Buyers Guide Questions, Links, Helpful Hints & Tips

helpful-hints-tipsThe most important decision you will make in the purchase of your home is the hiring of the best, most competent and qualified real estate professional to partner with you. There are so many things to know and do when buying your home. This is why an expert in the art of real estate purchasing is vital to your success. Elise Frederich and her team are top real estate specialists at buying homes, helping their clients to find their perfect dream home for the best price.

8 Steps To Buying A Home

  1. Choosing a Sensational agent is the very first step. You should feel comfortable working with your agent, good communications will be key while going through the home buying process. They should have experience, and educated to the current housing market. They should be willing to work hard for you searching for your dream home, and fight for your needs during negotiations. Time to sign them up as your agent with Exclusive buyer agencies. This means they will be protecting your personal information from the seller and representing you when purchasing a home. Relationship is very important between you and your agent. Establish your relationship early with Exclusive buyer agency.
  2. Contact a mortgage lender to discus your personal finances, get your financial picture in focus, and see what you feel comfortable paying per month for your mortgage, and have them provide a prequalification for you, so you are ready to shop for a home. Sensational realty has lender referrals that will provide a pre-qualification for you FREE of charge and with no obligation.
  3. Your Sensational Agent can help you determine your home buying needs and wants. A need is a feature or parameter you MUST have and a want is something you DESIRE to have in your home. Example – If you are an empty nester, it’s possible you need to purchase a low-maintenance property. There are many home options from Single family to custom built, town homes to condos decide which is best for you and your lifestyle. Consider whether you prefer a new home or existing home, this is a good conversation to have with your Sensational agent to weigh the pros and cons of each.
  4. Your Sensational Agent can help you determine your location needs. Does your home need to be located near your office, a golf course or a particular school? What are your priorities about location?
  5. Ready to Go? With your price range determined from step 2, the type and amenities you require in a home determined from Step 3 and Location determined from Step 4 you are ready to have your Agent find for you and set up appointments to see the very best choices in a home for you.
  6. Once you have selected your home, its time to make an offer. Your Sensational Agent will sit down with you, and show you the comparables of houses that have sold like the one you want to buy and discover the best price to offer with you. There are many other factors and decisions to make when writing your offer. Your Sensational agent will help you through every step of the way.
  7. The negotiating process is where your agent fights for your sales price and terms of the offer to purchase on your behalf. They will communicate with you each step of the way so that you can make decisions on how you want to proceed in the negotiations of your home.
  8. After your Sensational Agent helps you WIN your home, and you are now under contract, they will provide a checklist of all the things that will be taking place from contract to closing. Your sensational agent will again help you every step of the way. There are attorneys and lenders to contact, home inspectors and termite inspectors to schedule. Help to find homeowners insurance, and negotiate repair agreements and much more. Your sensational agent will help you all the way through to the closing day for final walk through and the closing table, where you become a proud owner of your new dream home.

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Loan FAQs

How do I know how much house I can afford?

Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.

What is the difference between a fixed-rate loan and an adjustable-rate loan?

With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.

How is an index and margin used in an ARM?

An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).

How do I know which type of mortgage is best for me?

There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Jasmine Krnjetin can help you evaluate your choices and help you make the most appropriate decision.

What does my mortgage payment include?

For most homeowners, the monthly mortgage payments include three separate parts:
Principal: Repayment on the amount borrowed
Interest: Payment to the lender for the amount borrowed
Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.

How much cash will I need to purchase a home?

The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
Earnest Money: The deposit that is supplied when you make an offer on the house
Down Payment: A percentage of the cost of the home that is due at settlement
Closing Costs: Costs associated with processing paperwork to purchase or refinance a house

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Real Estate Action

A Real Estate Action can occur when a home is in foreclosure occurs, if a homeowner defaults on a mortgage loan. The loan lender then begins the process of foreclosure by filing a complaint against the homeowner and can then arrange for the property to be sold at auction. These public foreclosure auctions, which occur regularly all over the United States, provide an excellent opportunity for real estate investors or homebuyers to purchase property at far below its normal market cost.

The properties in these types of foreclosure and repossession proceedings may be in good condition with a little spit and polish required, or the auctions may feature properties that have a lot of damage to them, and will require a great amount of money to refurbish to get it back to a saleable product.

Through these auctions, the buyers will be aware of what liens are in place against each property before the bidding process begins. These liens will need to be settled once the property is purchased. The asking price for the property will be submitted through a sealed bid process. The prospective buyer would have considered the cost to repair the property and the liens that have been placed against the sale price for the property that would have to be paid in addition to the asking price for the home when they are participating in real estate auctions.

There are realty auctions featured through Internet Company websites that provide you with a listing of foreclosed home, repossessed homes, bank owned REO homes, and government seized homes. There is also land available through auctions that can be bought at 90% below actual market value.

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1031 Tax Deferred Exchanges – – The Best Kept Secret in Real Estate Investing!

How would you like to defer your capital gains tax liability on the sale of your investment property? Talk to us about doing a 1031 exchange. We can get you in touch with the right people to make this happen.

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VIA or VA Home Loans

Quick Facts About VA Home Financing:

  • Purchase a home with no money down
  • Seller may pay all of your closing costs
  • No private mortgage insurance required*
  • May finance the cost of energy saving improvements
  • Save thousands of dollars in closing costs
  • Get cash for purchases and remodeling
  • Refinance to lower your monthly payments
  • Easy qualifying
  • VA interest rates are typically lower than conventional mortgages
  • No Pre-Payment Penalty
  • The maximum VA home loan is $417,000

Note: The veteran may purchase a property for more than $417,000 and still be able to put a reduced amount down.

Applying for A VA Home Loan
You will need VA Form 26-1880/Certificate of Eligibility. A veteran who does not have a certificate can obtain one easily by completing VA Form 26-1880 (Click Here to get VA Form 26-1880) and submitting it to the VA Eligibility Center. You must also submit your Certificate of Release from Active Duty (DD214) if you are already separated from military service or a Statement of Service (SOS) if you are currently on active duty.

Send the completed VA Form 28-1880 and your DD214 or SOS to:
VA Loan Eligibility Center
PO Box 20729
Winston-Salem, NC 27120

*VA Funding Fee
Although there is not private mortgage insurance due there is a “VA funding fee”. A basic funding fee of 2.0 percent must be paid to VA by all but certain exempt veterans. A down payment of 5 percent or more will reduce the fee to 1.5 percent and a 10 percent down payment will reduce it to 1.25 percent.

A first-time buyer will pay a little over two percent for no money down loan and a second time buyer’s fee is just above three percent.

The funding fee for loans to refinance an existing VA home loan with a new VA home loan to lower the existing interest rate is 0.5 percent.

Veterans who are using entitlement for a second or subsequent time who do not make a down payment of at least 5 percent are charged a funding fee of 3 percent.

Some veterans are exempt from paying the VA funding fee. If you are a veteran getting disability compensation for service-related medical issues, or are entitled to get compensation if you aren’t drawing retirement pay, you are exempt from the VA funding fee for your VA home loan. Also, surviving spouses of those who died in the service, or from service related disabilities are also exempt. It doesn’t matter in this case whether the spouse has any of their own entitlements.

The funding fee may be included in the loan.

Requirements for VA Loan Approval

  • The applicant must be an eligible veteran who has available entitlement
  • The loan must be for an eligible purpose
  • The veteran must occupy or intend to occupy the property
  • The veteran must be a satisfactory credit risk
  • The income of the veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the costs of owning a home, take care of other obligations and expenses, and have enough left over for family support

Closing Costs
The following items may be paid by the veteran purchaser, the seller or shared:

  • VA appraisal
  • Credit report
  • Loan origination fee
  • Discount points (if applicable)
  • Title search and title insurance
  • Recording fees
  • State and/or local transfer taxes, if applicable

VA Refinancing Options:

  • VA Cash-Out Refinance Loans
  • Interest Rate Reduction Refinance Loan
  • Streamline Refinance Loan

VA Cash-Out Refinance Loans are available for homes that are your principal residence. The VA guidelines allow you to refinance up to 90% of the appraised value of the home plus allowing for many of the closing costs to be rolled into the loan amount as long as the property meets the designated loan-to-value ratio. There is no minimum amount of time that you must have your existing loan or own your home.

If you only want to lower your existing interest rate then a loan program called the Interest Rate Reduction Refinance Loan (IRRRL) or Streamline Refinance may be the way to go. This loan provides a way for current VA homeowners to reduce or lower their interest rates with no out of pocket expenses and very little documentation. This is only available to veterans who are refinancing their original VA mortgage in which they have used their VA eligibility.

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FHA Loans

Reasons to Consider an FHA Home Loan

Why should you investigate an FHA home purchase? There are many reasons, especially for people looking at options for their first home. First-time homebuyers have a distinct advantage with FHA loan options compared to conventional loans–it’s easier to qualify for an FHA home mortgage.

FHA home loans are guaranteed by the government, so the loan application is more attractive to participating lenders. Many typical first-time FHA home loan applicants are young and in the early phases of their careers. Many are still paying on student loans, credit card debt from college or other debt. FHA home mortgages often wind up offering less expensive monthly payments.

Another advantage for the first-time homebuyer? FHA home loans don’t require a big down payment at closing time. A typical borrower in the early stages of a new career often doesn’t have a lot of money set aside specifically for purchasing a home. The terms of an FHA mortgage includes a 3.5% down payment. That money can come from a variety of sources including HUD down payment assistance grants or gifts from family members.

For first time buyers, closing costs are another consideration. Typical closing costs for FHA home loans are up to 3% of the total mortgage. An advantage of some FHA loan product–the terms can allow you to build in closing costs into your mortgage.

FHA home mortgages aren’t just for first-time home buyers. FHA refinance loans help people get out of toxic debt situations caused by sub-prime mortgages with interest rates that have spiraled out of control. FHA home mortgage refinancing is a way to keep your home and prevent damage to your credit rating. The advantages include a low fixed rate mortgage guaranteed by the FHA, predictable mortgage payments and better interest rates for those who qualify.

The FHA also provides cash-out refinancing. Do you need to set aside money for additional college study or major home improvement projects? FHA cash-out refinancing mortgages offer lower interest rates than traditional home equity financing loans. Consider one of two FHA mortgage plans which offer cash-out plans; one with loan amounts for up to 95% of the appraised value of the home, another for up to 85% of the appraised value. Each program has its own specific requirements and rules; your loan officer can inform you of your options under FHA cash-out refinancing mortgages.

FHA mortgage loan payments should consist of no more than 29% of your monthly income. The loan officer will ask for verification of your income to calculate your debt-to-income ratio with the new loan. It is true that borrowers can get conventional loans using “stated income”, but requirements for FHA mortgage products including FHA refinancing loans require copies of your income tax returns to verify the actual amount of money you report to the government.

FHA home loans have requirements for income, debt-to-income ratios, and maximum loan amounts. The kind of FHA loan you apply for is unique, there’s no one-size-fits-all lending product from the FHA. Ask your lender for assistance in learning which FHA mortgage is right for you. If you aren’t satisfied with your current lender, consider getting applying for an FHA home

Things to Know About FHA Refinancing
Do you need to refinance your existing mortgage? It could be time to explore your FHA refinance options. Are you at risk of default? Foreclosure? If you have an adjustable rate mortgage and are paying much more than anticipated per month, you should consider going into a fixed-rate FHA mortgage.

An FHA refinance loan may be right for you if you have an adjustable rate mortgage that is raising your mortgage payments higher than you can afford to pay. Is your income average or below average for the area where you live? Does your mortgage payment take 31% or more of your total income? Do you live in the building you want to refinance? If the answers to any or all of these questions are yes, it’s time to think about an FHA refinancing loan.

DOES MY CREDIT RATING AFFECT MY CHANCES?

FHA refinance loans require a credit check before FHA refinancing is approved. This FHA credit check compares your overall credit activity to any negative information in your credit report. To qualify for an FHA loan for refinancing purposes, your general pattern of credit activity is taken into account, not just current or past payment issues. You may be surprised to learn the FHA is much more flexible when reviewing your credit history for an FHA refinancing loan.

ARE FHA REFINANCING LOANS AVAILABLE AFTER FILING BANKRUPTCY?

If you’ve been discharged from Chapter 7 bankruptcy at least two years, you are eligible to apply for FHA refinancing. If you filed Chapter 13 bankruptcy and have made all payments on time for at least one year, you are eligible to apply for an FHA refinancing loan.

HOW CAN I GET READY FOR AN FHA REFINANCING LOAN?

Always prepare for your FHA refinancing credit check in the same way you’d get ready for a conventional home loan. Establish or continue a history of on time payments, reduce your debt-to-income ratio and cut the amount of potential debt you have in your name. Also double-check your credit for current, accurate information. Challenge items on your credit report which may be out of date or suspicious.

WHAT IF I ALREADY HAVE AN FHA HOME LOAN?

Do you already have an FHA home loan? Do want to lower your interest rates? FHA Streamline Refinancing is an option to help you do just that. FHA Streamline loans have no income verification requirements. No credit report is needed unless your particular lender requires it. FHA Streamline loans are offered to borrowers who are current on their payments. Since you are already established as a good borrower, in the eyes of the FHA no additional verification is needed to help you get into a new FHA mortgage product.

You can add another person to the property title with no credit check, but if you want to remove someone from your title, you’re required to get a full credit check before you can be approved for an FHA Streamline refinancing loan. Contact your lender for additional information. Income requirements vary depending on your state of residence and your zip code; you may also find additional flexibility depending on your credit report and the nature of the building you want to refinance.

Please feel to contact us for a list of lenders that can answer all your questions about FHA loans.

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Understanding Mortgage Insurance (PMI)

Mortgage Insurance covers the mortgage lender against loss from default on your loan. This is referred to as (PMI) Insurance. Loans have different requirements about if you need PMI insurance. We can get you in touch with the right banker to answer questions about Mortgage Insurance and if you really need it.

VA Mortgages

VA Type loans, use whats called a funding fee. This can be up to 3%. We can get you with the right banker to discuss getting a VA loan and all about funding fees.

FHA Mortgages
FHA loans require an upfront fee of 2.25% which may be financed in with the loan. Sometimes there is also a yearly fee. We can get you with a banker to discuss FHA loans, and if this is the right fit for you.

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What to Expect at the Real Estate Closing

A real estate settlement or closing is the time where the real property switches from one owner to another. This is when the Deed and Title to the property is conveyed, and the balance sheet called the HUD is reviewed and all parties receive or give monies to balance the HUD.  A good closing attorney’s role at closing is to represent the lender’s loan package to the buyers, explain the HUD, collect the funding amounts and administer the loan paperwork to both sides of the transaction. We will help you through the process to closing every step of the way. We will make sure your sale runs smoothly to closing.

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