This bi-monthly Market Update produced by John L. Scott for the Pacific Northwest real estate market is now available on www.johnlscott.com.
This timely update talks about real estate market trends and how they impact the Pacific Northwest.
The purchase of a home is one of the most important personal and financial decisions a person will ever make. To assist you in purchasing your first home I have provided a summary Guide of some of the things that need to be considered in the process.
Be Prepared
Before you start looking a home you will need to become an educated consumer. Make sure that you have looked at all the reasons for making a move. Once you have a clear idea of what your goals and expectations are you will be more focused in your search for a new home.
Selecting a Real Estate Professional
Once you have decided to begin the process of finding your dream home, you will need to make sure that you work with a trusted and experienced real estate agent who listens to and understands your needs.
Have a Financial Game Plan Before You Find a Home
You can reduce the stress of home buying by planning ahead. Before you find a home you want to purchase, you will need to develop a financial plan. This plan will help guide your decision making process as you look for and evaluate potential homes.
Establishing Credit & Mortgage Pre-Approval
Before you begin the home search process you will need to know what your credit history is like. This will dictate what type of loans you will be able to qualify for. Once you know the types of loans available to you, a mortgage pre-approval will be needed. This will show potential sellers that you are serious about purchasing their home.
Down Payment
A down payment is the money you pay up front toward the purchase of your new home. Typically, the larger your down payment, the less you pay each month on the mortgage, and the lower the interest costs will be over the life of the mortgage.
Mortgage
There are a number of financing options on the market today. Here is an overview of some of the more common financing options available:
• Adjustable Rate Mortgage (ARM): This is a mortgage in which the interest rate is tied to a specific economic index and may adjust at specific times. Overall, your monthly payment may go up or down at intervals specified in the disclosure associated with this type of mortgage, depending on the current interest rate.
• Fixed Rate Mortgage (FRM): This is a mortgage with an interest rate that does not change during the entire term of the loan. This means the monthly payments for principal and interest are also fixed for the life of the loan.
• Conventional Mortgage: This is mortgage that is not part of a government-housing program, typically has a limit of $322,700, and is not insured by the federal government.
• Jumbo Mortgage: This is a mortgage that typically exceeds $322,700 and is not insured by the federal government. These loans usually have higher interest rates.
• Government Backed Loans: There are two types of government-backed loans — FHA and VA. FHA loans are insured by HUD (the Department of Housing and Urban Development of the United States) and VA loans are insured by the Veterans Administration.
Closing and Other Additional Costs
After you find a home and receive mortgage approval, the closing is when ownership of your new home officially transfers from the seller to you. In some cases, sellers pay the closing costs. If not, you need to be prepared to pay this additional cost. This can add another two to five percent to the home purchase price.
Finding a Home
When you are ready to start looking for a home you will need to have an idea of the features you “want” versus the features you “need”. Some the questions you can ask yourself to help you through the process are as follows:
• What features are most important to me? Number of bedrooms? Number of bathrooms?
• Does it have special features like a garden, a fireplace, a yard or a garage?
• Do I want a newly constructed house or a house that has been lived in before?
• Is it most important that the house be near a specific school, my job, or public transportation?
• What is the school district like?
• Are there kids in the neighborhood who are the same age as my own?
• Does this house need a lot of repairs?
Making an Offer
When you find a home you want to buy, you’ll make the seller an offer in writing. Your offer is typically the first step toward negotiating a sales contract. A trusted real estate agent will help you through this process.
Good Faith Deposit
Along with your offer, you’ll provide a “good faith” deposit that demonstrates to the seller your serious interest in buying. This is one of the additional costs mentioned earlier. This money is deposited only once the offer has been negotiated and accepted by both parties.
The Home Inspection
After you find a home and make an offer, a house inspection is often ordered. The seller should have the property available for inspection by a professional.
In a typical inspection, experts examine the existing conditions of the property. Inspections may be required by law with the elements inspected varying by region, state, and/or your agreement.
Insurance
Before a mortgage company will approve your lending arrangement and allow you to close on your new home, they will typically ask you to show proof of title, title insurance, and homeowner’s insurance.
The Final Walk-Though
Before the closing and property ownership is transferred, you and your real estate agent will want to visit your future house. This “walk-through” is an opportunity to ensure that the house has been left in the expected condition.
Closing
To be knowledgeable and prepared, ask your real estate agent to go over the details of the closing with you beforehand. Generally, the seller is required to provide clean title to the property at closing. Your agent, mortgage lender representative, and real estate attorney/legal counsel can help you make sure all documents are provided and steps followed.
If you haven’t taken a look at your credit report in a while, now might be a great time. Ideally you should check your credit report every 12 months. You can do this at www.annualcreditreport.com where you will be given a free credit report from each of the three credit bureaus: Equifax, Experian and TransUnion.
You’ll only have to fill in your relevant personal information once to get all three reports. Once you have your reports, you will want to review them for any mistakes or inaccuracies. If you find any, you will need to contact the respective credit bureaus directly.
It doesn’t take much time to project your credit history.
A big question facing real estate consumers these days is whether they should buy or wait. Since we are now at the beginning of the next real estate cycle, it is a perfect time to buy. As with all financial markets, there are cycles, and real estate is no different.
After a long growth cycle in real estate, we have seen a two year cycle in which the real estate market has slowed down. Now that we are near the bottom of the cycle, there is evidence that the next real estate growth cycle is upon us.
You never know when a cycle begins or ends until you have history to look back at, but the trends in the Puget Sound real estate market point to positive growth towards the end of 2008.
Markets never stay up and they never stay down. To take advantage of these markets means that you have to stay in the game.
Lennox Scott, CEO of John L. Scott Real Estate has been speaking a lot about “Buying Smart In Today’s Market” lately. According to Lennox, a number of factors have converged to make this the best buyers’ market the Pacific Northwest has seen in years.
If you’ve been considering buying NOW is the Buy Smart Zone.
What is 2008 going to bring for the Eastside real estate market? Many experts are predicting anywhere from a 3% gain to a 5% decline in real estate values for the coming year. The fortunate thing is that the Puget Sound real estate market is going to fair much better than the rest of the country in 2008.
The press has really spent a lot of time talking up the awful condition of the national real estate market. The problem is that they forget that there are areas in the county like the Puget Sound real estate market that are bucking the national trend. Granted, our market is off from the past few years but if you look at the numbers from a historical basis we are around 2003 numbers, which was in the middle of the run up of values through 2006.
There will be opportunities in the Eastside Real Estate market for those who choose to take advantage of them this coming year.
Winter
Spring
Summer
As we head into the
We all have the opportunity to work with people in helping them find their “dream home”. This is a huge responsibility that has been given to each of us. It is one that we need to take seriously as we help guide our clients through the unique market conditions we currently are facing.
Our clients are looking for us to be a solid rock of knowledge and insights in helping them navigate their home buying or home selling journey. We need to make sure that we are always there for them.
By taking care of our clients in challenging times we can solidify the relationships we have with them and continue to be their Trusted Real Estate Advisor.
This past weekends snow storm was pretty amazing for the Snoqualmie area. We had 6-8 inches come down on Saturday. I-90 was also severely affected as well on Saturday night, as the freeway was effectivly reduced to one usable lane.
This is our first winter here at Snoqualmie Ridge and it has started out with a bang. It will be very interesting to see what the rest of the winter is like considering that we are just starting the month of December.
Fortunately we haven’t been affected by the flooding that has plagued highway 405 from Kirkland to Bellevue.
A very fun website that you might want to check out is called Terabitz. This real estate oriented website allows you the option of having 9 different data sets present on a single web-page (think 9 gadgets, 3 high and 3 across).
The data sets you can choose from are listings, local, market, education, safety, financing, professional & misc. The listing option is not as advanced as those on John L. Scott’s website, but it does give you some data. As a mother, the education and safety data sets are very, very useful. Under the safety tab I was able to do a search for sexual predators in the Snoqualmie Ridge neighborhood where I live.
There are hundreds of real estate focused websites on the internet today, but in a sea of hundreds, Terabitz does stand out.