Home sales decline 5.7% in August; median price up 3.3%

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Benefits of a Buyer's Agent

For most of us, buying a home is the biggest single investment we’re likely to make – and we’re only likely to do it maybe once or twice in a lifetime. The process is, by nature, filled with checks and balances – and many complex details. Traditionally, agents were legally obligated to protect the interests of the home seller. Today preferences are changing. One of these changes is that more home buyers are choosing to have their own real estate agent, known as a buyer's agent, to legally represent them.                                                      A buyer’s agent represents you, the buyer, not the seller, and has full fiduciary duties, including loyalty to you. By definition, the buyer’s agent has your best interests in mind throughout the transaction. The percentage of homebuyers with buyer representation has grown significantly in the past decade. According to a recent National Association of Realtors® survey, nearly half (46%) of home buyers used the services of a buyer’s agent last year, and four out of every five buyer’s agent agreements were in writing. The benefits of buyer representation is the dedication of a buyer’s agent to the home buyer. The buyer’s agent and homebuyer establish a mutual agreement, known as a buyer agency agreement, that will entitle the homebuyer to, but is not limited by: Loyalty The real estate agent must act in the best interest of the buyer. Disclosure All material facts such as relationships between agent and other parties, existence of other offers, status of earnest money, seller’s financial condition, property’s true worth, commission split with other brokers, and legal effect of important contract provisions. Confidentiality Any discussions, facts, or information that should not be revealed to others but does not include responsibility of fairness and honesty in dealings with all parties. Accounting in dealings Reporting of where any money placed in the hands of the broker is kept. Reasonable Skill and Care Arriving at a reasonable purchase price and advising the buyer of such, affirmatively discovering material facts and disclosing them to the buyer, investigating the material facts related to the sale. With a buyer agency, the interests of the homebuyer will be represented in the purchase of the home. This scenario is different from a typical transaction where the buyer is not technically represented.

Your Credit Score

Consumer lending executive Neekia McCoy answers questions about credit scores that can help customers about this key instrument to credit access in the latest Your Money Matters financial planning video from REALTOR Magazine.

Click the link below to watch the 5 minute video.

http://youtu.be/KPLcg1lHRXA

Think Like a Lender: It’s a Critical First Step

Most people know that discussing options with a mortgage professional is an important step to finding out how much house you can afford to buy. However, few realize that understanding what lenders look for is also critical to the home-buying process.

First, you need to calculate your current debt load and your price range. To determine your price range, your debt load is determined by two ratios – your Front End Ratio and your Back End Ratio. These limits may vary, but it’s wise to stick to the guidelines.

The first guideline is that your monthly housing costs  should not exceed 28 percent of your gross monthly income. This is the Front End Ratio. The housing cost is your monthly mortgage payments, which includes principal, interest, taxes, and insurance. Lenders add up your housing costs and figure out what percentage they represent of your gross monthly income. Note that the better your credit score, the higher your ratio can be.

Your entire monthly debt should not be more than 36 percent of your gross monthly income. This is your Back End Ratio. Again, the better your credit, the higher the ratio. Your entire debt load includes housing costs plus all other debt payments – car loans, credit card payments, loans, lines of credit, alimony, etc.

The maximum home price you can realistically afford depends on a number of other factors as well. These include your household gross monthly income, your down payment, and the mortgage interest rate.

If your calculations show that you are ready to begin the home buying process, then the next step is getting preapproved. Not only is this confirmation that you are approved for a set amount, it will also lock in a favorable interest rate.

The hardest part for many first-time home buyers is saving for the down payment. There are options available, and first-time home buyers should speak to their mortgage professional.