- ISBN: 9781119674795 | 1119674794
- Cover: Paperback
- Copyright: 4/7/2020
Home Buying Kit For Dummies, 7th Edition simplifies and explains the home-buying process to new home buyers everywhere. Authors Eric Tyson, MBA and Ray Brown inform and educate readers in the simple, straightforward and incisive style the For Dummies series is known for across the world.
This book covers all the topics necessary to tackle the purchase of a home with confidence, including:
- Complete coverage of new US tax rules and strategies
- What's happening with home financing given the high home prices and fluctuating economies found in many markets
- How to compare renting and buying in light of new rules regarding mortgage interest and property tax write-offs
- Updated coverage of internet resources and how to best utilize them as a buyer
The 7th Edition of Home Buying Kit For Dummies offers brand new content of particular interest to millennial homebuyers, as well as freshly updated online companion content.
Eric Tyson is a personal finance writer, lecturer, and former management consultant to Fortune 500 financial service firms.
Ray Brown is a real estate professional with over four decades of hands-on experience and a public speaker on residential real estate topics.
Introduction 1
About This Book: The Eric Tyson/Ray Brown Difference 2
Icons Used in This Book 2
Beyond the Book 3
Where to Go from Here 4
Part 1: Getting Started With Buying A Home 5
Chapter 1: Deciding Whether to Buy 7
Weighing the Advantages of Owning versus Renting 8
Ownership advantages 9
Renting advantages 14
The Pitfalls of the Rent-versus-Buy Decision 16
Renting because it seems cheaper 16
Fretting too much over job security 16
Buying when you expect to move soon 17
Succumbing to pushy salespeople 17
Ignoring logistics 17
Overbuying 18
Underbuying 18
Buying because it’s a grown-up thing to do 19
Buying because you’re afraid that escalating prices will lock you out 19
Misunderstanding what you can afford 20
Chapter 2: Getting Your Financial House in Order 21
Surveying Your Spending 22
Gathering the data 22
Analyzing your spending numbers 27
Reckoning Your Savings Requirements 28
Setting some goals 28
Retirement-savings accounts and a dilemma 29
Other reasons to save 31
Protecting Yourself, Your Dependents, and Your Assets 32
Insuring yourself 33
Insuring your assets 34
Invest in Yourself 36
Chapter 3: What Can You Afford to Buy? 37
Lenders Can’t Tell You What You Can Afford 38
The Cost of Buying and Owning a Home 39
Mortgage payments 39
Property taxes 48
Insurance 49
Maintenance and other costs 50
The tax benefits of homeownership 51
Closing Costs 54
Accumulating the Down Payment 57
The 20 percent solution 57
Ways to buy with less money down 58
Where to invest the down payment 60
Chapter 4: Why Home Prices Rise and Fall 67
What Drives Real Estate Markets and Prices? 68
Jobs, glorious jobs 70
Available housing 71
Inventory of homes for sale and actual sales 72
The rental market 74
Tax rules and changes 75
How to Get a Good Buy in Any Market 76
Seek hidden opportunities to add value 77
Buy when others are scared to buy 78
Find a motivated seller 78
Buy during slow periods 79
Become a great negotiator 80
Buy in a good neighborhood 80
Part 2: Financing 101 81
Chapter 5: Understanding and Improving Your Credit Score 83
The Record You Can’t Ignore: Your Credit Report 84
What your credit history comprises 84
What goes into your credit report 85
Why you should check your credit report 85
The Most Popular Kid on the Block: FICO Scores 86
How scores work — the short version 87
How a FICO score assesses your credit history —the long version 88
What FICO scores ignore 95
Why your score is what it is 96
Getting Hold of Your Report and Score 96
Chapter 6: Selecting a Mortgage 99
Getting a Grasp on Mortgage Basics 99
Fixed or Adjustable? That Is the Interest(ing) Question 100
Distinguishing fixed-rate mortgages from adjustables 100
Looking at hybrid loans 102
Starting out risky: Interest-only mortgages 102
Making the fixed/adjustable decision 104
Deciding on your loan’s life: 15 years or 30? 109
Finding a Fixed-Rate Mortgage 111
The all-important interest rate 111
The finer points of points 112
Other lender fees 114
Arriving at the Absolute Best Adjustable 115
Where an ARM’s interest rate comes from 116
How often does the interest rate adjust? 118
Limits on interest-rate adjustments 118
Locating the Best, Lowest-Cost Lenders 120
Shopping on your own 120
Working with a mortgage broker 123
Chapter 7: Mortgage Quandaries, Conundrums, and Forms 129
Overcoming Common Mortgage Problems 129
Insufficient income 130
Debt and credit problems 130
Dealing with Appraisal Problems 133
You’ve overpaid 134
The appraiser doesn’t know your area 134
The appraiser/lender is sandbagging you 135
Those Darn Mortgage Forms 135
The laundry list of required documents 136
Permissions to inspect your finances 139
The Uniform Residential Loan Application 140
I Borrower information 142
II Financial information — Assets and liabilities 145
III Financial information — Real estate 147
IV Loan and property information 148
V Declarations 149
VI Acknowledgments and agreements 150
VII Demographic information 152
Other typical documents 152
Part 3: Property, Players, And Prices 155
Chapter 8: Where and What to Buy 157
Location, Location, Value 159
Characteristics of good neighborhoods 160
Selecting your best neighborhood 161
Fundamental Principles for Selecting Your Home 163
The principle of progression: Why to buy one of the cheaper homes on the block 163
The principle of regression: Why not to buy the most expensive house on the block 165
The principle of conformity: Why unusual is usually costly 166
Defining Home Sweet Home 167
Detached residences 167
Attached residences 173
Finding a Great Deal 183
Finding a fixer-upper 183
Taking over a foreclosure 187
Seeking a short sale 190
Pooling Your Resources: Ad Hoc Partnerships 193
Types of residential co-ownership 193
Structuring a successful co-ownership 195
Chapter 9: Assembling an All-Star Real Estate Team 197
The Team Concept 198
Lining up the players 198
Avoiding gratuitous advice 199
Reeling in a Real Estate Agent 200
Types of agent relationships 201
How agents get paid 204
Characteristics of good agents 205
Selecting your agent 207
Getting the most from your agent 215
Bagging a Broker 217
Landing a Lender 219
Procuring Property Inspectors 219
Electing an Escrow Officer 220
Finding (or Forgoing) Financial and Tax Advisors 221
Looking for Lawyers 223
Selecting your lawyer 224
Getting the most out of a lawyer 225
Chapter 10: What’s It Worth? 227
Preparing to Tour an Endless Parade of Homes 227
The Three Elusive Components of Worth 228
Value is a moving target 229
Cost is yesterday 229
Price is what it’s worth today 231
Fair Market Value 232
When fair market value isn’t fair — need-based pricing 232
Median home prices versus fair market value 234
Determining Fair Market Value: Comparable Market Analysis 235
The basics of a helpful CMA 236
The flaws of CMAs 240
Getting a Second Opinion: Appraisals versus CMAs 242
Why Buyers and Sellers Often Start Far Apart 243
Inept agents 245
Unrealistic sellers 246
Chapter 11: Tapping the Internet’s Best Resources 247
Finding Useful Information 248
Get your feet wet at Realtor.com 248
Discover more at these sites 248
Doing Some Preliminary Shopping 249
Surveying homes for sale 250
Watching out for sites promoting foreclosures 250
Sifting through school information 252
Perusing “best places” to live 252
Familiarizing yourself with financing options 253
The Drawbacks of Searching for Houses in Cyberspace 254
Conflicts of interest 254
Bankruptcies 254
Misleading home-valuation tools 255
Untrustworthy mortgage calculators 255
Part 4: Making The Deal 257
Chapter 12: Negotiating Your Best Deal 259
Understanding and Coping with Your Emotions 260
Examining the violent forces at work 260
Controlling yourself 261
The Art of Negotiating 263
Being realistic 264
Examining your negotiating style 265
Negotiating with finesse 267
The Negotiating Process 269
Making an offer to purchase 269
Leaving an escape hatch: Contingencies 271
Getting a counteroffer 272
The Finer Points of Negotiating 275
Negotiating when the playing field isn’t level 275
Spotting fake sellers 277
Lowballing 280
Negotiating credits in escrow 283
Chapter 13: Inspecting and Protecting Your Home 287
Conducting Thorough Inspections 288
All properties should be inspected 288
The two types of defects: Patent and latent 290
Patent defect red flags 290
Types of property inspections 291
Inspecting inspectors 293
Insuring Your Home 299
Homeowners insurance 300
Title insurance 302
Chapter 14: It Ain’t Over till the Weight-Challenged Escrow Officer Sings 309
An Escrow Is a Good Thing 310
Know thy escrow officer 310
Cover all the bases 311
’Tis the season: December escrows 315
Follow through 317
How You Take Title Is Vital 318
Joint tenancy 318
Community property 319
Tenants-in-common 319
Getting help drafting an agreement 319
Getting Possessive 320
Moving day 320
Final verification of condition 322
Coping with Buyer’s Remorse 322
Part 5: The Part Of Tens 325
Chapter 15: Ten Financial “To Do’s” After You Buy 327
Stay on Top of Your Spending and Saving 328
Consider Electronic Mortgage Payments 328
Rebuild Your Emergency Reserve 329
Ignore Solicitations for Mortgage Insurance 329
Ignore Solicitations for Faster Payoff 330
Consider Protesting Your Tax Assessment 331
Refinance if Interest Rates Fall 331
Keep Receipts for All Improvements 332
Ignore Solicitations to Homestead 333
Take Time to Smell the Roses 333
Chapter 16: Ten Things to Know When Investing in Real Estate 335
Real Estate Is a Solid Long-Term Investment 336
Real Estate Investing Isn’t for Everyone 336
REITs Are Good if You Loathe Being a Landlord 337
Don’t Invest in Limited Partnerships 337
Avoid Timeshare Condos and Vacation Homes 338
Residential Properties Are Your Best Investment Option 339
Consider Fixer-Upper Income Property 339
Consider Converting Small Apartment Buildings to Condos 340
Consider the Property’s Cash Flow 340
Your Rental Losses Are Limited for Tax Purposes 341
Chapter 17: Ten Things to Consider When Selling Your House 343
Why Are You Selling? 344
Can You Afford to Buy the Next Home? 344
What’s It Worth? 345
Have You Done Your Homework to Find a Good Real Estate Agent? 345
Do You Have the Skills to Sell the House Yourself? 346
Have You Properly Prepared the House for Sale? 347
Do You Understand the House’s Hot Buttons? 348
What Are the Financial Ramifications of Selling? 348
Do You Know the Rules for Capital-Gains Taxes
on the Sale of a House? 348
Part 6: Appendixes 351
Appendix A: Sample Real Estate Purchase Contract 353
Appendix B: Sample Short-Sale Addendum plus Short-Sale Information and Advisory 365
Appendix C: Example of a Good Inspection Report 373
Appendix D: Glossary 393
Index 411
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