For the Home Buyer

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When checking out a house, leave your emotions at home

Homebuyers often follow their hearts, and they should. Sometimes just going with a gut feeling is the best indicator. But when it's house-touring time, it's important to set those emotions aside and replace them with clear-headed thinking and a critical eye. Otherwise, your potential dream house might just turn into a money pit.
Although you should always hire a professional inspection before you complete ttle sale, you can spot the more obvious trouble signs early in the process simply by knowing what to look for. You can quickly check five key
areas to determine if the home has serious problems.

Foundation. A cracked foundation is a serious matter. It can cost tens of
thousands of dollars to fix, and, in severe cases, may not be fixable. Keep an
eye out for these potential warning signs:

Piping. Copper piping rarely corrodes and is the plumbing of choice these
days, but many older homes have galvanized steel plumbing. After 30 years or
so it tends to rust out and leak. Replacing it can cost $5,000 or more, so it's
something you'll want to watch out for. Call a plumber if you have specific
questions.

Flooding. If a house is poorly situated on its lot, flooding can occur under the
house, which can seriously damage the home.
• In the basement, check for water stains on the foundation indicating flooding
during rainy periods. If you find these, call in a soils engineer to confirm the
problem and suggest solutions.

Unapproved work. All improvements to the property should have been done
with permits from the local building department. Work done without permit
may be substandard and, if discovered later, may need to be ripped out.
• Go down to your local building department and request copies of permits
for all work that was done at the property address. Compare these with any
additions or replacements done by the seller. If work was not done by
permit, you may ask the seller to obtain permits for the work and bring it up
to building-code standards before you purchase.

A home inspection is well worth the cost

When buying a home, how do you know what you're getting?

Most people probably only think of one or two questions to ask a home
inspector: "How much is your fee?" and "When can you be there?" But these
only scratch the surface.

Here's a list of suggested questions you might ask:
• What types of licenses do you hold
• What kind of training do you have?
• Do you belong to a professional inspectors' association?
• How long have you been licensed in Texas?
• Are you a full-time home inspector?
• How much do you charge?
• Do you also perform repairs? (If the answer is yes, that may indicate a
conflict of interest)
• What will the inspection include? (Get specifics. It should include the
electrical, heating, and central air-conditioning systems; interior plumbing;
visible insulation; roof; walls; ceilings; floors; windows; doors; foundation;
basement; and the visible structure of the house.)
• Do you inspect gas lines, swimming pools, spas, septic systems, and
wells? (You can identify other atypical systems or items.) Do you charge
extra for these?
• Do you charge extra based on the size of the home? Multiple AC units?
Other items?
• How much would you charge if I ask for a reinspection after repairs are
completed?
• Will you supply a written report? (The inspector should.)
• Can I attend the inspection? (The home inspection is an opportunity for
you to learn about your new home and ask questions. If the inspector says
no, find another inspector.)
• Do you go up on the roof to inspect it?
• How long will the inspection typically take? (Anything less than two hours
is not long enough for a thorough inspection.)
• Can I call you with questions that come up later?
• Can you give me names and phone numbers of three people for whom
you've inspected homes recently?
The inspector may not inspect swimming pools, wells, septic tanks, and other
systems and items, and many inspectors will not conduct environmental tests
or wood-destroying insect inspections. You will likely need to arrange for
these inspections separately.
You can find a blank copy of the standard inspector report form at
www.trec.state.tx.us to give you an idea of what mayor may not be covered in
the inspection.

Questions buyers should ask a mortgage lender

How do you decide which lender is best for you?

There is a lot more to the mortgage process than getting a good rate. High
costs in fees and poor service can come as very unhappy surprises.

Here's a list of suggested questions you might ask a lender:
• How large is your company, and how long has it been in business?
• Are you a licensed mortgage broker or loan officer in Texas?
• Is your company a mortgage banker or a mortgage broker? (A banker
lends its own funds; a broker searches mortgage sources and arranges for
you to receive financing from the lending entity.)
• What is the name, phone number, and e-mail address of the person who
will actually be processing my loan application? How accessible is that
person?
• Tell me about all loan fees. What fees must I pay up front? What fees will I
have to pay at closing?
• How can you assure me I won't pay any unnecessary "add-on" fees?
• Do the costs you are quoting include the lender origination fee?
• Are there loans available with no origination fees? No closing costs?
Reduced closing costs?
• What are your interest rates?
• Is there a fee to lock in my interest rate? How long can I lock in the rate? If
interest rates go down, can 1relock at the lower rate? If so, will there be a
fee for that?
• What information must I provide to get a mortgage loan?
• What documentation will I have to provide?
• Will you require current tax returns? (Take note of this especially between
Jan. 1 and April 15 if you haven't prepared your return yet.)
• How long will it take to get complete and unequivocal loan approval and be
ready to close?
• I plan to stay in this house for _ years. Can you show me the breakdown
of any ARM loans you offer vs. fixed-rate loans to see which could save me
the most money in my situation?
• What is private mortgage insurance? Other than a 20% downpayment,
how can I avoid the private mortgage insurance?
• In the last three months, how many loan applications have you taken and
how many have you been unable to close?
• Can you give me names and phone numbers of two or three people for
whom you've funded loans in the last two months?
Currently, Texas-licensed mortgage brokers must use the standard
Conditional Qualification and Conditional Approval letters when representing
that an applicant is prequalified or preapproved for a mortgage loan.
Mortgage bankers may be required to do so in the future.

How to secure home financing the smart way

Three elements are crucial to the purchase of a home-the down payment,
closing costs, and qualifying for a mortgage. Here is a quick rundown of what
you should know:

Down payment
Typically, conventional lenders will require a 20% down payment, although
you may be~able to find loans with down payments of as little as 5% (perhaps
less in some cases). With down payments less than 20%, you likely will have
to pay private mortgage insurance, which guarantees the lender will be repaid
in case of default.

Mortgages insured by the Federal Housing Administration (FHA) and those
available to U.S. veterans often require very low down payments. Ask your
lender if you can qualify for one of these loans.

If you are having trouble coming up with the down payment, here are some
tips to ease the burden:
• Consider down payment assistance programs. The Texas Department of
Housing & Community Affairs offers down payment assistance as well as
low-cost mortgages for first-time buyers. For more information, visit
MyFirstTexasHome.org.
• Start early. Begin saving for a down payment as soon as possible. After a
few years, it adds up,
• Ask for a My Community Mortgage. A Fannie Mae product, the My
Community Mortgage offers many advantages for buyers, including the
ability to use non-traditional forms of credit for loan qualification purposes.
• Convert stocks. Consider selling stock for the down payment. The housing
market often is a better investment anyway.
• Sell an asset. If you have "toys" such as a boat, extra car, or other asset,
consider selling it for the down payment.
• Borrow from relatives. Today lenders will allow you to use money borrowed
from relatives as the down payment. In many cases the relatives do not
need to co-sign the mortgage. Check with your lender for restrictions.

Closing costs
No matter what home you buy, there will be closing costs. These can include:
discount points, title insurance, escrow fees, attorney fees, termite report,
recording fees, appraisal fees, document preparation fees, notary fees, and a
loan underwriting fee. Usually these are due in cash, but sometimes they can
be folded into the mortgage.

Loan qualification
The size of the mortgage you qualify for is based mainly on the interest rate
offered and your income. The higher the interest rate, the higher the monthly
payment. And, the higher the monthly payment, the more income you will need
to qualify for the mortgage.

Contacting a lender before you're actually ready to make an offer on a house
can be a good idea. This head start gives you a chance to work out any
problems that may arise without the pressure of contract deadlines.

Homeowners insurance: 7 tips for Texans

Save on homeowners insurance
Here are seven ways to cut the cost of your home insurance from helpinsure.com, a Texas consumer-friendly Internet site:
1. Shop around - and do it early!
Check with several different home insurance companies to get rate quotes. (An independent insurance agent can provide rate quotes from a variety of companies.) And definitely do it well before your policy expires, just in case
you run into any snags along the way.
2. Raise your deductible
The deductible is the amount of money you have to pay toward a loss before your insurance kicks in. Home insurance deductibles usually start around $250. However, if you increase your deductible to:


3. Buy your home and auto policies from the same company
Many companies will give what's called a "multi-line" discount if you buy both
home insurance and auto coverage from them.
4. Don't skimp when buying a home
If you're looking at buying a home, think about the cost of insuring the home.
A newer home's electrical, heating, and plumbing systems and overall
structure are likely to be in better condition than those of an older home - and
can lead to a discount on your premiums.
5. Insure your home, not the land
While your home and its contents are at risk from fire, theft, windstorms, and
other perils, the land your home sits on is not. Don't include the value of the
land in deciding how much home insurance you need to buy.
6. Improve security and safety
Items such as dead-bolt locks, burglar alarms, and smoke detectors can
usually bring discounts of 5% each. Your insurance company may also offer a
significant discount of 15% or sometimes even 20% if you install a
sophisticated home-security system.
7. Check your policy annually
Your policy should reflect the value of your home and belongings. If you
review your policy every year, you can easily make the necessary adjustments.
If, for example, you just sold a valuable painting, you won't need the same
amount of personal property coverage. But if you've added a garage or other
addition, you'll need to increase your dwelling coverage.

Welcome to Texas!

Information to help you settle into the Lone Star State

If you just moved to Texas, you'll soon learn plenty about the culture,
customs, and history of the state. In the meantime, here are a few items to
consider as you get acclimated.

Get legal on the road
As a new Texas resident, you have 30 days to register your vehicle and get
your driver's license. Before you register your vehicle, though, it must pass
the state inspection process. In order, here are the three steps to follow:
1. Take ytlur vehicle to a state inspection station. You can find a list of what
types of inspections are required in your county and an inspections-station
locator at www.txdps.state.tx.us/vi. When you go, make sure you take
your driver's license and proof of insurance. If your insurance policy
wasn't issued in Texas, you may need to show proof that you carry the
minimum coverage required by the state: $20,000 bodily injury or death to
one person; $40,000 bodily injury or death to two or more persons; and
$15,000 injury or destruction to other property.
2. When your vehicle passes inspection, the inspection station will give you a
verification form to bring to the county tax assessor-collector's office. This
is where you obtain a Texas vehicle registration sticker and license plates.
You'll need proof of ownership, such as registration or title from your
previous home state, as well as proof of insurance. Again, you may need
to show that you carry minimum coverage amounts.
3. Apply for a Texas driver's license at the Texas Department of Public Safety
(DPS) office in your area. To find the location nearest you, visit
www.txdps.state.tx.us.Bring an 10, proof of Social Security number, proof
of liability insurance, and proof of Texas vehicle registration. Expect to
provide a thumbprint and surrender any valid out-of-state license you
currently have.

Register to vote
While at the driver's license office, you can register to vote-or you can pick
up a voter-registration application from the county voter registrar's office, a
library, post office, or from the secretary of state's Web site,
www.sos.state.tx.us. The application must be received 30 days before an
election to vote in that election.

Go online
You can find a wealth of information about the state at TexasOnline.com. You
can also search here for links to Web sites for counties, cities, chambers of
commerce, schools, and libraries. If you're looking for answers to questions
about state laws, required business licenses, taxes, and more, you may also
find that information here.

Don't fall for misleading solicitations to file your homestead exemption
There is no fee to file a property-tax homestead exemption. You might receive
letters, though, on official-looking stationery offering to file your homestead
exemption for you for a fee. Even some people who have lived in Texas their
entire lives confuse these letters as a form from a state agency requiring a
mandatory fee. Don't fall for it. The process is simple and costs nothing. You
can download the application from
www.window.state.tx.us/taxinfo/taxforms/50-114.pdf, fill out the form, and
send it in to your appraisal district.

If you have other questions, please feel free to get in touch with me.
Welcome to your new home!

Four ways to fix bad credit

Credit problems can seem like an insurmountable barrier to getting a home loan.
It's not an easy task, but with patience and some insight you can
turn things around. Here are four ways you can get on the road to credit
repair-and put yourself in a better position for homeownership.

1. Develop a budget
Stop all cregit transactions right now. It might sound harsh, but you should hide
or destroy ~11 of your cards if necessaryl Now you can manage your inflow of cash
and, more importantly. your outflow-money in and money out.
Develop a flexible budget. Consider all necessary expenses such as housing,
food, and healthcare. Then, eliminate expenses that can be trimmed such as
entertainment and dining out. For more help, contact a nonprofit credit counseling
agency, such as the TCA at 866/528-0588 or takechargeamerica.org.

2. Contact your creditors
If you aren't making timely payments, don't wait for your account to be turned
over to collectors. Your creditors may be able to help you get on a lower-interest
payment plan or agree to a settlement.

A helpful tip: If your balance is unmanageable, offer a 30% settlement payment
first. Some creditors will take payments of 30%-40% rather than have you
default. Make sure to get the agreement in writing. Once you've paid in full,
send the settlement letter to each of the credit bureaus (Equifax, Trans Union,
and Experian/TRW) for reference so they will update your credit report.

3. Consolidate your debt
Another approach to consider is acquiring a debt consolidation loan. This type
of loan will allow you to payoff your outstanding balances with one, lower-interest
monthly payment. A home equity loan for debt consolidation could allow the
interest you pay to become tax-deductible.

4. Avoid bankruptcy if you can
A last resort is bankruptcy because of its long-lasting effects. Bankruptcy can
make it difficult to attain future credit, life insurance, and sometimes even a job.
It does, however, offer a new start. The primary types of personal bankruptcy
are Chapter 13 and Chapter 7. Chapter 13 allows you to keep property that you
would otherwise lose, but payoff a default amount during a three-to five-year
period. Chapter 7 (straight bankruptcy) liquidates all of your assets that are not
exempt. Property is turned over to creditors or sold by a court-appointed official.

Help for homeownership is out there
There are lots of programs to help first-time and low-income homeowners, and
even those with spotty credit histories who want to realize the American dream
of homeownership. One is the Texas First Time Homebuyer Program. For more
information, visit MyFirstTexasHome.org or ask your Texas REALTOR"',