4. Taxes As a property owner, you are responsible for property taxes. The rate will vary from town to town. To get a general idea on how much the tax bill will be for a property, ask the seller for a copy of the previous year's tax assessment. Your real estate professional can get you all the information you need regarding the taxes on any property you are interested in. In Simsbury, for instance, the tax rate is 29.6 percent. That means for a home with a market value of $200,000 ( the tax assessment of the property), yearly taxes would run $ 5920.00

5. Association Dues Another cost you may incur is homeowner association (HOA) dues. Most condominiums and some residential developments/subdivisions/neighborhoods/PUDs have HOA's, which are legal entities, created to maintain common areas and enforce deed restrictions. As a property owner, you are required to pay the established monthly or annual homeowner association dues. Be sure you factor this cost into your budget.

6. Maintenance You also need to consider the upkeep of your home. You should budget for seasonal maintenance such as lawn care, pest inspections, snow removal, carpet cleaning, etc. as well as unexpected repairs. The amount you budget will depend on the age of the home, as older homes tend to require more repairs such as installing a new roof, replacing older appliances and mechanicals.

7. Insurance Depending on the type of coverage and your area, the costs for homeowners insurance each year can be anywhere from a few hundred dollars to thousands of dollars. And, if you live in an area that has high risks for flooding, earthquakes, hurricanes, etc., you may need supplemental insurance.

8. Remodeling/Upgrades Unless the home you purchase is picture perfect, you'll more than likely be adding your personal touch. Therefore, you need to add to your housing budget the costs for remodeling and upgrades. According to "Remodeling Magazine's 2007 Cost vs. Value Report, the national average for a midrange minor kitchen remodel is $21,185; a bathroom remodel averages $15,789. Prices for 2008 are just about the same according to local contractors. Even minor cosmetic fix-ups such as light fixtures, window treatments, carpeting and decorative cabinet knobs can begin to add up.

9. Moving expenses Professional movers, moving van rental fees, boxes.

By foreseeing and allowing for all the costs associated with homeownership, you can go into your home search with a reasonable price range that will allow you to stay within your budget.  Don't allow poor planning and emotions to turn your home purchase into a burden, after all--a home is more than just a smart, sound investment--it's a place for you and your family to ENJOY.

Why Now Is a Great Time to Buy

The 4 factors that make this the perfect storm for Buyers

1. Mortgage interest rates remain at historically low levels   Mortgage interest rates are still less than 6% for the typical, 30 year fixed-rate mortgage.  Don't believe everything you hear in the media these days concerning the mortgage industry and a shortage of loan money--there is currently an abundance of conventional financing available for qualified homebuyers.

2. Higher than average inventory = better selection and lower prices   With a higher than average number of homes on the market, and fewer buyers, not only do you have a great selection to choose from, but your negotiation leverage is enhanced.  The "fair market value" is currently being established by buyers, not sellers.  In addition to offering lower, discounted prices on their homes, many sellers are also offering seller concessions such as buy-downs, seller financing, rent-with-option, builder upgrades, Hubbard Clauses, credit towards closing costs, credit at closing for upgrades, Home Warranty programs, etc.

3. Tax credit for first time home buyers   An $8,000 tax credit (or 10% of Value tax credit - whichever is lower) for first-time home buyers only is now available as part of the new Stimulus Bill that was just passed on 2/16/09.  This tax credit is available until 12/1/09, and requires NO REPAYMENT!!  It applies to owner occupied/principal residence only.  There are income limits to qualify of $75,000 for individuals, and $150,000 for couples.  Speak to our Connecticut Home Mortgage Certified Mortgage Planner for more details and to see if you qualify. 

4. While all real estate markets have ups and downs, it is still one of the best means to build wealth  On average, the value of a home almost doubles every 10 years.  The average homeowner today has 36 times the wealth of the average renter.  When you own your own home you are essentially paying yourself- when you pay your mortgage, you are building equity. Homeowners also benefit from real estate related tax write-offs such as mortgage interest.  And, residential real estate's long-term financial performance has certainly out-performed Wall Street!

Interest rates at record lows, motivated sellers, discounted homes, great selection, available credit, government incentives-- WHAT ARE YOU WAITING FOR?  Don't look back at this rare opportunity and say WE SHOULD HAVE!

Why You Need a Home Inspection

Purchasing a home is one of the biggest investments you will ever make.  A Home Inspection will make you aware of its condition and alert you to any problems or areas of concern prior to the actual purchase.  Some of the benefits of a Home Inspection are:

Home Inspection by Buyers 

1. The Inspection will give you knowledge about your purchase - you will know exactly what you're buying. The Inspection will reveal many things about the house that are not apparent when you're walking through initially.

2. The Inspection will give you confidence and peace of mind. It will determine whether or not you're making a sound buying decision. You will have information that will enable you to re-negotiate with the seller on any major expenses you were not aware of when making your offer.

3. The Inspection will prepare you for any necessary repairs, replacements, or maintenance, and limit the number of problems you may discover after you move in.

4. The Inspection will educate you about your new home, and provide you with invaluable details about the condition of the property, as well as how the house operates, where important mechanicals/valves/switches are located and how they operate, etc.

Home Inspection by Sellers

1. If you choose to have your home inspected before putting it on the market, you will anticipate any problems the buyer's Home Inspector will reveal. If you do not want to do a full Home Inspection, you should probably hire experts to inspect the major items that can cause the most concern to buyers such as: furnace, air conditioning, roof and plumbing systems.

2. By doing your own inspections, and fixing any problems, you will avoid the buyer getting a negative inspection report that gives them the opportunity to request significant price reductions, or gives them a reason to get out of the deal completely.

Home Inspection of New Construction

1. For newly constructed homes, have your home inspected before the drywall is installed. This is called a "preclosure inspection". This inspection will give you a better chance to identify and correct any potential problems at a time when they are easier and more economical to fix.

How to Find a Good Home Inspector

1. Make sure your home inspector is a member of a professional home inspection organization. Companies that are affiliated with professional organizations are professional and are serious about what they do, and who works for them. They make sure their representatives are knowledgeable about new developments in their field, and offer continuing educational/licensing opportunities. Two very well-known trade associations are: American Society of Home Inspectors (ASHI) and National Association of Home Inspectors (NAHI). These associations can help you find members in your area.

2. If your inspector is not a member of the above organizations, make sure he or she has extensive experience. The best home inspectors have been in the business for many years and have inspected hundreds and even thousands of homes. Make sure your inspector has gone through extensive training. In many states inspectors can simply call themselves home inspectors without any training or licensing.

3. Make sure your inspector carries Professional Liability Insurance (Errors and Omissions Insurance). If you ever need to collect on a legal judgment, an inspector without insurance may not be able to pay your claim.

What to Look for in a Home Inspection

Your home inspector will be checking and analyzing many things about the home, both inside and out.  Most Home Inspections are extremely detailed and will provide you with a written record of what was inspected and what condition your home was in at the time of the inspection.  Walk through the home with your inspector and ask any questions you may have.  Pay particular attention to the condition and recommendations of your inspector regarding the following vital components:

1. Foundation Your inspector will be looking for cracks in the foundation. If there are cracks or irregularities, you may need a further inspection to check the integrity of the construction. Not all cracks are problematic, but a structural expert can determine how serious foundation cracks are. Follow your inspector's recommendations.

2. Roof The most important thing to determine when checking the roof, is determining whether it is leaking. If the roof is not leaking, the inspector will attempt to determine if the roof has any flaws that could cause leaks in the future. The inspector will also be able to estimate approximately how old the roof is, and how much life the roof has left, although there is no scientific way to determine this exactly.

3. Drainage In order to prevent flooding into the home, the home should be properly situated on the property. The land should slope away from the home and at least 6-8 inches of the foundation should be visible. Also, all gutters and drainage spouts should be angled away from the house.

4. Windows and Doors All windows should open freely, and close properly with a good seal, the windowsills and frames should be free of rot, and the screens should be present and intact. Besides looking for cracked or broken glass, make sure there are no broken seals. All doors should open and close properly with a good seal to ensure efficiency with heating and cooling.

5. Siding, trim, gutters and paint Your inspector will check for bubbling or peeling paint. You should also check all shutters, and trim as well as the gutters for overall condition. Make sure the gutters are securely attached to the house, and not rotting.

6. Decks and porches Be especially careful to inspect these areas for insect damage, as they are most vulnerable. Rotting from moisture is also a big issue in these areas.

7. Walls, Floors and Ceilings Check all of these areas for water damage- look for stains, or mold. Areas around plumbing fixtures should be thoroughly looked at for water damage. Check any gaps or cracks in exterior walls for the presence of insects.

8. Appliances Check the working order of all appliances. Typically your home inspector will run one dishwasher cycle and check the functions of the oven and stove. Many inspectors will not run the dishwasher, however, and most will not check the washer or dryer.

9. Electrical, Heating and Cooling Systems The inspection of these vital areas will give you an indication of how well your home has been maintained. The inspection of the electrical system will test all outlets, light fixtures and circuit breakers. Updated features in older homes, such as GFI outlets in the bathrooms and kitchens, will also be noted. When checking the heating and cooling systems, inspectors typically test the furnace, monitor the response of the thermostat for heating and cooling, and assess the overall ventilation of the home.

10. Plumbing The plumbing system will be checked for leaks around all fixtures and pipes. Hot and cold water pressure will also be checked by turning on multiple faucets. The bathrooms will be thoroughly inspected for water damage around the tub, sink, showers and toilets. The hot water heater will also be inspected to be sure it is up to code and functioning properly.

11. Basement The most important thing to check for in the basement is the presence of water, or water damage. If the area does occasionally flood, a sump pump should be present, and this will be checked to be sure it is functioning.

12. Chimney and Fireplace The Chimney and Fireplace will both be checked for loose bricks and mortar, the overall condition will be assessed, and the chimney will be checked to make sure there are no obstructions within it.

Remember, the home inspection is an invaluable step in the home buying process that will help you determine the value of the home and prevent you from overpaying or experiencing unwanted, and unplanned for repairs.  Depending on what is uncovered during the inspection, you may want to pursue further evaluation by a specialist in a given area, or you may want to work with the seller to resolve the issue as part of your offer.

Real Estate Glossary of Commonly Used Terms

Amortization Repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example 15 or 30 years)

Annual Percentage Rate (APR) Calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan

Appraisal A document that gives an estimate of a property's fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property

ARM Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates, when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the change in monthly payment amount, however, is usually subject to a cap

Certificate of Title A document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.

Closing Also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller

Closing Costs Customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application

Credit History History of an individual's debt payment; lenders use this information to gauge a potential borrower's ability to repay a loan

Debt-to-income Ratio A comparison of gross income to housing and non-housing expenses. With the FHA, the monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income

Deed The document that transfers ownership of a property

Discount Point Normally paid at closing and generally calculated to be equivalent to 15 of the total loan amount, discount points are paid to reduce the interest rate on a loan

Down Payment The portion of a home's purchase price that is paid in cash and is not part of the mortgage loan

Earnest Money Money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal

Equity A owner's financial interest in a property; calculated by subtracting the amount still owed on the mortgage loan from the fair market value of the property

Escrow Account A trust account created by a third party to hold money.  A mortgage escrow account is an account set up to pay taxes and insurance.  Monthly mortgage payments may include 1/12 of annual property taxes and insurance.  When the bills come due, lenders use the money in the escrow account to pay them

Fair Market Value The hypothetical price that a willing buyer and seller agree upon when they are acting freely, carefully, and with complete knowledge of the situation

Fannie Mae Federal National Mortgage Association (FNMA); a federally chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers

Fixed Rate Mortgage A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change

Flood Insurance Insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan

Freddie Mac Federal Home Loan Mortgage Corporation (FHLM); a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders with funds for new homebuyers

Ginnie Mae Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment; as with Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders

Home Inspection An examination of the structure and mechanical systems to determine a home's safety; makes the potential homebuyer aware of any repairs that may be needed

Homeowner's Insurance An insurance policy that combines protection against damage to a dwelling and its contents with protection against claims of negligence or inappropriate action that results in someone's injury or property damage

HUD1 Statement Also known as the settlement sheet, it itemizes all closing costs; must be given to the borrower at or before closing

Lien A legal claim against property that must be satisfied when the property is sold

Loan to Value (LTV) ratio A percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment

Lock In Since interest rates can change frequently, many lenders offer an interest rate lock in that guarantees a specific interest rate if the loan is closed within a specific time

Mortgage A lien on the property that secures the promise to repay a loan

Mortgage Insurance A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price

Origination Fee The charge for originating a loan; is usually calculated in the form of points and paid at closing

PMI Private mortgage insurance; privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price

Pre-approve Lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase

Pre-qualify A lender informally determines the maximum amount an individual is eligible to borrow

Prepayment Payment of the mortgage loan before the scheduled due date; may be subject to a prepayment penalty

Principal The amount borrowed from a lender; doesn't include interest or additional fees

Radon A radioactive gas found in some homes that, if occurring in strong enough concentration, can cause health problems

Title Insurance Insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for homeowners

Title Search A check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property

Truth in Lending A federal law obligating a lender to give full written disclosure of all fees, terms, and conditions associated with the loan for the initial period and then adjusts to another rate that lasts for the term of the loan

Underwriting The process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value