Mary Shelsby

I got an e-mail today that was very similiar to many that I've received in the past. It read, "My husband, Peter, and I are thinking about buying a house in the near future as we are quickly outgrowing our apartment (we have 2 young children). We have so many questions, and have no idea where to start. Do you have any advice?"



I referred them to a blog that clients of mine did several years ago whereby they documented each step of their journey to buy their first home. It's very entertaining yet educational. Of course, because it is in blog format, the end of the story is on top. To follow their story, you must start at the end of the blog, which is their first post. To check it out, go to http://prinzihouse.blogspot.com/.

In much less detail, the basic steps for buying a home follow:

1. Get pre-qualified for financing. I can recommend someone that will review your credit and income to advise what type of financing (FHA, Conventional and/or SONYMA) is best for you as well as how much you can/should spend for a home.
2. Meet with a realtor to go over the process, paperwork and to discuss what are priorities are for a home.
3. Look for property on the internet, do drive-bys and schedule appointments through your realtor.
4. Find the house of your dreams and submit a purchase offer.
5. Once the offer is accepted, you usually have a week or so to complete inspections and shop for a mortgage.
6. Closing is generally 45 to 60 days after the offer is accepted.
7. Live happy ever after.

Several weeks back CNN Money Magazine predicted Rochester's housing prices to increase 2.7%, ranking it second in the country for fastest growing markets. And while that is very good news for the Rochester real estate market, there are a few things to keep in mind. First off, this is only a prediction. Second, this is a cool off of the 4 to 6% appreciation we've been seeing in recent years.

As I work with buyers, especially first time buyers, I urge them to consider shorter term financing, even if it means purchasing a less expensive property. In my opinion, that is the greatest hedge against today's uncertain economy.

Case in point, consider 137 Boardman St (www.RochestersBestHomes.com/811190 ) listed at $96,500 with property taxes of $2,285 per year. Let's suppose we come to terms with a purchase price of $93,000 and we plan to put 5% down ($4,650) which means we are financing $88,350. Let's say our interest rate is 6.125%.

For a 30 year mortgage, consider the following:

Monthly principle & interest is $536.82 (Of course, that does not include taxes of $190.42 which would make the payment $727.85) After five years, the balance of your loan will be approximately $81,500. That means, of the nearly $35,000 you send to the mortgage company over the period of 5 years, only $6,850 is used to pay down your loan.

Now, let's look at a 15 year mortgage. Sometimes you can get a better interest rate on a shorter term loan but for the sake of comparison, let's stick with the 6.125% Monthly principle & interest is $751.52 and at the end of five years, you will have paid down your loan to nearly $65,000. Instead of having $7000 in equity, you will have approximately $23,000!

Most banks also offer 20 and 10 year mortgages. Often buyers will not even inquire about a shorter term mortgage because they assume they can't afford it. In my opinion, they can't afford not to! When shopping for a mortgage, ask your lender to also provide a good faith estimate for a 20 year and 15 year mortgage and go with the shortest term mortgage you can possibly afford.

Tomorrow concludes the Liliac Festival for 2008 but the peonies are about to pop at Highland Park. If you are like me, you might prefer to wait until the crowds are done to go see the park and so I've encluded a list of open houses for your Sunday afternoon. The hottest real estate in town these days are homes priced for less than $125,000 and so that's what is on this week's list. Open House Report

The University of Rochester and the City of Rochester each are offering $3000 in assistance to full and part time employees of the University of Rochester that buy a home in select neighborhoods in the City of Rochester. In addition, Advantage Federal Credit Union and Canandaigua National Bank & Trust will provide an additional $3000 in assistance.

The targeted areas for the incentive program are the 19th Ward, Plymouth-Exchange on the west in Sector 4; while to the east, they include Highland Park, the South Wedge and other nearby communities in Sector 6. They are the neighborhoods that are closest to the campus.

These neighborhoods provide a wide variety of homes in a broad price range. At the upper end of the range is a beautiful 2000 sq foot Arts & Craft style home listed at $186,900 ( www.RochestersBestHomes.com/808603 ). The South Wedge Neighborhood is a popular neighborhood for young professionals and has several nice options. For example, a 5 bedroom home with lots of natural woodwork goes for $122,000 (www.RochestersBestHomes.com/812319 )

On the west side, there are approximately 100 current listings of single family homes, with prices between $20,000 (needs lots of work! to $145,000. A cute bungalow style home with three bedrooms and 1 and a half baths is listed at only $61,500 (www.RochestersBestHomes.com/805433 ) or a drop-dead gorgeous colonial with new kitchen and as well as recent new furnace, AC, roof for $119,500 (www.RochestersBestHomes/733325)

In addition, NeighborWorks Rochester will be providing participants with home ownership counseling. For additional information about this program and an updated list of eligible properties, and other information about Rochester real estate drop me an e-mail or give me a call.

Mary Shelsby MShelsby@gmail.com office: 585-756-7457 cell: 585-414-5513