J. Dudley Schiel

Thursday, July 29, 2010

Four Signs You’re Ready To Be A Homeowner

No doubt you’ve been hearing about the current mortgage rates of around 4.5% being some of the lowest in history and that homes in Nashville are still available at a significant discount compared to four years ago. All the talk probably has you wondering if it’s your time to buy. While the talk is all true and it makes for one of the best opportunities in history to buy your first home, your decision to buy should not be based on the market alone. The most important thing is deciding if the timing is right for you to buy. The following four signs are good indicators that you are ready to buy and not just rushing into buying because everyone says you should:

You’re planning on staying in the same place for at least three years:

Plan to own your home for at least three, preferably five, years prior to selling to allow equity to build up through monthly payments against principal, appreciation, and home improvements. This equity will cover the costs of selling when you’re ready to sell and will give you a cushion against future dips in the market. If you might have to move before the three year mark, renting out your home for a couple of years to allow more equity to accrue is an option you should consider ahead of time in case the alternative is bringing money to the closing table.

You have a dependable income and adequate savings:

Allow room in your budget for a downpayment, a monthly payment, taxes, insurance, and additional costs of home ownership before you buy. You need to have a minimum of 3.5% of your purchase price to put down for an FHA loan and 20% for a conventional loan.
Only buy what you can afford with your current income and don’t plan on future raises or promotions. Adjust your budget if you plan on going down to one income from two in the next three years. If you aren’t certain of your job security or have a varying income, have adequate living expenses saved before purchasing in the event of a job loss or period of decreased income.
Consider the costs of routine maintenance, unexpected repairs, and desired home improvements when designing your budget.

You can qualify for a loan:

You’ll most likely need a credit score in the 700’s to get a preferred interest rate from a lender. Late payments and too much consumer debt are just a couple of the mistakes that can negatively impact your credit score. Contact a mortgage advisor to have your credit run well in advance of purchasing to allow time to correct negative marks on your credit report. Bad credit history can take months to repair.

You can handle home ownership:

Homeownership is not without its pitfalls. Unlike renting, when you own a home and something breaks there is no landlord to call. Repairs and house and lawn maintenance are part of the home ownership experience. Be prepared financially and emotionally for all of the unexpected expenses and occurrences that will arise over the next few years.

Purchasing a home can be a great financial investment, particularly when considering the current market conditions in Nashville and the great interest rates, but buying is only a good decision if the timing is right for you. Buying a home is the largest single investment you will probably ever make. My job is not only to help you find the right place for the right price, but also to help you make a smart decision concerning that investment that you will feel as good about when you sell as the day you buy. If you’re wondering if it’s your time to buy please give me a call so I can help you figure out if you’re ready. Whether you’re ready or not, I’ll get you started on the right track.

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Thursday, July 8, 2010

Never Fly Solo. Always Have A Wingman.

By Dudley Schiel

Your wingman watches your flank. He keeps you from getting shot down. Flying without him leaves you vulnerable. Purchasing a home without using an expert to guide you through the process and watch out for your best interests makes about as much sense as leaving your blind spot exposed to enemy fire, yet hundreds of people buy real estate in Nashville every year without consulting a Realtor. Largely due to a misunderstanding of what a Realtor does and a lack of knowledge about the many variables involved in a real estate transaction, many people feel they can purchase a house as easily as they can buy a car: Find the car, haggle a little over the price, and sign the papers. Not so. The home buying process has more steps and carries more risk than the average buyer realizes. Beginning your real estate search with a professional on your side will save you valuable time and money, help make the process easier and less stressful, and significantly improve your odds of getting the house once you find it.

Each unrepresented buyer probably has their own set of reasons for choosing to fly solo. Based on conversations with clients who've bought by themselves in the past, solo buyers usually forego a realtor for at least one of the following three reasons: First, some people don't understand what a Realtor does and therefore don't realize how using one can help them. Second, some are afraid that a Realtor will rush them to buy too soon or pressure them to buy a particular house. Third, some people think they can save money by not using a Realtor because they don't understand how Realtors are paid.

Ironically, the answer to each of these concerns creates a pretty good list of the top three reasons to use a Realtor. First, your Realtor's job is to represent your best interests throughout the entire home buying process and he can help you by using his experience, expertise, and knowledge to help you make the best decisions possible and prevent you from overlooking important details or making costly mistakes. He does a lot more than just drive you around town and introduce you to the right house. While supremely important to both buyer and agent, finding the right house is actually only one step of dozens involved in a Realtor's job. The majority of the process is negotiating on your behalf to make sure you get the house at your price and on terms that protect and benefit you and ultimately managing the transaction to a smooth closing. After all, finding the perfect house is a moot point if you don't get it or if you have to pay too much for it. Second, a Realtor will help you assess your needs to start your search on the right track, prepare you for the home buying process, educate you on the market and eventually help you make good decisions when you are ready to buy. Pressuring you to buy a particular house or rushing you into buying isn't in line with a Realtor's goal of establishing a long term client relationship. A good Realtor is more likely to talk you out of buying a particular house than to convince you to buy it. Third, using a buyer's agent doesn't cost you money. It saves you money. Your Realtor's job as your negotiator is to save you money by getting the house cheaper, getting the most seller concessions possible, and by preventing you from overlooking details that could cost you money in the future. Your agent's commission is almost always paid by the seller's proceeds at closing. The listing fee paid by the seller is usually the same whether or not a buyer's agent is involved. Foregoing an agent under the assumption that the seller will discount the price accordingly only means you've given up representation and donated your would-be agent's commission to the listing agent who is exclusively representing the seller's interests.

Jester's scold to Maverick in Top Gun couldn't have been more clear: "Never, never leave your wingman." Flying solo when you have the option of having protection just doesn't make sense. While lives aren't at stake in real estate as they are in a dogfight in the skies, buying a home is the biggest investment most people make in their lifetime and your money is on the line. Always hire a Realtor to watch over your shoulder. As your Nashville Realtor, I'm happy to be your wingman anytime.

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