Why should I use a real estate agent?
A real estate agent is more than just a "sales person." They act on your behalf as your agent, providing you with advice and guidance and doing a job - helping you buy or sell a home. Due to the fast changing market, the data on available listings is not 100% accurate. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with an agent.
Owning. U.S. tax code has been designed to promote home ownership. Home owners receive credits for interest paid toward the purchase of a home and usually become eligible for other deductions not available to those who cannot itemize. It is also true that landlords build profit into rent so buying is at least that much cheaper than rent. Over time real estate appreciates some times at varying rates but traditionally at around ten percent per year. The difference between what you owe and the worth of your home is referred to as equity. Tax deductions, discounted shelter and equity all make owning the wiser choice.
What are closing costs?
Closing costs are the fees that must be paid in order to originate your loan, insure your deed, record and transfer title.
Can the seller pay closing costs?
Usually yes however you must be sure your loan product allows this. It is important to clarify your underwriters rules before submitting an offer. Each institution has rules governing allowed closing costs and or concessions.
Should I make a large down payment?
The answer to this and other financial questions is peculiar to your circumstances. The first thing to find out is if your credit allows you options. If your credit allows a lower down payment, you must decide if it is the best use of your funds. If you will need money in the near future for furnishings or home maintenance, a large down payment may be unwise. If you need a safe investment vehicle, you may wish to have a large down payment on the other hand a sophisticated investor my wish to invest in higher returns.
A buyer can be pre-approved after they have applied for a loan and had a credit report run. A pre-approval will have some exceptions, the fewer the exceptions the stronger the pre-approval. Remember, the pre-approval is only as good as the institution issuing it.
Pre-approval has many benefits. The buyer is assured of his/her purchasing power and only shops within that range. The agents involved and the seller are all assured of the buyers serious intent. This assurance of ability and intent makes the pre-approved buyer a more desirable than someone who has not put forth the effort. Not being pre-approved can cost the buyer thousands in negotiating.
What is the lowest down payment I can make?
There are a lot of factors to consider. A buyer who is qualified can get into a property with no money down. Whether this is the best choice is a matter that should be considered.
An appraisal is a written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby. Ordering the appraisal is one of the good faith efforts required in the contract of the buyer. Delayed payment for the appraisal is one of the most common delays in closing and may place the buyer in default.
Underwriting is the process of reviewing a loan package after the loan officer has prepared it and the home has been appraised. When underwriting is complete the lender should issue a commitment.
A paper is a term used by underwriters to refer to a loan which meets the parameters set by Fannie Mae/Freddie Mac for loans those organizations will buy or purchase. Also referred to as conforming, A paper says the borrower has adequate credit, income and job history for a given loan.
B paper on nonconforming is a loan which does not meet the requirements set out by Fannie Mae. At least one factor has caused the loan to be unacceptable. The borrower may be borrowing a large percentage of their income, may have a low credit score, or have income that is erratic or poorly documented. These loans have higher rates and more fees than A paper. If you believe you are eligible for a conforming loan and are not being offered one, see another lender.
When I find the home I want, how much should I offer?
Your real estate broker can help you here. But there are several things you should consider: 1) is the asking price in line with prices of similar homes in the area? 2) Is the home in good condition or will you have to spend a substantial amount of money making it the way you want it? You probably want to get a professional home inspection before you make your offer. Your real estate broker can help you arrange one. 3) How long has the home been on the market? If it's been for sale for awhile, the seller may be more eager to accept a lower offer. 4) How much mortgage will be required? Make sure you really can afford whatever offer you make. 5) How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In some cases, you may even want to offer more than the asking price, if you know you are competing with others for the house.
So what will happen at closing?
Basically, you'll sit at a table with your broker, the broker for the seller, probably the seller, and a closing agent. The closing agent will have a stack of papers for you and the seller to sign. While he or she will give you a basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to make sure you know exactly what you're signing. After all, this is a large amount of money you're committing to pay for a lot of years! Before you go to closing, your lender is required to give you a booklet explaining the closing costs, a "good faith estimate" of how much cash you'll have to supply at closing, and a list of documents you'll need at closing.
What happens on the day of closing and can I move in on that day?
The actual day of your closing will be the day in which the buyer deposits any remaining money due into escrow and signs the escrow and loan documents. It is also the day in which the seller will sign the deed and closing statements and receive a check for the money due to the seller. In some parts of the country, the buyer and seller go into the closing agent's office separately. In other parts of the country, the buyer and seller go in together. Either way, closing is the day in which the deed is exchanged for the sales proceeds money. "Recording" will take place on that day, which means that the deed and any mortgage documents are taken to the county court house and recorded in the official records. These documents are them made of "public record" for anyone to see. The actual day that you can move in will be determined by local practice and the terms of your purchase agreement. It may be the day of closing, or it may be a day or two after the closing.
