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October 19, 2007November 23, 2021

Before you buy- First time home buyer fundamentals

by Dan Krell © 2007
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Don’t let your first time home buying experience be overwhelming. Before you plan your Sunday trip to open houses, it’s important to review the fundamentals and make sure you are going into your home purchase fully aware of the responsibility you are about to take on, as well as prepare you for the process and pitfalls that may come your way.

The first item on the list is to determine how much you can afford. Affordability is determined by your financial state and interest rates. Your financial state includes factors such as your income, debt, savings, and expenses. Interest rates impact on your ability to purchase a home because your monthly payment is based on the rate you lock into; the higher the rate, the higher your payment.

Once you know how much you can afford, make a housing budget. Making a housing budget can help you understand your expenses, which included utilities, maintenance, and other expenses such as cable and internet. Additionally, take into account any interest rate adjustment (if you have an adjustable rate mortgage) and increasing real estate taxes. Many first time home buyers get into trouble because they underestimate their monthly housing expenses, as well as not accounting for rising mortgage payments and real estate taxes.

As a first time homebuyer, you will want to be aware of any special programs that are available to you. There are many local home buyer programs that offer special financing and/or closing assistance through the county, the Housing Opportunities Commission, as well as through banks and organizations.

Talking to a lender can help you understand your credit and how much you can afford. You should compare lenders for interest rates and fees. Lender fees vary significantly and by choosing the right lender, you can possibly save several thousand dollars at settlement.

Knowing your rights as a home buyer can help you prevent problems that may occur. As a homebuyer, you are affected by federal and local fair housing laws, RESPA (Real Estate Settlement Procedures Act), Equal Credit Opportunity Act, Fair Credit Reporting Act, and the Truth in Lending Act. Your real estate agent should be aware of these laws and can help you understand them. You can get more information about these laws at the HUD website, HUD.gov.

As a first time home buyer it is important to know that you have the right to choose your service providers, such as real estate agent, lender, title company, insurance company, etc. Additionally, you have rights specific to obtaining a loan and credit, such as the right to a good faith estimate of settlement charges and interest rate and other disclosures. A list of these rights can be found at the HUD website (www.hud.gov/offices/hsg/sfh/res/resborwr.cfm).

Your next step will be to choose a real estate agent. It is recommended to interview several agents before choosing as your agent will be your trusted guide through the home buying process. A good real estate agent will know and protect your rights, as well as know what home buyer programs are available to you.

Finally, HUD recommends that first time home buyers attend housing counseling to assist in learning these and other fundamentals. It is clear that doing your homework and choosing the right professionals to assist you can make the difference in your home buying experience.

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of July 9, 2007. Copyright © 2007 Dan Krell.

October 19, 2007November 23, 2021

Considerations in choosing a real estate agent

by Dan Krell
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So you’re thinking of moving. If you are going to buy and/or sell a home you may be thinking of hiring a real estate agent to assist you. If you have bought or sold a home in the past, you know that there are thousands of real estate agents to choose from.

Choosing a real estate agent should be an objective as well as subjective process. You want an agent with experience and expertise, but you also want to make sure they listen to your needs and are patient with you. Additionally, you want to feel comfortable enough to trust them.

Choosing the right real estate agent is important because the agent that is chosen to represent you will have a fiduciary responsibility to you. As many home buyers and sellers don’t know, a fiduciary is someone who acts as a custodian for your rights and/or assets. The fiduciary has a responsibility to act with honesty and integrity, as well as act in your best interest and not exert influence on you or pressure you for their own or others interests. So, if the agent seems impatient, pushy or desperate you may need to look elsewhere.

Some people advise that your first step in choosing a quality real estate agent is to choose a broker or real estate firm first. However, the quality if an agent is not dependant on the firm. The quality of real estate agents varies from agent to agent; real estate firms have very good agents as well as agents that are less than perfect.

Whether you are interviewing an agent that was recommended or one you found in the paper, you should ask many questions about their knowledge, experience and expertise. You should also ask them if and how long they have been licensed.

Ask where the agent is licensed; not all agents are licensed in all jurisdictions. If your intention is to look at homes in Maryland, Virginia, and DC, make sure the agent is licensed in all three jurisdictions. If you are only looking in Maryland then they only need to be licensed in Maryland.

Once you have determined where the real estate agent is licensed, you can get an idea of their experience by asking how long they have been licensed. Someone who just received their license may not be as experienced in negotiating as someone who has been licensed five or ten years. If you are considering a novice agent, make sure they have some type of mentor that is training them. If the agent does have mentor, meet and interview them as well.

Additionally, you may want to consider working with a real estate agent who is a Realtor®. A Realtor® is a member of the National Association of Realtors® (NAR) and follows the NAR code of ethics. It has been said that the NAR code of ethics exceeds the ethics requirements of many state laws.

Finding the right agent is a process much like home buying. Through interviewing real estate agents you can find out the agent’s professionalism, training, and knowledge base. Additionally, you can find out if the agent’s personality clicks with yours, as you will spend time together selling or buying your home.

August 21, 2007October 5, 2019

Home Ownership Month

by Dan Krell

June is here! For many it means that summer is around the corner, school is ending, and trips to the beach. For Realtors and community groups, June is National Homeownership Month.

Since 2002, President Bush has declared June as National Homeownership Month. By doing so, the goal has been to increase minority home ownership to 5.5 million new home owners by the end of the decade. Despite a declining real estate market, home ownership is at record highs. The White House reports that there were 75 million American homeowners during the fourth quarter of 2006, while the homeownership rate was close to sixty-nine percent.

In keeping with the goal, the President and the Congress have passed a number of laws to promote home ownership including The American Dream Downpayment Act, HOME Investments Partnerships Program, and the Self-Help Homeownership Opportunity Program.

In 2003, The American Dream Downpayment Act was signed into law. The program was designed to offer down payment and closing cost assistance to low income home buyers. According to the White House, the program has helped over 21,000 families since its inception. Information for local participation and qualification can be obtained through the Montgomery County Department of Housing and Community Affairs.

The HOME Investment Partnerships Program, which was part of the Title II of the Cranston-Gonzalez National Affordable Housing Act, is a federal block grant that allocates almost $2 Billion annually to create affordable housing for low income families. This program has been so successful that it is reported that more than 143,000 families used this program to purchase a home during the 2006 fiscal year.

In keeping with the spirit of home ownership, the Self-Help Homeownership Opportunity Program was created. This program provides non profit organizations, such as the Habitat for Humanity (habitat.montgomery.md.us), the funds necessary to purchase home sites for the purpose of building or renovating by sweat equity and volunteer-based homeownership programs for low-income persons and families. Local programs, such as Habitat for Humanity, offer the resources to families to own affordable homes as well as retaining home ownership by making repairs that they could not otherwise make.

Looking ahead, the 2008 Federal budget includes funding for the “modernizing” of FHA (see my column from the week of May 17, 2007). The expansion of FHA will provide financing alternatives to sub-prime loans for home buyers while offering additional protection from and assistance for those in foreclosure.

Home ownership is the American dream. However for many families, it is still out of reach. Locally, the Maryland Association of Realtors, in conjunction with a coalition with home owners and those who want to be home owners, has created the League of Maryland Homeowners (leagueofmarylandhomeowners.com). The group is committed to making affordable housing available by searching and implementing solutions to the affordability crisis in housing.

There are many opportunities to assist others in their pursuit to home ownership. For example, the Tikvat Israel Congregation of Rockville is sending a contingent of high school students to New Orleans, LA later this month to assist the Habitat for Humanity effort in the still ravaged region.

Although we celebrate home ownership in June, we can make a difference year round from volunteering manual labor to as little as voicing your support for affordable housing initiatives.