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• How much should I spend on my next home?
• How can I find a good real estate agent when buying a home?
• Can I save money by buying a home without a real estate agent?
• How can I negotiate the lowest price when buying a home?
• Should I have the home I want to buy inspected?
• What should I watch out for when dealing with home contractors?
• How much should I expect to pay in closing costs?
• Should I buy or rent?

SELLING A HOME

• How can I find a good real estate agent when selling my home?
• Which type of listing agreement should I enter into with the real estate
  agent?
• How can I speed up the sale of my home?
• How can I get the best price for my home?

MORTGAGES

• How can I minimize the problems in getting a mortgage?
• How can I lock in a mortgage most effectively?
• How are escrow payments calculated?
• What should I do if my bank or other mortgage lender sells my
  mortgage?
• When can I stop paying private mortgage insurance?
• How can I avoid paying private mortgage insurance?
• Should I prepay my mortgage?
• When should I refinance my home?
• Should I pay off my mortgage?
• What are the different options for mortgages?
• How do I choose between low rates and low points on a mortgage?
• Which mortgage is best for me?

PLANNING FOR YOUR MOVE

• How can I get the best deal in hiring a moving company?
• How can I minimize the problems in moving?
• Whom should I notify of a new address?

To find an agent, look for the following traits. 

Is the Agent Full-Time? Is the Agent Experienced? Be sure the agent has been doing the type of work you will need him or her to do for at least a few years. 

Does the Agent Listen, and Communicate Clearly? The agent must be able to learn what’s important to you in your home purchase, and to tell you what you need to know about a home.

Is the Agent Willing to Negotiate For You? To get the best home for your dollar you’ll have to negotiate with the seller on the price. If the agent is not willing to show you houses that are 20% over your price range, or to go to bat for you when negotiating with the seller, you need to find a new agent. 

Is the Agent Careful In His or Her Work? You need an agent who will cover all the details that go into buying a home.

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• Be willing to walk away from a deal. If you decide you must have a certain house, you have already lost negotiating power. There are other good properties out there.
• Learn everything you can about the property before making your offer. For instance, how long has it been on the market? Has the buyer dropped the asking price? Why is the owner selling? The answers to these questions will help you to negotiate.
• Know what comparable homes are selling for.
• When the seller won’t budge on price, try to negotiate something else. For instance, try to get the seller to pay for repairs or improvements you would have done yourself.
• Don’t forget the real estate agent’s commission. This is negotiable, too.

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The inspection fee for a typical one-family house varies geographically, as does the cost of housing. Similarly, within a given area, the inspection fee may vary depending upon the size of the house, particular features of the house, its age, and possible additional services, such as septic, well, or radon testing. The knowledge gained from an inspection is well worth the cost. The inspector's qualifications, including his experience, training, and professional affiliations, should be the most important consideration.

Since there are no licensing requirements for home inspectors (except in Texas), make certain that such an association has a set of nationally recognized practice standards and a code of ethics. This provides members with professional inspection guidelines, and prohibits them from engaging in any conflict of interest activities.

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Your lender must send you an estimate of your closing costs shortly after receiving your application. Your realtor, lawyer, or escrow agent will give you the exact amount before closing. If you have only enough cash for a down payment, you can fold closing costs into your mortgage, but you will have to pay a higher interest rate.

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You may want to rent, however, if you can find cheap housing, such as a rent-controlled apartment. If you are young and single, newly divorced, or move often with your job, renting may make more sense. It's tough to recover the costs of buying a home within the first few years. Retirees also may want to sell the family homestead and invest the proceeds. Renting may be a good idea for anyone living in an area where housing prices are falling. Then you can wait until the market bottoms out before you buy.

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You will generally have to enter into an exclusive listing, which gives the agent the exclusive right to sell your house for a limited period of time. The listing agent gets 100% of the commission if he or she sells the house, and part of the commission if another broker sells the house.

	TIP: Use an exclusive right to sell agreement, for a period of three months. This will give the broker an incentive to sell the home, and it will still give you an out if you feel the broker isn’t doing enough for you. If you have a lot of confidence in the broker, and you have seen and approved his or her plans for marketing the home, you may wish to sign for six months.
	TIP: If, at any time during the marketing process, you feel that your broker is not as effective as he or she could be, switch brokers. Do not waste time with a broker about whom you have doubts.

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Here are some ideas for working with your broker to speed up the sale of your home. 

Offer a warranty. Sometimes offering a warranty on the roof, electrical system, appliances, or other area that is causing the buyers to balk can speed up a sale or smooth the negotiating process. 

Create a home sale kit with your broker. This consists of flyers to be distributed to potential home buyers. The flyer should contain photos of your home’s exterior, interior, and surroundings and should list major selling points. It should include information about utility costs, taxes, and a floor plan. 

Do not help the broker show the home. Allow the broker to do his or her job, and make yourself available for questions, but do not try to help sell to potential buyers who are looking at your home. 

Offer a bonus to your broker, and offer to pay half of the points on closing. Finally, if your house has been on the market for a long time, take it off and re-list it at a later time.

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• Find out as much as possible about the potential buyer’s situation. Knowing whether the buyer needs to buy a home quickly or is in a position to take plenty of time to negotiate will help you in deciding what type of negotiating stance to take. Knowing about the buyer’s family will help you to point out selling points of your home. And knowing whether the buyer needs to equip him- or herself with all new appliances and furniture enables you to throw in deal-sweeteners—e.g., refrigerators, washer and dryers, and furnishings.
• Reveal as little as possible about your own situation.

Overall, it’s important to avoid having the negotiations become confrontational, which can kill a potential deal. The offers you receive will be 10 to 15% below your asking price. Do not be offended by this or by any "low-balling" techniques engaged in by buyers. Be willing to make some concessions. Make counter-offers to try to bring the offer closer to your asking price. If you feel that an offer is unreasonable, however, there’s no reason to entertain it.

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When you first meet with your lender, be sure to bring the following documents:

• The purchase contract for the house
• Your bank account numbers, the address of your bank branch and your latest bank statement, plus pay stubs, W-2 forms, or other proof of employment and salary.
• If you are self-employed, balance sheets and tax returns for 2-3 previous years.
• Information about debts, including loan and credit card account numbers and the names and addresses of your creditors.
• Evidence of your mortgage or rental payments, such as canceled checks.
• Certificate of Eligibility from the Veterans Administration if you want a VA-guaranteed loan.

Ask the lender what has been their average time for processing loans recently and whether the lender's loan volume has increased.

Those who are rejected for a mortgage may be rejected because of a "credit score." To improve your credit score a few months before applying for a mortgage, pay down your credit cards; obtain a copy of your credit report so as to be able to dispute any errors; keep only a few credit cards, and do not apply for credit unless you really need it; start paying bills punctually (if you do not already do so)—your recent history is counted heavily; if you haven’t borrowed enough, take out a small loan or obtain a credit or charge card to beef up your credit history; and try not to change jobs.

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When considering a lock-in, you should ask these questions. 

• Does the lender offer a lock-in of the interest rate and points?
• When will the lender let you lock in the interest rate and points?
• Will the lock-in be in writing?
• Does the lender charge a fee to lock in your interest rate?
• Does the fee increase for longer lock-in periods?
• If so, how much? If you have locked in a rate, and the lender's rate drops, can you lock in at the lower rate?
• Does the lender charge you an additional fee to lock in the lower rate?
• Can you float your interest rate and points for now and lock them in later?
• What rate will be charged if the lock-in expires before settlement-the rate in effect when the lock-in expires?
• If you don't settle within the lock-in period, will the lender refund some or all of your application or lock-in fees if you decide to cancel the loan application?
• If your lock-in expires and you want to get another lock-in at the rate in effect at the time of the expiration, will the lender charge an additional fee for the second lock-in?

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To cover possible tax or insurance increases, the federal Real Estate Settlement Procedures Act (RESPA) permits the lender to add to the yearly amount two months of extra payments prorated monthly. So, the lender would collect an additional $200 divided by 12, or $16.67 per month, for a total escrow payment of $116.67 per month. 

To determine if you are being charged correctly, compare your escrow payments with what you owe annually on your hazard insurance and property taxes. You can get this information from your local tax authority and your insurance company. If the lender charges you substantially less than the required amount, you will need to pay an additional lump sum at the end of the year. If the lender charges you substantially more, it may tie up your money unfairly, as well as violate the RESPA regulations.

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• They must provide a disclosure statement that says whether the lender intends to sell the mortgage servicing immediately; whether the mortgage servicing can be sold at any time during the life of the loan; and the percentage of loans the lender has sold previously.
• The lender also must provide information about servicing procedures, transfer practices, and complaint resolution.

• The name and address of the new servicer.
• The date the current servicer will stop accepting mortgage payments, and the date the new servicer will begin accepting them.
• Free or collect call telephone numbers for both the current servicer and the new servicer that you can call for information about the transfer of service.
• Information that tells whether you can continue any option insurance, such as mortgage life or disability insurance, and what action, if any, you must take to maintain coverage. You also must be told whether the insurance terms will change.
• A statement that the transfer will not affect any terms or conditions of the contract you signed with the original mortgage company, other than terms directly related to the servicing of such loan.

For example, if your old lender did not require an escrow account, but allowed you to pay property taxes and insurance premiums on your own, the new servicer cannot demand that you establish such an account. They must grant a 60-day grace period, in which you cannot be charged a late fee if you mistakenly send your mortgage payment to the old mortgage servicer instead of the new one. Respond promptly to written inquiries. If you believe you have been improperly charged a penalty or late fee, or there are other problems with the servicing of your loan, contact your servicer in writing. Be sure to include your account number and explain why you believe your account is incorrect. Within 20 business days of receiving your inquiry, the servicer must send you a written response acknowledging your inquiry. Within 60 business days, the servicer must either correct your account or determine it is accurate. The servicer must send you a written notice of what action it took and why.

If you believe the servicer has not responded appropriately to your written inquiry, contact your local or state consumer protection office. You can also send your complaint to the FTC. Write to: Correspondence Branch, Federal Trade Commission, Washington, DC 20580. Or, may want to contact an attorney to advise you of your legal rights. Under the National Affordable Housing Act, consumers can initiate class action suits and obtain actual damages, plus additional damages, for a pattern or practice of noncompliance.

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Some lenders require you to keep the PMI forever, and others make you keep it at least five years.

To find out whether you can cancel the coverage, send a letter to your mortgage servicing company (the company to which you send your mortgage payments). This will get the process started. You may be required to pay for an appraisal, and you will need to have a good payment record.

If you are able to cancel the insurance, you will receive any pre-paid premiums that are in your escrow account.

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If you only have 5 percent to put down, you may still be able to do the deal. You will pay a much higher interest rate on a 15 percent second mortgage, however.
 

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1. You do not have an emergency fund stashed away—three to six months’ worth of expenses. All extra funds should be put towards this cache. You can begin paying down your mortgage afterwards.
2. You have a large amount of credit card debt. In such case, all of your extra funds should be used to pay down those debts.
3. There are a few individuals who may be better off not paying down their mortgages, since they will achieve a better return by investing that money elsewhere. Whether an investor fits into this category depends on his or her marginal tax rate, mortgage interest rate, return achievable on an investment, and long-term investment goals.

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Refinancing can be a good idea for homeowners who want to get out of a high interest rate loan to take advantage of lower rates or those who have an adjustable-rate mortgage (ARM) and want a fixed-rate loan in order to know exactly what the mortgage payment will be for the life of the loan. It is also a good idea for those who want to convert to an ARM with a lower interest rate or more protective features than the ARM they currently have. Finally refinancing is recommended for those who want to build up equity more quickly by converting to a loan with a shorter term or want to draw on the equity built up in their house to get cash for a major purchase or for their children's education.

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Make sure your loan has no prepayment penalty. You can make an extra payment once a year, pay every two weeks instead of every month, or just send in whatever you can afford above your normal monthly mortgage payment. The larger the extra payment and the sooner you make it, the faster your mortgage will be paid off and the more you will save in interest. Contact your lender to make sure your payments will be credited toward principal rather than future payments. There is no need to pay a third party to arrange extra mortgage payments.
 

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There are now many different kinds of mortgages that combine aspects of both fixed-rate and adjustable loans. A mortgage may start as a fixed-rate loan, for example, and then convert to an adjustable after several years. One loan that has been around a long time is a balloon. It has low, fixed payments for a period of years, and then the entire loan comes due. Considered very risky, it is sometimes used by a seller to help a buyer with the down payment. Banks now offer balloons that can convert to fixed-rate or adjustable mortgages. 
 

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An adjustable rate mortgage, or ARM, is riskier but often less costly. ARMs typically offer below-market teaser rates and then adjust according to current interest rates as often as every few months. These loans set caps on the interest rate and the amount it can ratchet up each period. Be careful of loans that have payment caps because they can leave you owing more money on your mortgage each time you make a payment if interest rates rise quickly. ARMs are best for people who need initially lower monthly payments, who expect their income to rise, or who expect to live in their home for five years or less.

Mortgages with 30-year terms are still the most popular although 15-year mortgages are gaining favor among people who want to build equity faster at a lower cost. Many homeowners with 30-year mortgages, however, can also lower their costs and shorten the term of their loans by paying extra each month.
 

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Call a number of movers for estimates. You’ll have to provide them with the number of miles involved in the move and the approximate weight of your belongings. The mover will help you in making this estimate.

Do not use a mover whose estimate seems too low. The services provided may be second rate.

Ask in advance about extra charges for heavy items, stairways, or pianos. Be aware that having the movers pack for you will increase your moving bill by about 30%. Also, you may pay a premium if you schedule your move during busy moving times, generally after the 25th of the month or before the 2nd.

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• Decide which items you are leaving behind for the new owners, and tag them.
• If your move is job-related, ask whether your employer will reimburse you for part of the cost.
• Save any receipts relating to the move, since part of the cost will be deductible.
• Start shopping for a new bank in your new neighborhood. 
• Get a change of address kit from the post office, and start notifying everyone of your impending change. Note that you will need to follow the directions given by credit card companies, banks, and others to effect a change of address—sending them a change-of-address card will generally not be effective. 
• Call the schools in the new area to enroll your children.
• Get copies of your medical and dental records (and veterinary records). Be sure your move is covered by insurance—either the moving company’s insurance, or your homeowner’s insurance. Also, take care of transferring your homeowner’s insurance to the new home.

As you get closer to the date of your move, take care of the following. 

• Call utility companies and tell them to turn on service in the new place, and arrange terminate service in the old place.
• Switch your direct payroll deposit, and any automatic payments, to your new checking account. 
• Two or three days before you move, take the money out of your old account and transfer it to your new account. Be sure to leave your new address with the old bank.
• Shop for auto insurance in the new area (if moving out of state). 
• Transfer your brokerage account to your new area. 
• Defrost your refrigerator. 
• On moving day, check your contract with the mover. Be sure the total cost of the move is clearly detailed. Make sure the moving date, location, and insurance information is correct.

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