When do I need to get prequalified?

If you are starting to look at homes, your first step should be to get prequalified. Unfortunately, many homebuyers decide to wait to get prequalified until they get more serious about purchasing. Often this is once they have found a property they are interested in going to see. This is a mistake because once you are interested in a property there is very limited time to make improvements or corrections to your credit.

You may have stellar credit, but as a former affiliate of Wells Fargo, I have seen more than a few people be disappointed when they had their credit for a mortgage – even those who were using a credit monitoring service. What many people don’t realize is the algorithm used for a mortgage is not the same and often more stringent than say applying for credit card or the soft pull of a credit service.

You may be concerned having your credit pulled now and then again later when you feel more ready might lower your score. The credit agencies actually factor in that people shopping for a mortgage may have their credit pulled multiple times. This should not lower your score if done within reason.
The truth is if you are like most, you try to money where you can. So if you try to save money on groceries or with fuel points, why would you not try to what is advised to save on your mortgage? With a little extra time, you might be able to help you boost your score to the next threshold. Even lowering your rate by 1/8 or .125% would save you $22 a month on a $300,000 loan. It may not sound like a lot but in 5 years that is $1,320 or $7,920 over the life of a 30 year mortgage.

You are going to have to do it anyway, and you need to precisely what you can afford. So why not do it now while you still have time to let us help you potentially save some money. There could easily be an item you are unaware of or something that needs to be corrected. Stop putting it off. Don’t let procrastination cost you thousands or worse a missed opportunity at a deal of a lifetime.

Contact us to set up 20 minute phone appointment our preferred lender.

Buying a Home with Zero Down

There are still several programs available that allow certain buyers to purchase a home or with little to no money payment. They are great way for buyers to break into the housing market and stop wasting money paying someone else mortgage. Some buyers feel they should put off purchasing a home until they are able to save for a more substantial down payment. They feel maybe it would be better wait until they can avoid paying mortgage insurance.

The truth is it takes most people a while to save up 20% for a down payment, and in that time they home could purchase now will be appreciating. If a home that cost $300,000 today appreciates at 5% per year in 3 year will cost $347,287. Also in that time, a homeowner would be making payments toward their home and their future – not somebody else’s.

No one like mortgage insurance, but it what it does is enable you to get a hedge on inflation. It allows you purchase at today’s value instead of years down the road. The good thing about mortgage insurance goes away once you pay down 20% of your note. You could also make it go away sooner by refinancing once your home appreciates and is worth 20% more than you owe.

The good news is there are currently some great programs that offer reduced or no mortgage insurance. Stop letting opportunities to invest in your future pass you by, contact us today to see what programs might be available to you.

Comparing Mortgage Quotes

When shopping for a mortgage, it is recommended that you obtain zero-zero quote from the lenders you are comparing. This means their quote will not have any buy down points or origination fees. This is a much easier way to compare who is providing the better quote.

If you try to compare quotes with varying points or origination fees, it can get messy real quick. I’ve seen it confuse seasoned real estate agents. Mortgage companies know this so some try to use to their advantage to make their quote seem better than it really is.

You also want to be certain you are comparing quotes on the same type of loan. If a mortgage originator introduces you to a different type of loan that might also work for you, by all means compare it to your first quote, but remember you are now comparing different programs. If you want to compare rates, you should obtain the same quote from the other lender.

If you need help deciphering mortgage quotes, contact me. As a former mortgage affiliate of Wells Fargo, I can help.

Deciding to Sell Your Home

Deciding to sell your home or even your second home can be difficult decision. It is often one that also involves various emotions. As you go through this process, it is important to consider your needs and motivations for selling. What is it that you are hoping to accomplish? Clarifying these will help you attain purpose and have a more successful and enjoyable selling experience.

Your motivations 

Has your family outgrown your current home? Do you want your kids in a better school district? Did you recently take a new job? Are you looking for a better commute? Did the neighborhood you live in not mature as you had hoped? Are you moving to another city or state? Did your financial position recently change?

While your need to sell might seem evident, if you think about it you may have additional underlying motivations as well. These are also important to discuss with your agent. The better we understand what is driving your decision the better we can help you achieve your goals. It is also important to consider the impact this decision will have on your lifestyle and your future.

Your Finances

You also will need to consider you current financial situation. What impact will selling your current home and potential purchasing another have on financial security and future goals? We provide an upfront and detailed layout of all the cost involved. We also can help you will potential tax and estate planning strategies. Our goal is to not just to help you save money today but also to help you structure your investment for a better tomorrow.

Your Timeline

You also should consider your timeline for selling. Do you have a contingency contract on a home you are purchasing? Do you need to sell quickly or are waiting for that perfect offer? We can review the current market conditions to help you decide when would be the most appropriate time for you to sell. We can also discuss the financial implications of moving up or down in the same market and how future market conditions and rates could be more or less favorable.

Market Trends

We provide the most accurate and up to date information available to help you make an informed decision regarding when to sell. While it is true that no one has a crystal ball, we do everything possible to help you take the stay in front of national and local trends. This way you can take the out guesswork out of the equation and know when to sell with confidence.

Deciding on Price

Deciding where to price your home can be a more difficult decision than most sellers think, and it is not one that you should take lightly. If you price you home to high it will stay on the market longer. Some sellers think this is okay because they are in no rush to sell their home. While that may be true, studies have shown homes that sit on the market often sell for less.

In today’s market, a buyer can easily see how many days your home has been on the market. Homes that sit on the market too long are less attractive because of buyer perception. Maybe there’s something wrong with it. They’re probably just asking too much.  It is human nature to question things that others pass up on.

The longer your home sits on the market, the lower the chances of you getting a respectable offer. Buyer activity usually peaks within the first 60 days, and with no additional change, activity tends to further diminish after the first 90 days. If you want to get the best offer, it is advised for you to price to sell within the first 100 days.

It is also important to remember a buyer does not have the same emotional attachment to your home as you do. They will be indifferent to any sentimental value you have for your home. Many homeowners fall into the trap of overestimating the value of their property because of how they feel. A professional will see your home through the eyes of a potential buyer and will help you set a fair and objective price for your home.

You also need accurate data. You should be wary of some of the popular national real estate websites. The information they provide is often inaccurate and based on less equivalent properties. You want verified data from the most comparable homes to one want to sell.

Your pricing decision should be based on what comparable homes actually sold for and not solely on what other sellers are asking. This can set an unrealistic expectation and diminish you marketing efforts. Often homes that ask for the most are the ones that get shown the least.

What Does a Prequalified Buyer Mean?

If you own a home, you probably have been through this process yourself. But what does being prequalified really mean? A prequalification is a basic screening for a potential borrower. It however is not a mortgage application. It can help rule out some people who want to buy your home but cannot due to their credit, income, or debt.

A prequalified buyer means a licensed mortgage officer has reviewed the borrower’s credit for red flags and verified the borrower has met minimum score requirements. They also use the debt listed on the borrower’s credit report and annual income to determine if they meet the established ratios for the specific mortgage program, rate, and terms. These are what determine how much they can potentially borrow.

A prequalification is great first step but no guarantee. Sometimes borrowers initially include overtime or other income that lender will not count. Sometimes they do not provide full disclosure because they do not understand why a certain detail is relevant. Sometimes a mortgage officer will notice a detail they missed the more detailed formal mortgage application.

As a seller things can happen that are out of you or your agents control. However, requiring a prequalification letter from a reputable lender is a good way to gauge a borrower’s ability to close the loan. If you are considering a cash deal, you should obtain a verification of funds.

Hiring a Home Inspector

You may also want to consider a home inspector to find out if your home needs any repairs beforehand. Most buyers are going to require this as part of the contract anyway. Most of the companies who do this are extremely thorough. If something has gone bad or is on its way out, chances are they are going to find it. Even if it is something you are not going to fix it, you can still disclose it to would be buyers.

If their home inspector finds an issue you could or should have been aware of, it may put doubt in a buyer’s mind. Nothing is worse than looking like you may have been trying to hide something. I wonder what else they are not telling us. If they didn’t do… what other maintenance should we be worried about? Some issues might also give a buyer an easy out of the contract if they are looking for one already.

Preparing Your Home to Sell

If you want to sell your home for top dollar, there are a few things you can do to better your chances. Some sellers believe prospective buyers should be able to look past unkept home or minor repairs. In a way they have point, the prospective buyers are looking a used home.

However, most buyers want to purchase a home they feel has been well taken care of. Think about what other products you might purchase pre-owned or refurbished. Would you consider a car that is dirty and in need of maintenance?

Curb Appeal

Maybe you would … but if what? If it was a good deal, right? Selling a home is no different. The homes that sell for most are typically the ones that look the best. The following are a few simple and often inexpensive steps you can take to increase your chances of getting the most for your home.

Repairs

You should also consider small upgrades and repairs. Simple things such as paint touchups, window treatments, or replacing worn out hardware can make significant difference in the overall appeal of your home. If buyers see your attention the little things, it leaves the impression that your home has been well cared for.  Many buyers also exclude or discount homes they should have done more.

For more costly upgrades or repairs, you should consult with a professional. Some repairs and upgrades add more value than others. You probably do not want to make an upgrade that cost $5,000 if it does add that value to your home. If necessary, a seller credit or concession might be more appropriate.

Staging and Cleanliness

There is no secret as to why model homes look immaculate. It helps the builder sell more homes. But for most people who actually live in the home they are trying to sell, this is unrealistic. However, you should do your very best to keep your home clean and especially clutter free. Pay attention to the details because your equity depends on it.

Take the time to clear the kitchen countertops. Clean up any dog/hair and make sure there are no unwanted smells. The kid’s rooms should be picked up. The garage should be organized. You could put out some flower or light a scented candle.

I’m sure you are proud of your family but it you have a more than a few pictures of them, you might want to store some of them while you are trying to sell. Seeing your pictures only remind prospective buyers whose home it is. Instead we want them to visualize it as their own.

It is also advised that you are not present during any showing. This will help buyers feel more comfortable discussing your home with their agent. If you do happen to see a prospective buyer in passing, try to be polite and promptly move on. You do not want to get drawn into answering questions as it rather easy to say something that could turn them off to the property.

Prepaid Taxes and Insurance

If you intend to obtain a mortgage to purchase your next home, you will be required to pay homeowner’s insurance as part of your note. You will select the insurance company and the policy details prior to closing and also be required to pay one year in advance. You will then pay your lender monthly and they will pay your insurance company.

They do this to ensure their interests are always protected and your policy never lapses. You can at a later date change insurance companies, but you will need to coordinate it with your lender. Also when you decide to sell your home, your mortgage servicer is required to pay you back the one year you have in escrow.

Property taxes are usually due in December depending on the county. At closing the current tax bill will be prorated to the day. You will be required to pay that amount at closing. If your down payment if less that 20% your property taxes will also be collected as part of your note. You will also be required to escrow one year of property taxes at closing. Lenders require this to protect their interests by ensuring your property taxes get paid.

In some cases, a portion or all of your prepaid can be paid for as a seller concession. This would need to be negotiated in the contract. In doing so however it is very important to get accurate figures because any money not used on seller concessions will go back to the seller. If you have questions or need help structuring this, please contact us.

Accepting an Offer

It may sound like a no brainer – the higher the price the better offer. Focusing entirely on price is perhaps one of the hardest obstacles for many sellers overcome. There are many factors to take into account when considering offers.

Terms and conditions can play a major role is assessing the probability of a buyer actually closing. Is the sale contingent on the sale of another property? Does a buyer need more than 45 days to close, why? I am here to explain and help you evaluate all the terms and conditions before you accept an offer.

Once both parties agree and sign off on pricing and all terms a contract is considered executed. In most states an escrow deposit also must be made for the contract to be considered binding. The escrow is often held by the title agent designated in the contract until all conditions of the contract are met. At closing the escrow will either be applied toward the purchase or a check will be issued to the buyer.

Upon accepting an offer, you will be given a timeline for every stage of the process to closing. It is very important that you stay on top of this schedule. This will encourage better cooperation from the buyer and ensure neither you nor the buyer is in breach of the contract. It is also advised that keep a written record of everything going forward.