Home buyer's guide
(house, condominum and co-operative).
- Before you start looking for a home:
- After you find a home that you like:
- After your offer is accepted:
- After the Contract is signed
- Apply for your mortgage ASAP.
- Apply for Board Approval if you are buying a co-op.
- Get ready for your closing.
- Apply for your mortgage ASAP.
Programs to help you buy a home.
If you think you will never be able to own your own home, here are a few of the programs available to help you become part of the American Dream. Most of the programs are for first-time home buyers and have restrictions on the price of the home and income requirements. These programs are there to make home ownership possible for people who could not buy a home without help.
- SONYMA (State of New York Mortgage Agency): SONYMA has several programs to help you with down payment/closing costs, low interest, low down payment loans with 30-40 year terms. Except for veterans, these programs are available for first-time buyers only. That would mean that you have not owned a primary residence for at least 3 years and do not now own investment or vacation property.
- Mortgage Credit Certificate Program. Available only for homes in “target" areas. Converts 20% of the mortgage interest you pay into a tax credit. You can still use the remaining 80% as a tax deduction.
- Down Payment Assistance Loan. Provides no interest loans of up to $10,000.00 to cover down payment and/or closing costs. After 10 years you may not have to pay it back.
- Achieving the Dream Program. Up to 97% (95% for condos or co-ops) financing and low interest rates.
- Construction Incentive Program. Up to 97% (95% for condos or co-ops) financing, low interest rates and long lock-in terms to help buy new homes.
- ENERGY STAR® Labeled Homes Saves .5% off of SONYMA's other loans for new energy efficient construction.
- Remodel New York Program up to 97% financing and low interest rates. To help buy and renovate homes which need work.
- FHA (Federal Housing Administration). Provides low down payment, low closing cost loans with relaxed credit qualifying criteria through participating lenders.
- Habitat for Humanity. A not for profit Christian Ministry that provides basic homes for those in need. You are required to pay what you are able and to volunteer your time and work.
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Should I buy the home with someone else?
Quite often it will be necessary for someone such as a parent to help you buy a home or you may need to buy the home (especially a multi-family home) with someone else. In some cases the other person will be listed on the deed and/or the mortgage. In other cases, they may not - such as when a parent loans their child money for the down payment.
The single most important thing to do if you are buying a home with someone else is to make sure that your agreement regarding the purchase is in writing! Because agreements involving real estate must be in writing, you might later be stopped from testifying to what you and the other person agreed to. For your protection and piece of mind, have your lawyer prepare an agreement. It can save you from going to court later and keep your family and friends together without hurt feelings or resentment.
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Dealing with a Real Estate Broker/Agent.You are most likely going to find and look at houses (condos or co-ops) with a “Real Estate Broker" or "Real Estate Salesperson", also called an "Agent." In order to list and show properties a person must be licensed as either a “Real Estate Broker or a Real Estate Salesperson. A Broker can own their own business or practice but a Salesperson or Agent must work for and through a Broker. They each operate the same way and must follow the same rules.
To check if a Broker or Agent is licensed go to the eAccessNY search page. You may also see the term "Realtor." That simply means that the Broker is a member of the Association of Realtors and is required to live up to their standards in doing business. It is not an addition or extra license.
In almost all circumstances, brokers/agents work for Sellers – not for Buyers! Unless you have specifically hired the Broker/Agent, he/she is working for the Seller – not for you. Because brokers/agents try to be very friendly and helpful to buyers, it is easy to think that they are looking out for your interests. DO NOT RELY ON THIS! The broker/agent's main goal is to make a sale – your goal is to buy the best home you can at a fair price. Look out for your own interests. Take the time to review the NYS Real Estate Guide.
Abroker/agent may try to explain away your concerns. If you have any concerns, check with persons that do not have such a large stake in your closing on the home. While most brokers/agents will not mislead you, your home is likely to be your largest purchase and one that you will have to live with for a long time.
The broker/agents, including the listing and selling broker, normally get paid by the Seller.
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Get a mortgage pre-approval letter.
You want to be in the best bargaining position and if the Seller knows you are eager they may take a tough stance in negotiations.
How can you improve your Buyer profile? By having a pre-approval from a lender. A pre-approval is a one page document which states that based on the information you have provided the lender you have been pre-approved for a certain dollar amount loan. It will also state that the approval is subject to review of your income, and verification of your employment and assets. You should also have at your fingertips your last three months bank statements and tax returns for the last two years. The lender will ask you for these when you are ready for full approval.
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Check prices for similar homes in the area.
Before you make an offer on a home, you want to look at what homes like the one you found have sold for in the same neighborhood. These are called "comparables" or "comps." The broker/agent you are working with should be very willing to get you this information, but you want to double check yourself.
To check the comps yourself, go to the Trulia Real Estate Search tool. Click on the "Recently Sold" tab on the top. You can search for an address or a zip code. If an address doesn't come up with enough results, try the zip code.
Look at the results to see what homes seem most like the one you want to make an offer on. There can be a big difference in prices since the condition of the homes may be different and even a 1 block difference in location can affect price a great deal. Use these results as a guide for deciding how much you should offer.
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Make an offer:If you are working through a broker/agent, your offer will be made to him/her. Otherwise you will make your offer directly to the seller. If making the offer directly to the seller, be prepared to explain why you are offering less than the asking price.
- When you communicate the offer, make sure that you include all conditions. For example, you could say the price is $300,000 as long the Seller leaves all the window treatments and appliances.
- Some brokers/agents require that the offer be in writing, signed by you and that you put down a small deposit also know as a “good faith deposit.” Usually this will be between $500.00 and $1,000.00. Your offer is usually not binding. It should include a statement that it is “subject to signing a formal contract containg all of the conditions of the sale.” Normally, if a contract is signed the deposits are refunded to you at the closing of title, or immediately if the contracts are not signed.
- The Broker/Agent has an obligation to present any offer you make to the seller. If the Broker/Agent tells you that your offer is below the seller's mortgage, remind him/her of this obligation and consider suggesting a short sale.
- When you make your offer, the Broker/Agent will often try to get you to increase your offer or give an indication that you can go higher before presenting your offer to the seller. Remember that the broker/agent usually works for the seller, not for you. You can avoid this question by saying that you “can't say until we hear from the seller.”
- Your offer could be followed by an offer by another buyer which could result in a bidding war. You have to decide how much you like the property and how much you want to offer. The law requires that the broker not inform you of what the other Buyer has offered. Remember they are working on behalf of the Sellers and even if you have a Buyer's agent the broker will not share any information with you or a Buyer's agent. You should make your decision based on what you can afford and want to pay.