders It’s tough being a Real Estate Agent. You have numerous deadlines to keep, clients & partners to impress & keep happy, and leads to chase. Often it can feel like one thing going wrong could cause the house of cards to come tumbling down all over you. Sometimes that “ one thing ” that goes wrong is your mortgage financing. And when that goes wrong, it’s as useful to you as a leaf blower is to that house of cards you’ve been building. Have you ever been called by a loan officer the day before a closing because they need “ just one more thing ” before they can finalize the loan? And that “ one thing ” is currently on a moving truck with the rest of your client’s worldly possessions? Have you ever been told that a loan is as good as done, only to find out later that there are glaring errors in the paperwork which are now preventing the loan from going through? Any real estate agent who’s been in the business for enough time has had these problems. Maybe more than once. Maybe even worse ones that I can’t fathom because my imagination is not twisted enough. For example, let me tell you a story about a real estate agent who had worked diligently to obtain a desirable listing. He worked incredibly hard on behalf of his clients to stage and show the home, find a buyer, and negotiate a great deal. The listing itself had come to the selling agent by referral of a 2

former client, which meant even more leads might have grown out of this one. As you may have guessed, “ might have ” is the operative phrase here. The buyer’s lender blew it. The buyer was getting a loan to buy the house. The closing was set for the end of the month. Everything seemed to be going fine. The real estate agent ordered a survey of the home, just like he’d done for every other client who he had worked with. Everything was on track.

Or so it seemed.

The loan program the buyer was using had a specific, non- standard survey requirement. A few days before closing, the lender surprised the real estate agent with this somehow- forgotten information. As a result, the real estate agent had to reorder the entire survey. The survey company had to go back out to the house ( at an additional cost of $150 ) and do everything over again. The survey ended up pushing back the closing by 10 whole days. In the end, no one was happy with how the sale turned out. Even though this situation was the fault of the lender, not the agent, the agent’s reputation was still damaged. He did not get client referrals from the seller. Whatever business that may have come from that relationship was soured and gone. Has this ( or something similar ) happened to you? Have you lost time, lost money, or had your reputation tarnished because a lender did or did not do something that affected your sale? Well, this book is written by a lender — me — who understands the frustrations that real estate agents have with people in my profession.

THIS BOOK CAN HELP Y K CAN HELP YOU.

I can help you. I have intimate knowledge in the ways to defend yourself from bad lenders. Not only that, but I’ll teach you how to obtain ( and keep! ) the good ones. This book will help you cut through the B.S. surrounding the lending game. Contained in these pages is concrete, fact-based advice that will help you stop worrying about whether or not your lender is going to drop the ball, and instead focus more on doing what you actually do for a living: buy & sell homes. I’m going to peel back the curtain and give you the tools that will help you never have to worry about something happening to you like what happened to that other real estate agent. I’ve also added some useful reference content: a glossary of mortgage industry terms, a sample Good Faith Estimate (loan estimate) , and other helpful information.

This book can — and will — help you.

The best tool anyone has in life is knowledge. Whether you’re a real estate agent, a welder, a pilot, or an actor, the more knowledge you have about your industry the more successful you will be in that industry. As a real estate agent, it’s not enough to simply know how to sell a home. If all you had to do to be a successful agent was walk people through a house and get them to sign a piece of paper indicating their interest in purchasing it, anyone could be a real estate agent. As I’m sure you already know, that’s not all there is to being a great agent. You have to know how to chase leads, know how to read a market, know how to close a deal, and know how to promote yourself. Likewise, a great agent knows how the mortgage lending industry works. As we learned in this book’s introduction, the mortgage lending process may seem like it’s out of your wheelhouse — but it’s not. What happens in the lending phase

also affects you and your standing as an agent. With that in mind, the more you know about mortgage lending, the better you’ll be at spotting the problems before they get out of hand. Once you are educated on how the loan process works, when a lender tells you, “ Everything is okay. The loan is on track. We’re golden.” You can ask, “What does that really mean?” Mortgage lenders brushing off an agent’s inquiries is a thing that happens frequently. You’ve worked hard to make a deal work. You’ve engaged with the lender and done all that is asked for. You call for status and the lender tells you, “Yes, everything’s on track; all is fine.” But it really isn’t. The lender has not completed everything that needs to be done to make the sale a success. They are behind and you don’t know it. Without direct communication from them on their progress, how could you know? Furthermore, how would you know where the loan stands if you don’t even know how the loan process works in the first place? You could ask some questions, but how would you understand the answers? How would you even know what questions to ask? Knowledge is the difference between being entirely dependent on another and having some control of the situation. In response to an “everything is on track ” statement from a lender, the educated real estate agent can respond with, “Okay, that’s great. Does that mean the loan is completely approved, and all the conditions have been met? Which conditions have been met, and which have not? Exactly what does ‘on track’ mean?” Ask just that. Then shut up and wait. John Doe Lender will stutter, stammer, and not know what to say. Once the lender realizes that you know how the game works, the jig is up. They are left with no choice but to come clean and tell you exactly

how things are really going.

Maybe you’ll discover that the loan really is on track. Maybe you’ll discover that things are a complete mess. But either way, you’ll get the real answer and not just a patronizing brush-off. If you know the road, you can’t be sent down the wrong one. If you know the scam, you can’t be scammed. With knowledge, you can’t be misled. Ask the lender, “ What step are we on? What is left undone? Where are we at? What does ‘on track’ mean?” However, there’s no point in asking those questions if you don’t know what the answers mean. If the lender responds with a bunch of industry acronyms and lender jargon that is foreign to you, their answers simply won’t make sense. In this case, it’s not enough to simply demand more details if the details are simply gobbledygook as far as you’re concerned. An educated consumer is always the best consumer. If you’re an educated consumer, you can obtain better results and you can make better decisions for yourself. Education will give you an upper hand when you’re dealing with lenders. It makes the process easier because you know what’s going on. You know what’s happening. You understand the terminology and what things mean. No one can get by with an “ Oh, everything’s okay,” toss-off statement and expect you to go away. You’re going to ask for specifics. Here’s the bottom line: if there are problems, you need to be prepared so you can make better decisions — and help your clients make better decisions, too. You need to be there for your clients to give them advice on whether they should move forward with a transaction, whether or not they should move forward with that particular lender, and what’s going to be the best outcome for them during the lending process.

CHAPTER 2 Owning vs. Renting

Owning your own home might be one of the defining qualities of the “American Dream:” the set of ideals that includes opportunity for prosperity and success and an upward social mobility for the family and children, achieved through hard work. Home ownership is surely ingrained as one of the strongest representations of that vision — 66% of Americans own their own home, and more hope they will or wish they did. Something about home ownership plucks a strong chord with Americans. Financial security, permanency, status, and pride are values many of us seek. Lifestyle plays a big role in the decision to own versus rent. Home buying is most often driven by household formation, such as marriage and growing a family. Less than 40% of people under 35 years old own homes, 60% of people over 35 years old own homes, and more than 80% of people 65 years old or over own homes. Interestingly, for the millennial generation, the primary reason for buying a home? Owning a dog. The U.S. homeownership rate has fluctuated between 62% and 70% since the 1950s. Most young people begin their independent lives renting an apartment, maximizing lifestyle flexibility and minimizing the hefty upfront costs associated with purchasing a home. As they build careers, save money, and start families, many choose to buy a home, recognizing that home ownership, as opposed to rental living, is more appropriate to their growing family needs. At the other end of the age spectrum are homeowners nearing 8

retirement who may desire to sell their homes, downsize, avoid the maintenance and other obligations, and go back to renting.

WHICH IS BEST?

Is it better to rent or buy a home? Most adults ask themselves this at some point as they form their goals and plan for the years ahead. Before you answer the question, here are some things to ask yourself. Owning and renting each have their advantages, but what’s best for you depends on your circumstances. What will be the duration of your stay in the home? Each market is different, but whether the time you plan to spend in the house warrants its purchase is possible to predict. In general terms, it takes four to seven years to break even on a home (i.e., where there has been enough appreciation to pay back the cost of the transaction and cost of ownership). If you’re thinking about buying a home and selling it in two years, buying is very unlikely to be cheaper than renting. Do you think of or need your house as an investment in your retirement plan? Americans are used to their homes being a store for wealth to liquidate in retirement when downsizing their lifestyle. According to Jacob Passy, a recent study from the Federal Reserve Bank of New York examined consumer preferences toward being a homeowner and how their perceptions have changed over the course of the COVID-19 pandemic. Survey participants were asked to rate which was the better investment—a home or stocks. The results showed that over 90% of the respondents preferred owning their residence rather than investing in the stock market. Majority of the survey participants also favored the idea of being a landlord to buying stocks, with more than 50% of the participating households preferring to own a rental property.

Are you financially ready? Owning a home is a financial

commitment that requires planning how home ownership fits into where your life is headed. Ask yourself what your budget is and if either buying or renting would require you to stretch your finances. Crunch all the numbers. A frequent mistake of first-time home buyers is comparing a month’s rent to a month’s mortgage payment. Many people don’t have all the numbers. There are many additional fees necessary to include to make a fair comparison: principal interest, property taxes, property insurance, homeowners’ association (HOA) fees, and ongoing maintenance. Are you prepared for the down payment? T his is the lump sum payment that funds your equity in the property (how much of the property you actually own). Down payments vary; 20% is preferred and gets the best rates. There are some loans that allow down payments as low as 3%. Sometimes relatives help with the down payment. If you have a choice, take a gift rather than a loan because lenders will add the loan debt to other monthly obligations and potential mortgage payments to determine your debt-to-income ratio, which generally can’t top 43% to qualify for a home loan. Can you afford the monthly mortgage and its components? Generally, a mortgage includes loan principal and interest (both amortized over the life of the loan) plus homeowner’s insurance and property taxes (prorated). These items can affect the monthly loan-only payment by several hundred dollars. Are you emotionally ready? Can you handle the stress? A big factor to consider when buying a home is stress. The Holmes and Rahe Stress Scale, a landmark stress study, ranks many events that go along with buying a home in the top 43 most stressful circumstances in life. Four events are specifically home-related: change in financial state (No. 16), large mortgage or loan (No. 20), change in living conditions (No. 28), and change in residence (No. 32). If someone has recently made other life changes, such

as marriage (No. 7), switching careers (No. 18), or having a child (No. 14), it might be wise to postpone buying a home. Stress overload can lead to missed payments, which can result in destroyed credit or even losing the home. It’s better to rent if your life is in flux and then buy when your stress levels are lower. Are you ready for commitment? Are you ready to make lots of decisions, from picking a real estate agent to picking paint colors? Are you confident enough to choose a neighborhood where you believe home values will continue to appreciate and that will serve your needs (i.e., proximity to schools, shopping, recreation, etc.)? Are you ready for devoting the time and attention to maintaining a home (i.e., leaf-raking, grass-cutting, appliance maintenance and repair, etc.)? Taking care of your biggest investment can be gratifying, but only if you’re ready.

ADVANTAGES OF BUYING YOUR HOME

Control over housing expense. By selecting a fixed-rate 15-, 20-, 25-, or 30-year mortgage, the homeowner has assurance that housing costs won’t increase over the period, and, in fact, will be eliminated at the end of the term (subject to refinancing). You build equity. Some of each monthly mortgage payment goes toward the loan’s interest. Other portions may go to homeowner’s insurance and county taxes. The remainder pays down the loan principal. Every dollar put toward your loan’s principal represents a dollar of equity — actual ownership of the property. Further, the property should appreciate in value each year, further adding to equity (what the house could be sold for versus what is owed on it). Discounting certain blip periods, such as the 2006 housing bubble burst, home prices in the U.S. appreciate nationally at an average annual rate between 3% and 5%. Remember, though, home value appreciation in different metro areas can appreciate at markedly different rates than the national average.

Improvements increase your home’s value. A homeowner can also increase a home’s value through home improvements, thus both making your home more comfortable and enjoyable while growing its loan-to-value (LTV) ratio. For instance, adding a bathroom or finishing a basement substantially increases the property’s functionality and appeal, while potentially boosting its value. Tax advantages of home ownership. T here are significant tax benefits associated with buying a house, both at the time of purchase and for the duration of time you own the home: • Homestead exemption. Many states exempt owner- occupied homes (homesteads) from a portion of the property tax amount that would normally accrue. For instance, Louisiana exempts the first $75,000 of a home’s value from property tax assessments, so a $200,000 home in New Orleans is taxed as if it were worth $125,000. • Federal tax deductions. When you’re looking to purchase a home, it’s important to understand what can be deducted on your tax return and what can’t. Property taxes and interest paid on your mortgage can be deducted if you itemize your federal income taxes, which can reduce your income tax burden. Many home buyers, unfortunately, overlook the effect of mortgage interest on their federal income tax payments. Mortgage interest can be a powerful financial planning tool. Calculate the amount of mortgage interest deductions you are eligible for, and include that in your annual financial planning. Then, make a point of checking Internal Revenue Service (IRS) Form 1098, which you’ll receive from your lender at the end of the year. This form shows the amount of

mortgage interest that you’ve paid. The Tax Cuts and Jobs Act (TCJA) applies from 2018 to 2025 and limits the aggregate deduction for state and local real estate property taxes; state and local personal property taxes; state, and local, and foreign income, war profits, and excess profits taxes; and general sales taxes (if elected) for any tax year, up to $10,000 ($5,000 for marrieds filing separately). This limit does not apply if those taxes are paid or accrued in carrying on a trade or business, or in an activity engaged in for the production of income. In other words, if you are just living in your home, you can only claim up to $10,000 in tax deductions on your property, but if you are earning income directly from your home in some way, the limit might be waived. Current mortgage rates are relatively low. Interest rates vary through the years. Several years ago, interest rates were higher, and it was more expensive to obtain a mortgage. Since these costs have been reduced, it’s now easier and less expensive to own a house. Ownership rights and creative freedom. Your decorating and home-improvement choices are just that — yours, provided they don’t break building codes or violate homeowners’ association rules. You can paint walls any which way, add fixtures, update or finish your basement, or build a patio or deck. Changing your environment to suit whims is a freeing aspect of homeownership. A sense of belonging to the community. Homeowners tend to stay in homes for longer than renters and are more likely to grow roots. They might join a neighborhood association, volunteer at a nearby community center, join a school group, or align with a business improvement district. Renters might not do any of those things, particularly if they know their lease is up in a year and 13

they might move. There’s an intangible pleasant feeling attached to owning your own house — a sense of freedom and independence. The home you live in belongs to you, and you can do what you want with it. You aren’t daunted about increases in rent or losing the lease. You’re free to make improvements and changes. Also, owning your home gives your children the guarantee of attending the schools in the area on a more permanent basis; you never need to worry about a notice from the landlord to vacate your rented house or apartment for a variety of reasons over which you have no control.

ADVANTAGES OF RENTING

It seems a shorter list, but one man’s pro is another man’s con, and there certainly are advantages to renting to factor into your buy- or-rent decision. No responsibility for maintenance. A dmittedly, this is a big one. As a renter, you’re not responsible for home maintenance or repair costs. If a toilet backs up, a pipe bursts, or an appliance stops working, you don’t have to call an expensive repair person — you just call your landlord or superintendent. Renters in condos, townhouses, or apartments don’t have lawn and grounds care obligations. Relocating is easier. When renting, relocating for work is easier. Though a sudden move may require you to break your lease, you can partially offset the cost by subletting your apartment or talking with your landlord. On the other hand, selling a home takes time and effort. If you have a short timeline to sell your home, you may be forced to accept a lower price and lose some of your investment. No real estate market exposure. Home values fluctuate and can decline over time. If you’re a renter, that’s not your problem. If you’re an owner trying to sell — it is.

DISADVANTAGES OF OWNING

Maintenance. The renter’s largest advantage might just be the homeowner’s major disadvantage. While insurance might be available to protect against expense from major catastrophe, usual maintenance items are on the homeowners’ dime. Maintenance and repair can be as simple as repainting the baseboards and can also be as extensive and expensive as replacing a HVAC system or sewer pipe. The expense will vary from year-to-year; however, you can expect to pay about 1% of the value of your home annually toward these expenses. If you live in a $200,000 home for 10 years, that’s $20,000 over the period, and perhaps more if you must replace a costly, long- lived mechanical item, such as a furnace. Keep in mind the usual homeowner’s chores of lawn care, snow removal, gutter cleaning, and other regular home maintenance needs. Upfront and closing costs. Buying a home entails numerous upfront costs. Some are paid out-of-pocket after the seller accepts your purchase offer, while others are paid at closing. These include earnest money, down payment (typically ranging from 3.5% for FHA [Federal Housing Administration] loans to more than 20% of the purchase price), home appraisal, home inspection, property taxes, and first year’s homeowner’s insurance. Loss of relocation flexibility. It’s much easier to break a lease and move out of town than to arrange for the sale of a residence. Selling the home from out of town involves special logistics and financial matters, such dealing with the mortgage while the home is on the market. Financial loss potential. Homeownership builds equity over time; however, equity doesn’t equate to profit. If home values in your area go down or remain stagnant during your time as a

homeowner, the appraised value of your home could decrease, putting you at risk of a financial loss when you sell.

DISADVANTAGES OF RENTING

No equity building. The monthly rent you pay goes to the landlord. It represents the fee you pay for using the property. You gain no ownership in the property, no matter how long you live there. No tax benefits. While homeowners can deduct property taxes and mortgage interest on their tax returns, renters aren’t eligible for housing-related federal tax credits or deductions. Home improvements go to the landlord. Any structural and decorative home improvements that renters make belong to the building owner and will have to stay behind when you move to a different place. Additionally, approval for desired major redecoration will be necessary. After all is said and done, the decision to buy or rent depends on the prospective home buyer’s circumstances. There’s no denying, though, that a home of your own is a good financial and a great emotional investment. An investment in a home can also mean an investment in your future. There is much to consider when you want to buy a home. Switching from renting to homeownership is highly challenging, but an exciting and amazing decision to make.

CHAPTER 3 Buyers' Needs and Desires

After you’ve decided to buy a home, what sort of home it will be is your next decision point. It’s a better approach to have a concrete vision in mind of what type, features, and amenities you want in your home, rather than a “shotgun look” at every listing that’s out there in your price range. Imagine your dream house. It fulfills both your needs and desires. It fits the need for a good roof over your head, a sturdy structure, modern fixtures and appliances, living space (i.e., bedrooms, living room), and functional rooms (i.e., kitchen, bathroom[s]). Your needs fulfilled, you turn to your desires. Perhaps you envision a home on the beach or in the woods, a gourmet kitchen, a wood-paneled den, a crystal chandelier over a banquet table in the manor-sized dining room or an Olympic-sized swimming pool with a hot tub and sauna. Your priority in any home purchase should be ensuring all of your needs are met. Sometimes, you won’t find everything you desire in a home and if you do, you may not be able to afford it. It’s important to prioritize the things you want in a home by how important they are in your search. Decide your needs vs your desires. • Would you like a swimming pool? Enough that a home without one will not be looked at? • In what areas or neighborhoods might the home be located? Where do you want to live? Where might you have to live for work commute or home price reasons? • What features would make it special? 18

• What can you afford and what is out of your budget? Budget usually constrains us most in selecting a home. While some things are necessary for any home (as mentioned, a good roof and working appliances), others will just stay on the list of desires for now (like the sauna).

MAKE A LIST; CHECK IT T ; CHECK IT TWICE

You may have an impression of what you want in your new home. Putting that to paper and having a complete checklist can prove useful. Before starting your hunt for a new home, it’s advisable to make a list of all your basic needs and desires, then prioritize the desires, figuring that all needs must be met in any house under consideration. This will make the search easier and help weed out the ones that don’t meet the basics. Realize, however, that it’s nearly impossible to find a home that meets all requirements. Compromises will be necessary. It’s a good idea to work from outside-the-house factors to inside- the-house. For example, location is perhaps the primary concern and both “needs” factors and “desires” factors might be involved. A “need” would be “must be within 25 miles of work.” A desire might be, “would like Westwood” (a favored neighborhood), while a need might be “on the west side of the city” (because work, family, friends, and recreation activities are all located there). Location needs may include proximity to schools, frequently used recreation facilities, or mode of transportation (bus or suburban rail access). Whether an item is a need or a desire depends on circumstance. Closeness to family might be a need for a couple with young children or elderly parents to care for — or a desire if those 19

factors aren’t involved. It’s items like these that make a checklist most helpful. After location needs and desires are compiled, housing factors can be considered. Needs include having all essential house structures and systems in good working order. Accepting a house with need for a new roof because the owner is willing to knock $7,000 off the listing price — but it will cost $10,000 to replace the roof in two years — is not a sensible deal. Needs might include a minimum number of bedrooms and bathrooms, no steps, fenced yard, perhaps a first-floor laundry facility, and any feature the prospective buyers have decided they cannot accept a home without. Desires are features that make the home more attractive or enjoyable — an upgraded kitchen, walk- in closets, a master bedroom suite. Of course, one buyer’s need is another buyer’s desire. The point is to know your own needs and desires so you can easily assess potential properties and make the process smoother. Regardless, buying a house is not a simple process. Much of the planning should be done well before contacting a real estate agent or looking at homes. Work the costs as well as your budget. Choose a general location. Contact lenders well ahead of home shopping, so that your offers aren’t tied up in getting financial approval. Having the image of your dream home is reality married with imagination. In fact, you may find that some aspects of the house you intend to buy are different. It’s not the same as what your dreams told you. Different people have different requirements. It depends on your thought processes, as well as personality. We understand important things and potential compromises differently. Needs are basic requirements that just can’t be ignored or compromised. Desires, on the other hand, can be left

behind if the situation demands it. You need to make a clear distinction between what your needs are and which items you would classify as desires. No matter how many desires you have unfulfilled now, they can be worked on later. A pool can be added and paint colors can always be changed.

A NOTE ABOUT PETS

Consider your pets in your home shopping. Home buyers who are pet owners have specific requirements — they must provide for their pets. A third of millennial-aged Americans (ages 18 to 36) who purchased their first home (33%) say the desire to have a better space or yard for a dog influenced their decision to purchase the home, according to a survey conducted online by Harris Poll, on behalf of SunTrust Mortgage. Dogs ranked among the top three motivators for first-time home purchasers and were cited by more millennials than marriage/upcoming marriage, 25%, or the birth/expected birth of a child, 19%. It’s essential that the neighborhood in which you’re going to buy a house has no restrictions on pets — or livestock, if that’s something you desire. Do you raise American Staffordshire Terriers, also known as pit bulls? There are neighborhoods that ban this breed. What about goats? Vietnamese pigs? Have you always wanted fresh eggs from your own chickens? Include your animals in location planning. Some pet owners choose wood or other hard flooring, not wanting to risk pet damage or odors. An appropriate-sized fenced backyard is on the “needs” list for many pet-owning house buyers. Consider the arrangement of rooms and the structure of the house to ensure it’s suitable for your pets, too. Traffic in the area could be another checklist item.

Pet services, such as veterinary, grooming, and exercising, should be conveniently nearby.

LOCATION, LOCATION, LOCATION!

You must make sure to limit your search to a neighborhood that offers the closest possible match to the kind of lifestyle that you like and want to live. In addition, based on the 2021 NAR Generational Trends Report, 62% of homebuyers ages 22-95 years old prioritized the quality of the neighborhood as a reason for purchasing a house and primary reason for neighborhood choice. Location is so important that people are willing to give up “must- have” features to buy into their desired neighborhood — 72% would forget about a pool, 55% would lose a finished basement, and 33% would accept less square footage. What matters is living in a safe place with good schools. According to Trulia, 69% would drive through the neighborhood during different times of day to determine if the neighborhood was the right fit. You can’t go shopping for a home without choosing a location where you’d like to live. Probably the most significant decision when buying a home is where it is. Location influences your everyday life. Your property does not exist in a bubble; it’s part of a bigger community. It’s important to find a neighborhood or area that suits your needs. Do you want the peace of a secluded woods, or the energy of a bustling city center? Do research before starting your search. Drive through the area and see if all the stores, activities, and features you want are there.

Eat at local restaurants and walk through a nearby park. As price is mainly based on location and condition of the property, when someone starts looking for their house, it’s important to consider the location and how far it is from schools, shopping areas, and other facilities. Home means comfort, and comfort can’t come if the location isn’t suitable.

CHAPTER 4 Real Estate Horror Stories To Learn From

You’ve seen frightening stories like this on TV. Perhaps you’ve heard about them from neighbors or co-workers, but you still haven’t witnessed anything like them yourself. Be warned. The first time is one time too many. Now that you’re in the market for your first home, or maybe a second or third, congratulations! Buying a new home is one of the biggest achievements for many people. Unfortunately, home buyers — especially first-time buyers — can be the victims of real estate horror stories. Absolute horror, from the buyer’s perspective. Here are a few examples.

Example #1

Just this week I received a phone call from a local realtor whom I work with. She had a buyer under agreement, scheduled to close in only 1 week. The buyers' financing commitment date (date to walk away from the purchase but still be able to retain his initial deposit money back) had already lapsed. The buyer had used Rocket Mortgage, despite the agent trying to refer him to my team & I early on. Well, long story short is this Loan Officer did not verify the wages that the buyer was having garnished from his paychecks every week. Once the underwriter got to the root of the problem they identified that this buyer pays nearly $3,000 per month in Child Support & Alimony. Once factored into his qualifying ability, his Debt-to-Income ratio went way over the limit. Therefore, due to the incompetence of this Rocket Mortgage Loan Officer, this buyers initial deposit to the sellers of 24

$64,000 is now in jeopardy, and the chances of him closing on the house; slim to none. His deposit totaled nearly ALL of his Life savings. Because of a mistake made by this Loan Officer, this gentlemen in on the verge of losing his entire life savings. The only viable chance of him ever seeing that money again is if the sellers' have a big heart and do not decide to keep it, as legally they have the right to keep every cent of that $64K. Make sure you fully disclose all of your financial info to your Loan Officer and lending team, it can make a BIG difference & if they're not experienced enough to ask you, disclosing it to them on your own is always a safe bet!

Example #2

Alex was excited about making her first home purchase. Being in the Washington, D.C., area, she was limited with pricing options, with many of the lower-cost homes around $250,000. She went to several banks and got preapproved for different amounts at various lower interest rates. She found her dream condo, and, after some deliberating, she decided to go with the lowest rate of 4% offered by her lender. She completed her paperwork and submitted it with her 10% deposit. The rate wasn’t her only deciding factor. Personnel had been friendly and great at communication, making her feel very comfortable about the process. Until now. Suddenly, it seemed as though all of the bank corporation dropped off the map. A closing process that should have taken 30 days or less turned into several months of waiting and a larger deposit of an additional $20,000. They ran her in circles, until the seller told her, through the real estate agent, that the deal was over if she didn’t find another solution. Luckily, the seller’s real estate agent referred her to

another lender and was able to help her to obtain another loan (although at higher interest) much more quickly. It turned out the first lender was a scammer.

Example #3

In another case, Ron and Jenna were planning on upgrading to a new home. After a long search, they found it — or so they thought. A bright and colorful kitchen, open living and dining areas, three bathrooms, high ceilings, a fireplace, and even a covered porch made the home seem perfect. They were especially thrilled that the price was only $235,000. That was a steal. They signed the contract and were in the house a little more than a month later. Less than six months later, the horror story began to unfold. Jenna was cleaning one of the bathrooms when she noticed tiny little ants with wings. Following Ron’s advice, she called the exterminator. When he arrived, he delivered the first blow — these winged ants were termites. The exterminator went under the house to assess the damage. He found that not only was the floor under the bathroom completely infested, but also the other two bathrooms, and the infestation was spreading to more of the house. The grand total to repair this problem came to over $12,000! That’s an unbelievable amount of money to unexpectedly invest in a house you’ve only lived in for less than six months. The key lesson here is to really know the house that you’re buying. You should always hire an exterminator on your own to investigate the house, particularly for termites.

If you’re going to make such a huge investment in a new home,

the small price of precaution is worth it.

Example #4

The stories continue endlessly. I recently met a lady at a café with an incredible first-time buyer story. I happened to overhear her conversation, so I decided to step in and ask about it. Sue and her fiancé were searching for their first home with the intention of buying one before their wedding. They had been told about a great real estate agent in the city where they wanted to call home, and so they looked him up to ask his help in finding the right home. The problem was that the only praise they heard about him was from clients who had hired him to sell homes, not from home buyers. The agent met up with Sue and her fiancé to go over different homes he had on his list, and then it was time to take a trip around town to see them. There was one home that he talked profusely about, and so they went in person to take a look. Sue and her fiancé knew what good quality was, and so they were able to see right away that there were problems. The basement doorway was weak. The upstairs bathroom floor bounced, and the light switches in the hallway seemed to pop and flicker. Although very nicely painted, this house didn’t fool them. When confronted with these concerns, the agent replied that they could always fix those problems later. Although their gut told them not to move forward with making a purchase, they agreed to a $10,000 price reduction and took the house.

Big mistake! The problems they had noticed went much deeper.

The weak basement doorway translated into unfortified walls leading downstairs. The bouncy bathroom floor had been wet under the linoleum and about three inches up two of the walls. The flickering light switches were warning them of the outdated wiring which had to be replaced. In the end, their $10,000 savings only helped to give them a bit of consolation when they paid $27,000 for all of the remodeling!

Example #5

Ben and Amber soon realized the dream home they had purchased for their growing family was infested with hundreds of garter snakes. Throngs of reptiles crawled beneath the outer walls. At night, the young couple said they would lie awake and listen to slithering inside the walls. It was like living in a horror movie. The home was most likely built on a winter snake den, or hibernaculum, where the reptiles gather in large numbers to hibernate. In the spring and summer, the snakes fan out across southeast Idaho, but as the days get shorter and cooler, they return to the den. At the height of the infestation, the home buyer said he killed 42 snakes in one day before he decided he couldn’t do it anymore. He waged war against the snakes and “they won.” Buyers had little recourse when they decided to flee the home. They had signed a document, noting the snake infestation. They said they had been assured by their agent that the snakes were just a story “invented” by the previous owners to leave their mortgage behind.

The buyers filed for bankruptcy and the house was repossessed.

They left the home the day after their daughter was born, just three months after moving in. The house briefly went back on the market. Now owned by the bank, it was listed at $114,900 a year later. The property has since been taken off the market, while the bank decides what to do with it. The moral of the story is to have a good inspection. These buyers were attracted by a price. They didn’t have a proper inspection of the home before purchasing. It seems the real issue was the agent who cared more about selling the home than his clients.

HOME-BUYER PLAGUES

Although a home inspector passed on Justin’s and Kate’s home, he missed some problems. For instance, the previous homeowner supposedly installed and tested the sump pump in the basement, and it failed shortly after moving in, flooding the basement. Then, the sunroom was filled with termites, costing the couple $2,000 in repairs. After the termites were eradicated, they discovered the sunroom was entirely covered in mold, and there was no caulking around the windows to keep the moisture out. A better home inspector would have been able to see the signs of termites and mold. The sump pump should have also been checked by the inspector, but it could have failed after the inspection. Sump pumps can burn out, lose power, become clogged or misaligned, or malfunction in a variety of other ways. It’s valuable to have a warning device installed that will signal water buildup. These alarms can alert homeowners or neighbors of flooding, so that it can be resolved before water damage occurs.

Be careful. Be smart. These horror stories are real and happen every day. Do your homework before signing paperwork or jumping into a new home. Too many people spend more time shopping for a car than they do on a home — a much larger and more permanent investment. You have time to educate yourself, and I hope that this has helped you move forward in the right direction.

CHAPTER 5 Searching for the Rig or the Right Home ht Home

Buying a home is an exciting event, but the process of finding the right one can be daunting. It’s a major investment. It’s an emotional time of making lifestyle decisions. It isn’t like buying a pair of shoes from the department store that are a bit snug, because you can’t just return the house if you’re not satisfied. Once you buy, you’re in for the long haul. To avoid costly mistakes that could haunt you for years, you need to make sure you do your homework properly when house hunting.

VIEWING A HOME

For most people, the prospect of going to view homes they like is a thrilling experience. It’s tempting to think that this is the first step to buying a home, but it’s not. Assuming you have your down payment, mortgage preapproval, and other financial issues handled, the first thing you need to do before viewing any home is to determine what you’re looking for. • What is your criteria? • Do you need a certain number of bedrooms and bathrooms? • Do you want a yard? Is a separate garden area necessary to your lifestyle? • Do you want property only in particular neighborhoods? • How much are you willing or able to spend? Answering these questions will save you significant time and

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