Friday, August 24, 2012

Common Mistakes to Avoid When Obtaining a Home Loan!

You are about to make what is most likely the largest purchase of your life: your home.  Unfortunately most homebuyers do not take time to research the importance of a home mortgage.  Researching the process takes little time compared to the tens of thousands of dollars it could save you.

·        Find a reputable lender – This is the most important choice you can make when starting the mortgage process.  If you don’t trust your lender, you are in for a long and stressful home – buying experience.
·        Pricing – Don’t be lured into a mortgage company strictly by promises of low rates.  Make sure there is enough time to close your loan at the low rate you have been quoted.  Make sure you lock-in your rate so it can not adjust.
·        Programs – As you start the process you will find there are many more loan programs than you expected.  Make sure your lender shows you the best program to fit YOUR specific needs.
·        Fixed or Adjustable Rate Mortgage (ARM) – Conventional thinking is that fixed is always better and while this is sometimes true, it is not always the case.  The key is to ask, “How long am I going to live in the property?”  An ARM can actually be a better choice if you are going to be in your new home a short period of time.  The rule of thumb is the longer you plan on staying in your home, the better a fixed rate mortgage will suit your needs.
·        Negotiate problems prior to closing – It’s common for a problem to arise before closing.  Waiting until closing will rarely be in your best interest.  For instance, if the seller has agreed to make a repair do not wait to closing to check to see if the repair has been made.  Taking care of problems prior to closing benefits both parties.
·        Be prepared for closing cost – In addition to the down payment, you be required to pay fees and other closing cost at the time of closing.  Your lender must provide you with a “Good Faith Estimate” which will provide you with a breakdown of all costs so you will know what to expect at closing. 
·        Close at the end of the month – When making a mortgage payment, you will be paying interest that has accrued from the previous month.  At closing however, your lender will charge you prepaid interest for the date the loan is recorded through the end of the month.  Therefore, one way to lower your closing cost is to close at the end of the month.  This will lower the amount of prepaid interest you must pay.
·        Look out for hidden fees – Check for certain miscellaneous fees such as inspection, notary, and document preparation.  Theses fees can total hundreds of dollars in closing cost.  Never be afraid to ask for explanations of fees you are being charged.

The above article is to be used as an information tool only and does not make any guarantees. 

Repairs that Help Boost Your Bottom Line

Quick fixes before selling your house always pay off, but which repairs bring the biggest return?  Specific answers to this often asked question mostly depend on a variety of factors such as: The time of year, location, market stability and your competition.  There is no hard fast rule.  But there are general guidelines that apply to most houses.  Floors, ceilings, walls, kitchens, bathrooms and roofs have at least one thing in common buyers want them in good condition and you will receive a generous return on your investment.

Wood floors are a hot item in today’s market.  If your home has hardwood flooring under the carpeting it would pay to remove the carpeting and spruce up the hardwoods.  Still some buyers prefer carpeting or ceramic flooring.  If you have carpeting then replace it or make sure it is in tip-top condition.  If you have ceramic replace chipped or broken tiles.  But in my opinion you should not install ceramic it’s to expensive unless it can be placed in a small area such as an entry way.

Buyers spend more time than you would think looking at ceilings and walls.  As for ceilings they are mainly looking for signs of a leaky roof.  You do not want them to see stains from smoke, or grease nor do you want them to see cracks.  Ditto for walls.  Nothing says fresh like new paint.  Painting is the most cost effective improvement you can invest in.  Paint with a neutral color such as light tan – think of coffee with extra cream.  In our area wood paneling is commonly found.  Dated paneling must go prime it and paint it a soft neutral color. 

Kitchen improvements are a must and are typically the most expensive.  If your appliances are a dated color paint them.  If your cabinets are dated and beat-up it is a must to repair and repaint them you can also replace your cabinets handles and hinges for a more modern look.  Remodeled kitchens have a return of nearly 100%.  New countertops will make an unbelievable difference in the presentation of your kitchen.  Granite countertops are not necessary.  Simple laminates, newer faucets and sparkling sinks pay a substantial return.

On a national average the recoupable cost for bathrooms is more than 100%.  New floors, fixtures and lights pay off.

If your roof needs replacing bite the bullet and do it.  Buyers shy away from buying a home if the roof needs replacing.

When remodeling or updating your property all sellers should learn the difference between an improvement and maintenance.  An improvement will add value to your property where maintenance is sometimes costly but normally adds little to no value to the property.  An example of an improvement is adding a room; an example of maintenance is replacing faucets because they leak. Maintenance is one of those necessary evils that are a must in order to sell the property.

Overall, a large majority of buyers want to buy a home that has no deferred maintenance, newer appliances, updated plumbing, electrical, heating & air conditioning, modern conveniences and is move in ready.  A dear friend of mine who is also a REALTOR® has a great saying: “To get top dollar your home must look top dollar”.

This article is to be used as an informational tool and does not guarantee the sell of your home. 

12 Real Estate Terms to Know

Buying or selling a home can be confusing.  Knowing the definitions of the following terms will help you better understand what’s going on.

    ·        Adjustable Rate Mortgage (ARM) – can be also referred to as a Variable Rate Mortgage. A mortgage in which the interest rate is adjusted periodically based on a pre-selected schedule.

·        Buy-Down – A method of lowering a buyer’s monthly payments for a short period of time.  The lender subsidizes the mortgage by lowering the interest rate for the first few years of the loan. At that point the interest rate will go up to an agreed upon rate.

·        Caps – a limit the interest rate or monthly payments can adjust to with and Adjustable Rate Mortgage.

·        Debt-to-Income Ratio – the percentage of your monthly debt versus your monthly income.  This percentage is calculated by dividing a buyer’s monthly long-term debts by a buyer’s gross monthly income.

·        Underwriting – The decision-making process of granting a loan to a potential homebuyer.

·        PITI Payment – Refers to a payment that includes the Principal, Interest, Taxes, and Insurance.

·        Origination Fee – a fee charged by the lender for processing a loan application; usually calculated as a percentage of the loan.

·        Market Value – The price a property could possibly bring in the real estate marketplace.

·        Mortgage Insurance – insurance that protect lenders against loss if a buyer defaults on their loan.  This is required when the loan-to-value ratio is greater than 80 percent.

·        Fixed Rate Mortgage – a mortgage in which the interest remains the same throughout the life of the loan.

·        Earnest Money – money given by a buyer to a seller as a deposit to purchase a property.  Earnest money is subtracted from closing costs.

·        Closing – Also referred to as settlement.  The meeting in which the real estate transaction is completed and when the property and funds are exchanged between the Buyer(s) and Seller(s).

The terms above are used in 99.99% of all real estate transactions.  Whether you’re Realtor®, Lender or closing attorney use these terms you will now know what’s going on.