How to easily research an area before you buy your next home

By Salvatore Induisi

Buying a home is one of life’s major milestones, full of decisions and choices. Many concern the type and size of house or apartment, but the location is just as significant. Choosing the right area to live in can be a big factor in improving your lifestyle, and many people see it as just as important as the type of home they should buy.

Crime

Crime is a major factor these days when considering a move to a new area, and you want to ensure peace of mind by finding out as much as you can before making a decision. The traditional method, often suggested by realtors, is to take a drive through the streets at night to see if it seems quiet. This may give you some idea, but it’s not foolproof. It may not be fully representative of the area, or you might just pick on a quiet moment. You might even run into trouble on your fact-finding mission.

Thankfully, you don’t have to put yourself at risk for the sake of incomplete personal research – you don’t even have to leave the house! Simply access the details you need through one of a number of websites giving the crime statistics of any location in America. Sites like spotcrime.com let you zoom in on a map and show all recent misdemeanors in your chosen area, from low-end vandalism and theft up to assault and other serious crimes.

Researching the statistics in this way gives you a much more representative view of all the crime figures in your chosen area, but you should study the data carefully to work out how the information is analyzed and displayed. For example, areas with a high population density will obviously show higher crime rates per square meter, but that doesn’t necessarily mean you will be less safe.

Another great advantage of researching online is that you can find out about a new area from hundreds of miles away! No need to keep organizing trips for repeated visits; whatever your reason for moving long distance, all the information you need is right at your fingertips.

General feel of the area

Finding out about crime levels is relatively easy, and as we have seen the results are already analyzed for us. Other factors in choosing an area are less precise and largely depend on personal choice. Many homebuyers are just looking for a nice area that feels and looks good; they would like to spend some time in the neighborhood before deciding, but this isn’t always possible. Thankfully, if you are stuck in Illinois but thinking of moving to California, various platforms will allow you to zoom in on a map and take a virtual tour of the area.

This feature has already helped thousands of people check out a new neighborhood; they can see within minutes if they like the area and want to investigate further, or look elsewhere. Simple things like trees, architecture, and street layout can all be important, and now you can view these details from street level just as though you were driving around.

Schools and recreation

Education these days is one of the biggest elements in considering whether to move to a new area. Whether you have preschoolers or kids going off to college, you want to be sure you choose the right options for them in the years ahead. This difficult decision is often a deciding factor for parents when it comes to weighing up different locations.

Traditionally, researching into local schools has generally been pretty informal and unscientific. A parent often asks other parents about schools in the area and finds out which one they would recommend. This is a great way to meet other moms and dads and get a personalized view, but it’s not particularly efficient or representative when it comes to deciding your child’s education.

As with so many other things, there are now plenty of online tools to help you find the right educational options in the location of your choice. Sites like greatschools.org offer plenty of choices for potential homebuyers; you can research any area across the States, with results including each school’s specific highlights and facilities, as well as user reviews, and overall ratings.

Don’t forget to check out the local parks and recreation facilities too. They may be less important than your child’s education, but they can make a big difference to your quality of life. Again, you can research online to discover whether your chosen area has the local leisure and entertainment facilities your family needs to relax and spend quality time together, indulge in favorite sports or enjoy other outdoor activities.

House prices

Of course, the major factor for most people in deciding whether to move to a new area will be how expensive it is, especially the local house prices. It’s no good finding a great location if you can’t afford to live there! Fortunately there are a number of websites to help potential homebuyers here too. As well as the price of property now on the market, they show details of recent sale prices, and the average house prices for any given area.

These websites can also be an important tool in determining how much your home is worth on the current market and what you might expect to sell it for – a big factor in choosing your new location. You should also bear in mind other significant costs, such as any specific local or regional real estate taxes, and the actual moving costs, especially over long distance.

Choose the right location

Choosing the right location has long been a vital part of buying a new home, but now the internet has opened up a vast new range of research options. No longer dependent on word of mouth and traveling back and forth (or just hoping for the best!), every homebuyer now has access to as much data as they need. There are even sites, like city-data.com, which combine elements from a number of sources – crime figures, house prices and schools, for example - to provide all the information in one place. Although maybe not quite as detailed as specific sites, it can be a great place to start your research.

This article was written by Salvatore Induisi, owner of SFI Realty which is your #1 source if you're looking for Fort Lauderdale condos and homes.

How Much To Save Before Buying a Home

Knowing how much to save for a home is about more than just down payment if you're not paying for the property in cash. Purchasing a home is a often a large financial decision involving quite a lot of up front real estate purchase costs including future mortgage payments in some cases. 

In the United States, there are real estate purchase costs apart from the mortgage down-payment that may also be required at the time of sale. For example Realtor commission, closing costs, prepaid tax, mortgage insurance etc. may all be costs included in a mortgage contract. If the property is international, less costs may be required depending on the real estate regulations within that country. This article will discuss knowing how much to save for a home in terms of the following items:

• Down payment

• Mortgage and hazard insurance

• Closing and additional costs

• Property taxes

• First month's expenses

• Realtor commission

Downpayment

The down payment is the most obvious and essential cost needed for a new home. Depending on the type of loan this could typically range from a few percent to 20% or higher. Some owner financed homes may offer a rent to buy program where the buyer accumulates a down payment through the initial month's rent and then converts to a mortgage thereafter. The down-payment amount could be as low as a few thousand and as high as 10's of thousands or more dependant on the market value, location, and mortgage requirements if any.

Mortgage and hazard insurance

Mortgage insurance may not be required if more than 20% of the home's value is paid for in advance via down payment. Otherwise, mortgage insurance may be required by the lender. Moreover, for the owners own interest and that of the mortgage company, hazard insurance requirements can also be levied upon the tax payer. In real estate investing, having insurance can also hedge against investment risk. This insurance if combined with auto insurance may be discounted due to multi-coverage discounts offered by the insurer. Typically, mortgage and hazard insurance may run about $100-$200 per month combined. Sometimes, mortgage companies will require advance payment of one or both these types of insurance which don't necessarily include flood protection.

Closing and additional costs

Closing costs can add up to a few thousand depending on the percentage required by the mortgage company. For example, on a $125,000 USD property, a 2% closing cost fee would cost $2,500. In addition to the closing cost are other related fees having to do with the home's title, deed documentation, and other charges that might be added into the mortgage. Moreover, some loans require inspections to be performed to insure the quality of the home meets acceptable standards and to help protect the home buyer from unforeseen costs and expenses. The closing and other costs could end up costing between $2000-$5000 depending on the sale price of the real estate.

• Title registration and transfer

• Title search

• Property appraisal(s)

• Property inspection(s)

• Closing fee

• Miscellaneous expenses/'Junk fees'

Property taxes

Property taxes are levied by local government and vary in cost, but 1-2% of the home's 'assessed value' is an approximation that can be used when estimating the tax cost on the property. For State property tax values or exact tax percentages consult local government tax listings or a property tax comparison chart. Property tax may be required to be paid into an escrow account on a monthly basis. Thereafter, the mortgage company may pay the property tax separately to help insure the stability of the mortgage and it's loan to their client. This also consolidates payment of taxes for the mortgagee which can be helpful in bill paying.

First month's expenses

First month's expenses include mortgage payment, insurance, utilities, taxes and even furnishing and repairs to the property. Thus, it is possible the first month's expenses for a new property are going to be higher than in subsequent months. For this reason it can be a good idea to plan ahead financially in anticipation of such expenses as there may be items not mentioned in the seller disclosure that need repair, or the real estate may have been a foreclosure with property damage or you may simply want to customize the property to your taste. In such cases, an extra $1000-$4,000 or more can be needed and in some cases required by the mortgage lender.

Realtor commission

Unless a for sale by owner (FSBO) is used and the buyer does not seek the assistance of an agent or Realtor, a commission fee is paid to the facilitating agents of the home's sale. These fees typically range from 5-6% and may or may not be worth the cost depending on the buyer's experience, know how and ability to negotiate. An agent's cost may sometimes end up costing less than had an agent not be used at all due to the agent's knowledge of the marketplace and property purchase techniques. On a $125,000 property one can expect to pay around $6-$7,500 in commission.

How to Choose a Mortgage, Apply and get a Mortgage

One of the most important things to do before applying for a mortgage is to research the different types of mortgages and mortgage lenders. The reason this research is so important is because there are many lenders who simply don't care how much money goes out of the borrowers pocket and into the lenders pocket.

Mortgages are more often than not about bottom lines and profit for mortgage lenders, and to a lesser extent economic development. There are three considerations that can be considered when determining which type of mortgage to apply for. Those considerations are provided below as an informational source to aid the mortgage application decision.

Types of mortgages

• Interest Only Mortgages

Interest only mortgages pay nothing on the base loan of a mortgage making most if not all of a monthly mortgage payment apply to that interest as determined by the amortization schedule. The advantage of this type of mortgage is the monthly payment can be smaller, but the disadvantage is that it will be more difficult to build equity in the home. The reason for this is equity is built from home appreciation in addition to capital investment i.e. buying the value of the home by paying off the mortgage.

• Adjustable Rate Mortgages (ARM):

Adjustable rate mortgages have a lot to do with the housing crisis of the mid to late 2000's. Many of these mortgages were written for home buyers who did not completely understand the implications of the mortgage terms or who were overly optimistic about their ability to pay their mortgages at a later point in time.

The reasons adjustable interest rate mortgages are able to cause so much default and foreclosure is because when interest rates rise, so do the mortgage amounts. For example, a $100, 000.00 ARM with an initial interest rate of 5% would cost $416.00 without insurance, property tax and capital payments built in.

If an ARM was not an interest only mortgage, the actual mortgage amount would be somewhere between $500-$600/month with capital investment and other costs. For each 1% rise in interest rates that mortgage goes up by $100.00 per month. Depending on the size of the mortgage a 1% increase may or may not lead to a dramatic increase in payment, however for increases more than 1% on smaller mortgages and larger mortgages with increases of 1%, the annual increase can end up being in the thousands of dollars.

• Fixed Rate Mortgage

Fixed rate mortgages are as the name implies, mortgages with interest rates that do not change for the life of the loan. Whether it be a 15, 20 or 30 year mortgage, the interest rate will be steady for this kind of loan. An advantage of fixed rate mortgages is the borrower does not have to fear a dramatic rise monthly payments when interest rates change. However, if interest rates drop, the fixed rate mortgage holder is left with a monthly payment that could have been lower with an adjustable rate interest only mortgage.

• Prime, Alt-A, and Sub-Prime Mortgages

A few other categories of loans are the credit ratings and income reporting requirements of the borrowers. Generally, borrowers who have very good credit ratings and solid earnings statements and asset capital are considered to be prime mortgage borrowers. Borrowers who have good credit ratings but do not fully document income when applying for mortgages are classified as Alt-A mortgages. The last and riskiest category known as Sub-prime, are for those lenders with poor credit ratings and/or limited income and asset leverage.

Types of lenders

Lenders are very important in the mortgage process as they determine whether or not funds will be available in time to make a successful bid on a home. Many factors go into the lending process which can take as long as 2 months in some cases. Those factors include loan officer know how and experience, research of lenders, financial soundness of the lender, lender requirements and bureaucracy, and overall process functionality and integration as loans may start off with a loan officer but end up with an accountant for approval. Making sure the application gets from start to finish can sometimes take a little prodding.

• Online Banks

When applying for a mortgage online, banks will offer what they call a "pre-qualification". A pre-qualification is essentially a statement of willingness to consider financing based on a credit check. Pre-qualifications are not the same as pre-approvals which are bank guarantee funds will be supplied to the lender in the form of a loan.

There is a little harm in obtaining one or two pre-qualifications, but too many may negatively affect one's credit score so it is wise to only request pre-qualification from banks one is seriously considering borrowing from. The more creditable and financially sound the online bank, the wiser the choice may be. Incentives for using online banks may include but not be limited to lower interest rates and settlement costs.

• Federally backed banks

Banks such as Fannie Mae and Freddie Mac are not managed by the Government but are linked to the Government through loan subsidization programs. These programs have strict lending requirements but are fairly secure and cost effective if a mortgage borrower qualifies for such financing. Often, these types of loans are reserved for first time home buyers and/or home buyers with income levels below a certain dollar denomination.

• Private and national banks

Other brick and mortar lenders include private and public national banks. Some of these banks have stellar reputations and financial security and offer competitive rates and a variety of mortgage loan products. An advantage with such banks is the fact one can access a loan officer who will be quite important in determining how the loan gets processed and answering any questions regarding the application procedure.

It is important to research the differing incentives, interest rates and benefits of private and public lenders because they can vary considerably. Also, since the value of mortgages can become quite large, being frugal with percentage points and percentage point reduction programs can end up costing thousands of dollars in the long run.

Paperwork requirements

Paper work requirements vary with the standards and requirements of the mortgage lender. Paperwork may include tax returns from the last 5 years, complete documentation of assets and liabilities, pay stubs, credit reports from all borrowers, loan education and testing materials, application forms, disclosures, and any other relevant paperwork such as proof of marriage, prior bankruptcy rulings if any, and all debts owed. Generally speaking, all lenders will require some income, credit, and asset reporting with the application.

Determining which type of mortgage to apply for can take and should take a little time in order to research the right lender, type of mortgage, convenience, cost effectiveness, accessibility of loan officers and accountants, practicality etc. Feeling completely confident with a mortgage is important in the home buying process because there are so many variables involved of which the mortgage is one significantly important part. The information provided above can be used as a supplemental reference and/or starting point when searching for a mortgage.