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If you're getting ready to buy a house during what is
typically the busiest buying and selling time of the
year, then offers may be flying, loans may seem
confusing, and everything may be moving way too fast.
That's why it's important to do everything you can to
protect yourself throughout the entire homebuying
process.
Low mortgage interest rates and a strong underlying
demand for housing drove total state existing-home sales
to a new record in the first quarter of 2003 with 34
states experiencing sales increases over the first
quarter of 2002, according to the National Association
of Realtors.
And the NAR says that many states that saw sales
decline actually had a shortage of homes for sale - and
the biggest price increases.
"Too many buyers, not enough sellers is making this
an exceptional sellers' market ... Some bidding wars are
here again especially in the first-time buyers market of
single-family homes," said Ben Lambert, a Realtor in
Herndon, Virg.
The same phenomenon is being felt in other parts of
the country.
"The lack of inventory continues to be a concern for
the buyer," said Dave Petruncio, a broker in Western
Springs, Ill.
What this means if you're buying during the frenzied
spring and summer months is that you'll need to do
everything you can to protect yourself as you make
offers, obtain your loan, buy insurance, and strike up
contracts.
Freddie Mac offers a number of tips:
Get pre-approved for a loan. With competition
fierce, you'll want to be ready to make an offer. With a
pre-approved loan, you'll have more clout as the seller
considers your offer.
Make sure it's in writing. Don't settle for verbal
agreements. If the seller says he'll replace the carpet
or leave his washer and dryer, get it in writing.
Get a good-faith estimate. Your mortgage lender is
required to provide you with a good-faith estimate of
closing costs within three days of receiving your
application. They need to provide it in writing. If you
don't have to pay loan application fees, you may want to
compare lenders and compare closing costs.
Don't settle for the first lender you come across.
Contact at least three lenders and compare rates.
Lock-in your rate. One of the most stressful parts
of the loan process is watching rates inch up and down
each day and trying to figure out when to lock in your
rate. Once you do lock in, be sure to get a written
statement that outlines your interest rate and length of
the lock.
Get a home inspection. A professional home inspector
will examine the house's major systems and let you know
if there are any problems or defects. You can then use
the information in your negotiations. Look for an
inspector who is a member of the American Society of
Home Inspectors. Members are required to have completed
at least 250 paid professional home inspections and
passed two written exams that test the inspector's
knowledge. Also, ask for references.
Shop for homeowners' insurance as soon as your offer
is accepted. The National Association of Realtors
recently cautioned homebuyers to not take homeowners
insurance for granted. You and your spouse may have a
clean claims history and a stellar credit history -
something insurance companies use to determine whether
they will insure you - but it's not just you they're
looking at. If the house you're eyeing has had claims,
there's a chance they won't insure you, especially if
it's a water-related claim.
Read everything. When you have the closing meeting
to sign the mountain of papers, make sure you read
through everything carefully and don't hesitate to ask
questions if there are something you don't understand.
Finally, give yourself enough time between your
closing and your move date, just in case there are
delays in the closing process.
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