Buying real estate is a complex matter and can be especially confusing for the first-time homebuyer. Do yourself a favor and learn as much about the process as you can before you begin. There are plenty of resources on the Internet, and most real estate offices will have pamphlets to explain things in plain language. You may also be able to research the real estate process by attending community-sponsored classes, or you can take a look at books like Home Buying For Dummies by Eric Tyson and Ray Brown, (IDG Books Worldwide, Inc.)
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Buying – Work with a Realtor / Real Estate Agent
Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.
In most areas, this advice applies even if you don’t have school-age children. Reason: When it comes time to sell, you’ll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values. And improve the chances of Reselling your home quickly should you have to relocate again.
Your opening bid should be based on the sales trend of( Current Market Value) of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that’s about eight to 10 percent lower than what the seller is asking. This is a good rule of thumb in your approach to buying your next home.
Inspection Process – Sure, your lender will require a home appraisal anyway. But that’s just the bank’s way of determining whether the house is worth the price you’ve agreed to pay. Separately, you should hire your own homeinspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.
Disclosure’s – This is a set of document’s entailing what is wrong with the home or need to be fixed prior to closing or of record so there is no misunderstanding as to the properties condition now or in the future possibly. Always ask your realtor to see these. This is a process of due diligence on all sides to the transaction so as to disclose in good faith as the homes past condition and current.
Pre- Qualify– Shopping around for a mortgage should go beyond comparing interest rates. Rates are important, but would-be borrowers must consider points, closing costs and different types of loans, once you submit your mortgage application to the lender, the clock starts ticking. Make sure you quickly send in any documents requested during the approval process. Centennial Bank Application Caliber Home Loans Application
Financing – Study your credit
Most lenders require a minimum credit score of 640 to comply with Fannie Mae and Freddie Mac’s guidelines. ( other lenders many not require scores this high ) Federal Housing Administration loans, which are guaranteed by the FHA, allow for lower scores, but most lenders want to stay away from scores lower than 620.
Selling -Price it right from the get-go
The old-school strategy of real estate sellers crossing their arms and holding out for a better offer will be brushed off by most homebuyers. Consider that of the homes that took four months or more to sell in the past year, almost half of their owners accepted less than 90 percent of the asking price, according to the National Association of Realtors.
Repairs– The subject property should be brought up to an acceptable condition for the future owners also many times the lender or future grantee prior to being conveyed. Florida is know for heat and the homes roof is the main structural part the many times must be replaced every 20 years. This insures that the life expectancy of the property with be prolonged for future owners and tenants. So make sure you see that your future home has a more that 25% life expectance still on the roof before qualif for financing. As this might slow down your financeing 203K loans are available but you should consult your lender first.
Closing Process- After the searching for a buyer has been done, the negotiations have been completed, the house has been inspected, and the mortgage has been applied for and committed to, the focus suddenly turns to the Closing, Settlement, or Escrow as it is known in some localities. For simplicity, in our discussions here we will refer to the process when it all comes together and you finally sell your house as Closing. An understanding of the elements of and players in the closing, as well as a concise preparation for it, will eliminate many nervous hours as the day approaches.
What is involved?
It is the proverbial “signing on the dotted line:” the process of which will take the title to the house out of your name and put it into someone else’s–your buyers. The keys to the house leave your hands for the last time and are delivered to the buyers. The weeks and months of anticipation are all settled in a very short amount of time at the closing.
Closing procedures will vary from locality to locality. In some areas, the buyers and sellers (as well as their Real Estate Agents – Realtors) will all attend the closing. In other areas, only the buyers will be present. The closing will take place at the office of an Attorney, a Title Company, or an Escrow Company (again, there is some variance here based on your local laws and tradition). In general, though, the closing will be attended by all of the buyers involved and their Real Estate Agent, as well as the Closing Agent.
As a seller, you will in all probability have an attorney who will represent you, either physically at the closing or through a review of all the documents relating to the sale. At the very least, your attorney will prepare the deed and coordinate all paperwork with the buyer’s attorney or closing agent.
Applying for a mortgage is both exciting and terrifying. It can be one of the most stressful processes and is likely the largest purchase a person makes in his entire life. The mortgage application process requires filling out volumes of paperwork and gathering personal documents. Borrowers will need to provide personal information as well as paystubs, tax returns and credit reports. This process is lengthy, but is standard across most mortgage companies. The borrower may be asked for additional information during the process, and once the application is submitted, the final answer on approval can take a few days or more.
Unfortunately, despite careful documentation and submitting everything the borrower is asked for, almost 29 percent of mortgage applicants are turned down by the 10 largest lenders. When this happens, the mortgage company has a period of 30 days to notify the applicant as to the reasons of the denial. This will be done in writing, although the mortgage broker may advise the applicant of the denial reasons when they are informed the application has not been approved.
If a borrower receives a denial for a mortgage, it is important to find out the reasons for the denial. First, the borrower needs to ensure they were not turned down based on incorrect information or errors. Review the reason and double check all paperwork for accuracy. Reasons for denial can include one or more of the following:
- Insufficient income, length of employment or documentation.
- Credit rating that does not meet minimum requirements by mortgage lenders.
- Income-to-debt ratio does not meet lender’s parameters for lending.
- Bankruptcy or foreclosure history.
- Problems with property appraisal.
- Lack of co-signer if required.
- Missing or incomplete application or documentation.
- Insufficient down payment.
Other reasons for denial may be given. When denied for reasons such as lack of down payment, this may be rectified by putting more money down. Other reasons such as not meeting minimum credit score requirements are not as easy to overcome in the short term. The borrower may have to work on these items for a period of time and then reapply for a loan. Read on for more tips on how to address reasons for denial and some steps to take before reapplying for a loan.
Work on Repairing Credit
If a borrower is denied based on credit, the reasons may vary. It could be an insufficient credit history or lack of any credit history. Poor credit with a score that is lower than a loan company’s requirement will result in denial. Problems like bankruptcy or foreclosure may prevent a lender from approving a buyer. If the borrower doesn’t have enough credit history, the lender may approve the loan if they have a qualified co-signer for the loan. Once a positive payment record is established, it may be possible to remove the co-signer. Negative credit history can take some time to repair. Review the credit report and dispute any incorrect information. Pay off negative accounts or contact the creditor to offer settlement in order to improve the overall credit rating. Try to open a secured credit card and make all payments on time in order to establish a positive payment history.
Reduce Income-to-Debt Ratio
A denial based on an income-to-debt ratio that is too high is an indication that the borrower carries too much debt, or is trying to buy more property than he can afford. At this point the borrower has two choices – pay off some of the debt or find a house with a lower price. Many times borrowers try to buy more house than they can truly afford. There is the option of renegotiating the sales price with the seller to reduce the total amount borrowed.
To prepare to apply for a mortgage, it is advisable to review all credit reports and address issues in advance. Review all finances and use online tools to determine your debt to income ratio. Finally, obtain loan preapproval from a lending company to know in advance the amount of loan that can be obtained prior to choosing a property.
Please feel free to speak with me or any professionl in the feild of real estate or lending before you begin. This way you get a good understanding where you should be in the real estate investing or buying position. The market changes every day and lenders are constantly looking at the market changes to make the best decissions to help you buy your next home. So consult one and better navigate the proccess. Best of Luck!! Kinsey Haddock