Frequently Asked Questions
 
 
 

About About Buying a Home

1. What price home can I afford? More Questions

As a "rule of thumb" you can afford to buy a home equal in price to twice your gross annual income. More precisely, the price you can afford to pay for a home will depend on six factors:
  1. Your income
  2. The amount of cash you have available for the down payment, closing costs and cash reserves required by the lender.
  3. Your outstanding debts
  4. Your credit history
  5. The type of mortgage you select
  6. Current interest rates

Lenders will analyze your income in relation to your projected cost of the home and outstanding debts. This will determine the size loan you can borrow. Your housing expense-to-income ratio is determined by calculating your projected monthly housing expense, which consists of the principal and interest payment on your loan, property taxes and hazard insurance. The sum of these costs is referred to as "PITI." Monthly homeowner association dues, if you're purchasing a condominium or townhouse, and private mortgage insurance are added to the PITI.

2. How do I find out about the condition of the home I'm considering? More Questions

First and foremost it is strongly recommended that you hire a professional person to inspect the home. They attend seminars and stay abreast of the latest developments. Secondly some realtors require sellers to complete a disclosure form revealing everything known about their property. Home sellers are required to indicate any significant defects or malfunctions existing in the home's major systems. A checklist specifies interior and exterior walls, ceilings, roof, insulation, windows, fences, driveway, sidewalks, floors, doors, foundation, as well as the electrical and plumbing systems.
The form asks sellers to note the presence of environmental hazards, walls or fences shared with adjoining landowners, any encroachment of easements, room additions or repairs made without the necessary permits or not in compliance with building codes, zoning violations, citations against the property and lawsuits against the seller affecting the property. Also look for settling, sliding or soil problems, flooding or drainage problems. People buying a condominium must be told about covenants, codes and restrictions or other deed restrictions, if the homeowners association has any authority over the subject property and ownership of common areas with others. Be sure to ask questions about anything that remains unclear or does not seem to be properly addressed by the forms provided to you.

3. How low can I consider offering? More Questions

There are always some sellers who for some reason must sell quickly, however in general, a very low offer in a normal market might be rejected immediately. In a strong buyer's market, the below-market offer will usually either be accepted or generate a counteroffer. If few offers are being made, an outright rejection of offers becomes unlikely. In a strong seller's market, offers are often higher than full price. While it is true that offers at or above full price are more likely to be accepted by the seller, there are other considerations involved:
  1. Is the offer contingent upon anything, such as the sale of the buyer's current house? If so, such an offer, even at full price, may not be as attractive as an offer without that condition.
  2. Is the offer made on the house "as is," or does the buyer want the seller to make some repairs before the close of escrow or make a price concession instead?
  3. Is the offer all cash, meaning the buyer has waived the financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.
  4. Are there any requests for seller concessions, such as asking the seller to contribute towards points and/or closing costs? If so, the offer is not really full price.

4. How and what do I negotiate? More Questions

Different sellers price houses very differently. Some deliberately overprice, others ask for pretty close to what they hope to get and a few (maybe the cleverest) underprice their houses in the hope that potential buyers will compete and overbid. A seller's advertised price should be treated only as a rough estimate of what they would like to receive. If possible try to learn about the seller's motivation. For example, a lower price with a speedy escrow may be more acceptable to someone who must move quickly due to a job transfer. People going through a divorce or are eager to move into another home are frequently more receptive to lower offers.

Some buyers believe in making deliberate low-ball offers. While any offer can be presented to the seller, a low-ball offer often sours a prospective sale and discourages the seller from negotiating at all. And unless the house is extremely overpriced, the offer probably will be rejected anyway. Before making an offer, also investigate how much comparable homes have sold for in the area so that you can determine whether the home is priced right.

5. What about my down payment, should I put more or less down, if we can afford it? More Questions

Various types of loan programs exist. Some require a minimum of 3 percent down payment or 5 percent on conventional loans. Putting down as little as possible allows buyers to take full advantage of the tax benefits of home ownership. Mortgage interest and property taxes may be deductible from taxes. Buyers using a small down payment also have a reserve for making unexpected improvements. It may be more prudent to make a larger down payment and thereby reduce the amount of debt that must be financed. Once a buyer puts twenty percent or more as a down payment on their desired home, they will waive the requirement for mortgage insurance. Mortgage insurance is a requirement on all loans, That means a full years premium for the insurance is collected "up front' at the closing of escrow, plus you will be paying monthly as part of your PITI, principle-interest-taxes-insurance.

6. What steps should I take when looking for a home loan? More Questions

It is strongly recommended that home buyers are prequalified or pre-approved for a loan as their first step in the process. By being prequalified, a buyer knows exactly how much house they can afford. They can make more informed decisions in the market place. This does not mean they will definitely get the loan because their credit reports, wages and bank statements still need to be verified before you can receive a commitment from the lender for the loan.

Almost all lenders prequalify people at no charge. In order to be pre-approved, an application will be taken. For a fee, your credit report will be pulled, your employment and income will be verified, your checking and savings accounts will also be verified. In other words, all the necessary documentation will be completed in order for you to obtain a loan. The only things remaining will be for you to find a home, obtain an appraisal on it to prove its value to the bank and perform whatever inspections you may want on the property. This process considerably shortens the time frame to closing.

7. Is it possible to negotiate interest rates? More Questions

Compare the loan charts published in most newspapers. Occasionally some lenders are willing to negotiate on both the loan rate and the number of points. This isn't typical among many of the established lenders who set their rates. Nevertheless, it never hurts to shop around, know the market and try to get the best deal. Always look at the combination of interest rate and points and get the best deal possible. This is reflected in what is called the APR or Actual Percentage Rate. The interest rate is much more open to negotiation on purchases that involve seller financing. Generally, these are based on market rates but some flexibility exists when negotiating such a deal.

8. Is it better to buy a new home or a resale? More Questions

Sales price increases in either type of housing are strongly tied to location, growth in the local housing market and the state of the overall economy. Some people feel that buying into a new-home community is a bit riskier than purchasing a house in an established neighborhood. Future appreciation in value in either case depends upon many of the same factors. Others believe that a new home is less risky because things won't "wear out" and need replacement. "Existing homes have been appreciating a little more than new homes but every once in awhile they're at the same level and sometimes the new home prices go up a little quicker" according to the National Association of REALTORS® (NAR).

9. Fixer-Uppers - Are they good or bad? More Questions

Distressed properties or fixer-uppers can be found everywhere. These properties are poorly maintained and have a lower market value than other houses in the neighborhood. It is often recommended that buyers find the least desirable house in the best neighborhood. You must consider if the expenses needed to bring the value of that property to its full potential market value are within your budget. Most buyers should avoid run-down houses that need major structural repairs. Remember the movie " The Money Pit?" Those properties should be left to the builder or tradesman normally engaged in the repair business.

10. Can you borrow the money to repair? More Questions

You purchase a "fixer-upper" property "as is" and rehabilitate it. Or, you may refinance a temporary loan to buy the property and do the rehabilitation. It can also be done as a rehabilitation-only loan. Investors are required to put 15 percent down. Owner-occupants have a required down payment of 3 to 5 percent. A minimum of $5,000 must be spent on major improvements.

Major repairs can be: a new roof, replacement windows, etc. You may then also finance additional repairs and improvements i.e.: new carpeting, kitchen cabinets, appliances, etc. You must of course "qualify" for the total amount you will be borrowing through this program. Two appraisals are required. These appraisals will be on the property "as repaired" not "as is." Plans and specifications for the proposed word must be submitted for architectural review and cost estimation. Once approved mortgage proceeds are advanced periodically during the rehabilitation period to finance the construction costs.

11. Is there a good "return" for my efforts? More Questions

Remodeling a home improves its livability and enhances curb appeal, making it more salable to potential buyers. Some of the popular improvement projects are updated kitchens and baths, enlarged master bedroom suits, home-office additions and increased amenities in older homes. The resale market is often difficult because you are competing with new construction. You need to give your home every competitive advantage you can if you are selling an older home. Home offices are a relatively new remodeling trend. Adding one to a house often recoups 58 percent of the costs, according to a survey found in a report called "Cost vs. Value Report" in Remodeling Magazine.

12. Are foreclosures good or bad ideas? More Questions

The incidence of foreclosures is cyclical, based on national and regional economic trends. People can get a rough estimate of the number of foreclosures in a target area by dividing its population by 2,500, according to John T. Reed of Reed Publishing, Danville, Calif. New England had so many foreclosures that newspapers added foreclosures-only sections to their real estate classified advertising section. But these states recovered in the mid-1990's.

Buying directly at a legal foreclosure sale can be risky and dangerous. The process has many disadvantages. There is no financing so purchases require cash. The title needs to be checked before the purchase or the buyer could buy a seriously deficient title. The property's condition is not well known and generally, an interior inspection of the property is not possible before the sale. Additionally Estate (probate) and foreclosure sales are exempt from some states' disclosure laws. The law protects the seller (usually an heir or financial institution) who has recently acquired the property through adverse circumstances and may have little or no direct information about it.

About Selling a Home

1. Is there a best time to sell my house? More Questions

Property sells year round. It is mostly a function of supply and demand, as well as other economic factors. The time of year you choose to sell can make a difference in the amount of time it takes and the final selling price. Weather conditions are often a consideration; sunny versus rainy season. Generally the real estate market picks up in the early spring. During the summer, the market usually slows. The Carnival season in July and August are often the slowest months for real estate sales. The strong spring market often places upward pressure on interest rates, many prospective home buyers and REALTORS® take vacations during mid-summer.

After the summer slowdown, sales activity tends to pick up, although less vigorous, season which usually lasts into November. The market then slows again as buyers, sellers and REALTORS® turn their attention to the holidays. The supply of homes on the market diminish because sellers often wonder whether or not they should take their homes off the market for the holidays. There are still buyers in the market place, but now those buyers have fewer homes to choose from. Those homes on the market at that time have considerably less competition.

Generally speaking, you'll have the best results if your house is available to show to prospective buyers continuously until it sells.

2. Are there important factors to consider when selling a home? More Questions

The two most important factors are price and condition in selling a home. The first step is to price it properly. Then, go through the house to see if there are any cosmetic defects that can be repaired. A third factor is exposure. It is also important that the home gets the exposure it deserves through open houses, broker open houses, advertising, good signage and listing on multiple listing services, as well as the internet. Choose the real estate REALTOR® that you believe will get the job done, not the one that quotes you the highest price - sometimes just to buy your listing.

3. How much is my home worth? More Questions

There are two methods many people use to determine their homes value, an appraisal and comparative market analysis. Appraisals vary in cost and are defendable in court. Appraisers review numerous factors and base information on recent sales of similar properties, their location, square footage, construction quality, excess land, views, water frontage and amenities such as garages, number of baths, etc.

A comparative market analysis on the other hand is an informal estimate of market value performed by a real estate REALTOR® or broker. It is based on sales and listings that will compete with your property that are similar in size, style and location. A range of values will be determined thus arriving at a probable market value. Many REALTORS® offer a free analysis anticipating they will have a new client. The analysis or opinion should be in writing and should involve professionally accepted appraisal techniques.

4. What should I do to get my house ready? More Questions

The way you live in a home and the way you sell a house are two different things. First and foremost, "declutter" counter tops, walls and rooms. Too many "things" make it difficult for the buyer to see their possessions in your rooms or on your walls, however don't strip everything completely or it will appear stark and inhospitable. Then clean and make attractive all rooms, furnishings, floors, walls and ceilings. It's especially important that the bathroom and kitchen are spotless. Organize closets. Make sure the basic appliances and fixtures work and get rid of leaky faucets and frayed cords. Make sure the house smells good: from cookies baking to spaghetti sauce simmering on the stove. Hide the kitty litter, and possibly put vases of fresh flowers throughout the house. Pleasant background music is also a nice touch.

The second important thing to consider is "curb appeal." People driving by a property will judge it from outside appearances and make a decision then as to whether or not they want to see the inside. Sweep the sidewalk, mow the lawn, trim the bushes, weed the garden and clean debris from the yard. Clean the windows (both inside and out) and make sure the paint is not chipped or flaking.

5. Should I make repairs? More Questions

Minor repairs before putting the house on the market may lead to a better sales price. Buyers often include a contingency "inspection clause" in the purchase contract which allows then to back out if numerous defects are found. Once the problems are noted, buyers can attempt to negotiate repairs or lowering the price with the seller. Any known problems that are not repaired must be revealed as a material defect. You do not have to repair the problem, only reveal it and the house should be appropriately priced for that defect.

6. What are my obligations to disclose? More Questions

Items sellers often disclose include: homeowners association dues: whether or not work done on the house meets local building codes and permits requirements; the presence of any neighborhood nuisances or noises which a prospective buyer might not notice, such as any restrictions on the use of property, including but not limited to zoning ordinances or association rules. It is wise to review the seller's written disclosure prior to a home purchase and ask questions if it does not satisfy you entirely.

7. Must I disclose the terms of other offers? More Questions

No, according to experts, sellers do not have to disclose the terms of other offers. You may disclose the existence of other offers, so that all parties are aware that they should be submitting their best offer.

8. Are there standard contingencies in an offer? More Questions

Yes, the two basic contingencies in a purchase contract are financing and inspections.

9. Should I be flexible in granting contingencies? More Questions

That often depends on if you are in a buyer's or a seller's market, the condition of your home, the price you hope to get, how motivated you are to sell, as well as the quality and quantity of the offers you are getting. Any contingencies that are negotiated are written into your contract. Both the buyer and seller can place requirements on the table during the negotiation phase. A frequently seen contingency is regarding the sale and closing of the buyers home before they can purchase yours. Whether this requirement is reasonable, or even achievable, depends on the individuals involved. Financial capabilities usually play a major role in negotiations. Few people can afford to own two homes simultaneously, except for some all-cash buyers.

10. What do I do if my house isn't getting activity? More Questions

Even in a slow market, price and condition are the two most important factors in selling a home. If a home is not getting the activity it needs in order to sell it is probably because it is overpriced for the market. The first step is to lower the price. Then go through the house and see if there are cosmetic defects that you missed that can be repaired. The second step is to make sure that the home is getting the exposure it deserves through broker open houses, advertising, good signage and a listing on multiple listing services and internet.

The third option is to remove the home from the market and wait for overall housing conditions to improve and catch up to the price your asking. Finally, frustrated sellers who have no equity and are forced to sell because of a long term illness, divorce or financial considerations should discuss a short sale or a deed in lieu of a foreclosure with their mortgage lender and their REALTOR®. A short sale is when the seller finds a buyer for a price that is below the mortgage amount and negotiates the difference with the lender. In a deed-in-lieu-of-foreclosure, the lender agrees to take the house back without instituting foreclosure proceedings. These are considered more radical options than lowering the price.

11. Is it possible to sell for less than my mortgage? More Questions

A "short sale" is for home sellers who are upside down on their mortgage. The home's value is less than the amount of the mortgage. A hardship must exist, then sometimes home owners can negotiate with lenders and split the difference between the sale price and loan amount, which still must be paid. If the loan was a low-down-payment mortgage with private mortgage insurance (or PMI), the lender needs to involve the mortgage insurance company that insured the low-down loan. Once all these issues are resolved or negotiated, the house may be sold.

12. How will a foreclosure affect my credit? More Questions

Without a doubt a property foreclosure is one of the most damaging events in terms of the borrower's credit history. Talking to the lender who holds the mortgage note on the property might provide specific answers as the possible courses of action available to the borrower, as well as to the effects those actions might have on that person's credit report. In terms of the effect on credit history, a deed in lieu of foreclosure or a short sale are not as adverse an event as is the forced foreclosure. However, even often a foreclosure or bankruptcy, there are lenders who are providing loans after 7-10 years have lapsed. The borrower will have many obstacles to overcome and will need to provide a good paper trail to the lender proving they are once again credit worthy.

13. Is it possible to refinance after bankruptcy? More Questions

Although a good idea, it is usually difficult to refinance after a bankruptcy. If you have been struggling but keeping current on your payments the lender may be accommodating. You first need to contact them and explain your situation. They may suggest or perhaps you can suggest a way to work out alternative payments until you recover.

When you are ready to list your home please Contact Us.

About Loans & Mortgages

1. How much down payment is required? More Questions

A normal down payment is 5 - 20% of the selling price of the house or land or construction estimate.

2. How are repayments made? More Questions

Your mortgage is paid in monthly installments comprising both principal and interest. Interest is charged on the reducing principal balance.

3. How long do I have to repay my loan? More Questions

The maximum number of years for the loan can be 30 years or the number of years left until your retirement age – 60 or 65 for self-employed applicants – whichever is less.

4.What is the maximum amount I can borrow? More Questions

For first time homeowners, the normal lending criterion is up to 90% of the total value. However, the Bank may consider up to 100% financing subject to special conditions.

5. What is the bridging period? More Questions

This is the period during construction when the homeowner is required to pay interest only on the amount drawn, usually up to a period not exceeding eight (8) months or upon completion of construction whichever is sooner.

6. What is amortization? More Questions

This is loan repayment by equal periodic installments including accrued interest on the outstanding balances, calculated to pay off the debt at the end of a fixed period.

7. What is the Letter of Offer? More Questions

This is a letter given to mortgage applicants when a facility has been approved. The Letter of Offer will explain the terms and conditions of the mortgage. Briefly, it is your loan agreement with the bank.

8. What is disbursement? More Questions

This refers to the amount paid out under an approved loan. It is often used interchangeably with the term “drawdown”. Disbursement can be full or partial.

 

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