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“Questions that buyers frequently ask me.” Q. How many homes should I plan to view and how should I make the final decision? A. Generally you should view a number of homes so you can become familiar with what you can expect to get for your money. When you find a home you really like, it’s a good idea to go back and look at it at a different time of day. This will give you greater insight into what it will be like living in the home full time. Q. How can I check my credit rating before I apply for a mortgage? A. Your credit rating is based on a combined score generated from three credit bureaus who look at your credit history, amount of credit available, and recent inquiries to determine what’s called your FICO score. A smart way to go is to have your Mortgage Professional check your rating for you and, if appropriate, suggest ways for you to improve your credit. For a small fee, you can get your score or review your credit report by going online to www.myfico.com or contacting the credit bureaus directly at: Equifax: w http://www.equifax.comw Expedia: http://www.experian.comw TransUnion, www.transunion.comQ. Why should I consider paying points? A. Buyers often choose to pay a one-time charge called mortgage “points” in exchange for a lower interest rate. Usually paid at closing, each “point” costs 1% of the mortgage amount, or $2,000 on a $200,000 loan. The lower rate reduces the monthly mortgage payment, and points paid in conjunction with the purchase of a home are generally tax-deductible in the year they’re paid (see tax advisor). Monthly savings will often exceed what was paid in points in just a few years’ time. Q. What is title insurance and why do I need it? A. Basically, title insurance assures that you have clear title to the home you’re purchasing. A title search is the primary component of “due diligence,” a process that will be started either by your attorney, if you are using one, or by the title company you choose. The title search determines whether the seller actually owns the property and if there are any claims against it. Q. What happens if the house I want to purchase does not appraise at the amount expected? A. If the house doesn’t appraise at the amount expected, other alternatives are typically found. A second appraisal may be sought, the buyer may be willing to put more money down, the seller may adjust the price or offer other concessions, or the two sides may negotiate to split the difference between them. Q. Is there an advantage to securing a mortgage credit approval? A. An approval will take the mystery out of what you can afford, and will certainly give the prospective seller more confidence in you. When multiple buyers are bidding on the same house, a mortgage credit approval can be the deciding factor in whose offer gets accepted. Q. What Should I Offer? That is the Question? A. There are a number of factors that will affect the offer you make. Supply and demand, the condition of the home, how long the house has been on the market, and your personal circumstances with regard to how soon you need to close on a home all come into play when framing your offer. You might also weigh in the demand for the home and how much you really want it. If you “low ball,” some sellers will react with a counter offer; others might dismiss your offer outright. In an active market, you’re likely to lose out by making a low bid. If multiple bids are anticipated, it’s advisable to go with your “best offer.” I will advise you on ways to make your offer more attractive: for instance, a mortgage credit approval and flexibility on the closing\settlement date can help make your offer stand out and ultimately close the sale. I will help you think through all of these issues so you can determine what is the best offer for you to make at the time. Q. What is involved in a home inspection and is it necessary? A. While only certain inspections are required by mortgage lenders or government mandate, a comprehensive home inspection is considered a wise thing to do when purchasing a home. However, since it is not required, the buyer must pay for it. It is also recommended that at the time of the inspection, you accompany the home inspector so that you can learn firsthand as much as possible about the home you are about to purchase – including such basics as where the main water shut-off is and electrical distribution boxes are. Mortgage lenders typically require inspections for wood-destroying insects. Inspections mandated by the state or municipality could include: smoke alarm inspection, testing of well water, septic system test, and a certificate of occupancy – all of which are typically paid for by the seller. All other inspections are generally paid for by the buyer and must be done within a specified time frame, as indicated in the contract. Some insurers require inspection of underground oil tanks. Q. What if the inspections turn up problems? A. Few homes are perfect. Some problems may be a matter of simple cosmetics; others may be more serious and call for costly repairs. The good news, however, is that in most cases the seller and the buyer are able to come to terms. You and the seller may decide to compromise, with both sharing the costs of repairs, or the seller may pay for any repairs. Or you may decide that the issue is not important enough to risk losing the home. Do You have any more questions? Please, submit to us. |
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