Tags Archives: first time homebuyer

If you are thinking of buying a home in 2018, now is the time to get ready. Most of us are on Holiday break, and what better time to get everything in order to buy a home in 2018 while you are home and on vacation. Are you ready?

7 Steps to Be Ready to Buy a House in 2018

1. Check your credit score.

A credit score is a numerical representation of your credit report. FICO scores range from 300 to 850, and the higher your score, the better. “Good credit is like gold when obtaining a mortgage,” says Denise Supplee, a Pennsylvania agent. Typically, you’ll get the best interest rate on a loan if your score is 740 and above. “A higher credit score should net you a lower mortgage rate,” says Lee Gimpel, co-creator of The Good Credit Game, which specializes in financial education. “That lower rate, even if it’s only 1 or 2 percent lower, can mean saving thousands of dollars per year.” If your credit score falls short, get busy repairing it. Correct any errors that might be on your report, start paying all your bills on time, and get your credit limit raised. Note, though, that you shouldn’t max out your card each month. It’s best to use 30 percent or less of your total available credit.

2. Don’t open new credit cards.

If you think resisting taking a selfie when you’re face-to-face with your fave celebrity is a testament to your willpower, that’s sissy stuff compared with turning down every offer to open a credit card, even if you could save 20 percent (or more!) on your holiday purchases. Tempting as saving at checkout can be, opening new credit may hurt your chances of getting a mortgage, or at least of getting the best rate on a loan.

“By opening the account, you have created another line of credit,” says Paul Anastos, president of Mortgage Master, a division of loanDepot, a nonbank lender. “That credit line, and what is borrowed, can change the application numbers and jeopardize the application.” What could save you a few dollars now could cost you far more in the long run if your mortgage payments will be higher. And along those same lines, “Don’t overspend during the holiday season,” says Dean Sioukas founder of Magilla Loans, an online lending exchange. “Especially on impulse purchases that can be tempting during the holidays.”

3. Suggest financial gifts for the holidays

Besides the mortgage loan, you’ll need a sizable amount of cash to buy a house. There’s the down payment to consider, closing costs, and moving costs. You should also set aside money for unexpected repairs and costs, says Brian Betzler, regional sales manager at TD Bank. Not being prepared “is probably why nearly half of millennials incurred up to $5,000 in unexpected costs during the mortgage process, according to a TD survey,” he says.

A potential solution? Bulk up that emergency fund. “Instead of getting gifts for the holidays, [prospective homebuyers] can suggest cash instead that will be put toward their home,” says Paul Sian, a Kentucky and Ohio agent. And remember, you might be getting some money back after you file your tax return. Don’t blow it on vacation. “A tax refund is a great way to add to your cash reserves for a down payment,” says David Hosterman, branch manager of Castle & Cooke Mortgage in Colorado.

4. Interview potential real estate agents.

Obviously we would hope you would interview and choose Justin or Kristen Andersen to be your agent but here are some good tips. If your neighbor, relative, or friend of a friend happens to know (or is) a real estate agent, that’s great. This person might be the perfect agent for you. But you owe it to yourself to shop around. “Look for [an agent] who is knowledgeable, good, integral, and can assist you in reaching the goal of homeownership,” says Chantay Bridges, a Los Angeles, CA, real estate agent. “Make sure they are not a novice, new, or just unaware of how to do a specific transaction.” The end of the year is usually a slow time for agents, so chances are they’ll be more accommodating to making an appointment on your schedule.

5. Keep tabs on interest rates.

If you hear that interest rates are at historic lows or that interest rates are on the rise, you should not assume that you can get the rock-bottom rate. Not everyone gets the same interest rate on a mortgage loan. It depends on your financial picture and on the lender you choose. “Everyone knows that home prices are, at least to some extent, negotiable, but we find loans to be the same,” says Warren Ward, CFP with WWA Planning & Investments in Indiana. He advises that homebuyers shop around for the lowest interest rates. Note that closing costs can vary too, so discuss with your real estate agent ways to keep yours down. “We saved $150 on the closing fees by selecting the cheapest title company,” says Ward. “I guess that’s not much, but I think most people would bend over to pick up three $50 bills if they were lying on the sidewalk.”

6. Find a mortgage lender.

Before you even start looking for a home (and yes, we even mean browsing online listings), look for a mortgage lender to find out if you can afford to buy a home. If you can’t right now, there’s no use torturing yourself by finding your dream home that’s just out of reach. But how do you find a lender? “If you have a bank you’ve been with for years, ask them,” says Bridges. “Your [real estate agent] can also refer a good lender to you. Compare [that lender] with two others. Look at what they offer, costs, points, and how long to close.” Once you know how much home you can afford, perform your home search based on your preapproval amount or less.

7. Get preapproved.

When a lender gives your financials the once-over and preapproves you for a mortgage, you’ll be able to show sellers that you really can buy their house. But how do you get preapproved? By preparing a few documents, which you can do several months in advance of the actual purchase. Here’s what you need to buy a house.

  • Tax returns for the past two years
  • W-2 forms for the past two years
  • Paycheck stubs from the past few months
  • Proof of mortgage or rent payments for the past year
  • A list of all your debts, including credit cards, student loans, auto loans, and alimony
  • A list of all your assets, including bank statements, auto titles, real estate, and any investment accounts

Paul Anastos also advises not to change jobs, make big purchases, or miss any debt payments as you prepare to get a mortgage.

Cheers to a prosperous 2018 and we hope to help you or anyone you know with your home needs in 2018!

Originally published October 17, 2016. Updated October 30, 2017. Excerpts From trulia.com

 

 

The home-buying process is a high-stakes thrill ride full of exhilarating ups and scary downs, but unquestionably one of the most deflating moments is when the appraisal comes in significantly lower than the accepted offer. This is, to use technical real estate lingo, “a bummer.”

Either you feel as though you got the raw end of a deal by paying more than the property’s worth or, if you don’t have extra cash to hand over, the deal can crumble into dust. (Your lender’s not going to fork over money for a higher loan amount if the appraisal came in lower than expected, so you’ll have to make up that difference yourself.)

“In a rising market, low valuations are pretty common because appraisals are based upon sales that closed when prices were lower,” says Diane Saatchi, a senior broker with Saunders & Associates in Bridgehampton, NY. “The reverse is so in a declining market.”

In other words: Appraisals can’t keep up with how quickly homes are selling in a hot market, so you’re bound to see lower-than-expected values placed on homes.So, what do you do if this happens to you? You have four options:

1. Appeal the appraisal

Sometimes called a “rebuttal of value,” the appraisal appeal takes some work. In fact, it’s a total team effort.

“The homeowner, loan officer, and often the real estate agent work together to find better comparable market data to justify a higher valuation,” says Casey Fleming, a mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage.” 

That means everyone puts on their best Sherlock Holmes garb and gets to work looking for anything that helps the claim for higher valuation. Perhaps the appraiser overlooked some comps (homes similar in style, location, and square footage sold within the past few years).

“It’s not uncommon to discover, for instance, that the appraiser used a comparable sale that looks like it’s in great condition, when in fact the home was trashed when purchased and has already been rehabilitated,” Fleming says.

The loan officer writes an appeal using the new comparables and then sends it to the appraiser. There might be some negotiating back and forth until all parties come to a compromise with a new valuation.

Spoiler: It’s a hard battle to fight.

“My record on this one is 0 for 9 so far,” Fleming says. “But I know many appraisers personally who have adjusted their values.” So keep the hope alive!

2. Order a second appraisal

“Most often, if the appraised value is not as high as the agreed (contract) price, the seller’s agent will ask to see the comps and get a second or third appraisal,” Saatchi says.

But it will likely cost you–you’re not only paying for the first appraisal (in your closing costs), but you’ll pony up for any additional appraisals as well. They can range between a few hundred dollars and $1,000 depending on the area. Occasionally, real estate agents or sellers will foot the bill if they really want to keep the sale.

3. Negotiate with the seller

If you’re lucky, you and the seller will both budge a little.

“You might go back to the sellers and ask them to reduce the price or split the difference,” says Peter Grabel, managing director of Luxury Mortgage in Stamford, CT. “The seller is under no obligation to do so, but they may prefer to do this rather than take a chance of losing you as a buyer, and starting over again. It is likely that another buyer will have the same issue, so the seller might be better off renegotiating with you unless they have other offers.”

Sellers might be more willing to cooperate, especially if the Federal Housing Administration is involved. Lenders often require the use of their own FHA-approved appraiser, and these appraisals are “locked in” for six months.

“The seller could be forced to take a poor appraisal or wait it out for a buyer with a different loan,” explains Joshua Jarvis of Jarvis Team Real Estate in Duluth, GA.

Jeff Knox, broker and owner of Dallas-area real estate firm Knox & Associates, says this is the most common outcome in his area.

“Of all possible outcomes, this is what happens most frequently,” he says. “While the seller will usually be upset about the low appraisal value, most reasonable sellers eventually come to terms with the fact that any other appraisal values by potential future buyers will most likely come in at about the same value.”

4. Walk away

No one wants to let a property slip through their fingers, especially if it feels like their dream home. But beware of ignoring a low appraisal—you could end up losing thousands whenever you decide to sell.

If you have an appraisal contingency in your contract, you can walk away, get your deposit back, and hope for better luck the next time around.

This article was written by Maureen Dempsey for Realtor.com. She is a writer who covers fashion, beauty, lifestyle, and home decor. She’s recently learned that decorating her new home is just as satisfying as filling her closet.

 

Congratulations, you have decided to buy a home for the first time. Does the thought of buying a home make you nervous? Does it make your palms sweat? Have you started to look at buying a home and got cold feet before you even looked at a single home. Are you tired of paying rent and not getting the tax benefit of owning a home? Well we are here to help with a checklist to get you on your way to closing on your first home.

Step 1: Find a Real Estate Agent

Yes, you can look at homes online or drive around to open houses thinking you can buy a home by yourself without help from a professional. There are a couple reasons why you want to work with a Real Estate Agent one being they are seasoned professionals. They are constantly working with real estate contracts and know what needs to be in the contract to protect you, the buyer. There are many deadlines in a real estate contract and if those deadlines are not met the deal could fall apart, could benefit the seller, could jeopardize your financing, and much more.

A buyers agent does not cost you, the buyer, anything! The sellers pay the sellers agent and buyers agent commissions; why wouldn’t you use someone to represent you, the buyer.

Here at Andersen Realty, we love working with buyers! We have been in Real Estate for a very long time. With that said, you want to find a buyers agent that is a seasoned professional, and you probably want to interview 3 or 4 agents before signing an agreement with someone. If you would like to interview Kristen or Justin please give them a call today to set up an appointment. If you call today, you have completed step 1 and on to step 2!

Step 2: Talk to a Mortgage Lender:

This step could go before finding a real estate agent or at the same time. When you look for a mortgage lender after you find an agent the agent can help you find a lender locally and one who is trustworthy. Therefore, ask your agent for two to three lender recommendations. Talking to multiple lenders will enable you to fully assess your financing options with no obligation to pick until you’ve found one that’s right.

The goal is to get pre-approved for a home loan. To do that, you’ll need to provide the lender with a significant amount of paperwork, including bank statements, pay stubs, W-2 forms, 1099 forms, and tax returns. If the lender decides to offer you pre-approval, you’ll receive an estimate of what size loan you would qualify for and approximately what interest rate you’d get.

Pre-approval is typically good for 90 to 120 days; however, “it’s easy to renew it if the borrower’s financial picture doesn’t change,” says Richard Redmond, broker associate at ACM Investor Services, a private lender in Larkspur, CA, and author of “Mortgages: The Insider’s Guide.”

A good mortgage lender will also be able to help you determine which type of loan is right for you.

Step 3: Improve your credit, if needed

When you meet with a mortgage lender, the lender will pull your credit score. Although a perfect credit score is 850, all scores 760 and above are considered to be in the best credit score range—meaning you would qualify for the most competitive interest rates. (For comparison, a good credit score is from 700 to 759, a fair score is from 650 to 699, and a score of 300 to 649 is considered poor.) Your credit score is calculated based on a number of factors, including your debt payment history, debt-to-credit utilization, and length of credit history.

If you find that your credit score is subpar, you may be able to take steps to boost your score. Just keep in mind that you won’t improve a credit score overnight. Indeed, you may need to postpone your house search for a few months in order to mend your credit.

Step 4: Determine where you want to live.

To focus your house hunt, you’ll need to decide where you want to settle down. If you don’t have your heart set on a particular neighborhood, think about what areas are best suited for your commuting needs, school requirements, proximity to family and friends, and overall lifestyle.

“What do you do at night? What do you do on the weekend? Your habits can help you determine where you should live,” says Sanderfoot.

Need help digging up information? At realtor.com/local, you can enter a town, neighborhood, or ZIP code to find out more about the area, like the median home price and quality of public schools.

Step 5: Don’t damage your credit

When you’re in the process of buying a home, you need to walk the straight and narrow with your finances. Why? Because your loan doesn’t get fully approved until it goes through underwriting—which could take place just a few days before closing. To keep your credit score stable, you’ll want to avoid taking on new debt (e.g., getting an auto loan), opening new credit cards, neglecting student loan payments, or falling behind on credit card payments.

If you are ready to start the home buying process today, give Kristen or Justin Andersen a call today at 720-314-6863 or 720-314-6861