Hi all! I know it's been a while. I was in Atlanta last week in some pretty intense conferences and meetings. The best part was the meeting I had with my publisher. I have started writing a book "Nine things every First-Time Homebuyer should know." I realized after talking with just a few people at a time about buying homes--the majority being first time home buyers--that I could reach more people by writing this book. It's something I am quite excited about.

The home-buying process is daunting for anyone--regardless if it is your first time or not, and even though there is SO much information available at our fingertips--especially on the internet--it is sometimes hard to wade through it all.

With that said, I've talked with a number of first time homebuyers just in the last couple of weeks that were just getting started and had no idea where to start (confirmation for me to get this book written!) And while I always explain that the best place to start is to talk with a lender, I try explaining some things a first-time homebuyer may not know or understand yet.

When you rent a home or apartment, you know that your $1000 rent payment is RENT. Period. Sometimes you are lucky enough to have utilities included in that rent, some or all, or maybe the benefit of being a part of a complex that has a pool, tennis courts, and exercise rooms. You know before you start paying your rent what it will include.

The same should go for your house payment. When you talk to a lender to get qualified, and they tell you that the biggest payment you can afford is $1500, you need to know what goes in to that payment, and how that translates to how much house you can afford. Usually, if you put less than 20% for a down payment, your lender will require an "escrow" account to be set up. Part of your monthly payment will go in to that account each month and when your tax bill and insurance bill is due, the lender will ensure it is paid out of that escrow account.

When you talk with a lender and they say "you can afford a PITI of $1500 a month" this means that P=Principle; I=Interest; T=Taxes; I=Insurance. Your annual tax and insurance estimates are broken down in to 12 monthly portions which are added to your principle and interest payment.

SO, you ask, how do I figure out how much house the comes out to? Good question! You need to have an idea of how much the taxes and insurance are in your area where you live. Your Realtor can help you with this, or your lender. In Okaloosa County, Florida, we have the ability to go to the property appraiser's website, and find out what last year's tax bill was on any given property. Not all counties in the United States have that capability, though.

Interest rates and terms will also have an effect on your payment; allow me to illustrate on a loan for $175,000. The same home, this shows a fixed loan rate for 15 and 30 years, at both 6 and 7 percent interest rates, and the difference in total house payments. This is why it is important to talk with your lender. Interest rates change daily, and right now are under 6%, so that does affect what you can afford based on your personal circumstances.

Years	Interest Rate	Annual Tax	Annual Insurance	P&I	PITI (Monthly payment)
15	6%	$1,500.00	$1,500.00	$1,476.74	$1,726.74
15	7%	$1,500.00	$1,500.00	$1,572.94	$1,822.94
30	6%	$1,500.00	$1,500.00	$1,049.21	$1,299.21
30	7%	$1,500.00	$1,500.00	$1,164.27	$1,414.27

Tax and insurance rates depend on where you live. The only way to know how much insurance you will pay is to get insurance quotes for the house(s) you are interested in buying.

There is a lot to digest--and this should help explain where you are headed when buying a home!

Good Luck!

Hi all!

As you may or may not know, I have a number of listings that can be viewed on my website at www.ValerieSullivan.net. Well, one of these listings that I have is a property my husband and I own. It's been listed for a few months, and we finally got an offer on it this past weekend.

I've bought and sold my own properties for a few years so one would think it would be no big deal. However, this is the first time I actually lost sleep and became emotional over the whole thing. I analyze things (sometimes to a fault) to figure out the "why's," and this time was no different. I understand getting emotional over a home you've built memories with your family in, however, that was not the case with this home. It was strictly an investment when we bought it.

We rented it out for a few years. It is a cute little Florida cottage, and when we decided to sell it, decided it would be best to make some updates (central A/C and heating and new kitchen, plus a few other things).

I read through the entire offer, and presented it to my husband like I do to any other seller, with all the numbers, and the options, but something just didn't feel right about the whole thing. I could feel it in my gut. I couldn't put my finger on it, though. I had to chuckle to myself because here I am, the one, who on a regular basis helps buyers and sellers do what they can to take the emotion out of a very large financial transaction, and my head was hurting. I couldn't decide ANY direction, let alone spell them all out.

The realization at that point, was this is an excellent reason to bring in a disinterested third party to help iron out the options. But it was too late to call anyone. I'd thought of all the different people I could call the next day, and went to bed...however, lost more sleep over this than when I bought the house I live in! (Which, by the way cost more than this house we received the offer on).

I decided to re-read the entire offer (submitted from another Realtor), and realized two things. Number one; this wasn't a serious buyer. First off, as a seller, I see a serious buyer as willing to put down an Earnest Money Deposit. No such thing here...but that's not all! (Mind you, an Earnest Money Deposit is not REQUIRED to enter in to negotiations, but a good Realtor will tell you that it's generally a good idea. I would not recommend a transaction with no EMD.) Second; this buyer had not even spoken with ANY lenders yet. This, too, is not a requirement to enter in to negotiations, but, again, in the current market, if you are serious about buying a home, show it. Not only to the sellers, but to your Realtor.

One thing that kept going through my mind was "what if this falls through?!" until I realized that if it didn't, it wasn't the end of the world. I've had clients where we negotiated two offers before the third finally stuck--and it was better than either of the first two.

SO what are the major learning points here? There's some for both buyers AND sellers.

Buyers: In any market, it's a good idea to talk to a lender (or multiple lenders) when you're ready to start viewing houses (if not sooner). Find out what you are qualified for. This way you don't waste your time looking at houses that are too small for your needs because you think it's all you can afford. Or on the opposite side, this keeps you from wasting time looking at homes that are out of your price range. If you know what you can afford, it will help your Realtor help you focus in on what you do need and want.

Many sellers are now requiring a pre-approval letter accompany an offer--wouldn't you rather, as a buyer, only have to make one quick phone call while your Realtor® is writing up the offer to get a letter sent over, than have to wait a week...and then find out someone else that WAS ready with their pre-approval letter from a lender snagged up that perfect house?

Also, as for an earnest money deposit (EMD), this money will go for the price of the home. It's not money that you "lose," unless you decide suddenly that you don't like the color of the house and back out of the contract after all parties have agreed to terms and signed the paperwork. This is money that the seller can keep given the right conditions. But it's showing the seller you have "good faith" in buying this home.

Sellers: In any market, it's a good idea to ask for a pre-approval letter to accompany any offer. This way you do know your buyer IS serious about buying a home. If they aren't getting a loan, and expect to pay cash, then ask for proof of funds. This should not be an issue if this is a serious buyer.

Requesting a pre-approval letter will also weed out those buyers who are "just looking" to see what they can get. This will weed out what I call "the time-wasters," that are truly afraid to take that step--for whatever reason.

Regardless of the situation--whether you are a buyer or seller, make sure you talk with your Realtor®. Talk with him or her honestly about your situation. Your Realtor® is there to help you get started with financing if you don't already have it to buy a home. They are also there to answer your questions when it comes to selling your home. Never be afraid to ask the questions, and what it takes to get started.

Good Luck!