Category: Buying

Tips and information about buying a home.

New Home Construction

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Whether to buy an existing home or have one built is yet another decision to make during the home-buying process. If you decide to go with new construction, a real estate agent can be a powerful advocate in your corner as you negotiate upgrades, a move-in date and other terms with the home builder.

Below are some basic pointers to prepare you for the journey ahead.

Selecting a builder

Shopping for a large production or custom home builder can be a daunting task. Start by defining what architectural styles appeal to you and then seek out the builders in your area who offer those styles. Due diligence is essential. Ask friends for referrals to get firsthand accounts; verify the builder’s state license status, if applicable; and check whether they’re certified by the National Association of Home Builders.

The builder representative and your real estate agent

A builder representative’s ultimate goal is to sell you a home. His or her role is to provide a wide range of information to help you in your decision-making, from building restrictions, roads and easements to inspections, warranties, rebates and upgrades. A real estate agent knowledgeable in new-home construction will be able to help you wade through all the data and point out the downsides and upsides of each line item. Your agent also can look out for your interests in reviewing the builder’s contract, which often contains more legal jargon than consumer-friendly language.

It’s all about timing

Market conditions greatly dictate a builder’s incentive to make a deal you cannot refuse. When a builder has inventory on his hands, his carrying costs start adding up. When this happens, a builder might be more amenable to strike a favorable deal, whether it’s throwing in upgrades or taking a bit off the asking price. A real estate agent can help you know when market conditions are right for these benefits. Also, watch for builder close-out sales. Builders promote these special events when a new subdivision is near completion but empty inventory still remains.

A word about paying up

While there are always exceptions, most builders require a deposit when a purchase agreement is signed. They also require that the buyer pay for any upgrades prior to closing. If you back out prior to closing, unless the agreement states otherwise, you will lose that money. Make sure you understand every detail in the builder’s contract before signing it.

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Steps To Buying A Home

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  1. Define your needs.

    Congratulations on your decision to purchase a new home! Before you go house hunting, it’s a good idea to define what kind of home and neighborhood would best suit your desires and needs and make a wish list. Share this list with your real estate agent. The finer the details, the more effective your home search will be. To further define your needs, you may want to divide your lists into negotiable and non-negotiable items, so your agent can operate with some flexibility when scouting for homes on your behalf.

  2. Get prequalified or preapproved.

    Now that you know what you want in a home and neighborhood, you need to find out what you can afford. There are two ways to go about this: prequalification or preapproval for a home loan. Your real estate agent can refer you to a mortgage broker to begin the process. In most markets, preapproved buyers are preferred by sellers over those who are pre-qualified.

    Your preapproved status lets the seller know:

    * You have gone through an extensive financial background check. * A lender is willing to do business with you. * The likelihood of unexpected obstacles regarding financing is minimal.

  3. Let the house hunting begin!

    Now you are ready to embark on your home search – an endeavor that can prove overwhelming if not approached with some forethought. The most efficient route is to allow your real estate agent do the initial scouting for you. Using your wish list as a guide, he or she will alert you of new and existing listings that have strong potential. If these listings pique your interest, your agent will arrange home tours at your convenience. Many agents send alerts via email – sometimes as often as daily, depending on the available inventory in your market. Let your agent know how you’d like to receive these alerts, whether by phone, email or fax.

    You also can do some research on your own. Read local real estate publications, contact your local neighborhood associations, visit the local chamber of commerce, surf the Internet, or drive around your favorite neighborhoods. While these methods certainly can lead to your dream home, it’s important to note that 82 percent of home sales are the result of agent connections.* That means it’s more likely your agent will find your dream home through being in the real estate business than you driving around on the weekends.

    * National Association of REALTORS(r)

  4. Make an offer.

    When you’re ready to make an offer on a home, your real estate agent will help you determine the offer price by reviewing recent sales of homes similar in size, quality and amenities. With your input, your agent will draft a written contract that outlines what needs to be done by both parties to execute the transaction. If the seller accepts the offer, the document becomes a binding agreement, so it is imperative that you carefully review it with your agent and speak up if anything is not clear to you. It’s important to note that if the seller changes any aspect of the offer, it is not a binding agreement until the buyer agrees to the seller’s changes.

  5. Strike a deal.

    Sometimes, you get lucky and the seller accepts your offer as is. However, in most instances, the seller will make a counteroffer. This is where your real estate agent’s experience in negotiations will be invaluable. Keep in mind almost everything is negotiable when you are buying a house. This can give you a great deal of leverage in the buying process – that is, if you have adequate information and you use it in an appropriate manner. Some items you may negotiate:

    * Price

    * Financing

    * Closing costs

    * Move-in date

    * Repairs

    * Appliances and fixtures

    * Landscaping

    * Painting

    Remain in close contact with your real estate agent so you can quickly review any changes from the seller. Remember: Bargaining is not a winner-take-all deal. It is a business process that involves compromise and mutual respect.

  6. Prepare for the closing.

    When an offer becomes a binding agreement, your real estate agent will help you tackle the checklist of action items that you, as the buyer, have agreed to perform prior to closing. Depending on how the responsibilities are divvied up in the agreement, this is typically when you will:

    * Conduct a home inspection.

    * Get an appraisal and finalize your financing.

    * Secure title insurance.

    * Shop for a home warranty.

    Having these procedures done in a timely and professional manner is a must, as any delays could threaten a successful closing. A first-rate real estate agent should be able to serve as your “one-stop shopping” referral source for service providers. Your agent also should serve as your advocate, helping to coordinate activities and making sure the vendors have access to the property to perform their jobs.

  7. Close the deal.

    Congratulations! The moment you’ve been anticipating has arrived. The closing is where home ownership is legally transferred from the seller to the buyer. It is a formal meeting that most parties involved in the transaction will attend. Closing procedures usually are held at the title company’s or lawyer’s office. The closing officer will coordinate all the document-signing and the collection and disbursement of funds. A few days before your closing date, your lender will send a final closing statement that outlines your closing costs, if applicable. Your real estate agent will review this document with you to ensure its accuracy, as well as help you gather any necessary documentation that you’ll need to bring to closing.

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Investing in Short Sales

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Okay, Mr./Mrs. Moneybucks, so you you have a little stash of cash set aside and you’ve been listening to market trends and keeping a keen eye on the real estate market. Now you’re thinking that today is the perfect time to buy real estate low and sell high later. Well, congratulations! You’re right!

Real estate market values are at a record low compared to what they were just a few short years ago, and with the mortgage mess going on thanks to the promises of adjustable rates, the short sale market is sadly becoming a growing trend. The potential to buy a property listed as a short sale at up to a 50% discount is becoming a reality, and for savvy investors looking towards real estate again as another way to diversify their portfolio, they’re in luck!

Most short sales can be purchased with a real estate agent, in fact, I highly recommend using a real estate agent because there is a ton of paperwork to contend with, not to mention the guidelines of dealing with real estate in general. However, there are ways to learn how to find short sales on your own and how to deal with lenders directly to purchase short sales.

Which ever way you decide to find and purchase your next investment, remember to take some time to plan out what you’re going to do once you have the property. Are you going to rent it out? Are you going to fix it up and flip it? Planning is the key to any successful investment– that includes planning for any unforeseen events. But I have faith in you. You’re smart and even smarter for reading Free-RealEstate-Tips.com!

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Categories: Buying Investing Short Sales and Foreclosures

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Home Inspections

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home inspections

You got an offer on your house and after numerous counter offers, everyone is finally happy with the terms (including your real estate agent!). Besides the appraisal report, the next dreaded step that buyers and sellers fear is the home inspection. Sellers worry that the inspector will nit-pick miscellaneous items that may deter buyers, and buyers worry that their future dream home could be riddled with problems.

Home inspectors are not evil. They were not put on this planet to destroy the hopes and dreams of home buyers and home sellers. They are trained professionals whose duty it is to ensure that a house in question is sound, livable and up to code, and to point out items that need to be repaired immediately or in the future.

Sellers, you can avoid nit-picking fears by tending to repairs that are obvious. Do a home inspection of your own and try to view things objectively.

Buyers, just because the home inspector has a long list of items in the report doesn’t mean that the house is in shambles. Go over the list of items, talk to the inspector, get estimates of repairs or replacements. You’ll feel much better if you get a better understanding of the seriousness of the findings.

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Choices That Affect a Mortgage Payment Amount

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  • Mortgage term. Mortgages are generally available at 15-, 20-, or 30-year terms. The longer the term, the lower the monthly payment if the same amount is borrowed. However, you pay more interest overall if you borrow for a longer term.
  • Fixed or adjustable interest rate. A fixed rate allows you to lock in a low rate for as long as you hold the mortgage and is usually a good choice if interest rates are low. An adjustable-rate mortgage (ARM) is designed so that interest rates will rise as interest rates increase; however they usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. ARMs are a good choice when interest rates are high or when you expect your income to grow significantly in the coming years.
  • Balloon mortgages. Balloon mortgages offer very low interest rates for a short period of time—often three to seven years. Payments usually cover only the interest, so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.
  • Government-backed loans. Government-backed loans, sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the U.S. Department of Veterans Affairs (www.va.gov), offer special terms, including lower down payments or reduced interest rates—to qualified buyers.

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Creative Ways to Afford a Home

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  1. Investigate local, state, and national downpayment assistance programs. These programs give loans or grants to cover all or part of your required downpayment. National programs include the Nehemiah program (http://www.getdownpayment.com) and the American Dream Downpayment Fund from the U.S. Department of Housing and Urban Development (http://www.hud.gov).
  2. Get the seller to provide financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you do a mortgage.
  3. Consider a shared-appreciation, or shared equity, arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and thus share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and all maintenance costs, but all investors’ names are usually on the mortgage. There are companies that can help you find such an investor if your family can’t participate.
  4. Get help from your family. Perhaps a family member will loan you money for the downpayment and/or act as a cosigner for the mortgage. Lenders often like to have a cosigner if you have little credit history.
  5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.
  6. See if you can qualify for a short-term second mortgage to give you the money to make a higher downpayment. This may be possible if you have a good income and little other debt.

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8 Ways to Improve Your Credit

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Credit scores, along with your overall income and debt, are a big factor in determining if you’ll qualify for a loan and what loan terms you’ll be able to qualify for.

  1. Check for and correct errors in your credit report. Mistakes happen, and you could be paying for someone else’s poor financial management.
  2. Pay down credit card bills. If possible, pay off the entire balance every month. However, transferring credit card debt from one card to another could lower your score.
  3. Don’t charge your credit cards to the maximum limit.
  4. Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less for problems after a year.
  5. Don’t purchase big-ticket items for your new home on credit cards until after the loan is approved. The amounts will add to your debt.
  6. Don’t open new credit card accounts before applying for a mortgage. Having too much available credit can lower your score.
  7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.
  8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

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This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation.

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How can a home have multiple appriasal values?

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I had a client once who didn’t understand why his house had multiple appraised values. He had hired an appraiser to come out and tell him what his house was worth before deciding to place it on the market. When he called me in to list his house, I did my research and provided him with a comparable market analysis which averaged an amount much different than his appraised value, and when we got a ratified contract, the buyers appraisal showed yet another value. So he wanted to know what the deal was with the different amounts.

Here’s the thing: appraisals are really opinions… educated and objective opinions, but opinions none the less. Appraisals are used for different purposes and because of that, can sometimes vary. When a home is bought or sold, appraisals are normally based on the market selling price. For tax purposes, the value is based on a lot of factors specific to to the jurisdiction the house is in. Insurance values are based on how much it costs to replace the home, factoring in the cost of materials.

So it is possible to have multiple appraisal values, but if you’re thinking about selling your home, save yourself a few hundred dollars and ask a real estate agent to provide you a current and detailed report of the market value in your neighborhood.

Categories: Buying Selling

Pre-Qualification vs. Pre-Approval

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So you think you’re ready to make the leap to homeownership? Or maybe the time you bought your first house seemed like a blur and you can’t remember the difference between pre-qualifying for a loan vs. obtaining pre-approval for a loan. Well I hope this post will clarify things a bit for you.

The biggest difference between the two is a credit history check and full debt and income verification.

When you pre-qualify for a loan, you are not applying for a specific loan amount. You state your income, any debts you may have and your lender or mortgage broker will do a preliminary calculation of how much you can afford. No credit history check is obtained, and you may not need to provide documentation of your income. You still need to apply for the loan amount you need when the time comes.

When you obtain pre-approval for a loan, you are applying for a loan so your lender or mortgage broker wants to see all your income documentation and runs a credit history check to determine how you’ve paid your debt in the past and what debt you currently have. They gather all this information and determine your FICO score which helps them determine what loan program best suits your situation.

Pre-qualifying will help you in the following ways:

  • Generally, interest rates are locked in for a set period of time. You will know in advance exactly what your payments will be on offers you choose to make.
  • You won’t waste time considering homes you cannot afford.

Pre-approval will help you in the following ways:

  • A seller may choose to make concessions if they know that your financing is secured. You are like a cash buyer, and this may make your offer more competitive.
  • You can select the best loan package without being under pressure.

I always recommend that my customers obtain pre-qualification to see how much they may be able to afford and weigh the difference of the payments on a new home against what they are paying now for their housing situation. If they find that they are ready and serious about shopping for a new home, I highly recommend that they obtain pre-approval for a loan.

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