When you set out to buy a house, how many do you look at? Probably too many.
"Looking at homes should be the fun part," says M. Steve Jacobson, a Maryland real estate agent. "But for many buyers, the fun ends after they look at 15 or 20 homes and one begins to blur into another."It pays to do some thinking before you go house hunting. While you may get ideas by dropping in on Sunday afternoon open houses, you need more preparation to launch a serious buying expedition.
Jacobson, president of the Maryland-D.C. chapter of the Residential Sales Council, offers these tips:
Make a list of what you like about your current house or apartment. Perhaps it's the bright kitchen or a large yard. Then make a list of what you would like to improve, such as the house size or the family room. Finally, add a wish list, perhaps a big bathroom with a whirlpool.
Go to a mortgage lender and get pre-approved for a mortgage loan. The lender can help you figure out how much you can afford and will give you a pre-approval certificate that "is like having cash to take to a seller," Jacobson says.
Narrow your search to a few specific areas or communities. "Once you have a price range, you can begin looking in communities with homes that meet your requirements."
When homeowners try a 15-year mortgage, they often get hooked when they see how fast the principal in their house is growing. A quarterly survey by Freddie Mac, a big secondary mortgage lender, found that 77 percent of homeowners with 15-year mortgages chose such mortgages again when they refinanced during the fourth quarter last year. That was up from 70 percent in the previous quarter.
The good economy has had a salubrious effect on mortgage delinquency rates. With jobs plentiful, fewer people are missing loan payments, and the delinquency rate is at 4.24 percent, its lowest level since 1996, the Mortgage Bankers Association reports.
"A robust economy, booming stock market and the lowest mortgage interest rates in 30 years have been principal factors behind the improvement in the delinquency situation over this period," said MBA vice president Paul Reid.
If you're looking for a home improvement loan to go along with the house you plan to buy, check out Fannie Mae's Web site at www.homepath.com. Click on "what's new" and you'll find lots of details on home improvement and energy loans and lists of lenders available in each state, including phone numbers and addresses.
The site also has good calculators that let you figure out how much house you can afford, whether you should refinance and many other options.
Consider a seven-year balloon mortgage if you're buying a house and know you'll be moving in a few years. Rates on balloon mortgages are about half a point below 30-year mortgages -- 6.49 percent this week, according to the Mortgage Bankers Association. A seven-year balloon has the same rate for seven years and amortizes over 30 years. At the end of the balloon, you must refinance or sell the house.
Pamela Reeves writes this column weekly for Scripps Howard News Service.