Your Mortgage vs. A Cash Offer: What You Can Do

Cash is king in most business transactions, and it’s no different with mortgages. A cash offer can be very tempting for a seller because there is no risk of the buyer defaulting on their payment.

However, all is not lost if you’re going the way of the mortgage. You’ll just want to follow the steps below to make sure your offer is as appealing as possible.


1. Get your lender to back you up

A pre-approval letter from your lender is a must. It will also help if you can get your lender or real estate agent to show the seller financial statements that clearly display you’re a qualified homebuyer.

2. Have an appraisal ready

You don’t want to make the seller wait for your loan to be approved. Talk to your lender and find out exactly how fast they can get an appraisal done on the property, and when the loan will be approved. With some banks and mortgage brokers, it’s even possible to have an appraisal pre-ordered and ready to go.

3. Get inspections done right away

You don’t want to make the seller wait for anything. So as with everything else, get your inspection done as soon as possible.

4. Make a higher offer

When people pay with cash, they usually expect a discount. This provides an opportunity for non-cash buyers to make a higher offer. Paying more isn’t ideal, but if it’s what you have to do to get your dream home, it could be worth it.

5. Put more cash down

If you have some extra cash, consider making a higher down-payment. Instead of getting a mortgage for 70-80% of the purchase price, you could drop the financing down to 60-70% and potentially make your offer more appealing.

6. Make it personal

It’s not uncommon to write a letter to the seller, explaining a little about yourself and why you would love to purchase their home. A seller almost always appreciates knowing more about their potential buyers, and if you can strike an emotional chord, your chances of closing the deal could increase.

Bottom line:
At the end of the day, being flush with cash isn’t what makes the difference; it’s convincing the seller that you are a sound candidate to purchase their home.

If you have your finances straightened out, get things done in a timely manner, and can make a personal connection with the seller, you could very well beat out a cash offer.

source: totalmortgage.com

How to Simplify the Home Buying Process

As a first­-time home-buyer, the home buying process can be intimidating and stressful. This is brand new territory for you. And since you don’t know what to expect, you might not realize how slow and complicated the process can be.

But even if you’re new to the “home buying game” and slowly learning the ropes, there are simple ways to streamline a purchase and minimize stress.

1. Organize your documents ahead of time

 

When you apply for a mortgage loan, the first thing a lender will do is request financial documents. This includes your tax returns from the past two years, recent paycheck stubs and copies of bank account statements.

If you’re not organized, finding these documents can be tedious and time-consuming. So make sure you have a system where all your financial information is located in one place and easily accessible.


The sooner you locate and forward these documents to the mortgage lender, the sooner the bank can process your application and get you approved for a loan.

2. Get pre­-approved before shopping

 

Some first­-time home-buyers don’t understand the importance of a mortgage pre-approval. Pre­approvals aren’t required to make an offer on a house, but they can streamline the process since you’ll already have financing in place. 

A pre-­approval involves completing an official mortgage loan application and going through the underwriting process, with the lender checking your credit and verifying your employment and income.

 

Once you’re pre­-approved, you know exactly how much you can spend on a property, plus you know your estimated mortgage rate before shopping for a home.

3. Check your credit beforehand

 

You might think you have excellent credit, but your credit report can paint a different picture. To avoid any surprises when applying for a home loan, check your credit report beforehand.

You can order a free report each year from AnnualCreditReport.com. Check the report for errors and unfamiliar account activity which can be a sign of identity theft. Mistakes on your credit report can lower your credit score and jeopardize qualifying for a mortgage.

4. Know what you’re expected to pay a lender

 

Speak with your mortgage lender to find out how much you’ll need for a down payment. Down payment minimums vary depending on the type of mortgage.


For example, a conventional mortgage loan requires a down payment between three percent and 20 percent, whereas an FHA home loan requires a 3.5 percent down payment.


You will also need cash for closing costs, which can be as much as two percent to five percent of the sale price (unless the seller agrees to pay all or a percentage of your closing costs).

5. Make sure your realtor understands your needs

 

Be as specific as possible when speaking with your realtor. If your realtor understands exactly what you’re looking for in a property, you won’t waste time looking at homes that don’t meet your needs.

For example, how many bedrooms and bathrooms do you need? Are you seeking new construction or a resell? What type of square footage do you have in mind? What’s your price range? Do you prefer a specific neighborhood or school district?

Bottom Line

 

There’s nothing more thrilling than buying a home — especially if you’re a first-time buyer. But the stress of getting a mortgage and negotiating a purchase can overshadow the excitement. The above tips, however, can reduce the risk of setbacks and speed the process so you can quickly move into your new place.

source: totalmortgage.com

5 Things to Consider When Buying a Foreclosure

Buying a home in foreclosure may seem like a good way to get in on some cheap real-estate, but with all the possible headaches, is it worth it? Ultimately, that’s for you to decide, but if you do choose to give it a go, keep these five thoughts in mind.

1. Find a real estate broker who specializes in foreclosed homes

Having an expert on hand is always a good thing. They’ll provide useful insight, and a lot of times, they’ll be aware of homes that haven’t even reached the market yet.

2. Get a pre-approval from a lender

Most buyers want to shop around, find their perfect home, and then work out the financing. However, with foreclosed homes, the deals move quickly, and if you aren’t pre-approved, that extra time could cost you your desired home.

3. Prices can change

Just because it’s a foreclosed home doesn’t mean the price is set in stone; there can still be multiple offers that drive the price up. Do your research, and find out the recent prices of comparable properties (comps) to make sure your offer is on point.

4. Plan for the long-run

If you’re only goal is to make a quick flip, you could end up with regrets if your plan falls through. To avoid such a tragedy, have a back-up plan that accounts for you holding onto the property for at least five years.

5. It’s going to need work

Foreclosed homes are sold as they stand, and this almost always means you’ll be doing some renovating. If you aren’t friends with a skilled tradesman, or don’t like DIY projects, foreclosed homes may not be for you.

source: totalmortgage.com

How to Sell Your Home Without an Open House

It doesn’t matter whether you’re selling a home yourself or working with a realtor, selling your property quickly is a priority. This way, you can move into your new home sooner rather than later.

Several marketing techniques can help sell a home faster, and many real estate agents host open houses which give potential buyers an opportunity to visit the home, receive information, and ask questions.

Although open houses are typical when selling a property, these aren’t always effective. As a matter of fact, you may consider open houses to be a complete waste of time. Luckily, there’s no rule that says you have to host an open house Instead, you may choose to focus on other selling methods. For example:

1. The power of an online listing

If you’re working with a realtor, ask about his marketing plan. You need your agent to do more than simply post a sign in the yard. You need your home to appear on websites, such as Zillow.com and Trulia.com.


Since many homebuyers use the Internet for preliminary searches, getting your house online is one of the most effective ways to attract attention. If you’re selling the home yourself, you can list the property on the multiple listing service (MLS) for a fee. This way, real estate agents can learn about the home and schedule times for their clients to tour the property.

Additionally, list your property on other websites, such as Owners.com and ForSaleByOwner.com (if you’re selling without an agent). You can also take advantage of a free Craigslist posting. However, there are rules when posting on this site. Read the terms and guidelines carefully to avoid having the listing removed from the site.


2. Don’t forget to add photos
With an online listing, it isn’t enough to provide text details about the property. That may be important stuff, but a picture speaks a 1000 words. Take images of each room of the house, and stage the property before taking these photos. Remove clutter, repaint and rearrange furniture to maximize space. It’s important to highlight as much available space as possible. Also, take photos of impressive features, such as a new fireplace mantel, granite countertops or any other sought-after real estate feature.

3. Create a video tour and post online

Since many homebuyers start their home search online, the more information you have online, the better. Some home sellers and agents have gotten creative and started making video tours of a property. These don’t have to be elaborate videos, and you can use any handheld video camera or the video camera on your smartphone.

Start recording at the entrance of the property and slowly walk through the home highlighting features and rooms, such as the kitchen and bathrooms, bedrooms, closets, and any other amazing features. You can add narration to your video, or use editing software to add music in the background. Once you finish recording and editing the video, post it to YouTube, attach it to your online listing, or post a link on Facebook or Twitter and share with your friends.

Bottom Line

The odds of finding a buyer with an open house are slim, so you’ll need to consider other ways to market your property and attract attention. Since the Internet is one of the first places homebuyers look, you’ll need to increase your online visibility to move your house quickly.

source: totalmortgage.com

Have Massive Home Price Gains Eclipsed the Benefit of Low Mortgage Rates?

The new threat to those resisting the urge to buy real estate (how dare you) is the risk of rising mortgage rates.

All the pundits believe interest rates are headed closer to 5% for a 30-year fixed, up nearly a full percentage point from current levels.

The sales pitch is pretty straightforward – if you wait any longer you’re really going to be priced out of the market, what with home prices and mortgage rates on the rise.

If you think things are expensive today, worry about tomorrow, they say.


But you have to question whether it’s a good deal to buy at this point, given the tremendous price increases over the past couple years.


Are Low Interest Rates Really a Strong Enough Tradeoff?


Sure, low mortgage rates are great. They make monthly mortgage payments more affordable, even if home prices are (a lot) higher than they once were.

And despite wages being stagnant, people can afford to buy more expensive homes because interest rates are so cheap. That’s the point, right?

But if you look at things from a home price-to-income ratio perspective, property values look pretty inflated historically.

So are the low rates still incentive enough to buy a home? And should you buy now because rates and prices are only going to climb higher?

That’s the million-dollar question, and one nobody can really answer with absolute certainty.

You could argue that we’re due for another correction after two solid (insane) years of gains. It’s clear home price growth is already slowing down, and it could even turn negative in the near future.


Just Take a Look at Property Histories

 

You don’t have to be a real estate genius to see what I’m talking about. Just go to Redfin or Zillow and scroll down to the property history for just about any for sale listing that sold recently.

You’ll see something like the screenshot above, a home that was purchased relatively recently and listed not too long after for a huge premium. Sure, they probably flipped it (and that kitchen looks absolutely breathtaking), but come on.

In this example, the home is being sold for 56% more just five months later! And this isn’t an outlier, it’s the norm in today’s bloated real estate market.

Just to do a little math, you could have purchased this home for $362,000 earlier this year and put down 20%, leaving you with a mortgage of $289,600.

Factor in a mortgage rate around 4.125% for a 30-year fixed and the monthly mortgage payment is just over $1,400.

But the asking price is now $564,900 (notice the price cut), which requires a down payment of $112,980 to get to 80% LTV (that’s about $40,000 more you need to bring to the closing table).

At a loan amount of $451,920, you’d be looking at a monthly mortgage payment of $2,190 at today’s ultra low rates (4.125% on a 30-year fixed).

To put it in perspective, mortgage rates would need to rise to about 8.25% at the original sales price for the monthly mortgage payment to be a similar amount (roughly $2,175).

In other words, home prices seemed to have shot way too high despite the low rates doing their part to keep things reasonable.

Sure, low mortgage rates make this home a lot more affordable to a lot more people, even at today’s inflated price, but it requires a much larger down payment.

And what happens when interest rates do rise to more historic norms? Who will buy this house from you at a premium in the future if everyone is priced out?

I suppose the takeaway here is to be really cautious when searching for a home to buy today, instead of just trying to get in to avoid missing the boat. A year or two ago, any house would do, now you need to be a lot more particular.

source: thetruthaboutmortgage.com

Important Items to Investigate When Buying a Foreclosure House to Flip

Many pitfalls exist when buying a foreclosure house for a resale or flip.  You obviously need to learn about the physical condition of the property to determine what needs to be repaired, replaced or upgraded.  Another must do is to obtain a title search.  The title search will show what liens or judgments encumber your property that were not discharged as part of the foreclosure process.   This article summarizes additional matters to consider that are not necessarily disclosed in your physical inspection or title search.


Often, foreclosure homes are in poor physical condition.   Each locality has a code enforcement department to make sure that properties are kept in good condition and are not renovated or repaired in violation of city or county code.   A homeowner can run afoul of the code enforcement rules by allowing the property condition to deteriorate, which is common in foreclosure homes, or by undertaking certain kinds of repairs on their own without a valid permit.  Another problem occurs when a permit has been obtained for a given activity, yet the work was not completed and the permit remains open.  An open permit often requires hiring a different contractor to complete the work or provide a valid contractor with a license to allow the final inspection to be completed.  Either way, resolving the matter is an expense.

What a potential buyer needs to do is call the local code enforcement agency to determine if any open code enforcement violations exist for the particular property.  If the code enforcement problem has existed long enough, the agency could have filed a lien on the property and that would be disclosed in the title search.  Unfortunately, you cannot rely on the the code enforcement lien to already be recorded.  Many municipalities have an online method of checking for code enforcement violations for properties such that a visit to their office or phone call is not necessary.  Also, the party doing the physical inspection may search this as well, but you as the buyer need to make sure what the inspection service encompasses.

Home Owners' Associations

Nearly all properties within subdivisions are subject to homeowners' associations.   The recorded covenants and restrictions are akin to a constitution governing the upkeep and use of the homes within the subdivision.   You need to read the covenants and restrictions to thoroughly understand them.

Similar to the code enforcement scenario, the foreclosure house may run afoul of the rules and regulations of the homeowners' association, sometimes called an HOA.  The association could have delivered a notice of violation of the covenants and restrictions to the prior owner and the violation has not been addressed or rectified.  Your title search would not pick this up unless the HOA recorded a lien in connection with the violation.  In any event, as the new owner of the property, you have to make the home compliant with the association requirements.  Depending on the severity of the problem, correction could be a significant expense.

Each homeowners' association has officers and directors.  Assuming the HOA is an actual not for profit corporation, which is usually the case, the identity of the officers is public information.  Further, each association generally has a management company to collect dues and provide a contact for owner issues.  Your best bet is to ask an owner in the subdivision for a contact at the management company and you can inquire from them as to the violation status of your property.

Another reason to contact an association representative is that many associations have rules and requirements with respect to renovations, such as roof replacement.  Often, the covenants and restrictions for a subdivision provide for an architectural control board or committee.  In addition to obtaining a building permit for an activity like installing a new roof, which would likely be obtained by your roofing contractor, you could need approval from the HOA architectural control board.   They often want to know about color schemes and materials.  Your subdivision may only allow certain colors or certain material, such as a tile roof.  Investigating the association renovation guidelines is necessary to avoid additional expense and delay.

Conclusion

In addition to investigating the physical condition and status of title to a foreclosure house prior to acquisition, you also need to check into code enforcement status and homeowners' association violations and improvement requirements.  Checking these additional matters could save you from heartache later.  

source: infobarrel.com