Rent or Buy?

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Buying a Home

Thanks to the Internet, being an informed home buyer has never been easier. No longer are buyers completely dependent upon real estate agents and mortgage lenders when it comes to gathering information. House listings are readily available online, as are interactive tools that can estimate mortgage payments and percentage rates. If you have never bought a home before, you can find step-by-step guides to the process online. Even seasoned real estate investors can turn to the Web for news and advice, as the market is constantly evolving. Whatever your needs, the Internet is an invaluable source of information for buying a house.

Rent or Buy?

The purchase of a home is likely the single largest transaction you will ever make. If you're wondering whether you're ready to take on the responsibilities of home ownership, and (more importantly) whether you can afford it, the Web can help you be more informed as you make that decision.

Dulcinea's Insight

  • As you consider the pros and cons of home ownership, remember that some Web sites (particularly real estate sites) will try to sway you toward making a home purchase because it is in their best interests. Don't allow yourself to be enticed into purchasing a home that's more than you need or more than you can afford.
  • Online loan calculators use factors such as current interest rates and the length of a home loan to calculate what your monthly mortgage payments might be. If you use one of these tools, remember that these tools are meant to be a rough guide, and you'll probably be paying a slightly different amount than what the calculator determines. For example, factors such as your credit score, the property taxes for the home you end up buying, and the timing of federal interest rate cuts and hikes can all affect your monthly payments.
  • If you want to check your credit score, you can do so online at AnnualCreditReport.com, a secure site where you can obtain a free credit report once a year without any adverse effects on your credit score. You can also order individual reports from each of the three leading credit reporting agencies in the United States: Equifax, Experian, and TransUnion. Find out more about these agencies and other online credit tools in the findingDulcinea Credit Web Guide.

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Where to Live

Finding the right neighborhood can be just as important as finding the right home. Maybe you’re looking for a city of a certain size, or with a particular climate, or a low crime rate, or good schools. No matter which factors are most important to you, we’ve found Web sites that can give you all the details you need.

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  • Most cities have their own Web sites that provide basic statistics and news. It may seem intuitive to add “.gov” to the name of your city to find its official Web site but that won’t work for most cities, as many of them have somewhat complicated Web addresses that include their state abbreviation as well. If you don’t know the Web address, you’re usually better off using a search engine.
  • Read a local paper to see what’s going on in the town or neighborhood where you are interested in moving. Most papers are available online (even the low-budget weeklies). If you're not sure of a newspaper’s Web address, the U.S. Newspaper List is a good place to look.

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Choosing a Home

As your hunting begins, you will soon find that there is no shortage of properties for sale. While this affords you many options, you are now burdened with narrowing the field and deciding what it is you should be looking for in a home. Fortunately, there are plenty of places on the Internet to help you narrow down your choices.

Dulcinea's Insight

  • Be sensible when determining whether a house is in your budget range. Even if you are approved for a large mortgage loan, it doesn't mean you should accept the largest amount and buy a house that will leave you penniless in six months' time.

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Find Homes for Sale

There was a time when the only way to find homes for sale was through newspapers or signs in people’s front yards. Those are still viable options but you can find much more complete and extensive listings online. Many Web sites list properties for sale, complete with asking price, specs, and often photographs. Naturally, you will want to visit a house in person before bidding on it, but using the Web first to research and narrow your choices will save you time and hassle, whether you’re looking to move down the block or around the world.

Dulcinea's Insight

  • There are multitudes of homes listed for sale on the Internet. All of the good property listing Web sites let you narrow your search by specifying your desired location, style, square footage, price range, and number of bedrooms and/or bathrooms.
  • We've included national sites in this section but there are also many good regional listing sites. To find listings more local to your area, just type your city and state, or even your county and state, and then "real estate" into your favorite search engine.
  • Many newspapers post their real estate listings online. To find a local newspaper’s official Web site, check for it on the U.S. Newspaper List.
  • Some houses, particularly ones that have been most recently listed, may not have accompanying photographs. As long as the listing is on a reputable Web site like the ones recommended below, the lack of a photograph is no reason to discount a particular listing.
  • Professional real estate sites are often easier to navigate but online classified ads are excellent sources for houses that are for sale by owner.
  • A multiple listing service (MLS) Web site provides you great exposure to most of the homes for sale in your area without confining you to one particular agent or agency. The biggest drawback is that these sites do not include properties that are being sold exclusively through one agency. You can find a regional MLS Web site by typing the area in which you wish to search (for example, Sacramento or Long Island) and "multiple listing service" into your favorite search engine.

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Find Real Estate Brokers

Whether you hire a broker to help you purchase a home is a personal decision. Some people feel better with professional assistance to ensure that every step of the home buying process is completed correctly. Others are quite confident executing the process by themselves and would rather put the money toward their new home. The sites in this section can help you sort it out.

Dulcinea's Insight

  • Ever wonder what the difference is between a real estate agent and a broker? This article from The Motley Fool can help you sort out the details.
  • Generally, it's more common to use a buyer's broker when purchasing a condo or an apartment than for purchasing a house.
  • There are some online-only brokers; for example: Foxtons or ZipRealty (ZipRealty shares 20 percent of their commission with you if you buy with them). Like many online-only businesses, these brokers are often less expensive than their real-world counterparts because they have lower operating costs.

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Home Inspections and Homeowners Insurance

Now that you've found a home you like, it's time to do a little more sleuthing. As soon as possible after you agree on a price, you'll need to have the home inspected by a licensed contractor, and you’ll need homeowner's insurance. The Web can answer questions about both of these steps.

Dulcinea's Insight

  • Home inspections may be performed by someone who carries an "inspector" title or someone who is, for example, a structural engineer. This article from the National Association of Home Inspectors, Inc., explains what you should do to ensure that your potential new home receives a thorough home inspection, and how to know whether you need an inspector or an engineer to look at your home.
  • Most people who perform home inspections can tell you if there’s obvious termite damage, but it’s a good idea (and often required to obtain homeowners insurance) to get an official termite inspection. Most licensed exterminators can perform termite inspections.
  • To find an engineer or exterminator near you, try an online directory like YellowPages.com. (And don’t forget to check out their reputations with the Better Business Bureau before hiring anyone.)
  • Homeowner’s insurance isn’t just a good idea: it’s required by most mortgage lenders. Make sure to get any home you’re buying insured early enough so that you can bring proof of insurance with you to the closing.

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Negotiating Home Prices

Negotiating the price of a home requires the same level of research and preparation you've put into finding the home of your dreams, researching loans, and learning about the responsibilities of home ownership. Now that you're ready to negotiate, take the time to study this process carefully. If you make a bid that's too low, a seller might end the whole process. Then again, you don't want to make an offer that's too high or you might end up paying more than you would have needed to.

Dulcinea's Insight

  • The art of negotiation isn’t specific to buying a home. When researching negotiation tactics, look beyond real estate sites; if an article is offering advice for boardroom negotiation tactics, you may find it just as useful if you can apply its principles to your home buying negotiations.
  • Read a bit about market trends and the recent sale history of houses in the neighborhood you are shopping in. Public records can be found online and this information may save you from overbidding.
  • Make sure you know how much you can afford to spend on a home before you start the negotiation process. The "Rent or Buy?" and "Home Mortgages" sections of this Web guide both contain sites that will can help you determine what you can afford to spend each month.
  • You'll have to think about interest rates when you are trying to settle on a purchase price for your home. We've included a site that lists current rates, updated weekly.

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Home Mortgages

The process of obtaining a home loan can be arduous and confusing if you're not prepared before you start your quest to find a new home. Review the Web sites in this section to familiarize yourself with financial jargon and the various types of home loans to ensure you'll understand how to secure the loan that's best for you and your financial future.

Dulcinea's Insight

  • Check a lender’s background thoroughly before you get caught up in a lending scheme that makes too-good-to-be-true–sounding promises for people with bad credit who want to own a home.
  • Online-only lending companies often boast low closing fees but it’s always a good idea to compare the fees of a few different lenders to be sure you’re really saving money. Also remember that saving a few hundred dollars in closing costs is easily negated by an interest rate that’s even slightly higher.
  • If your parents or someone else is helping you purchase your first home, remember that recent deposits of large sums of money into your bank account can be difficult to explain to a lender, who will want to know whether that money was a loan that you'll need to pay back.
  • If you want to learn more about how mortgages work, or how to choose the right mortgage for you, browse through the sites recommended in our findingDulcinea Mortgages Web Guide.
  • Ginnie Mae, Freddie Mac, and Fannie Mae are all secondary market lenders. In other words, they provide money to the lending institutions that will be giving you the money you need to buy your home. All three were founded by the federal government, though Freddie Mac and Fannie Mae are now publicly traded, for-profit companies.

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Closing Process

The day you close on your new home can be a very exciting one but if you want it to go smoothly you’ll have to prepare. We’ve found some excellent Web sites to help you be proactive and stay on top of the final stage in purchasing a home.

Dulcinea's Insight

  • Be ready to pay all closing costs on the day you sign for the house. This often means a visit to your bank beforehand to procure the correct form of payment. (Most contracts will specify exactly what forms of payment are acceptable.)
  • You will have a mound of paperwork to sign on closing day. In order to understand exactly what it is you are agreeing to, refer to Freddie Mac’s glossary of real estate terms.
  • Once the home is officially yours, it’s time to move. The findingDulcinea Moving Web Guide identifies the Web’s best resources for hiring movers, finding packing materials, notifying the necessary parties of your change of address, and much more.

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