http://ims.rapv.com/documents/UPDATE/FHA.pdf

1. What does your inspection cover?
The inspector should ensure that their inspection and inspection report will meet all applicable requirements in your state if applicable and will comply with a well-recognized standard of practice and code of ethics. You should be able to request and see a copy of these items ahead of time and ask any questions you may have. If there are any areas you want to make sure are inspected, be sure to identify them upfront.

2. How long have you been practicing in the home inspection profession and how many inspections have you completed?

The inspector should be able to provide his or her history in the profession and perhaps even a few names as referrals. Newer inspectors can be very qualified, and many work with a partner or have access to more experienced inspectors to assist them in the inspection.

3. Are you specifically experienced in residential inspection?

Related experience in construction or engineering is helpful, but is no substitute for training and experience in the unique discipline of home inspection. If the inspection is for a commercial property, then this should be asked about as well.

4. Do you offer to do repairs or improvements based on the inspection?

Some inspector associations and state regulations allow the inspector to perform repair work on problems uncovered in the inspection. Other associations and regulations strictly forbid this as a conflict of interest.

5. How long will the inspection take?

The average on-site inspection time for a single inspector is two to three hours for a typical single-family house; anything significantly less may not be enough time to perform a thorough inspection. Additional inspectors may be brought in for very large properties and buildings.

6. How much will it cost?

Costs vary dramatically, depending on the region, size and age of the house, scope of services and other factors. A typical range might be $300-$500, but consider the value of the home inspection in terms of the investment being made. Cost does not necessarily reflect quality. HUD Does not regulate home inspection fees.

7. What type of inspection report do you provide and how long will it take to receive the report?

Ask to see samples and determine whether or not you can understand the inspector™s reporting style and if the time parameters fulfill your needs. Most inspectors provide their full report within 24 hours of the inspection.

8. Will I be able to attend the inspection?

This is a valuable educational opportunity, and an inspector™s refusal to allow this should raise a red flag. Never pass up this opportunity to see your prospective home through the eyes of an expert.

9. Do you maintain membership in a professional home inspector association?

There are many state and national associations for home inspectors. Request to see their membership ID, and perform whatever due diligence you deem appropriate.

10. Do you participate in continuing education programs to keep your expertise up to date?

One can never know it all, and the inspector™s commitment to continuing education is a good measure of his or her professionalism and service to the consumer. This is especially important in cases where the home is much older or includes unique elements requiring additional or updated training.

Source: http://portal.hud.gov/hudportal/HUD?src=/topics/buying_a_home

Know what you can afford.
Review your monthly spending plan to estimate what you can afford to pay for a home, including the mortgage, property taxes, insurance, and monthly maintenance and utilities. Make sure you save for emergencies. Plan ahead to be sure you will be able to afford your monthly payments for several years. Check your credit report to make sure that the information in it is accurate. A higher credit score may help you get a lower interest rate on your mortgage.  

Shop around“compare loans from lenders and brokers.
Shopping takes time and energy, but not shopping around can cost you thousands of dollars. You can get a mortgage loan from mortgage lenders or mortgage brokers. Brokers arrange mortgage loans with a lender rather than lend money directly; in other words, brokers sell you a loan from a lender. Neither lenders nor brokers have to find the best loan for you“to find the best loan, you have to do the shopping. The idea is to  Shop, Compare, Negotiate.

Understand loan prices and fees.
Many consumers accept the first loan offered and don™t realize that they may be able to get a better loan. On any given day, lenders and brokers may offer different interest rates and fees to different consumers for the same loan, even when those consumers have the same loan qualifications. Keep in mind that lenders and brokers also consider the profit they receive if you agree to the terms of a loan with higher fees, higher points, or a higher interest rate. Shopping around is your best way to avoid more expensive loans.

Know the risks and benefits of loan options.
Mortgages have many features“some have fixed interest rates and some have adjustable rates; some have payment adjustments; on some you pay only the interest on the loan for a while and then you pay down the principal (the loan amount); some charge you a penalty for paying the loan off early; and some have a large payment due at the end of the loan (a balloon payment). Consider all mortgage features, the APR (annual percentage rate), and the settlement costs. Ask your lender to calculate how much your monthly payments could be a year from now, and 5 or 10 years from now. A mortgage shopping worksheet (33 KB PDF) can help you identify the features of different loans. Mortgage calculators (as seen on my webpage) can help you compare payments and the equity you could build with different mortgage loans.

Get advice from trusted sources.
A mortgage loan is one of the most complex, most expensive financial commitments you will ever assume“it™s okay to ask for help. Talk with a trusted housing counselor or a real estate attorney that you hire to review your documents before you sign them. You can find a list of counseling resources at NeighborWorks and on the U.S. Department of Housing and Urban Development™s (HUD) website or by calling (800) 569-4287.

In reality a home is worth what a typical buyer is willing to pay for it assuming it is an arms-length transaction. However, because a lender uses the home as collateral a formal appraisal is required to support the purchase or acquisition price. Furthermore a lender will then finance a certain percent of the appraised value or purchase price, whichever is less. For example, if a person is buying a home for $350,000 and it appraises at $380,000, the bank will only lend off the $350,000 number, and consideration will not be given to the excess value. In fact, the lender may question why the seller is selling at such a discount and may require supporting verification and documentation. Conversely, if the home appraises for $330,000 on a $350,000 sale, the lender will lend off the lower value, and similarly require a satisfactory explanation as to why the buyer is still proceeding with the transaction.

In buying a home you should make certain that your offer contains a mortgage contingency clause which does not require you to proceed with the transaction if you are unable to obtain mortgage financing at the stated terms. In fact, wording should be in the offer that the property will appraise at or above the purchase price. At the same time, a lower appraised value may give you the ability to renegotiate with the seller and hopefully adjust the sale price to something that is more appropriate in today™s market. I can guide you as these issues arise giving you available alternatives and options.

Many real estate experts of the housing market  continue to be hopeful yet cautious. In order to recover, it is well known that jobs are the key. Without job creation,  many homeowners  continue to face foreclosure and others are not  able to qualify for a home purchase. With single-family home inventory levels  considerably higher than normal, sales of housing will not recover unless more jobs are created and buyers feel more confident.  Here are some thoughts on current trends:

Full Recovery Not Likely: Let’s be real. Housing is still in the doldrums. There are still too many people without jobs and lending standards remain stringent. The home buyers pool is dramatically decreased and until that changes, a housing recovery will not happen. I predict that values will not begin to rise in any measurable way for several more years.

The job outlook is not  positive as we still have a considerable ways to go. We can be optimistic as long as our government continues to work towards job creation. Fortunately, after years of moribund growth,  the University of Massachusetts seems to be in a growing phase and many local communities seem fully involved in road repairs.

Buyers Want Smaller Homes; McMansions Are Out: In the Upper Pioneer Valley market a  clear trend has emerged over the last few years.  Home buyers aren’t into the huge homes with all the amenities anymore. Everyone seems to be downsizing or looking to save money.

The older generations are looking for less maintenance and first time buyers are looking for smaller homes in walkable neighborhoods. I do think this will be a problem for higher end homes. If you’re currently living in a large home, just know, resale in the near future will be more difficult do to the downsizing trend.

Buyers in Upper Price Range Less Like to Pay Top Dollar: Upper-end homes languishing on the market. And when they do sell they do so at a heavy discount off their asking prices. Well-healed buyers terrified of losing cash and committing to large investment.

Long Term Home Ownership Will Be The Norm:  Home buyers are thinking more long term with their home purchases.  During the boom homeowners were buying houses like candy and expected to turn around in a couple years, sale the home, and walk away with a nice profit.

Home buyers today realize that tactic is just not viable anymore. Home buyers are  more cautious and plan longer term home-ownership. This trend will cause buyers to become more picky and thoughtful about the homes they purchase. If you’re a seller, you’ll need to do more than ever to get your home sold. It must be in great condition and priced well to compete for  today’s more cautious home buyer.

Local Prices Seem to have Stabilized:  Compared to many other area where the bottom of the real estate market is still yet to come, we are fortunate that  prices in the Upper Pioneer Valley are holding steady. Elsewhere, home prices are still falling and even though the government announced the recession ended in 2009, values haven’t hit bottom. Reports are claiming home prices will decline another 7-10% depending on what market you’re in.

Interest Rates Should Remain Low:  With a fragile economy, the fed is expected to keep interest rates low for the  remainder  of 2011.  How low? No one knows, but  expect them to stay below 6%  and possibility even below 5%. Low interest rates mean housing affordability will remain low creating some sort of demand.  However, if rates do jump past 6%, the housing recovery could come to a halt.

Mortgage rates generally follow the U.S. Treasury bond yields. And although latter is under pressure politically, U.S. Treasury  bonds are still one of the safest investments available. In fact, pressure on stock markets causes these bonds to be more popular thereby their prices rise while their relative yield  falls, hence lower mortgage rates.

Lending Standards May Loosen:  There has been talk that lending standards to to tight for a full fledged housing recovery to take place, namely by Lawrence Yun, the National Association of Realtors (NAR) chief economist. If NAR’s lobbyists on capitol hill get their way, lenders may open up more options to  obtain  credit.

The biggest  problem currently plaguing  the real estate market is the  lack of home buyers. Inventory levels remain high and credit markets continue to impose strict guidelines on potential buyers. Do these factors effect real estate? Yes, but not disastrously so. More and more buyers are beginning to realize that with values at pre-boom levels, and interest rates remaining near historic lows, there has rarely been a better time to buy.

Welcome to Jim Lumley’s Blog! This blog will provide you with valuable information, tips, and general insight into the real estate market in Amherst. Visit my website at www.JIMLUMLEY.com