Should I Buy a Home Warranty?

If you are in the home buying process and wondering about the cost effectiveness of buying a home warranty, you are not in a minority. One of the most common questions we get from prospective homebuyers is “Should I buy a home warranty plan?” Unlike some questions that can be answered with a quick, decisive “yes” or “no,” this one takes a little more thought and pondering.

To Buy or Not to Buy?

 

The short answer is you should make the decision about purchasing a home warranty or any other type of insurance or warranty on your home purchased based on your personal circumstances and the advice of your real estate professional. However, there are some general guidelines that we can offer to help you in the decision making process. 

What Is a Home Warranty?

A home warranty plan is a contract that provides for the repair or replacement of certain items and/or mechanical systems on a structure. These plans are usually issued for a one-year period and may or may not be renewable at the end of the term. 

While plans vary according to the issuing company and any state or federal guidelines, they usually do not cover loss or damage due to fire, disasters (think hurricanes or floods), or theft. Most, but not all, newly constructed homes come with a one-year free warranty plan. If you are considering making an offer on a new house, why not ask the seller to include a free home warranty? It never hurts to ask for a concession!

Typically, the plan covers major items such as heating and air-conditioning systems, plumbing and major appliances. On an average, expect to pay about $300 to $600 for a one-year policy with an average deductible ranging from $50 to $100. Keep in mind that for every person who makes a claim for around $6000, the warranty company is predicting that there will be at least 10 people (if not more) who will never need to make a claim.

Like most warranties, contracts vary from state to state and even from company to company so you must do your due diligence so you know the specific limitations, coverages, and restrictions that apply to your situation. Read the contract completely and ask for clarification of any terminology or jargon you do not understand. Let’s take a quick look at the pros and cons of home warranty plans.

Advantages

 

 Here are some common pros of this type of coverage:

1. Knowing that you are covered for defects and mechanical problems is reassuring.
2. Even if you possess the skill and necessary equipment to make major repairs such as replacing a heating or air conditioning system, you may prefer the convenience of having it done for you. In addition, your time is typically better-spent working at whatever your profession is than in performing handy man home repairs.
3. The cost of any repairs could be less expensive under a home warranty plan than trying to do them yourself or paying a professional.
4. If you are purchasing an older home, there could be a greater likelihood of incurring a big-ticket repair because of the age of the home, mechanical systems, and appliances. Purchasing a warranty might outweigh the costs of repairs or replacements of these high dollar items.
5. While there are never any guarantees, if you have a home inspection done prior to making your purchase offer, potential problems areas could be identified. Knowing in advance that there could be a problem within the first year of your ownership makes it easier to make your final decision.

Disadvantages

In our opinion, the biggest disadvantage is the fact that if you never need the policy, you have wasted your one-year premium. Would you be better off if you simply set aside an equivalent amount of money for repairs? Here are some other drawbacks to ponder:

1. Home warranties provide short-term coverage. If you are purchasing an older home, the cost of the warranty may or may not be justified, but if you are purchasing a relatively newly constructed home, the odds of needing the coverage are dramatically reduced.
2. The warranty company makes the decision about replacing or repairing the item in question, not you. They may opt for the cheapest solution, which might not be the best overall solution for you.
3. You have to use a service provider that is approved by the warranty holder; you cannot make your own choices about who will mitigate your problem.
4. What will you do if your claim is denied? Will you have the time to invest in appealing the denial and trying to get your problem resolved?

What’s the Bottom Line

Home warranties may be a good answer in some situations but they are certainly not a “one size fits all” solution to some common problems of home ownership such as costly repairs. Consult with your real estate agent and consider factors such as:

• Annual cost
• Extent of coverage’s
• Deductible
• Additional fees if applicable
• Restrictions and exclusions

Weighing all these factors against the return on investment helps you make the best choice as to whether you should buy a home warranty or pass on it. For the most part, the bottom  line is the most a home warranty can do for you is limit your risk (for one year only) of having to deal with a major expense which was not apparent at the time of closing. 

Do you have other questions about the home buying process? You can find answers to some of the most frequently asked questions about buying a home by purchasing a copy of our latest book Buying Your First Home? Insider Secrets You Must Know or by browsing the archive files for more information on hot topics.

What Do You Think? Are Home Warranties a Good or Bad Idea?

Be sure to leave us a note in the comments section and share your input on the feasibility of buying  a warranty on a home purchase.

Image: Free Digital Photos by Basketman, used under license

Should You Sell Your Own Home or Hire a Real Estate Agent?

How can you get a fast sale?

One of the biggest mistakes for sale by owner (FSBO) sellers make is to underestimate the amount of time, money and effort it takes to sell a house. Should you sell your own house or get professional help? Before you make a final decision, consider these thoughts:

What Is the Average Commission

Now, if you have a $200,000 home you are thinking about putting on the market, and you know that the average commission rate for a real estate professional in your area is about 5 to 6%, you understand that means paying about $10,000 to $12,000 in commissions when the house is sold.

It is easy to jump to the conclusion that eliminating the intermediary – the real estate professional – would keep that huge chunk of cash in your pocket. However, there’s an excellent reason why a good real estate agent can charge  that commission rate, and that’s because he or she provides $10,000 to $12,000 worth of service and expertise to the seller. In many cases, he or she can get the seller closer to a true market value selling price than any other method.

What Does the Agent Really Make

In reality, your agent is likely to collect less than half that amount especially if another agent is involved in the home sale transaction. The broker takes his or her cut of the commission, and then the agent has to pay for marketing, traveling and all other related expenses of selling the house. When everything is said and done, in a scenario such as this one an agent is lucky to net 25% of the total commission amount.

However, an important question to ask is, "What is more important? The amount the real estate professional will earn or the profit you get from selling your house?" In most cases, the cost of hiring a professional to sell your house is more than outweighed by getting a higher selling price.

What Is Involved in Selling Your Own Home

So, by choosing to be a FSBO seller rather than hiring a real estate professional, you must be prepared to do an equivalent amount of work on your behalf as well as absorb the expenses of making the sale. For instance, you will have to prepare the house for sale, price it properly, market and show it, analyze all offers, negotiate a deal, and close the transaction. If you are already tired from just reading this to-do list, did you realize that you would also have expenses on top of the time investment for the aforementioned tasks?

Do you realize that one item alone - advertising - may dig deep into your wallet? Typically, the real estate agent pays for all the advertising be it newspaper or other print media, signage, Internet listings, open houses, and flyers.

In addition to paying for all the advertising promotions, you will have to find an appraiser and schedule an appraisal, and you must also arrange for a termite inspection, a survey, and a water and sewage certification.

If you do not have access to any preprinted forms or documents, you will have to buy or write your own contracts and other legal documents. You will need a real estate attorney or a closing agent to close the home sale, and you may have to help your buyer locate a mortgage broker or banker to obtain financing. While this short listing does not include everything that has to be done to sell a house, it does give you a pretty realistic idea of how hard a real estate agent works to earn that commission.

Finally, consider what you do for a living and how much you earn for doing it. Will you make more money selling your house by yourself or working at your regular job and letting your real estate professional take care of the house sale? 

How  Much Time Will It Take

If you are working full-time, when will you find the time (and energy) to complete all these additional tasks while holding down your job? What happens if the only time a prospective buyer can view the house is during your working hours, and you cannot take off the time to show the house? What if the buyer can’t qualify for a mortgage? These are just a few of the many issues that you will have to handle as a FSBO seller.

What Is the Bottom Line

If you are lucky enough to own a prime piece of real estate in a hot market area, you might get lucky and sell your house with a minimal amount of time, effort and expense. On the other hand, your house could sit in a glutted, buyer’s market for months or even years before you finally get a reasonable offer, or it could become a statistic and join the thousands of other not sold properties on the market. 

We'll be answering other questions like this about the home selling process in our new book The Fastest Ways to Sell Your Home in Any Market. We hope to have it ready for publication by fall of 2012. If you need tips on buying a home, be sure to pick up a copy of our book Buying Your First Home? Insider Secrets You Must Know. It's available in print or Kindle at Amazon, Barnes and Noble or at your local bookseller. 

What Is Your Opinion?

Should you sell your own home or hire a real estate professional to do the work for you? We would like to learn more about your thoughts on this subject or your personal experiences. Please drop us a note in the comments section below with your input. 

Image: Free Digital Photos by vichie81 under royalty free license

How to Raise Your Credit Score Quickly: Three Alternatives For Establishing Credit You May Not Have Considered

Handle credit wisely

One hurdle first-time homebuyers often face is being unable to qualify for a mortgage because their credit score is not high enough. However, most of these individuals are not unable to qualify because they have bad credit or have made poor financial choices; rather, their credit scores are low because they have not yet established a solid credit history.

Try these three waysto increase your credit score and start building a clean credit record that will help you qualify for a home loan to purchase the house of your dreams.

Partner With Your Current Creditors

Even if you do not have any installment loans such as a car payment or other large financial obligations for which you make regularly monthly payments (think student loans), there are probably people to whom you make payments each month. For instance, since you don’t own a home, you are probably renting a residence, which means you make rent payments. Ask your property owner to help you out, explain that you are trying to establish a clean, solid credit history, and request that he or she report your timely payments to agencies such as Equifax, Experian or TransUnion.

Manage Your Credit Wisely

Keeping your balances paid off each month is your smartest move, but if you find yourself unable to do that, make sure you pay down the card with the highest balance as soon as possible. Having too many credit cards hovering at the maximum credit limit lowers your score dramatically. 

Dispose of all those preapproved offers that flood your mailbox or email inbox and don’t open any new accounts. However, be cautious about closing unused accounts because they don’t simply “disappear.” The payment history on them will still show up on your credit report and will affect your scores. 

If you don’t have any credit cards at all and are carrying very little debt, consider getting one just to help establish your credit history, but use it judiciously. Pay off the balance every month and pay it on time. Late payments have a tremendous negative effect on credit scores.

Monitor and Maintain Your Good Record

Don’t disregard that letter that says your account at the hospital or physician’s office is being sent to a collection agency just because you think that the check from your insurance company is on the way and everything will be fine. Insurance companies do not always pay claims as promptly as one would wish or a claim could be disputed. Contact the company or organization that sent you the letter promptly and work with them to clear the matter up before a collection agency becomes involved. Just like late payments, an account that is sent to a collection agency could come back to haunt you when you apply for a home loan.

Be Persistent

There’s an old adage about how hard is can be to get your first job because all the employers are looking for someone with experience and you don’t have any. If you can’t get a job, how will you ever get any experience? The answer is you keep applying for jobs and putting your best face forward at every interview until you “sell” someone on the idea of hiring.

Establishing a high credit score works in a similar fashion. Keep paying your bills on time, make sure that your credit history is accurate, and eventually you will “sell” a mortgage lender on the idea of your credit worthiness.

Did you know that you are entitled by law to a free annual credit report?According to the Federal Trade Commission's website, the only authorized source for this free report is AnnualCreditReport.com. Be sure and take advantage of this valuable resource to help you monitor your progress as you build your credit history.

What Are Some Other Ways to Raise a Credit Score Quickly?

We love feedback from our readers and we are amazed at their creativity in handling issues like these. Please share your experiences in establishing or repairing your credit scores by leaving us a note in the comment section below. 

Get the answers to your FAQs

Are you interested in owning your own home, but you have unanswered questions about how to go about it? You can find answers to some of the most frequently asked questions about the home buying process by reading our new book Buying Your First Home? Insider Secrets You Must Know. It's available in print or you can download a copy to your Kindle device.

Image: Free Digital Photos via Salvatore Vuono

Dressed to Impress: Does Home Staging Improve Sales?

Stage important areas such as bathrooms to create an emotional appeal for buyers

Someone asked us recently if staging their home would help them get a faster sale. Although it is our experience and perception that staging makes a home look inviting, helps potential buyers connect with a property emotionally, and generates a faster sale, we did not really have any hard and fast data to support our view. 

Therefore, I decided to “don” my investigative reporter’s hat and see what I could find. Here are my results:

Staged Homes: Staged Homes is Barb Schwarz’ website. If you are not familiar with Barb, she is the creator of two popular home staging concepts: “Staging to Sell” and “Staging to Live.” With over 40 years of experience in the home staging industry as an educator, author, trainer and speaker, and with more awards and accolades than could be listed here, she has my vote as a voice of authority on the topic of home staging. According to her website, “945 of ASP Staged Homes sell on average in 29 days or less.”

Biased or Unbiased?

Now, there are those that could argue that these stats are biased as they are based on the staging being done by those who are trained by Barb’s company. However, with no professional training at all, and using tips I gathered from the Internet, personal experience, and books on the topic, I staged a spec home of ours that had languished on the market for over a year. The home sold in 30 days; you can read the full story and see pictures of the staging by reading “To Stage or Not to Stage? Tips for Home Staging.” If I can do that with no training, imagine what someone who has been trained by an expert like Barb could achieve for you! 

Disclaimer

Please understand that I have no affiliation with Barb Schwarz nor am I endorsing her company or service. I am merely stating that it is hard to ignore her record of accomplishment. As I continued to research the question of the value and/or return on investment for the topic of home staging, I found an interesting piece on Fox News, which is known for its unbiased, fair and balanced reporting. To my delight, guess whom they were quoting as their expert source – that’s right, Barb! Here’s what she had to say during their interview: “You want to make an investment on your investment. The buyer will want the best product for the best price with the best wrapper."

Should You Stage or Not? 

To wrap this up, in our professional opinion and based on both our personal experience in selling real estate combined with the research I’ve done, it seems clear the benefits of staging can outweigh the cost aspects of the service for most sellers. Like most other considerations when selling a house such as making major repairs or renovations, it does depend on your situation and circumstances. 

Our rule of thumb has always been to advise sellers to make sure that they can recoup at least $2 for every $1 that they spend on anything to “help” the home sell faster be it home staging, home improvements, or repairs. If you want more information on the pros and cons of home staging, ask your real estate professional. Because of their experience and knowledge of your local area, they are in the best possible position to advise you on whether or not to stage your home.

What Do You Say?

We are always looking for feedback from our readers to help us fine-tune the reading experience for all. Please leave us a note in the comments section and share your experiences - positive or negative - with the process of home staging.

Are You Buying a Home?

If you are thinking about buying a house or currently in the home buying process, you may want to check out the insider information in our latest book, Buying Your First Home? Insider Secrets You Must Know. It is available in print or if you prefer, you can download the e-book version to your Kindle device.

Image: Free Digital Photos by winnond

References:

Fox News

Staged Homes

Moving Day: Who Else Wants Tips to Make Moving Smooth and Painless?

Moving in is the best part of the home buying process

We are almost at the end of our journey together through the home buying process, and we hope you have enjoyed the trip as much as we have. 

While it hasn't always been easy, and you have had to do lots of homework during the procedure, you are now the proud owner of a home that fits your lifestyle, your values, your budget and most importantly, your dreams.

Before we say our final goodbyes, we want to leave you with some hints, tips and tricks that can make moving day more pleasant and less stressful for everyone.

Making a move is usually a four part process: planning, packing, moving, and unpacking. Let's look at each to see how we can streamline the procedure.

Planning

During your planning phase, think about any remodeling or repairs you want to make to the property before you move in. For instance, if you want to repaint the interior, replace carpet, or refinish hardwood floors, the process is easier and quicker if you complete these projects before occupying the property. Obviously, laying new carpet is much easier if the workmen do not have to move furniture and so forth.

Decorate: You may want to measure windows and make some decisions about window treatments or other accessories to buy. While you may want to wait until after you move in to purchase these items because there is no sense packing any more items than you have to, it saves you the stress of making those choices when you are already stressed out from unpacking and organizing your new home.

Re-key and remodel: Go ahead and have new locks made for the doors, and make any electrical upgrades that may be needed. For example, if you are planning on adding ceiling fans or additional lighting such as track lights, have those upgrades done before the move if at all possible.

Organize: Make a list of everyone who will help you move, and notify them of your move-in date. Two or three days before the move, call and reconfirm your helpers. If you are using a professional moving company rather than relying on "friend power," it is still a good idea to reconfirm your appointment and all the pertinent details.

Prioritize: Appoint a moving supervisor if you don't plan to take that role for yourself. Much like a wedding planner is the key person who keeps moving the events of the wedding forward and makes sure everyone is where they are supposed to be at the appointed times, your supervisor works from a master list and makes sure nothing gets left behind or undone.

Celebrate: Now that you are a home owner, there are tax deductions from which you benefit. Check with your income tax preparer or the IRS website to see what, if any, deductions you can take for expenses related to your move.

Document: Create a file for all your important documents such as insurance policies, birth certificates, immunization records, medical and dental records, prescriptions and so on. Include an up-to-date list of important phone numbers: your doctor, dentist, therapist, lawyer, real estate agent, etc.

 If your move includes pets, you need copies of their immunizations and rabies certificate(s) as well. Make sure all pets are wearing identification tags, and keep them in their crates or carriers.

Keep this file with you and hand carry it to your new home rather than taking a chance on packing it and then not being able to locate it quickly in an emergency. In addition to your documents, keep all necessary prescription medicines and valuables on your person rather than entrusting them to the movers.

De-clutter: Have a yard sale and sell the unused, unwanted items you do not plan to move to your new home. Stash the cash away and use it to treat yourself to a nice dinner on moving day when you are tired and hungry.

Use up:  Use or dispose of perishable items and chemicals or other hazardous items that you cannot or do not want to move. Prepack items that you use only rarely so you have a jump start on moving day.

Eat it up: If you can't consume all the food or frozen items before the big day, give them to friends and neighbors. You'll be amazed at how much relief from moving stress you'll enjoy by letting go of those items and moving on.

Sitters: Make arrangements for child and pet care on moving day. Moving is a traumatic event for little ones and pets, so do your best to keep their stress levels low.

Notify: Let the school system and utility companies know about the impeding move. Arrange for school records to be transferred if necessary, and leave forwarding addresses with the utilities if you anticipate any refunds on utility or housing deposits.

Packing

1. Have plenty of packing supplies on hand such as boxes, wrapping materials (think packing peanuts or bubble wrap), permanent marking pens, tape measure, packing tape, scissors, and old newspapers.
2. If you kept the original packaging materials from the purchase of large items such as televisions or computers, your safest bet is to repack them in those. If not, put all wiring, cables, screws and other fixtures in a sealable plastic bag and tape the bag to either the item or the box in which it is packed.
3. If boxes weigh approximately 40 to 50 pounds each, they are easier to stack, to load and to remove on location.
4. Mark each box with the contents, where to place it on the moving van or truck, and which room it should go to at the new location.
5. Remember that books are heavy so avoid overloading boxes with too many books or they may burst when they are picked up.
6. Pack up room by room and layer boxes: lighter items on top, heavier ones on bottom. Tape the box, label, stack and move on to the next one.

Moving

Let's talk about what you will not be able to move. If you are using a professional moving service, they have probably already given you a checklist or their guidelines for any items that they are not permitted to move. However, if you are making the move yourself, there are some items that cannot be transported across state lines.

Obey laws: Be sure to check with the U.S. Department of Agriculture before you move food and plants across state lines. Rules and regulations vary widely from state to state and you want to make sure you comply with the letter of the law. 

Houseplants, pets and perishable foods are some of the trickiest items to transport safely. In our experience, if it will not cause you incredible trauma, it's better to just give the houseplants away rather than try to move them. Regulations on pets vary from state to state so check ahead to see if your pet needs any health documentation from your veterinarian or if it will have to be quarantined for any length of time.

Special needs: Pets are a different story. The best scenario is to board them or to place them with a friend for a day or two if at all possible to keep their stress levels down. If that isn't possible, move them in their crates to give them a sense of being in a somewhat familiar situation, and get them moved into the new house first. For safety, you will probably want to leave them in their crate or carrier as long as the movers or strangers are in your new home.

Unpacking

Do yourself a favor before you start unpacking the first box. Assess your situation and decide which items you need first and where you need to focus your efforts for the maximum result. Wanting to get all the boxes unpacked, the debris hauled away, and everything neatly in its place is a normal response to the chaos of moving, but trying to accomplish it on the same day you move in is not realistic. Give yourself permission to unpack over the space of a few days, and stop when you start to feel frustrated or fatigued.

As a general rule, you will want to take care of necessities first, which means you will probably start in the bathroom or kitchen areas first. If you have to leave the mattresses on the floor and have a huge family sleep-in, who cares? You are now the owner of this castle and you can do as you please.  

Are you still looking for your new home? If you need tips on the best questions to ask before you hire your real estate professional, we've got you covered. 

Need help to understand what happens at a real estate closing? Check our archives for all the valuable information you need to know about the home buying process or purchase a copy of our new book, Buying Your First Home? Insider Secrets You Must Know.

You can purchase it in print or for a Kindle device on the Amazon website. 

Share Your Thoughts

How about you? How did your moving day go? What would you change or do differently the next time? We love hearing back from our readers with tips and tricks. 

Image: Download key in pocket by Michal Marcol via Free Digital Photo

What Happens at a Real Estate Closing?

Closing the sale is part of the home buying process

Now that you have found your dream home, made your purchase offer, and obtained your mortgage (among other things), you are ready to "go to closing." However, what happens at a real estate closing?

The Next to Last Step

The closing is (almost) the final step in the home buying process; moving is the final (and the most fun) step. Your real estate agent may refer to this as the closing or the settlement; the terms are synonymous. 

The closing is facilitated by either a settlement agent or the closing attorney, depending on how the lender and seller have agreed to finalize the sales transaction. 

The other attendees will be the seller and his or her agent and you and your agent. 

Closing is an important part of the home buying process because this is the process by which all legal titles and all legal rights to the property pass from the seller to you.

While the actual closing process will vary from state to state and even from closing agent to closing agent, in general you can expect to:

1. Sign all the documentation to finalize the home sale
2. Receive an evidence of any executed deed and any other pertinent documentation. The actual deed is mailed to you after it is duly recorded.
3. Pay your closing costs

Some of the documentation that must be presented at closing includes but is not limited to:

1. Appraisal
2. Title Insurance Policy
3. Truth in Lending Statement
4. Termite Inspection Certificate
5. Water and Sewage Certification
6. Mortgage Note
7. Deed of Trust
8. Hazard Insurance Policy
9. Homeowner Insurance Policy (be sure to bring your proof of payment)
10. Flood Insurance Policy (where applicable)
11. Certificate of Occupancy (CO)
12. Settlement Statement (HUD-1 form)
13. Right of Rescission Disclosure
14. Other documentation as required by law

Prior to closing, you provided all of your required documentation to the lender as part of the loan application process. 

You'll get the key to your new home at closing.

How Your Agent Helps You With Closing

Before we go into the next area of discussion, this is the time when the true real estate professional is worth his weight in importance and earns his or her commission. 

This is one reason we've urged you to spend time interviewing real estate professionals before you make your hiring decision.

It is imperative in the last few days prior to closing that the agent become extremely proactive and sees to it (as much as he is able) that everyone that is involved is doing what they are supposed to do when they are supposed to be doing it.

As an agent, I can tell you that I can't count the number of times that I have gone to closing only to discover that some attorney, real estate agent, mortgage lender, secretary or someone else has neglected to do their job in a timely fashion. The agent has to be a "bird dog" and nudge everyone involved in the closing process to do what they need to do.

This is where the high tech world has lulled some professionals into a false sense of security. They think that they can get any task done at the last minute via fax or email, but these electronic marvels are subject to glitches and malfunctions just like any other tool or resource. 

Check items off your list as you complete them

Closing To-Do List

Here are some important tasks you will need to complete before closing:

• Schedule and perform a final walkthrough of the property. This will be your last opportunity to ensure that all discrepancies and agreed-upon repairs have been mitigated.
• Confirm the date, time and location of the closing.
• Obtain a certified check for the amount of your down payment and closing costs. 

Your real estate professional can give an exact amount prior to closing so you can get your check in plenty of time. 

Who Pays What

On the settlement statement, there is a section which details which closing costs are paid by the seller, and which are paid by the buyer. As a rule of thumb, the seller pays for costs such as making a new deed, the certificate of sewage and potable water, and any other costs that were agreed upon in the sales contracts. The buyer pay points, attorney’s fees, documentation and recording fees, postage and so forth. 

However, oftentimes the seller will agree to pay additional closing costs such as the points in order to expedite the sale or make the offer more attractive to the buyer. Sometimes closing costs are rolled into the mortgage itself.  The bottom line here is every contract is different; your agent will answer any questions that you may have.

Avoiding Glitches

The odds are that your closing will go smoothly without a single hitch. That's because you did your due diligence before you ever started the home buying process and you have surrounded yourself with top-notch professionals to help you through the process. However, there are no guarantees in life, and an ounce of preparation is worth a pound of cure and goes a long way toward avoiding any last-minute delays. Here are three key areas to consider:

1. Compare your settlement statement to the Good Faith Estimate. Make sure you understand both documents completely. If the amount of funds you will need to close the transaction is significantly different make sure you understand why. Bring a certified check for the exact amount and made out as directed by your loan officer or real estate agent.

2. Bring all the necessary documentation to closing. It is much better to have something and not need it, than to need it and not have it, so feel free to go a little overboard when you are planning what to take to closing. As a minimum, you will want to have proof of payment for your homeowner's insurance, your driver's license or a valid photo ID, and your checkbook in case there are any unforeseen charges.

3. You already confirmed that the property was in move-in condition at the final walk through. The sellers should have vacated the property and removed all personal items. This is especially important if the property was occupied by tenants rather than the property owner.

Once all the paperwork has been signed and monies have been exchanged, you'll be given the keys and the appropriate documentation for your new home. Congratulations! You have succeeded in your journey as a first-time home buyer, and you can move into your new home and start experiencing the pride of home ownership. 

If you need more tips to help you move quickly through the home buying process, be sure to order your copy of our book, Buying Your First Home? Insider Secrets You Must Know. 

This handy guidebook for homebuyers is available for a Kindle device or in print. 

Share Your Thoughts

If you are getting ready to close on your first home, you may have other questions or concerns that we haven't addressed in this article discussing what happens at a real estate closing. Drop us a line in the comments section and we'll be glad to offer our advice and suggestions.

Image: Signing the contract by Ambro via Free Digital Photo
Image: Hand take key by ntwowe via Free Digital Photo
Image: Download checklist by Rawich via Free Digital Photo 

Three Reverse Mortgage Questions and Answers You Need to Know

Will you win or lose with a reverse mortgage?

What is a reverse mortgage?

When you take a reverse mortgage, you no longer reduce the principal on the loan amount of the mortgage. In fact, you are going backwards because instead of making payments on the mortgage to the lender, you receive payments in a stipulated monthly amount from the lender. 

These payments continue until you have received an amount that is equal to the value of the house. At this point, the house is no longer yours. A point to mention is that these mortgages are for seniors (ages 62 and older); they are not designed for younger folks.

These types of mortgages are marketed very heavily to the senior demographic currently. In my opinion, I would not care to get involved in one because you are taking a buy down plan on the equity you have accumulated in your property. In addition, there are costs and fees associated with obtaining a reverse mortgage just as there are with any other mortgage product.

If I wanted to access my equity and have the liquidity of ready cash, I would simply tap the equity and put the money where I choose to instead of being tied to a monthly stipend that someone else has structured. 

If you decide to take this route, be diligent in your research on reverse mortgages. Make sure you understand the terms to which you are agreeing. Do not be swayed by seeing some well-known actor on television hawking one of these mortgages. 

Are reverse mortgages regulated federally?

Yes and this is why you need to do your research. You need to find out to what degree you are protected. According to the FDIC, "Reverse mortgage lending is subject to many of the same underwriting requirements and consumer compliance regulations as traditional mortgage lending."

What are the benefits of a reverse mortgage?

It makes budgeting easier because there is a fixed monthly amount that you can use for planning purposes so you are dealing with known rather than unknown factors. If you prefer, you can take a lump sum payment. 

In addition, most of these loans are nonrecourse loans (although you will want to verify this with your individual lender to make sure your loan is indeed a nonrecourse type), which in plain English means you are not personally liable for the debt.

There may be other questions such as what happens if you die during the term of the loan or whether you can continue to live in the house when the loan is paid up. All these things are provided for contractually.

Be sure you know the terms that pertain to  your particular situation you make a final decision. Your mortgage banker is your best source of information for the most up-to-date facts, and you should have your attorney review the contract before you sign.

For more answers to frequently asked questions about mortgages, be sure to read "First Time Home Buying Questions About Mortgages," which is our blog post on this topic. To learn more about mortgage financing and decipher the jargon you may hear your real estate agent or lender use, check out our post about answers to financing questions you may have as a first time home buyer.

If you have questions of a more general nature, you might be interested in our answers to your first time home buying questions.

It's Here!

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We're happy to announce that copies of Buying Your First Home? Insider Secrets You Must Know are available now in print or for Kindle.

Reserve a copy  by leaving us a note in the comments section, and we'll be glad to autograph it for you:)

Bibliography: Lafleur, David D. "Reverse Mortgages: What Consumers & Lenders Need to Know"

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