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Before You Buy

The home buying process is exciting, but serious enough to deserve special attention and preparation. There is more to it than searching for the right home. You'll need to consider Maryland or Pennsylvania neighborhoods, schools, market values, the condition of the home, various inspections, your mortgage, title insurance, property insurance, and of course closing. Even experienced buyers can find this complex process a bit overwhelming. Don't worry. We are here to help. We will guide you every step of the way. You can use this site to help educate yourself on the process of buying a home. Please feel free to contact a professional Prudential Real Estate Agent with any questions you might have on your next Baltimore Real Estate, Harrisburg real estate, Lancaster real estate, York real estate, or surrounding Southern and Eastern Pennsylvania home purchase as well as homes for sale thorughout Maryland.

 

Is this a good time to buy my home?

YES! It is an excellent time to purchase your next Maryland or Pennsylvania home. Interest rates are at historical lows giving you more purchasing power. Due to increased cost of land development and home construction, prices are lower today than what they will be tomorrow. If you are looking to purchase a home, you may have an opportunity to purchase more home for the money if you act now.

For example, if home values increase 5% over the next year, a $100,000 house will be $105,000, a $300,000 home will now be $315,000. Plus, interest rates could be higher which would increase your mortgage payments even more.

It's also a good time to sell. There are ample buyers to purchase homes that are priced correctly, staged appropriately, and properly marketed.

We can help guide you through the home buying and home selling process.

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What is a buyer's agent and why do I need one?

A buyer's agent is a licensed Realtor whose loyalty and fiduciary responsibility is to the buyer. A buyer's agent can more fully advise buyers in all areas of the home buying process including proper handling of contract negotiations. Your buyer's agent will:

  • Explain steps & costs in advance
  • Guide you - so you're prepared
  • Conduct home searches for you
  • Show you available homes
  • Advise you about market conditions, pricing, and financing
  • Represent you in negotiations with Sellers, Lenders, Appraisers, Inspectors, Insurers, etc.
  • Manage your transaction - Mortgage, Insurances, Inspections, Repairs, Warranties, dozens of other details
  • Accompany you at final inspection and closing

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If you're not a represented buyer, by law, a Realtor can't advocate for you.

Contact an agent and they will review Pennsylvania's Consumer Notice which explains the ways a real estate agent can represent you.

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Should I get pre-approved for a mortgage?

It's certainly a good idea. You can apply for either pre-qualification or a pre-approval. A pre-qualification is an informal opinion from a lender. A pre-approval is a more formal written approval for you stating that you qualify for up to a specific mortgage and interest rate. A pre-approval requires more data from you but offers the following benefits:

  • Sellers will look at you as a stronger buyer. If the seller has more than one offer, this could help yours be more attractive.
  • You have a definite picture of what you can reasonably afford. You won't waste your time inspecting homes you can't buy.

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Can I preview my credit and correct mistakes?

ABSOLUTELY! It is surprising how many credit reports are wrong . . . over 40% by some estimates! You may avoid de-railing your transaction with a time-consuming credit hassle by reviewing the report up front.

You can order a copy of your own credit report by calling the three major credit reporting agencies: Experian at (888) 397-3742, Equifax at (800) 685-1111 and Trans Union at (800) 888-4213. Or, you can call the Annual Credit Report Request Service at 1-877-322-8228 for a free credit report from all three of the above sources.

Understanding a credit report can be very complicated. Your agent can help you with this process by connecting you with a loan officer who is an expert in this area.

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How do I purchase home #2 if I have to sell home #1 first?

Most of us cannot afford two mortgage payments; we need to sell our current home before completing the purchase of our next home. In a marketplace where there is a good supply of homes for sale, it's probably best to market your home successfully first. Then you enter the marketplace as a stronger buyer. None the less, you may find your next home prior to marketing your current home. Your Prudential Real Estate Agent can help you choose form several different options in this case so that you can still have your dream home and avoid a double payment situation.

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Should I have the home inspected?

In most cases, a property is purchased in its present condition! Many buyers are surprised to find that if a problem arises after settlement, the problem is theirs. As a buyer, you should consider hiring a home inspector who is trained to look for defects. The most common types of home inspections are general house inspection, wood destroying pest and organisms (termite) inspection, radon inspection, on-site septic inspection, and on-site water inspection.

When you are ready to make an offer on a home, your agent can explain the different types of inspections you may wish to have. Then recommend a home inspector if you'd like help finding someone.

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Should I buy a home warranty when I purchase a home?

There are reasons to purchase a home warranty, and there are circumstances where a home warranty may be less important. 75% of home buyers use their home warranty within the first year.

The initial term of a home warranty is one year. Thereafter, renewals can be purchased.

Some sellers provide home warranties as part of the sale. Under those circumstances the home warranty is included in the sale.

Your agent can help you determine if a home warranty is a good investment for you.

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How do I go about making an offer?

You may want to make your offer subject to certain terms or contingencies, including securing financing, the sale of your current home, or inspections. Your Prudential Real Estate Agent can help you understand your options and responsibilities. As a skilled negotiator, your agent is able to represent your best interests when speaking to the seller's agent.

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When should I get homeowner's insurance?

It's important to begin looking for homeowner's insurance as soon as the agreement of sale has been accepted. Not all insurance companies insure all types of properties. For example, some carriers won't insure a property with a flat roof, others do. If you wait too long to find insurance and run into any difficulties, you may not be able to get insurance in time and this may negatively impact your ability to close. HomeSale Insurance Services offers homeowner's and auto insurance.

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What is title insurance and why do I need it?

Imagine one of these nightmares:

  • An ex-spouse of the 3rd prior owner claims a continuing interest in your home because he/she did not sign off on the deed 10 years ago.
  • A Lender to the 2nd prior owner asserts a claim that their loan was not paid off when the property was sold 6 years ago and they want their money. A title insurance provider seeks to discover these "defects" by searching public records about the property. They also provide you with insurance - if they missed something, they step up to handle your defense and cover your costs.

Also, your lender will require that you provide title insurance from a reputable company at settlement such as HomeSale Settlement Services. HomeSale Settlement Services offers title insurance and settlement services. Each Prudential Homesale office has a HomeSale Settlement Services officer who shares the same core purpose that Prudential Homesale Real Estate Agents do: "We Help People Achieve Their Dreams."

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Understanding the seller's list price

Many factors influence the price that a seller expects to get for their home. While only you can decide how much you feel comfortable offering for a property, your agent can gather critical information for you regarding the factors that impact how much you should consider paying for the home. These factors include:

  • How long the home has been on the market
  • If the price has been reduced
  • The prices for other comparable homes in the area
  • If there are multiple offers being communicated
  • Other items that might be included in the sale - furniture, hot tub, etc.
  • The number of homes that are on the market and the amount of time it's taking them to sell
  • Whether the seller is offering buyer incentives

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What are closing costs?

Closing costs are fees and expenses paid in conjunction with the purchase of your home. The amount of your closing costs will depend on your transaction and your lender.

If you obtain a mortgage, the lender will collect a credit and appraisal fee and may charge you loan origination fees and document preparation fees. Should you use a low down payment, the lender may require you to pay for mortgage insurance.

Your lender will require title insurance. Title insurance is based upon the sales price of the home. Your settlement company will collect notary and recording fees.

If you haven't paid your homeowner's insurance premium prior to the closing, this will be an expense at closing.

Transfer taxes can range depending on the municipality in which you are purchasing. In most of South Central and Southeastern Pennsylvania, the transfer tax is 2% of the sale price. Typically, the buyer pays half of this tax.

Real estate taxes are typically pro-rated, reimbursing the seller for the taxes they have pre-paid. Depending upon the mortgage program, you may be required to start an escrow account with the lender for future taxes.

In some cases, sellers have agreed to pay part or most of their buyer's closing costs.

Your Prudential Homesale Real Estate Agent can help you understand these costs and can provide suggestions to reduce your closing costs.

In addition to your agent's suggestions, you will be receiving closing cost estimates when you submit your offer to buy and when you apply for your mortgage. This is all done so that you know what to expect at the closing.

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What happens at the closing?

The terms "real estate settlement" and "closing" mean the same. It is the meeting where the seller conveys the ownership of the property to the buyer. A settlement officer, either a title company representative or the buyer's attorney, will conduct the closing.

Many papers need to be reviewed, signed, notarized and witnessed. Among the documents you will be asked to sign is the mortgage, the mortgage note, other lender documents, buyer's affidavit, utility cards, etc. Once you've paid your down payment and closing costs and the seller has signed the deed, you will become the official owner of your new home. Your agent will walk you through what to expect at settlement and answer any questions you may have.

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