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9 WAYS TO SAVE WHEN YOU BUY

1. Knowing When To Buy
Experts would say that now is the time. Since real estate prices have declined, your timing may be perfect.

You should buy now if you meet the following criteria:

- Can afford the monthly payments.

- Plan to stay in the home/condo long enough for the appreciation to cover your transaction costs. Given current appreciation rates, this is often accomplished in a month or two.

- Need a tax break. The mortgage interest and property tax deductions can make home ownership very appealing. The depreciation allowed for investment properties can be extremely beneficial as well.

2. How To Determine What You Can Afford
If purchasing a primary residence, it´s roughly three times your annual income. Real estate experts strongly recommend people get prequalified by a lender as a way of calculating exactly how much of a home they can afford.

When qualifying people for a loan, lenders look at a borrower´s full financial standing. Lenders use the relationship PITI, or principal, interest, taxes and insurance payments, and their gross monthly income. Generally, lenders like to see the PITI not exceed 30% to 33% of the borrower´s gross monthly income. They also consider the ratio of the borrower´s monthly debt payments, including the PITI to income. Some lenders have flexibility in these qualifying ratios.

Although investment properties and second homes may have different qualifying guidelines, the rates are terms can be surprisingly similar to that of primary residences.

3. Knowing How Much Down Payment Is Best
Putting down as little as possible and taking a larger mortgage allows buyers to take full advantage of the tax benefits of homeownership. Mortgage interest (and property taxes) are fully deductible from state and federal income taxes, although, here in Florida we have no state income tax.
If purchasing in the name of a corporation, partnership or LLC, the down payment may be an out of pocket expense, but it's not likely tax deductible.

4. Knowing If You Can Buy With Nothing Down
Although some experts advise against it, those wishing to purchase with little or nothing down can do so. But it's not always easy finding these loans and in some cases they can be risky. Rates and terms will not be as attractive as the best preferred rates. Occasionally, a builder or developer may offer nothing-down loans to induce sales. In rare cases, a desperate seller may agree to finance the full purchase price (or higher) to get out from under a property.

5. Knowing Standard Contract Contingencies
Most real estate purchase contracts include a number of "standard" contingencies. While excessive contingencies may very well make your offer appear much less attractive to a seller, some of the more standard contingencies are:

- The financing contingency. This makes the purchase conditional on the buyers´ ability to obtain a loan from a lender.

- An inspection contingency. This allows the buyers to have professionals inspect the property to determine that everything is in proper working order.

- Title insurance and survey contingencies. These will help ensure that there are no ownership disputes.

6. Knowing How To Obtain Financing With Marginal Credit
A poor credit history makes it harder to qualify for a mortgage. A credit score of less than 620 means that you will probably pay more for the mortgage and jump through more hoops to obtain it. For investors, a score of at least 680 is preferred. While some credit irregularities can be explained to a lender's satisfaction, late mortgage payments in your history can be the kiss of death.

There are numerous types of credit report problems that cause a lender to reject a loan application, says Ilyce R. Glink in ´´100 Questions Every First-Time Home Buyer Should Ask,´´ (Random House): ´´If you´ve ever missed a credit card payment, or defaulted on a prior mortgage or school or car loan, it will probably show up on your credit report. If you´ve filed for bankruptcy within the past seven years, that will show up on your credit report.

If you haven´t paid your taxes, or there has been a judgment filed against you (perhaps for non-payment of spousal or child support), it will also show up. Failure to pay your landlord, doctor or hospital may turn into a black spot on your credit report.´´

7. Know Your Credit Score
Before applying for a loan, you should check your credit history by ordering a copy of your own report by calling the three main national credit reporting agencies: Equifax (800) 685-1111; TRW (800)392-1122 or Trans Union (317) 408-1050.

8. Know The Market Conditions
´´While a very low offer in a normal market might be rejected immediately, in a buyer´s market the below-market offer will usually either be accepted or generate a counteroffer. When few offers are being made, an outright rejection of offers becomes unlikely,´´ writes William H. Pivar, in ´´Real Estate Investing From A to Z:´´ (Probus Publishing). Plus, he said, ´´There are always some sellers who for some reason must sell quickly´´ and will consider a reduced price. There are other considerations:

-Is the offer contingent upon anything such as the sale of the buyer´s current house?

-If the offer made on the house ´´as is,´´ or does the buyer want the seller to make some repairs before closing?

-Is the offer all cash? A cash offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.

9. Knowing How to Find A Good Realtor
Here are some tips for finding an agent suggested by author Dian Hymer: "The best sources of contacts are friends or associates who have bought or sold recently and can recommend agents. Be sure to ask your colleagues if they would use the agent again. ´´If personal contacts don´t generate enough leads, call the managers of reputable local real estate companies and ask for recommendations of agents who specialize in your neighborhood if you´re buying or selling. Find out if the agent works full time at real estate and how much experience the agent has."