Life Insurance

Why You Should Get A Life Insurance Before Buying Your Home

 

You’re all set on making that big purchase. And it’s most likely the biggest purchase you’ll ever make. We’re talking about buying that dream home. This means more than just providing a roof over your head or a shelter for your family. Buying a home is a reflection of your achievements and that dream lifestyle. This home is where you’ll start making new life memories. It is a place where you and your family will achieve that sense of security that you all deserve and long for.  

 

Ensuring that security also entails making important steps which are related to buying a home. You will go through a lot of paperwork.  And you need to have a good grasp of how much house you can afford. Apart from all that, you also need to do one thing to achieve the certainty of a healthy financial future. If you don’t have one yet, it would be a good idea to purchase a Life Insurance Policy before buying a home. 

What Is Life Insurance And How Does It Work? 

 

Life insurance is a contract or agreement between an insurance company or provider and a policy holder. Buying a policy means making monthly payments to a life insurance company. In return for the payments, the company gives the assurance of paying the allotted lump sum to the policyholder’s beneficiaries in the event of the policyholder’s death. Payouts are based on a fixed period of time in exchange for paid premiums. 

 

You can also discuss and inquire about life insurance with a trusted financial advisor. This will help you understand how getting a policy can fit in your financial situation.  

The Sooner You Buy, The Better

 

It is more beneficial if you get a policy as soon as you are financially capable. The earlier you buy, the better. Cost of a policy becomes more expensive each passing year, the older you get. Having a policy in place even before planning on buying a home is a good step towards good financial planning. This secures your finances and the finances of your loved ones ahead of time. 

Life Insurance Comes At A Reasonable Price

 

There is a policy depending on different budgets. You can discuss the matter with your partner or family members. Together, you can decide on the type of coverage that would best suit your needs. There are a variety of plans available from the best life insurance providers. These companies can present rates that are within your means. 

What Are The Different Types of Life Insurance? 

Term Life Insurance 

 

Term life is an affordable and temporary policy option when you have a tight financial budget. This type of insurance is less expensive than other types of insurance policies. If you have a lot of dependents plus a list of financial obligations, you can opt for this type of policy. It is up to you to decide the amount of insurance that you need. 

 

The younger and healthier you are at the time of buying, the lower your premium payment. Available coverage can go for as low as $1 a day. This is applicable for non-smokers and those who do not have any pre-existing conditions. You need to note though that the premium increases as you get older – in a span of five, ten or twenty years. 

 

This policy gives you an option to buy insurance coverage for a specific term, similar to the length of your mortgage. You can also arrange for automatic renewal of the policy at the end of the term. This type of insurance, however, does not accumulate cash value. Meaning, it does not earn dividends and only provides you with the agreed policy face value.  

Permanent Life Insurance 

 

Permanent life is similar to term life in terms of having a fixed insurance amount. But, unlike term life, permanent life insurance does not need to be renewed. Moreover, this type of insurance policy usually accumulates cash value. This can be paid out to the policyholder should the individual decide to end the policy.

 

This type of life insurance also appears to be a more cost-effective long term financial plan compared to term life. The premiums paid for permanent life are higher when you’re younger and become lower as you get older. 

Universal Life Insurance 

 

Universal life provides lifetime protection and is deemed to be much more flexible than permanent life insurance. The premiums, however, can either stay the same or have a yearly increase depending on the policy you avail. 

 

The advantage of this type of policy is that you can make extra payments. Extra payments can be invested and in turn, accumulate tax-free. Policyholders can receive dividend payments depending on the product’s performance. However, you should also be aware of potential risks that come with the investment. 

Whole Life Insurance 

 

Whole life is a permanent coverage that only loses its validity if you decide to cancel the policy. It has fixed payments and lasts your entire lifetime. This type of insurance policy earns dividends. And it also allows you to build up cash value while the policy is in place. This is a good option for those who are looking to augment their savings and investments. The cash value can be there as an extra cushion or an emergency fund that you can tap any time when needed.  

Mortgage Protection Insurance 

 

Mortgage protection is otherwise known as accident, sickness, and unemployment insurance. It combines term life and critical illness insurance. This protects the beneficiaries from the financial challenges of death and serious illness in the family. The primary purpose of a mortgage protection policy is to cover mortgage payments. Those left behind will be provided for, in the event of the loss of the primary earner in the family. 

Why Should You Get Life Insurance Before Buying A Home? 

 

Getting a life insurance policy gives you peace of mind. It ensures that you or your loved ones are financially secure no matter what happens. There are indeed a lot of things to consider as a first-time home buyer. The primary reason for buying life insurance before buying a home is to make sure that all (if not most part) of your mortgage can be paid off even if untimely circumstances would occur. You need the confidence that you, your partner or family members would still be able to enjoy your home. Furthermore, you need the guarantee of being able to afford future mortgage payments.   

 

The life insurance policy that you should get is also dependent on the kind of lifestyle you currently have. Now, you are already thinking of buying a home. So it is important for you to also take into account the monthly mortgage you would be paying in the future. A mortgage calculator can help you determine, more or less, how much you need to plan for. 

How Does Life Insurance Work For Me When I’m a Homeowner?

 

In the event of the untimely death of the primary breadwinner, life insurance can help you and your loved ones pay off the mortgage (in full or in part). The money can also help cover maintenance repairs, property taxes, and utilities. The most important part there is that you or your loved ones can still enjoy living in your home. 

 

Beyond mortgage payments, there will still be other future home-related expenditures such as repairs, maintenance, and renovations. Apart from affordability, selection of life insurance plans or decisions on the right amount of coverage depends also on the following considerations: 

 

  • How big your family is, as well as the age of the family members 
  • Your earning capability or the earning potential of your partner / spouse 
  • The kind of lifestyle that you would like maintained or continue to enjoy 
  • And of course, the term of your mortgage and interest rate  

 

If you already have life insurance, it would be good to check if your current policy covers the additional debt of a home loan. If not, then it would be best to consider buying another policy to cover the mortgage. This is all about enabling those left behind with the financial capability to handle unpaid debts. 

Reassurance As The Primary Benefit of Life Insurance For A Homeowner 

 

Most households depend on two incomes to shoulder a list of living expenses. Your total expenses will be much higher if you plan to add mortgage payments to that list. If you and your spouse co-signed for a mortgage, either one of you may have the sole responsibility of repayment. Buying life insurance should be in your list of priorities before having the house transferred into your name. 

 

Should anything happen to you or your partner/spouse, you would want the person left behind to be able to continue paying the mortgage. It would be heartbreaking for them to risk losing the house or be forced to sell. This might be a difficult conversation to have with a partner/spouse but one that is essential and necessary. 

 

The tax-free lump sum that you can get from life insurance can be sufficient to pay off the mortgage balance. And with this, any expense, any debt, and mortgage will be the least of your worries if ever any tragedy occurs. The benefit of knowing that you or your family has financial protection in place is priceless. This also gives everyone freedom from worries and anxiety. 

 

 

how much house can I afford

5 Factors to Determine How Much House Can I Afford

How much house can I afford? That is the million dollar question.

Before checking out that dream home, you need to answer one question — how much house can I afford?

First Things First

Is this the right time to purchase a new house?

While there’s no easy way to answer this question, you can start by weighing your choices. Start by asking yourself these important questions:

  • Are you are willing to take the consequences of owning your new home? This means paying property taxes, maintenance repairs, and insurance, among other expenses.
  • Is it cheaper to buy a home than to rent?
  • Is your income enough to pay monthly loan payments?
  • Can you afford the home you’re eyeing?

These are just some of the most important questions you need to answer before you decide.

If you get stuck on the last question and you’re asking yourself “How much house can I afford?” you probably need to do some number crunching.

Before you start to get reeled into the next steps involved, it’s also useful to make a realistic budget for buying a house.

Once you have a budget estimate, you can determine how much you can afford to spend on a new home.

Factors To Determine How Much House Can I Afford

Before getting invested in the home search, it’s crucial to determine your budget. This keeps you grounded and you can make sure that you won’t bite off more than you can chew.

1. Savings

Do you have money set aside for making a down payment? When you buy a home, you need to put down 20% of the purchase price of the house that you have been eyeing. But don’t let this discourage you, the actual down payment required varies by lender.

If you’re eligible, you can buy a home with zero down payment. You may also qualify for first time home buyer grants and programs that may help you pay for the down payment and closing costs. However, it’s always better to have enough funds to cover the expenses related to buying a home.

2. Your FICO Score

Know your FICO or credit score and find out what you can do to improve or maintain it.  A high FICO score gives you the advantage to choose from the best loan options. Whether you buy a house or not, it’s useful to know your credit score in case you need to borrow money.

Your FICO Score Is In Your Hands

The FICO score is the credit score that is commonly used by US lenders. The score considers information about:

  1. 35% – Your credit history (how good are you in paying your debts i.e. credit cards)
  2. 30% – The amounts that you owed (how much money you borrowed)
  3. 15% – Length of credit history (how far back is your credit record)
  4. 10% – Types of credit that you used (credit cards, housing loan, car loan, other loans)
  5. 10% – New credit (any additional loans apart from current ones)

Lenders use this scorecard to know if you are eligible for a loan. This also predicts the chances that you’ll pay your bills on time. From the lending scorecard, lenders may determine the credit terms as well as the interest rate of the loan.

However, the FICO score is not the only basis for lenders. They also consider other factors such as your annual income, history of employment, home value, car value, and other financial relationships you have with them – if you are borrowing from a bank they may consider the movement of your checking or savings account.

Credit Score Ranges

FICO scores range from 300 to 850 and are categorized as follows:

    • 800-850 (Exceptional)
    • 740-799 (Very good)
    • 670-739 (Good)
    • 580-699 (Fair)
    • 300-579 (Poor / Bad)

About 18% of all consumers have credit scores which are considered fair. Meanwhile, about 66% have credit scores of at least 670.

Your FICO score depends on your credit habits. It is always good to be aware of your credit score to help you answer the question – how much house can I afford?

If possible, try to make your credit score higher by doing the following:

  1. Pay revolving credits and other bills on time.
  2. Try to keep your credit balances at a minimum.
  3. Do not close credit cards since a long history of good credit is better than no credit history at all.
  4. Limit new credit applications.
  5. Track your credit report.

Importance Of A High FICO Score

Why does the FICO score matter anyway? The FICO score matters because it makes the lending process faster. These scores allow lenders to follow standardized credit evaluations and all borrowers generally receive fair treatment.

People with very poor credit scores generally qualify for lower loan amounts and would have higher interest rates. Meanwhile, borrowers with higher credit scores have more choices and they can also take advantage of competitive rates.

Hence, your credit score would have a large effect on how much you can afford to spend on a home.

3. Your Income

The affordability of home prices is relative to a person’s income. You know how much you make, so basically you have an idea of the price range you can handle. It is important to stay within a reasonable budget.

As a rule, your total debts should not exceed 36% of your pre-tax income. Consider the monthly mortgage payments you make for a new property as part of the 36% and don’t forget to include property taxes.

When you apply for a mortgage, lenders use this ratio to see if you earn enough money to pay back your loan while paying for your living and recreational expenses. You can avoid getting caught off guard by skyrocketing expenses by forecasting additional expenses related to homeownership.

By taking these expenses into account right from the start, you would have a better answer for that pressing question – how much house can I afford?

Based On My Income, How Much House Can I Afford?

Now we go into specifics so that you would know how much of your monthly income must go to your mortgage payments.

Again, we have to stress that buying a home over your budget may overstretch your budget. You may have some difficulty in making payments on time and you want to avoid being in this situation as much as possible.

Some follow a basic formula saying the starting price point in shopping for homes must be with a purchase price that is equivalent to 2.5 times your salary.

So let’s say your annual salary is 100k. So how much house can I afford with 100k salary?

If we follow the basic formula, $100,000 x 2.5 = $250,000 then you can afford to buy a house worth 250k, which is a conservative estimate.

For people living in cities where the median price of homes is higher, this budget may not be enough to buy a house. So, some financial experts suggest though that you can afford to pay a mortgage which is as high as 28% of your gross income. That means that if your annual salary is 100k,  you can afford to make annual mortgage payments of $28K (28% of $100K). This translates to monthly payments of $2,300 ($28K divided by 12 months).

So, how much house can you afford with a 100k salary?

Your $2,300/month payment can also translate to a purchase price of $450,000 if we assume a 4.5% fixed rate for 30 years.

4. Type Of Loan

When it comes to a home mortgage, it is also important to know about the different types of loans available and how much house payment can I afford.

FHA Loan VA Loan Fannie Mae/Freddie Mac Loan
  • Insured by the Federal Housing Administration (FHA)
  • Guaranteed by the Veterans Administration (VA)
  • Not guaranteed or insured by the Federal Government
  • Since it is insured, you can get good terms like a low downpayment of 3.5% of the purchase price
  • Guaranteed with no money down but usually has a one-time charge (funding fee) of 1.25% – 3.3% of the loan amount.
  • Lowest downpayment for a conventional mortgage loan can be 3% – 5%
  • You need to pay a mortgage insurance premium (MIP) when you get an FHA loan.
  • There is no required mortgage insurance.
  • If less than 20% down payment is made, you have to pay for private mortgage insurance (PMI).
  • It is often easy to qualify for this type of loan even if you have a low FICO score.
  • To get this loan, you must be a current member of the U.S. armed forces, a veteran, a national guard member, or an eligible surviving spouse.
  • You can get a Fannie Mae/Freddie Mac Loan  conforming loan if you have good credit, a steady income, and can afford the down payment
 

 

  • Maximum lending amount in 2019
      • High-cost areas $726,525
      • Low-cost areas $314,827
  • Maximum lending amount in 2019
    • $484,350
  • Maximum lending amount in 2019
    • $726,525

5. Your 401k

If you have a 401k or any retirement fund, this makes the lender more confident to give you a loan. Retirement funds can serve as a buffer in case you lose your job.

Think of your 401K as something that can tide you over when unexpected events affect your current cash flow. If needed, you can also tap into your 401k for the down payment for your first home.

I Need Financial Assistance, What Should I Do?

Income-based down payment grants

If you know where to look and who to ask, you may be eligible grants to buy your first home. The city government, counties and different states usually offer downpayment and closing cost assistance to eligible individuals.

A lot of people actually do not realize that they are eligible for down payment assistance. So when you ask “How much house can I afford?” it pays to do some research about first time home buyer grants.

Grants For College Graduates

Some states and cities have special grants to assist college graduates in buying their first homes. Offering this type of grant makes a place  more attractive to educated workers.

So, it pays to find out if the city or town you plan to buy a house in offers this type of program.

Neighborhood LIFT Program By Wells Fargo

Wells Fargo provides down payment assistance or grants to home buyers in chosen communities across the country. To be eligible, you must earn less than 120% of the median income in the area. Apart from down payment assistance, they also provide financial education to home buyers.

Good Neighbor Next Door Program

Professionals in the education, medical, and public safety industries may be eligible for a 50% discount on the list price of different properties under this program. This can make people more confident to buy their first homes and know how much house can I afford. To qualify, they must work full time in an approved occupation and must agree to live in the house for at least three years. If you belong in the indicated fields of work, then this might be worth your time.

Fannie Mae And Freddie Mac

Thousands of lenders from private companies are out there. Apart from these, there are also other mortgage lending institutions that help assist and provide affordable housing for first time home buyers. These are the likes of Fannie Mae (FNMA – Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation). They are government-sponsored enterprises that provide stability and affordability to the mortgage market. They help ensure that the individuals or families that buy houses would have a stable supply of mortgage money.

Other Factors To Consider              

Age is a factor. You need to pay off the loan before retirement. Also, job security. Staying at a job for a long period can be a sign of stability to the lender. Your ability to pay monthly rent. This scores high personal points to the lender. You just have to prove that you can afford a substantial rent and is a good tenant.

Oh Wait, There’s More.

There are other financial considerations that you need to keep in mind when asking:  how much house can I afford? This pertains not only to how much monthly mortgage you can pay. There must also be enough money left for other housing-related expenses. These include interest rates, closing costs, insurance, and maintenance.

Other needs would be education, groceries, utilities, vacations, gas money plus other things a person or a family consider as necessities. Risk factors would also come into play. You must also take into consideration the size of your family and if any member requires special needs. You should also set aside emergency funds, in the event that a family member would need medical care.

So when thinking –  how much house can I afford –  what you want is a good balance of expense allocation. You don’t want to be in a situation wherein you barely have enough income to meet all your financial commitments. Be keen on searching for a housing loan and budget that truly works for you while also taking into account the other aspects of your financial life.                               

 

Top Agents in New York for 2019

Top Agents in New York for 2019

 

Based on 2018’s data, this is the list of the top real estate agents in New York for 2019.

There were a total of 20,752 residential properties sold in New York, with a total sales volume of $24.03 billion. Among all the properties sold in the Big Apple, 71% were apartments (co-ops, condos, and condops) and 29% were houses (single-family homes, townhouses, and multi-family homes). 

 

Highest property sales among the boroughs of New York registered in Manhattan. 7,803 properties were sold there, accounting for 38% of the total residential sales in 2018. Properties sold comprised mostly of apartments, with 4,569 co-ops, 3,002 condos, and 164 condops. 

 

Brooklyn comes in second, with 6,781 residential properties sold in the same year. There seems to be an overall preference for apartments in the Big Apple, as among the total properties sold in this borough, 2,369 were condos, 1,734 were co-ops, and 1 condop. 

 

Completing the top 3 in terms of highest residential sales is New York is Queens, with 4,607 properties sold. 1,682 of those properties were single-family homes, 569 were multi-family homes, and 117 were townhouses.   

 

Property Type 

 

Based on the real estate data for 2018, 8,439 of the total properties sold in New York were co-ops. This accounts for 41% of the total sales. Condos accounted for 30% of the total residential sales in New York, while condops registered 1% of total sales. 

 

When it comes to houses, there were a total of 3,455 single-family home sales. This accounts for 17% of the total property sales in New York. Multi-family homes, on the other hand, accounted for 9% of total sales. Townhouses had a 3% share of total sales in the city. 

 

Median Price 

 

In 2018, the median price for all properties sold in New York is $790K. 

 

The median price for houses is $850K. Townhouses had a median price of $1.23 million, while multi-family homes had a median selling price of $1.03 million. Single-family homes sold for a median price of $740K. 

 

Apartments had a median price of $750K. Condos in New York usually sold for a median price of $1 million, while condops sold at a median price of $818K. Co-ops, on the other hand, had a median price of $570K. 

 

Number of Days on the Market  

 

Residential properties in New York stayed on the market for an average of 97 days. 

 

Apartments stayed on the market for an average of 97 days. Co-ops sold fastest at 87 days compared to condops which had an average of 93 days on the market. Condos stayed longest on the market at an average of 112 days. 

 

Houses in the area stayed on the market for 96 days on average before being sold, which is just 1 day longer compared to apartments. Single-family homes sold at an average of 94 days. Next, are the townhouses at 96 days. Multi-family homes took an average of 98 days before being sold. 

 

Listing vs Selling Price 

 

New York properties usually sold at 2% below the list price. This shows among the apartments in the area. For houses, the selling price falls 3% lower than the listing price. 

 

Best Overall

 

In New York, Gabriel K. came out as the overall best agent, selling a total of 188 properties. He covered 1% of the overall residential property sales in New York City. All the properties he sold were houses (95 single-family homes, 90 multi-family houses, and 3 apartments). 

 

Gabriel’s average closing time on all the properties he sold was 79 days, which is shorter than the average closing time for houses in New York. His average selling price for houses was 1% lower than the list price. Gabriel sold the houses at a median price of $641K.

 

If you want to get in touch with Gabriel click here.

Best For Apartments

 

Igor L. stood out as the best agent for apartments in New York. He sold a total of 122 apartments, 98 condos and 24 co-ops. 

 

It took Igor an average of 132 days to close on the properties, which is longer compared to the average closing time for apartments in New York City. Igor sold the apartments at a median price of $565K. He sold the apartments at a price averaging 1% lower than the list price.

 

If you want to get in touch with Igor click here.

 

Best For Houses

 

Gabriel K. sold the most number of houses (single family homes, townhouses, and multi-family homes) in New York. He was able to close on 95 single-family homes at a median price of $540K and 3 townhouses which sold for a median price of $475K. 

 

If you want to get in touch with Gabriel click here.

Best For Multi-family

 

Still, Gabriel K. came out as the best in selling multi-family homes in the Big Apple. He sold 90 multi-family homes at a median price of $799K, His average closing time for this type of residential property is 74 days. Gabriel’s average selling price for this type of home is 1% lower than the list price. 

 

If you want to get in touch with Gabriel click here.

Fastest Selling

 

Real estate agent Andy O. sold 4 multi-family homes with the fastest being sold within 2 days. This counts as having the shortest closing date in New York. 

Andy sold the houses for a median price of  $4.45 million, which was the same as the listing price. 

 

If you want to get in touch with Andy click here.

Best Negotiator

 

The best negotiator in New York is Bertha C., who sold a single-family house for $870K. Bertha helped sell a property for 45% higher than the listing price. 

 

If you want to get in touch with Bertha click here.

 

Staten Island Top Agents

Top Agents in Staten Island NY for 2019

 

These are the top real estate agents in Staten Island NY for 2019 based on 2018 sales data with some information about the area.

 

In 2018 there were a total of 552 residential properties sold in Staten Island. These properties had a total sales volume of $338.41 million. Among the properties sold, 91% were houses (single-family homes, townhouses, and multi-family homes) and 9% were apartments (co-ops and condos).

 

  • The New Springville area registered the highest property sales in Staten Island. The 46 properties sold in the island’s geographical center accounted for 8% of the total residential sales in 2018. These properties comprised mostly of houses, with 27 single-family homes, 3 townhouses, 2 multi-family homes. 
  • Eltingville ranked second, with 35 residential properties sold in the same year. There was a preference for buying houses in the Staten Island neighborhood since of the 35 properties sold, 30 were single-family homes, 3 townhouses, and 1 multi-family home.
  • Great Kills completed the top 3 in areas with the highest residential sales with 28 properties sold. Of those properties, 21 were single-family homes, 6 were multi-family homes, and 1 was a townhouse.

Property Type 

  • In 2018,  380 of the total properties sold in Staten Island were single-family homes. This accounts for 69% of the total sales.
  • Townhouses accounted for 11% of the total residential sales in the neighborhood.
  • Multi-family homes also had the same share (11%) in terms of units sold.
  • As for apartments sold,
    • condo units topped the list with 42 unit sales. This accounts for 8% of the total property sales in Staten Island.
    • Co-ops, on the other hand, only made up 1% of the total sales with 7 units sold in 2018.

Median Price 

In 2018, the median price for all properties sold in Staten Island is $588K. 

 

Houses, in general, had a median price of $599K. Single-family homes had a median price of $600K, while townhouses had a median selling price of $450K. 

 

In 2018, multi-family homes sold in Staten Island had a slightly higher median price of $710K.  

 

Overall, apartment prices for units were lower compared to houses with a median price of $369K. The median price for condos and co-ops was $387K and $248K, respectively.  

Number of Days on the Market  

 

Properties in Staten Island stayed on the market for an average of 109 days. 

 

It took about 107 days to sell apartments in Staten Island. Condos sold faster at 106 days while co-ops sold in 108 days on average. 

 

In 2018, the average house for sale in Staten Island was on the market for 110 days three days longer compared to apartments. Townhouses sold the fastest at 98 days followed by single-family homes at 110 days. 

 

Multi-family houses were the hardest properties to sell with 118 days on the market.

Listing vs Selling Price 

 

Staten Island properties sold at 2% below the list price. This trend is consistent across all types of properties. 

Top Real Estate Agents

Best Overall

 

Overall, Michael D. came out as the best agent in Staten Island with a residential sale record of 40 properties. His sales made up 7% of the total property sales in the area. 

 

Michael sold  38 houses 30 single-family homes, 3 townhouses, and 5 multi-family houses. Of the two apartments he sold, one was a co-op and the other one was a condo.

 

Michael’s average closing time on all the properties he sold was 133 days longer than the average 109-day closing in Staten Island. His average selling price for apartments was 1% lower than the list price and the same is true for the houses he sold. 

 

If you want to get in touch with Michael click here.

Best For Apartments 

 

Both Sari K. and Renee M. stood out as the best agents for apartments in Staten Island. Both of them sold 4 apartments each. Sari K. sold 4 condos, while Renee M. sold 1 co-op and 3 condos. 

 

It took Sari an average of 97 days to close on the properties, which is shorter compared to the average closing time for apartments in the borough. The condos sold at a median price of $372K. The selling price of all the apartments was 3% lower than the list price.

 

If you want to get in touch with Sari click here.

 

Renee, on the other hand, completed the sale in 222 days much longer than the average closing time for apartments in Staten Island. She sold the apartments at a median price of $570K and at 4% lower than the list price.

 

If you want to get in touch with Renee click here.

Best For Houses

 

Michael D sold the most number of houses (single-family homes, multi-families, and townhouses) in Staten Island. Michael completed the sale of 38 homes including 30 single-family homes at a median price of $575K. Meanwhile, the three townhouses he sold had a median price of $450K. He also sold 5 multi-family homes. 

 

Michael’s average closing time on the houses was 124 days. His average selling price came out 1% lower than the listing price. 

 

If you want to get in touch with Michael click here.

Best for Multi-family 

 

Agents John P. and Michael D. sold the most number of multi-family houses in Staten Island. 

 

John P. sold 5 multi-family homes, with a median price of $663K. His average closing time for this type of residential property is 34 days. John’s average selling price is 1% lower than the list price. 

 

If you want to get in touch with John click here.

 

Michael was also able to close on 5 multi-family homes, which sold for a median price of $817K. His average closing time in this category was 222 days. Michael also sold the properties at 1% lower than the list price. 

 

If you want to get in touch with Michael click here.

Fastest Selling

 

Real estate agents Charles F. and Jeff M. sold 1 single-family house each and both properties stayed on the market for only 9 days. These sales have the shortest closing dates in Staten Island. 

 

Charles sold a house for $720K, which was 2% higher than the listing price. 

 

If you want to get in touch with Charles click here.

 

Jeff, on the other hand, sold a house for $435K, which was the same as the actual list price. 

 

If you want to get in touch with Jeff click here.

Best Negotiator

 

Allan Z. holds the record for the best negotiator in Staten Island. He sold a single-family home listed for $497K at $560K. Although it took him 121 days to close on the South Beach property, he sold it at 13% higher than the listing price. 

 

If you want to get in touch with Allan click here.

Next Steps

 

If you want to find a great real estate agent to buy or sell your home, we recommend you schedule a call to interview at least 3 real estate agents to see which one you prefer. You are looking for both a personal and a professional fit.

 

You can click on this link to schedule a call with any of the agents above and, you can use this interview checklist to help you find your perfect fit.

Our Methodology

 

To see the methodology that we follow to publish these reports, please visit this link: Our Methodology.

Closing on a House

Closing on a House: 10 Answers To The Most Common Questions About Your Closing Day

Finally, it’s the closing day. It’s the most exciting part of your home buying journey. You have everything ready to transfer the property to your name — we know it wasn’t easy. That dream home is one signature away from being yours. 

At this stage though, the keys are not with you yet. There are still a few important things you should take care of and finalize. So, it would be best to read up and get all the information you need. Knowing what to expect can make the concluding transaction run smoothly. 

 1. What Is Closing Day? 

The closing day is the last stage of the home buying process. Both the buyer and the seller have to agree on the closing day.

If you push through with the purchase on the closing day, you will become the new and legal owner of that dream home after you sign the required documents.  

2. When Does Closing Day Happen? 

The closing day is usually set 35 to 45 days after the seller accepts your offer or signs the purchase agreement. Your real estate agent should provide you with enough time to secure your mortgage and purchase the title insurance. 

Check your real estate purchase agreement contract if you’re not sure about the actual closing day

Take note that even if the buyer and the seller have agreed on a closing day, it’s possible to postpone the date — that is if the agreement you signed allows it and if the seller agrees. 

If the contract has a “time is of the essence” or TOC clause, it’s unlikely for the seller to give you an extension. After the designated date, both parties are free.

On the other hand, if your purchase agreement specifies the closing day as “on or about” a certain date, you will have more leeway. Buyers can usually extend for two to four weeks if there is an “on or about” clause.   

3. What Do I Need To Prepare On The Closing Day? 

It is good to get involved in every step of the home buying process. Buying a home is a huge investment and it’s crucial to know what’s going on.

With all the excitement, you might forget something. So, we suggest that you prepare a checklist. 

There are certain things that you need to prepare and bring on the closing day. But don’t worry. Usually, the loan officer and the title company representative will provide you with a checklist. 

What To Bring

Here are the items that you need to bring on closing day:

  • Identification cards.  Your passport or driver’s license will do. Closing agents have to verify your identity during closing.
  • Insurance policy. Mortgage lenders require property insurance for at least a year. The lender should have a copy of this policy but it never hurts to be prepared.
  • Closing Disclosure. The closing disclosure you received at least three days prior to closing may have changed. It’s better to bring this document so you can compare the one you received from the final closing disclosure.
  • Cashier’s check or certified check for the closing costs and the downpayment. Your closing agent should inform you how much money you need to bring during the closing day. If you don’t hear from the closing agent, give him or her a call. Ask what you need to pay for and the payee for the check. Sometimes you may have to issue more than one check. If you wire the funds, do it a few days ahead of the closing day. This way, there will be enough time for the funds to clear. 
  • Final sales and purchase contract. You may want to check some items so bringing this document can be helpful.
  • Personal check. In case there are last-minute changes in closing costs, it would be wise to bring your personal check.
  • Additional documents required by your lender and title company.

If you’re getting divorced you may need to submit additional requirements. There are also cases where you need to bring lien waivers.

The best thing to prepare all the paperwork is to get in touch with your agent and ask if there is anything else you need to bring.

4. How Long Does The Actual Closing Take?

Your closing agent should hand all the loan documents that the buyer needs to sign. The seller should also affix his or her signature on the deed. Sometimes, there are other documents that require the seller’s signature

If the buyer and seller agree on everything, and both parties understand the documents they need to sign closing can be completed in an hour. However, there are cases when the actual closing takes several hours.

This happens when the closing agent needs to explain each loan document to the seller, the buyer or to both.

The closing day may be the last leg in your home buying journey but don’t rush to the finish line.

If a document looks fishy, don’t sign it right away. Consult your lawyer or agent first.

Your closing agent should also answer your questions patiently. Remember that everything you sign is legal and enforceable. Even before the ink dries you will be the property owner. This means that you will take on all obligations related to the property.

5. What Are The Possible Reasons For Closing Delays? 

Closing delays happen. From June to August 2019, 27% of home buyers experienced delays. So, don’t be frustrated if you become part of that statistic. Most real estate transactions have to be pushed back because of these reasons.

Loan Issues 

Loan issues happen to be the leading cause of closing delays. In fact, 37% of home buyers experienced issues with obtaining financing according to the Realtors Confidence Index Survey for August 2019.

When you receive the mortgage commitment your loan is as good as approved. Even if your mortgage lender gives you the go signal for closing, some things may happen in the last minutes. 

Shortly before your closing day, your lender should review your loan application. If they see irregular transactions in your account, they may ask for more requirements before they fund the loan. Complying with these requirements take time and delay closing. 

Problems on Appraisal 

There are times when an appraisal comes out lower than what you were expecting. A home’s value is calculated based on comparable home sales within a neighborhood and nearby communities. If the appraiser comes back with a low appraisal then you may be paying more than what the property is worth.

Take note that your lender will not approve a loan amount which is more than the appraised value. 

Here are a few options that you can do when you are given a low appraisal: 

  • Haggle for a lower price. 
  • Hire a new appraiser to give you a second opinion. 
  • Don’t push through with the contract and let go of the home. Check the contingencies in your purchase agreement. If there’s an appraisal contingency, you won’t have issues with getting out of the contract.
  • Pay out-of-pocket cash. If you don’t want the sale to fall apart despite the risks, you can make up for the difference by paying cash. 

Aside from low appraisal, there are cases where the appraiser requires certain repairs. If the seller drags his or her feet, there may be delays in re-appraisal. There are also cases where the appraiser fails to perform the re-appraisal on time.

Problems Related To Uncompleted Repairs

Home inspections rarely come out perfect. There are usually issues – minor problems such as a cracked tile, failed window seals, and chipped paint won’t affect results that much. However, if there are major problems like roofing issues, you may have to request for repairs.

If the seller agreed to perform the necessary repairs, the work should be completed before the closing day. Closing delays happen when sellers forget to do these repairs or when they can’t complete it in time.

Your real estate agent usually checks up whether the seller completed the repairs prior to closing.

Problems With The Final Walkthrough 

You want to avoid nasty surprises when you move in. Before you close on a home, you want to check on the home’s condition and this is known as the final walkthrough.

The final walkthrough usually happens on the night before closing. But some buyers conduct the final walkthrough a few days before closing.

Closing delays happen when buyers spot issues such as:

  • Home damage after the seller moved out
  • Utilities were shut off. It may take a few days to turn utilities back on.
  • Seller removed included personal property
  • Included appliances and HVAC are not working
  • The seller failed to move out on the required date

6. What Can I Expect To Happen On Closing Day? 

On the closing day, the buyer needs to pay the remaining closing costs indicated in the closing disclosure. This happens before the signing begins. 

Once you’re done with that step, you can move on to signing documents. 

After all the signatures are in place, the title company registers the new deed in the buyer’s name.

7. How Many Documents Will I Sign?

A lot if you’re the buyer.

On the closing day, the seller needs to sign documents related to the property transfer. Meanwhile, the buyer has to deal with tons of paperwork.

If you’re the buyer, you better flex your fingers because you may have to sign 50 documents or so. The actual number of documents may vary depending on your lender and the requirements of your state.

While signing each document, read everything. Ask your attorney, if you have one, to help you go through everything. If you feel that a document includes certain details you did not agree to, bring up the issue with the appropriate party. You can also ask your real estate agent to assist you with unclear or technical details of the contract. 

During the closing day, buyers usually need to sign the following:

Documents Related To Your Mortgage

  • Closing disclosure. This contains the full details of your loan such as the interest rate, loan amount, annual percentage rate, closing costs, and other details.
  • Mortgage note or promissory note. This makes you liable for repaying your loan.  
  • Truth in lending statement
  • Deed of trust also known as your mortgage or security instrument. This allows the seller to foreclose the home if you can’t pay your loan. 

Documents Related To The Property Transfer

  • Title documents. This document records your right to the home.
  • Transfer tax declaration. Some states impose a transfer tax and for that, you have to sign this document.
  • Affidavits

8. What Is The Usual Venue For Closing Day Appointments? 

Closing usually happens at the escrow company, the title company, or the attorney’s office. Sometimes the escrow company takes care of all paper and the buyer and the seller may sign the papers separately. 

Escrow agents are usually the ones who take care of the paperwork on the closing day. 

9. Who Should Be There On Closing Day?

One thing that most home buyers are always curious about revolves around who exactly would be present during closing. The individuals required to be there when you close may vary from state to state. However, these people are usually present:

  • Buyer 
  • Buyer’s co-borrower
  • Seller. However, if the seller already signed the deed and transfer documents, then they don’t need to be present. 
  • Real estate agents for both the buyer and the seller
  • Escrow or closing agent 
  • Attorney. Some states require an attorney to be present during closing. Sometimes, the attorney may also act as the closing agent.
  • Title company representative 
  • Mortgage lender

10. When Can I Move In After Closing On A House? 

As a new homeowner, you’re probably excited about moving in. Naturally, you want to know when you can actually bring your stuff over to the house you just purchased.

The contract you signed usually includes the move-in date. So, even before the closing day, you will know when you can move in. However, there are cases when the move in date gets pushed back. Of course, both parties should agree on these changes.

Theoretically, you can move in after the closing meeting if your contract says so. In situations like this, the seller should have cleared the property prior to the closing day.

Sometimes, the seller may need more time to look for a new residence. So, the seller may ask you for more time to move out. If you are willing, you may allow the seller to say after closing and charge rent for staying in the property. This arrangement is called a rent-back agreement.

Bring Your “A” Game On Closing Day

Receiving the keys to your new property is the culmination of all your efforts. But before you become the proud owner of the house, you need to go through the monotonous closing day process.

No matter how excited you are to be the new homeowner, take your time. Don’t sign everything with haste —it’s perfectly acceptable to read everything carefully before you sign. 

The closing day marks the start of your journey as a new home owner. So, before you commit to buying a property, you want to make sure that you’re not getting the short end of the stick. 

Make an Offer On A House

4 Things That Can Happen After You Make An Offer On A House

The search is over and you have finally found the house that is perfect for you. With the help of your agent, you prepare an offer while keeping your fingers crossed. By now, you probably feel anxious and excited at the same time. To help you feel mentally prepared, here’s a list of the four most possible things that can happen after you send an offer:

    • You receive a counteroffer 
    • Your offer is rejected 
    • There is no response at all 
    • The seller accepts your offer

Scenario #1. Seller Makes A Counter Offer 

There are instances when the seller makes a counteroffer after you send your initial offer. This means that the seller is willing to consider your offer with some modifications.

When the seller counters your offer, the seller usually comes back to you with a price that is slightly higher than your initial offer. If the buyer is not satisfied with the counteroffer he or she can reply with a new offer. 

It usually takes several counteroffers between the buyer and seller before both parties find the best price and terms. If both parties can’t agree on the terms, one party usually stops communicating and walks away from the deal. 

Here are some of the most common questions buyers have about counteroffers. 

Why Did The Seller Counter My Offer? 

Receiving a counteroffer is one of the most common things that can happen after you send an offer. Sellers have different reasons for sending a counteroffer. But it’s usually because the seller wants certain amendments or changes in the offer.

The seller might want to adjust contingency timelines or change the closing date, for instance. Sometimes, sellers don’t want to pay certain fees so they add those fees to the selling price. This is why they want to sell the property for a higher price. In some cases, the seller requests a higher earnest money deposit

What Is The Average Number Of Counteroffers During Offer Negotiations?

There is actually no limit on the number of counteroffers between the buyer and seller. When a seller makes a counteroffer after you send an offer, you can counter that with another counteroffer.

Does it sound confusing?

Like what we mentioned earlier, this back and forth communication goes on until both parties are satisfied. Here’s a quick scenario of how the exchange could happen between you and the seller.

Let’s say a property was listed at $515,000. Then, a buyer submitted an offer for $500,000. Again, there are different things that can happen after you send an offer.  If you receive a counteroffer, the exchange can go like this: 

Seller counter offer 1:

Counters offer to $512,000. Refrigerator included without warranty. 

Buyer counter offer 1:

Counters sale price to $505,000. Refrigerator included without warranty. 

Seller counter offer 2:

Counters offer price to $509,900. Refrigerator excluded from sale. 

Buyer counter offer 2:

Counters sale price to $507,500. Refrigerator excluded from sale. 

After the buyer’s second counteroffer, the seller finally agrees to an offer price of $507,500 with the refrigerator excluded from sale. 

The buyer then accepts the last counter ending with a $507,500 sale price with some personal property remaining with the seller. 

What Do I Need To Know About Accepting Counteroffers? 

As a buyer, you can just accept a counteroffer after you send an offer if it still falls within your budget. What you need to know is that counteroffers usually include expiration dates. While you are deciding whether to go through with the counteroffer or not, the seller can still accept other offers. 

The seller might withdraw a counteroffer if he or she finds a buyer offering something that is more suitable to his or her needs. In this case, the seller then accepts the second buyer’s offer.  

When Is A Counter Offer Rejected? 

A seller can decide not to respond to an offer or counteroffer since most of these specify an expiration date. In other cases, after you send an offer or a counteroffer, the listing agent can send a rejection email stating that the seller will not respond since the deal is not acceptable. 

Scenario #2. The Offer Is Rejected

Though sellers are not required to formalize their rejection in writing, there are procedures on how to reject an offer. The bottom part of most purchase contracts, for instance, have an area for sellers to note rejection. Sellers can either do that or write “rejected” on the face of the contract together with his or her initials as well as the date. 

Among the many things that can happen after you send an offer includes outright rejection. When your offer is rejected, the best advice we can give you is just to move on. There are different things that can happen after you send an offer. It is important to hope for the best, but also prepare for any unfavorable response. No matter how great you think your offer was, it really boils down to the motivation of the seller. 

Below are some ways that can help you get accepted after you send an offer: 

  • Provide the Best Offer you can give 

There are times when the buyer doesn’t offer the maximum amount he or she can actually afford. I mean, it is good to leave some room for negotiations after you send an offer. But if you see that sellers are not responding favorably, then maybe you can cut to the chase.  You can offer something that will not make them think twice and would push them to accept your offer immediately. 

  • Believe that there is a Better Home out there for you

We know that buying a home can give you an emotional roller coaster ride. More so, if you are a first-time homebuyer. There are many benefits for a first-time homebuyer and that includes the experiences and lessons you learn in the process. 

After you send an offer and it is rejected, you might have trouble moving on, especially if you really liked a certain home. But just charge it to experience and try to use what you learned in the next offer you make. Once you finally close on a home, you’ll realize that it’s a good thing you didn’t end up with that first property. Believe that there is a great house out there that is meant for you.  

  • Accept that Sellers are Motivated by Different things 

Sellers have different personal situations as well as motivations for selling a home. Don’t get caught up on figuring out why a certain seller rejected your offer. Just focus on your next search. It won’t hurt if you try to ask the agents you’re working with for some background information on the sellers. This might help you with your next offer. 

Scenario #3. There Is No Response From The Seller 

Seenzoned?

Don’t worry! Not receiving any response from the seller is also one of the most common things that can happen after you send an offer.

It is not unethical or illegal if sellers choose to do nothing after you send an offer. This is also true for you, as a buyer, when you receive a counter offer. 

Take note that most offers have an expiration date. Say the seller accepts your offer but does so after the expiration date. Then, you would need to place a countersignature to reinstate the validity of the contract. Sometimes, sellers choose not to respond to an offer because they find the offer to be unreasonably low. 

Scenario #4. Your Offer Gets Accepted

If the seller accepts your offer, you’re closer to owning your dream home. Expect the next few weeks to be hectic since you would have a lot of work to do. Fortunately, you can use the help of your real estate agent during this period.

When your offer gets accepted, the status of the property listing could be any of the following.

Under Contract 

We say that a home is “under contract” when a buyer presented an offer and the seller accepted the said offer. However, the sale has not been finalized yet. Here are the most common reasons why the actual sale is yet to happen.

  • The home inspection has not been completed yet
  • Buyer is still trying to secure financing 
  • The buyer, the seller, or both parties have not fulfilled the conditions of the sale

When the buyer and seller complete proceeds with the actual sale, the home’s status should be sold.  

If a property that you really like happens to be under contract, do not lose hope. There are times when one party fails to meet some of the conditions or obligations within the given timeline. Hence, the sale may be called off. This is the reason why homes that are under contract continue to be marketed. Sellers may welcome backup offers when there’s a possibility that the contract will fall through. 

Contingent Sale 

A contingent sale means that the seller already accepted an offer although there are conditions that should be satisfied. The property with a Contingent Sale status continues to be on the active listing as there is still a possibility that the contract will fall through. This happens when the contingencies in the purchase agreement are not satisfied. 

Some sellers agree to show properties with a contingent sale status. In fact, there are sellers who are willing to accept a better offer.

On the brighter side, if everything goes smoothly, then the contingent deal gets upgraded to pending status. 

Sale Pending 

A property is marked as “pending” when the seller has accepted the offer with all contingencies adequately addressed or have been waived. Homes that are “pending” are excluded from active listings. The next step is the closing stage where all the legal work will be processed. Closing can happen in a few days or may take a few weeks. But at this stage, it’s almost a done deal. 

Is it possible to make an offer on a home with a Contingent Sale or a Sale Pending status?

You can actually make an offer on a home irrespective of its status. However, sending an offer to the seller who already accepted another offer will not be easy especially if the sale has a pending status.

That is why it is essential that you plan out a good strategy with your agent so you’ll get a favorable response after you send an offer.  

Of course, it’s always better to consult your real estate agent and seek his or her advice. Your agent can provide more insight on how to proceed. Moreover, real estate agents know how to handle complex deals.

What’s The Next Step After You Send An Offer And The Seller Accepts It?

The next steps may vary from state to state but they should not be too different. Your to-do list after receiving the seller’s positive response would most likely include the following. 

Move Forward With Your Financing 

We’re hoping that you already got a pre-qualification for a mortgage or pre-approval at this point. If not, you have to move quickly. 

After the seller accepts your offer, you should get in touch with your mortgage broker or lender to comply with the paperwork required to finalize your loan application. If you already have a pre-approval, the lender already checked your creditworthiness so the process would take less time. 

You should inform your lender and finalize your loan application. During the process, the lender will request a licensed appraiser to appraise the property. Your loan amount may depend on the appraised value of the property. 

Time For Some Home Inspection 

Most lenders do not require home inspections but it’s better to do one. Some buyers prefer to do the inspection before sending an offer. However, inspections are usually done after the seller accepts your offer and you sign the real estate purchase agreement. Doing an inspection is your right as a buyer and it’s advantageous to you since you’ll know the true state of the property. 

If there are issues with the property which will require repairs, you can ask the seller to do some repairs on the property. You can also renegotiate the offer or come up with a compromise to make up for the issue. 

Secure Your Homeowners Insurance 

Most lenders will require you to secure homeowners insurance prior to loan approval. You can look around for insurance policies that best suit your needs. Do not be afraid to negotiate and haggle for rates. There are many ways to reduce your insurance premium. For instance, you can save some money is by tying up your homeowner’s insurance with your auto insurance.

Focus On The Closing Date 

While your lender is busy evaluating your loan application, you might want to think about hiring a real estate attorney after you send an offer. They can help you with the closing documents and with all the legal matters. In certain states, you are actually required to have one.

Expect to deal with paperwork, tons of it, during the period leading to the closing day. Your real estate agent, the lender, your lawyer, and the title agent might ask for certain documents from time to time.

Aside from complying with all requirements promptly, you should also prepare your down payment. You have to be financially prepared and emotionally ready to let go of your down payment budget after you send an offer.

While waiting for your loan approval, be prudent with your spending. This is not the time to make big purchases which could alter your credit ratings. Once your mortgage lender gives you the green light and everything checks out on the title search, appraisal, and inspection, you can move towards closing. 

Unexpected Things That Can Happen After You Send An Offer And Sign The Purchase Agreement

You can never be in control of everything. Just when you’re ready to push through with everything, something surprising happens. Here are some questions you may have if you encounter difficulties after you get a property under contract.

Is It Possible To Back Out On An Offer?

Yes, but there could be consequences. There are certain situations when either the buyer or the seller decides to back out on an offer. It may be because of cold feet or there might be certain circumstances preventing them from pushing through with the home buying process.  

What Happens When A Buyer Wants To Withdraw An Offer Which Has Been Accepted?

There are several things that can happen after you send an offer.  There are times when buyers feel the need to withdraw an offer. Different states actually follow different rules when it comes to the withdrawal of offers. Certain states like California considers an offer binding to both parties after the seller signs everything or a buyer initials a counter offer. When a buyer withdraws, then legal actions might be taken by the seller. 

However, in states like New York or New Jersey, an offer may just be called a purchase proposal and is not considered binding. You are not bound to purchase the home even after a formal written offer has been accepted by the seller. 

Hence, in certain states, you are free to withdraw anytime should you change your mind after you send an offer. There will be no legal actions taken against you at this point. But if you back out after signing a real estate purchase agreement, which is a binding contract, there could be consequences.

What Happens When A Buyer Wants To Back Out On A Sales Contract Before Closing?

It is possible for a buyer to back out of a sales contract prior to closing. However, this comes with certain consequences. Buyers usually place an earnest money deposit, which amounts somewhere between 1 to 10% of the sale price. Backing out of the sale at this stage may mean forfeiting your earnest money deposit. This is subject to the terms and contingencies listed in the real estate purchase agreement. 

Due to these consequences, it is advisable to sign the purchase agreement after you fully consider all contingencies and accept the responsibilities of buying a house. 

What Are Some Of The Reasons Why A Seller Would Back Out After Accepting An Offer? 

There are instances when sellers back out after accepting your offer. These reasons may include the following.

Low Appraisal 

Most sellers back out of a sale when the property’s appraised value is too low. The price that the buyer and seller have agreed upon may not be the sale as the loan amount approved by a mortgage lender. 

A low appraisal means that the valuation of the property is lower than the offer price. If your lender appraisal is too low, the buyer has to make up for the difference. In some cases, buyers are not able or willing to do so, forcing the seller to pull out. 

Difficulty in Finding a House 

Most sellers will start looking for a new home after you send an offer.  But on certain occasions, they find it hard to find a property that meets their needs or is within their budget.

If the contract is contingent on the seller finding a new home, the seller can back out without a hitch. However, if such contingency has not been included then the seller may be liable for breach of contract. 

UnFORESEEN Life Events 

Changes in the seller’s life situation can also affect the home buying process. Some things that can happen after you send an offer may cause the deal to fall through. Loss of a job, changes in job opportunities or an unexpected family event may cause the seller to reconsider the sale of the property. 

Most buyers are understanding and sympathetic to the seller’s situation even if the offer has been accepted. Nonetheless, the buyer may request for reimbursement for certain expenses like appraisal fees and home inspection.  

What Happens When The Seller Wants To Back Out Before Closing?

Once a real estate purchase agreement has been signed, it becomes legally binding. If a seller breaks his or her end of the deal then the buyer may sue for damages due to breach of contract.

When sellers back out, the buyer gets a refund for the earnest money deposit. It would be best for the seller to hire an attorney to make sure that all bases are covered should he or she encounter emergencies or a sudden change of heart. 

Closing On A House 

The closing stage starts after you send an offer, and it has finally been accepted. We know it wasn’t easy to get to this point. At this stage, you are close to being a homeowner but the keys to that dream home are not yours for the taking. In a way, the transaction is still a contingent sale. 

The period between the offer acceptance and the closing date is the time to accomplish all the needed paperwork. This gives you and your agent adequate time to work with the lender and title agency in order to carry out the finances and title documentation.

The time after you send an offer and receive a positive reply would be eventful. There are even times when the closing date is pushed back for a few weeks to give your team enough time to complete all the arrangements. Sometimes, you have no choice but to wait because of the closing disclosure.

What About The Cost Of Closing? 

There are certain fees that you need to pay when you finalize the purchase of a home. And, you need to allot money for these closing costs. Closing costs may amount to 3 to 4% of the purchase price. So if the cost of the home is $400,000, then you might need to shell out something between $12,000 to $16,000 for closing costs. 

Closing costs often include the following expenditures: 

    • Home inspection 
    • Homeowners insurance
    • Appraisal fee
    • Attorney expenses
    • Credit report changes 
    • Title searches  

What Is The Usual Timeline When Closing On A House? 

The average waiting time after you send an offer is usually 41 days. You should exercise patience during the closing process. Most buyers encounter delays that could push back the closing date. Common delays are related to financing issues when buyers incur more debt along the processing period or when buyers are not honest with all their payment obligations. 

The key here is to be upfront with all your current finances and try to keep a good credit standing before you close the deal. 

Consider All The Things That Can Happen After You Send An Offer

There are so many things that can happen after you send an offer. It can go in the direction you are hoping for. It’s possible for everything to be smooth sailing from the time your offer gets accepted. Sometimes, things get a little more exciting – negotiations with the seller can go back and forth until you find the best deal. In some cases, buyers get rejected.

With all these possibilities, you should prepare yourself mentally after you send an offer. Whatever the outcome could be, remember that all your struggles will eventually lead to owning your dream home.

8 Essential Facts Regarding Real Estate Purchase Agreements

After the seller accepts your offer, it’s time to take care of more paperwork. At this point, you may also receive the real estate purchase agreement. 

Real estate agents are familiar with real purchase agreements. But it may also be useful to have a real estate attorney you trust to go over the contract. By consulting these professionals, you can feel more secure about the transaction. However, it still pays to do research on your own to know what the agreement covers. And, this post does exactly that!

We’ve got a list of 8 basic things to help you understand real estate purchase agreements better. 

1. What Is A Real Estate Purchase Agreement?

A real estate purchase agreement is basically a contract between a buyer and a seller. It outlines the terms of the sale of the property. It also includes the obligations and rights of both parties. 

Otherwise known as a home purchase contract, this written arrangement details the terms of buying the property. It also specified the agreed closing date. The buyer usually initiates the negotiation for purchasing the property with an initial offer. If the buyer and seller finally agree on the terms, the real estate purchase agreement enters the picture.

Tip: Some people use real estate sales contract or property sale agreement instead of real estate purchase agreements.

2. What Is Included In The Real Estate Purchase Agreement?

Real estate purchase agreements cater to the needs of both the buyer and the seller. Although terms can differ from contract to contract, all agreements contain these basic elements:  

Personal information of the Buyer and the Seller:

The agreement needs to include the full names and contact numbers of the parties involved.

Details of the Property:

Specific address of the property and the legal description, if needed. A licensed surveyor usually prepares this document. You can also request this information from your county’s recorder office.

Price offer:

This refers to the price you agree to offer for the property. You should include adjustments or deposits required. Most real estate purchase agreements include an earnest money deposit.

 

The earnest money deposit is the deposit made by the buyer to express his or her genuine interest in purchasing the property. In exchange for this deposit, the seller agrees to take the property off the market. A neutral third party should your earnest money deposit in escrow.

The earnest money deposit is usually deducted from the downpayment. If the buyer terminates the contract because of contingencies, this deposit may be refunded.  For instance, a problem occurs during the home inspection, and the buyer decides to let the property go because of serious issues. If the real estate purchase agreement has an inspection contingency, the funds held in escrow may be released to the buyer. 

Financing:

Our agreement should specify if the buyer plans to obtain financing to purchase the property. It should also state if the buyer will assume the seller’s current mortgage.

Warranties and representations:

This clause states that the seller holds a  clean title and has the right to sell it. This means that the title must not have any type of lien placed by creditors or other parties. There should also be no grey areas as to the legal ownership of the property. 

 

The seller is in no position to complete the real estate purchase agreement if he or she is not able to provide a clean title of the property. 

Title insurance:

This is a form of insurance covering loss of property value. It protects you in case of defects in title are discovered in the future.

Closing date:

Closing is considered as the final step in a real estate transaction. During closing, the buyer can take possession of the property. 

 

This is also the stage where the seller receives the payment for the property. The buyer also becomes the legal owner of the property. The negotiations finally come to an end and both parties sign and hand over the necessary documents.

Contingencies:

This refers to certain conditions that need to happen for the contract to push through. 

3. What Contingencies Can You Include In Your Real Estate Purchase Agreement?

As noted above, contingencies are circumstances that should occur for the actual sale to happen. These contingencies allow buyers to terminate the real estate purchase agreement without losing their earnest money deposit.

When something goes wrong in the process (e.g. mortgage loan applications don’t get approved), buyers can back out. Sellers, on the other hand, can entertain other offers if the buyer opts out of the agreement. Most real estate purchase agreements include these contingencies.

Home inspection contingency

A home inspection contingency gives buyers the right to hire a professional inspector to examine their prospective home. Usually, buyers can schedule the inspection after making the earnest money deposit.

A reliable inspection report should detect structural, material, or other home-related problems with the property.  The inspection should be completed prior to closing. This way, you can make sure that there are no serious defects in the property. 

If the inspection report finds defects or property damage, the buyer may request the seller to make the necessary repairs. The buyer can also use inspection results as leverage to negotiate a better price. With this contingency, the buyer may walk out of the deal if the seller is not willing to negotiate.  

Mortgage or Financing contingency

A mortgage or financing contingency gives buyers a deadline for securing a mortgage. There are cases where the buyer fails to get a loan approved after signing the real estate purchase agreement. When that happens, this contingency gives the buyer the right to back out without losing the earnest money deposit.

While the mortgage contingency protects buyers, it’s better to make the necessary arrangements ahead of time. Check if you qualify for a loan by getting pre-qualification for a mortgage. It would be even better if you have a pre-approval. This would save you and the seller a lot of time. Aside from that, knowing this can help you make a budget and determine how much house you can afford

Appraisal contingency

This contingency allows the buyer to back out if the sale price is higher than the property’s valuation. A licensed appraiser should provide an appraisal based on the fair market value of the property.

It’s advisable to retain this contingency to cover your bases. Most mortgage lenders will estimate the loanable value of a property based on their appraisal. If the appraised value is low, your loan may not cover the full amount you expected. Although you can pay the difference, it’s better to negotiate with the seller first. 

Sale of home contingency

Buyers who plan to use the sales proceeds of their home to buy a new one add the sale of home contingency. This contingency permits a buyer to back out if his or her home is not sold at a specific date.

4. Who Writes The Real Estate Purchase Agreement?

Usually, the seller’s attorney drafts the real estate purchase agreement or purchase contract. But there are instances where the buyer drafts the agreement. Sometimes, the escrow agent handling the closing process drafts the contract. 

The contract contains the important elements and terms required for closing. Hence, both the buyer and seller should understand the conditions in the real estate purchase agreement.  Attorney involvement would also be ideal to make sure that both parties understand what they are signing. 

You can check out these real estate purchase agreement templates to become more familiar with the contract.

5. Is It Advisable To Hire Someone To Prepare The Real Estate Purchase Agreement For Me? 

Most of the time, buyers only have to review purchase agreements. Unless you are an expert in drafting these contracts, it’s best to leave it to professionals.

Of course, you should still exert effort to understand the documents you have to sign. It would also be helpful to have someone familiar with the documentation and overall process to guide you. This is precisely where real estate agents come in. Your agent can enlighten you about the process and explain the details covered in the real estate purchase agreement. 

Moreover, real estate agents can recommend reliable inspectors and mortgage lenders. Negotiating with the seller’s agent will also be part of their job.

Real estate agents can assist you in drafting a real estate purchase agreement. However, in some states, you need a lawyer to draft the purchase agreement.  Even if it’s not mandatory in your state, seeking legal advice is highly recommended. After all, real estate attorneys are in the best position to answer your queries and concerns about clauses in the contract.

6. What Happens After Closing?

After closing, the seller is no longer the owner of the property. At this time, the buyer is the rightful owner of the property. The seller should surrender the keys, access codes, and controls to devices related to the property. 

Sometimes, however, the buyer and seller’s relationship continues after the closing date. 

Moving Out Period Agreement

After the closing date, the seller should have vacated the property with all of his or her assets or possessions. This also means that the house should be ready for the owner to move in. However, there are instances when the seller may not be able to move out on or before the closing date. If this happens, the seller can enter a post-closing possession agreement with the buyer.  

Post-Closing Possession Agreement

Aside from allowing the seller to stay longer, the buyer may also execute a post-closing possession agreement. This agreement is better known as a residential leaseback agreement or simply rent-back. Most sellers propose rent-back agreements before the closing date.

When a buyer rents back the property, the seller becomes a tenant for a specified period. This agreement requires rent payments. Depending on the agreement, the seller who is now a tenant may be responsible for property insurance, taxes, and damages that may arise while renting the property. 

7. What Are The Steps Involved Before You Sign A Real Estate Purchase Agreement?

After making an offer, it takes a while before you get to sign the purchase agreement. Here’s usually what happens from the time you make an offer on a house to the time you sign the agreement.

1. Make an offer.

2. Get the seller to accept your offer. It usually takes several counter-offers and negotiations to agree on a price and terms. At this point, you should receive the real estate purchase agreement from the seller.

3. Request your agent or lawyer to review the contract. There may be revisions in the contract to accommodate the needs of both parties. Your representatives should propose contingencies and other terms you want during the review process.

4. Check the contract. Even if professionals reviewed the contract, it’s still useful to go over it to make sure everything is there.

5. If everything checks out, sign the contract.

6. Make the earnest money deposit to a third party’s escrow account.

8. Can you terminate the real estate purchase agreement? 

Yes, you can terminate a real estate purchase agreement. If no issues arise, the transaction leads to the transfer of the property. However, there are several instances when a real estate purchase agreement can be terminated. 

Situations Where The Seller Can Terminate The Contract 

Sometimes, sellers change their mind about selling their home for several reasons.  For instance, their life circumstances may have changed. Undecided sellers usually include contingencies in the agreement which allows them to back out. But if the seller simply had a change of mind, the deal may not push through but the buyer claim for damages for breach of contract. 

Situations Where The Buyer Can Terminate The Contract 

Buyers can terminate the contract in the following instances: 

When contingencies are not satisfied

Most purchase agreements include several contingencies that allow buyers to terminate the contract. These grounds for backing out may include:

1. Serious problems with the property discovered after a home inspection and not disclosed by the seller did not disclose (inspection contingency)

2. Buyer’s inability to secure a mortgage (mortgage/financing contingency) 

3. The value of the property is lower than the sale price (appraisal contingency) 

When the condition of the property changes within the transaction period 

On the closing date, the condition of the property must be the same as when the offer was made. The buyer may withdraw and get the earnest money deposit back if any damage occurs to the property.  

A Real Estate Purchase Agreement Is Always A Must

When buying a home, make sure that your real estate purchase agreement covers everything. Before finalizing the sale, your goal as the buyer is to make sure that the property meets all your expectations. 

Your real estate purchase agreement should address your needs as well as the demands of the seller. Don’t forget to bring up any concern you have with earnest money deposits, contingencies, and deadlines. Equipped with your new knowledge and the assistance of your agent or lawyer, you should feel more at ease about proceeding to the next step in buying a home. 

mortgage brokers

How Mortgage Brokers Help You Finance Your Home

Most homebuyers worry about one thing – how to finance their first-time home purchase. This is where mortgage brokers and mortgage lenders come in.

Like financial advisors, mortgage lenders and brokers will help you assess if you can afford a residence of your own. However, these professionals focus more on your ability to pay back a loan, not your overall financial health.

To feel more confident about your home purchase, you’ll need the right partners. Before you start looking for a lender or mortgage broker to assist you, it pays to understand what these professionals do.    

Here’s a primer on mortgage lenders, mortgage brokers and how they can help you fund that first big investment. 

What are mortgage brokers?

Your mortgage loan may be the largest loan you might ever take, and this entails mortgage shopping. This is where mortgage brokers come in.

Mortgage brokers are the experts who can assist you in looking for a lender, shopping for the most affordable interest rates, and getting loan approval.

Mortgage brokers need to take a pre-licensure class and pass the SAFE Mortgage Loan Originator Test to get a license. Specific requirements vary per state, but mortgage brokers usually need to have at least a high school diploma. Every year, these professionals also need to comply with the continuing education requirements.

Brokers will assess the state of your finances and match you with a lender. These professionals have a network of lenders that they work with. They are also privy to different loan programs and specific lender requirements.

Your mortgage broker serves as a middleman between you and the lender. So, they will assist you in the entire loan processing stage.

They should also: 

  • Find loan programs with affordable payment schedules that would fit your budget
  • Suggest mortgage lenders and loan programs that you are eligible for
  • Recommend solutions to issues that may come up during the loan processing stage
  • Collect documents for pre-approval
  • Keep you updated with the status of your loan until it is settled

If there is a Mortgage Bankers Association, there is also a dedicated organization for mortgage brokers known as the National Association of Mortgage Brokers. NAMB is an organization that represents the interests of mortgage professionals and homebuyers. The association started in 1973 and is composed of members from different groups in the real estate finance industry, small business owners, account executives, and loan originators. NAMB encourages its members to follow a professional code of ethics in their dealings with clients and lenders.

How much do mortgage brokers make?

 

Mortgage brokers, like other sales professionals, earn a commission. Some brokers charge clients for the services they provide for a client. Other brokers receive a certain fee from the mortgage lender who financed their client’s home loan.  

 

Experienced brokers earn around $55,000 a year but professionals committed to the trade earn more.

What are mortgage lenders?

Mortgage lenders are financial companies such as banks, credit unions or cooperatives that provide financing for a real estate purchase. Some mortgage lenders focus on financing residential properties, others prioritize financing on commercial real estate loans.

The most common types of lenders you may encounter while shopping for residential loans include the following.

  • Veterans Affairs Lenders. VA lenders offer mortgage loans to veterans and active-duty members of the US Armed Forces eligible for VA Home Loans. Since the US Department of Veterans Affairs guarantees these loans, interest rates for VA loans are usually lower.  
  • Federal Housing Administration Lenders. Federal Housing Administration lenders is a collective term for financing companies offering housing loans backed by the FHA.
  • Private mortgage lenders.  A private mortgage lender is not your traditional mortgage lender. These lenders usually offer interest-only loans with terms ranging from 6 months to three years. Homeowners only need to pay the monthly interest on the loan but they have to pay the principal in full at the end of the loan term.
  • Reverse mortgage lenders. Some lenders offer a unique home equity loan known as the reverse mortgage to individuals who are 62 years old and above. In a reverse mortgage, you receive a lump sum or installment payments from your mortgage lender. You’ll only need to pay back this loan if you sell your home, move, or when you die- in which case, your family is now responsible for the loan. 

How do mortgage lenders operate?

Each mortgage lender should have a specific guideline in processing loan applications. However, most of these financing companies are part of an organization. Being part of an organization that fosters best practices among mortgage lenders and helps members stay up-to-date with relevant and vital information in the real estate finance industry.

Big names in the mortgage lending industry such as Chase, Barclays, and Bank of America, for instance, are part of the Mortgage Bankers Association. MBA is a national association that promotes fair and ethical lending practices. Being part of an organization is also a valuable networking resource for mortgage bankers.

Mortgage Lenders vs Mortgage Brokers

 

A mortgage lender could either be a bank or financing company that offers loan products. Mortgage brokers, on the other hand, are licensed professionals who can help you find a mortgage lender.

 

After you decide on a particular lender, a broker helps you with the application process. Brokers act as a middleman between you and the mortgage lender.

 

Brokers will assess your financial status to find loan products you are eligible for. Each mortgage lender will also set a criteria that you need to meet to be eligible for a loan.

How do mortgage lenders determine if I’m qualified for a loan?

 

A mortgage lender will assess whether you qualify for a loan based on your income, assets, employment, and credit history. You have to supply documents such as your payslip, tax returns, and bank statements to support your loan application.

 

Aside from income and assets, lenders also look at your Fair Isaac Corporation score or FICO score. Your FICO score which could range from 300 up to 850 is based on your credit report.

 

This score reflects your payment history, length of credit history, available credit, new credit and number of inquiries among other factors.

 

The three national credit bureaus, namely Experian, Equifax, and TransUnion, issue FICO scores along with your credit report. So, most people with a US credit history have three FICO scores.

 

Experian considers a FICO score of at least 670 as Good. As a general rule, borrowers with high FICO scores are eligible for lower rates and better loan terms.

 

Your FICO score along with your current employment and income sources help mortgage lenders assess your creditworthiness.

Which FICO score do mortgage Lenders use?

 

Since most people have three FICO scores, which one do mortgage lenders actually use?

 

First off, a mortgage lender will determine if your FICO score is usable. A usable FICO score is based on solid and sufficient information pertaining to a borrower’s credit history.

 

An underwriter which is employed by the mortgage lender will determine if a score is usable or not. If the FICO score is usable, mortgage lenders will use the following criteria to determine which score to use. 

  • If two scores are the same, mortgage lenders will use that FICO.
  • If all three scores are different, lenders use the middle score.

 

If you don’t have a usable FICO score, you may have difficulty in qualifying for a mortgage. You may have to ask someone with a good credit rating to be a guarantor. It’s also advisable to consult a mortgage broker to see if you have other options.

What are my options if I have a bad credit history?

 

Bad credit is a serious obstacle for anyone who plans to get a home loan. If your FICO score is between 500 and 579, you have poor rating while a FICO score lower than 500 indicates bad credit. However, current standards consider any score below 620 as unfavorable.

 

Mortgage lenders tend to charge higher interest rates for borrowers with unfavorable credit because they pose a higher risk of default.

 

Lenders can offer as little as 3.9% to borrowers with good credit ratings while individuals with bad credit can pay as much as 9.5% per year! However, this should not discourage you from applying for a home loan. 

 

Having a bad credit score makes it more challenging to get approved for a loan but it is not impossible. You have the option of fixing your credit score through a credit repair or debt management program.

 

One way of improving your credit score is by undergoing credit repair. If there are errors in your file, you can correct the wrong information in your credit report by submitting a dispute. Your credit report may be updated after 30 days. 

You can also try to reduce your amount of debt. It would also be good if you can pay off past due accounts. However, this might take a long time, possibly years! What you can do for now, to up your chances of getting that home loan are the following. 

Do your homework

Research lenders that offer reasonable interest rates to borrowers with bad credit. Having a low credit score may limit your options but that doesn’t mean that you have to grab the first one that gives you an offer. There might still be a better offer out there. You can also consult your mortgage broker to see if he or she works with a lender who is willing to work with you.  

Make a sizeable down payment

The probability of getting your mortgage loan approved will be higher if you make a bigger down payment. A lender may be willing to offer acceptable rates if you make a 15% to 20% down payment.

Bad Credit Mortgage Lenders

 

Borrowers with a bad credit history should not lose hope and think that they’ll never qualify for a home loan. There are still a lot of options out there even for those with bad credit. Here are a few private home loans and government-sponsored or insured home loans.

Rocket Mortgage

Rocket Mortgage provides loans for home purchase, refinancing and debt consolidation. This lender offers low down payment loans to borrowers with credit scores as low as 580. You can also avoid paying private mortgage insurance with the PMI advantage program.

Wells Fargo

Wells Fargo has a program that helps borrowers with low income and limited credit history. They give options for minimal out-of-pocket expenses and loans that do not require monthly mortgage insurance.

CitiMortgage

CitiMortgage offers low or no down payments and flexible credit guidelines to help low and moderate-income borrowers. They also offer refinance programs. Moreover, closing costs can be added to the loan.

FHA Home loans

FHA home loans refer to loans offered by an independent lender that is insured by the FHA. The lender faces reduced risk when they approve a housing loan application made by someone with a poor credit history. Borrowers with credit scores as low as 500 can qualify for this type of loan. Most FHA loans require a 3.5% to 5% down payment. But if a borrower’s credit score is between 500-579, he or she needs to put down a down payment of at least 10%.   

VA Home Loans

Active or retired members of the U.S. Military can qualify for this type of loan. This is coursed through the Department of Veteran Affairs (VA). This is also made through an independent lender, but insured by the VA. The minimum credit score requirement is typically 620. However, there are certain situations when someone with bad credit (minimum of 580) can qualify. Benefits include no down payment and exemptions from private mortgage insurance premiums and other fees.

USDA Loans or Rural Home Loans

This loan is designed for low-income homebuyers in rural areas. The U.S. Department of Agriculture (USDA) provides 90% guarantee to a qualified lender, reducing their loan risk. Thus, lenders don’t require any down payment from qualified borrowers. However, you can only apply for a USDA loan if you are financing your primary residence.

What fees do mortgage lenders charge?

Mortgage lenders earn through the interest they charge on a loan. If a borrower gets a $500,000 loan for 30 years at 5% annual interest, the mortgage lender earns around $25,000 on that loan in just one year.  

Aside from interest, lenders also charge fees better known as origination fees for processing your loan. Lender fees are a component of the total closing costs you pay when you get a loan.

Most lenders charge origination fees as a percentage (usually between 1.5 to 2%) of the total loan. So, if you borrowed $200K, and processing charges are 2%, total origination fees would be 4,000 ($200K multiplied by 2%).

Some lenders include administration fees, application fees or underwriting fees in the origination cost. When charged separately, these fees could range from $450 to $1,000.

Your lender may also charge you for the following:

  • Wire Transfer Fee. This fee covers expenses related to wiring funds to a settlement agent and is typically between $25 to $100.
  • Funding Fee. Government-backed mortgage programs like the Veterans Administration program charge a funding fee which could range from $695 to $1,295 on top of the normal mortgage lender fees.
  • MERS Fee. Some lenders charge a Mortgage Electronic Registration System (MERS) of about $13 to $25 to register the mortgage.

How can I find mortgage lenders near me?

Prior to diving in and buying a new home, you should look for the best mortgage lenders out there.  You should conduct your own research and consult people you can trust before you decide on a mortgage lender.

Start your search online if you have no idea where to start shopping for the best mortgage lenders and loan programs.

Don’t forget to compare rates, terms, customer service, availability of online applications, and loan tracking. It would be ideal to narrow down your search to 3 lenders before deciding. You may also want to search for lenders offering lower rates and incentives to first-time home buyers.

Quicken Loans

Quicken Loans is one of the biggest mortgage lenders in the US. It is also very popular since it operates nationwide. Quicken Loans offer very competitive rates and they make it easy for borrowers to apply for a mortgage online. With their online application, everything happens automatically when you connect your bank accounts. The quick and simple process makes it very attractive to borrowers.

SoFi – Social Finance

SoFi started out as a student loan refinancing company and has branched out to other financial areas including mortgage loans. The loan application process starts with a pre-qualification that takes around two minutes to finish. They don’t put too much weight on credit score and gives value to college degrees and your earning potential. What’s really good about SoFI is that you don’t have to pay an origination fee.

New American Funding

New American Funding offers mortgage loan products to borrowers with low credit scores or those who are self-employed. Unlike other online lenders, New American Funding does manual reviews, they don’t just approve or deny based on computer algorithms. This company considers other factors such as good savings and high income of borrowers. However, they require a minimum credit score of 580.

Citi Mortgage

If you’re planning to get an FHA or VA loan, CitiMortgage is a good choice since this company offers low down payment. loans to low-income earners. CitiMortgage is part of the Citigroup which includes one of the biggest retail banks in the country Citibank.

PennyMac

If you are seeking an FHA loan with a low-down payment, then PennyMac may be right for you. PennyMac is a direct lender with a focus on the online lending business. They offer a range of loans which include USDA, FHA, and VA. PennyMac also offers low down payment loans for first-time homebuyers.

What’s the best way to look for mortgage brokers near me?

Don’t hire the first mortgage broker you come across because you need one.

One way to look for a good mortgage broker is to ask friends or family members for referrals. It would be best if they actually worked with the mortgage broker.

Your real estate agent or financial advisor can also help you look for a reliable mortgage broker. Ask your agent or advisor for mortgage brokers they recommend.

When looking for a mortgage broker, it would be wise to talk to several brokers first to find someone who can help you with your financial needs.

Here are some questions you can ask when you interview mortgage brokers, to help you assess their qualifications. 

1. How many years have you been a mortgage broker?
2. Can you tell me about the loans you have helped get approved? How many are they?
3. What kind of service do you usually provide?
4. How can I communicate with you? How long do you usually respond?
5. How many lenders do you have in your panel?

Pick Your Mortgage Lenders and Brokers with Care

When you purchase a new home, you need to be financially ready. Taking small steps such as saving as much as you can, checking your credit score, and managing expenses and payments are important.

But when it’s time to look for home financing, you need to do sufficient research on available loan options!  Mortgage brokers are the most qualified professionals for this job.  

Making a conscious effort to find the right mortgage broker and mortgage lender helps you finance your new home without getting burdened with loan installments that don’t fit in your budget. 

Financial Advisor

What Does a Financial Advisor Do: 8 Essential Facts About Financial Advisors

What Does a Financial Advisor Do: 8 Essential Facts About Financial Advisors

Buying a home sometimes produces a roller coaster of emotions, from eagerness and excitement to uncertainty and apprehensions. You might be somewhere in between. Researching on the home buying process is a good first step. Next thing you need to do is to talk to a Financial Advisor so you’ll have someone who is qualified to answer all of your finance-related questions and give you confidence in the decision you are about to make. 

What Does A Financial Advisor Do?

Financial advisors help you understand your current financial situation. Once you know where you stand, you can make better, informed decisions in terms of your financial capabilities. Financial advisors can also help you set up financial goals and plans for the future, including the purchase of a new home. You can also ask them how much house can you afford and they’ll tell you based on your financial information. 

Financial advisors may include financial planners, brokers, or even accountants. However, financial advisors differ from these other professions due to the number of certifications, financial planning courses, and exams that they are required to take.

How To Become A Financial Advisor

A Financial advisor has, at the very least, a Bachelor’s Degree. The degree leans toward the business or finance programs. They are then mentored by other financial advisors from different firms. Financial advisors then have to undergo continuous education to keep on providing valuable financial advice to their clients. 

It is important that your Financial advisor holds certain certifications and licenses. This way, you can be sure that you really are talking to an expert and that they can help you achieve the financial freedom that you seek. 

When hiring a financial planner, you need to check if he or she is a Certified Financial Planner (CFP) or a Chartered Financial Consultant (ChFC). Financial advisors who help manage investments must hold a Series 65 securities license. License and certifications serve as proof that the advisor has completed the required education and experience needed in financial planning. Moreover, these titles show that they have passed an extremely thorough examination.

 

Types Of Financial Advisors

There are different types of financial advisors and the classification is somehow linked to how they are generally compensated: 

Personal financial advisor

A Personal financial advisor usually works for a firm. They assess a client’s financial situation and help them plan depending on their financial short or long term goals. These advisors often earn by commission or are fee-based advisors. 

These advisors are licensed to sell financial products such as mutual funds, stocks, bonds, etc and they are paid based on the specific financial product or service that they sell. This is why they are not truly objective and sometimes they may not have your best interest in mind.

They usually charge upfront fees for their services and earn a commission from the financial products that they sell.  

Fiduciary Financial Advisor

A fiduciary financial advisor is someone who puts the client’s best interests first. Legal requirements state that they should be very objective in all their dealings with their clients. They manage investments, make recommendations in portfolio, and sell products to clients, without regard for commissions and compensation. 

They are the fee-only advisors, who earn money only on the services that they provide to their clients. An advantage of hiring a fee-only advisor is that he or she doesn’t act like a salesman.

They get paid based on the advice and services rendered to clients. 

Moreover, potential conflicts of interest are also eliminated. Getting a fiduciary financial advisor is essential if you want sound, objective advice. This way, you can be sure that your money is in good hands!

 

Financial Advisor Salary

Most financial advisors who provide continuous service charge clients a 1% annual fee based on the assets that they manage. So if a client has $100K in investments, the financial advisor gets $1,000 each year from managing that investment. 

Others charge flat rates or hourly fees. There are those who charge around $1,500 to $2,500 if you need a full financial plan. For hourly fees, financial advisors usually charge $300 to $500 by the hour. 

 

How To Find A Financial Advisor

One of the best ways to find a good financial advisor is by word of mouth. Ask family members, friends, or your colleagues for recommendations. If you know people that are in a really good financial situation, then, by all means, inquire about how they manage their portfolio of investments and who they trust. 

You can try looking online for fee-only / fiduciary financial advisors. There are also some sites that provide tools for matching with financial advisors. Here they can help you find a really great professional in just a few clicks. 

What’s also important is for you to look at the fee structure of the financial advisor and their license and certifications. As previously mentioned, it would be best if your financial advisor is a Certified Financial Planner (CFP) or a Chartered Financial Consultant (ChFC).

Questions To Ask A Financial Advisor 

It can be difficult to decide who to hire. This is why here we give you a few questions that you can ask financial advisors to help you choose who can best address your needs: 

1. What are your qualifications? 

It is important that the advisor holds certifications and licenses 

2. Are you a fiduciary? 

You need to know upfront if the advisor works in your best interest

3. How do you earn your income? 

Keep it simple and avoid conflicts of interest. Go with a fee-only advisor. 

4. What are the other costs when it comes to investments?

Apart from the advisor’s fee, it would be best to know of other fees involved when it comes to placing certain investments.

5. How often would we meet and how can I communicate with you?

You need to know how much access you have with your advisor, should you need advice on financial matters. It is also important to know if he/she can take phone calls or answer emails. 

6. How much do I get after fees and taxes?

It would be good if your advisor also has your tax bill in mind when managing your assets and finances. 

7. What are your typical clients like? 

It can work to your advantage if the advisor handles clients with similar background, needs, and financial goals as yours. 

8. How do you allocate assets? 

Check if the advisor places value on a diversified portfolio, and also if he/she recommends real estate investments

9. Do you hire an independent brokerage to hold investments?

This is important for checks and balances to reduce mistakes and prevent unethical behavior. 

10. What benchmarks do you use in investing?

When you do your own research, it would be good to know if your financial advisor is benchmarking investments correctly to maximize gains. 

Financial Advisor Benefits

Financial advisors have expertise in financial planning and investment management. They can help you optimize your money, maximize the value of your assets, and just plainly get the most out of your savings. 

Financial advisors provide that objective view and perspective. They can take emotions out of the decision-making process and streamline your financial goals. They help you make better financial decisions. 

Financial advisors help you become more practical with your finances and also expenses. Will buying a house be more financially practical vs. renting? How do I know how much house can I afford? These are just a few questions that your financial advisor can answer for you.

What Is A Real Estate Financial Advisor?

We earlier mentioned about financial advisors managing assets such as stocks, bonds, currencies, etc. These are what you call paper investments. Real estate is also an investment, and what is called a hard investment. There are people who say that real estate is the ultimate investment, considered even better than stocks, bonds or gold. 

If you want to diversify your investment portfolio, you should include real estate. You can seek the advice of Real Estate financial advisors since they are the ones who are most familiar with the financial side as well as the ins and outs of investing in real estate. 

Since financial resources are finite, you need to think of a way to keep the cash flowing. Real estate financial advisors would tell you why one of the best investments you can ever make is in real estate.  

  • When you buy a house, you can later rent it out. 
  • Appreciation of 4%
  • Tax benefits / tax shelter

How To Financially Plan To Buy A House

As first-time home buyers, you need to make sure that you are financially ready to purchase that new house. We know that there are a lot of things on your mind regarding the home-buying process. Rest assured that even if this is one of the most important investments you might make, buying a house is really financially manageable. You can always seek the help of a fee-only / fiduciary financial advisor, but here are a few things that you can do on your own for starters: 

  • Save, save, save! – Putting money aside every payday does wonders to your financial capabilities and buying power. When you have more money saved up, you can make bigger down payments. This means that you can also save on additional insurance costs.  
  • Be aware of your credit score or FICO score – Lenders will always refer to this to determine whether or not to grant you a mortgage. Knowing your credit score gives you the advantage of knowing if you’re already at the qualified level to buy a house or if you still need to improve on it.
  • Pay your bills on time – Your credit history is very important. Make sure to pay your bills when they are due. If you dream of buying that new home, payments on utilities, your credit cards, car loan, and even student loan payments must be prioritized over wanting new shoes or luxury bags.
  • Do you own research – It would be best if you would have your own realistic budget when planning to buy a house. You also need to take into consideration other costs that are attached to buying a home. These include homeowners insurance, property taxes, service fees, maintenance and repair, and utilities. Online information can provide relevant and useful advice on how to buy a property.

Take The Plunge And Invest In Real Estate

When planning to purchase a home or invest in real estate property, one way to help you make sound and practical decisions by seeking the help of a financial advisor. You know you have money saved up, the hesitation may be brought about by lack of knowledge on financial opportunities or unfamiliarity with the real estate industry. 

Apprehensions may come from not knowing that you can already afford to buy a house. Seeking the help of a financial advisor will make you realize how much house you can afford and what your options are to achieving your goal … and eventually benefiting from it!

Making that home purchase is really not as difficult as you think. You’ve made the first steps and all you have to do is to follow through on the process.  Seeking the help of a fee-only, fiduciary, Real Estate Financial Advisor makes the process even easier. The doubts and apprehensions you might have had will be assured by sound, practical, and objective financial advice. All you need to do is to take action on your plans in order to achieve that dream home. 

how to interview a realtor when buying a home, questions to ask realtor

Questions to Ask A Realtor 10 Tips on How to Interview a Realtor When Buying a Home

How to interview a realtor when buying a home

We know that buying a new home takes time. It probably took years of planning before you finally decide that this is the right time!

Here’s the thing if it’s your first time to buy a house – you will have a lot of questions on your mind. Do I already have enough money? What should I do first? Is there someone I can talk to who will answer all my questions?

Actually, yes!

A real estate agent, more specifically, a buyers agent is the perfect person who can answer all your inquiries about buying a house. But, prior to hiring an agent to represent you, you have to find several candidates and find the one with whom you are most compatible with. 

This brings most potential home buyers to ask another question – Do I need to interview a real estate agent?

And the answer to the last question is a resounding YES! To find the agent with the right attitude and expertise to meet your needs, you need to conduct an interview. Use this opportunity to ask relevant questions.

Agent interviews usually take place in an office or over the phone. Here are a few guide questions that could help you if you have no idea how to interview a realtor when buying a home.

Pro Tip: If you are thinking about working with a relative or friend, make sure you interview them too and hold them to the same standards as the other agents because that friend or family member may not be the best agent for you. You can see more on this topic here

1. How much is your fee and do I need to sign a contract? 

When it comes to the fees, you, as the buyer, should understand not only how to interview a realtor when buying a home but also: 

a. Who is going to pay for your realtor’s fees and what are those fees? read more below

b. Am I going to receive part of your agent’s commission back at closing? read more below

c. What contracts do you need to sign and what do they mean? read more below

a. Who is going to pay for your realtor’s fees and what are those fees?

Almost always sellers pay the totality of the real estate commission. This happens at the end of the process, on the closing day or the day when property ownership transfer from the seller to the buyer. 

The real estate commission is usually 6% of the total purchase price. The seller’s agent gets half of this and the buyer’s agent receives the other half. And sellers typically pay the commission but some agents want you to pay fees upfront, so you should clarify this point.

b. Are you going to receive part of your agent’s commission back at closing?

Most agents are solely paid by commission. But more and more often, agents are offering to give home buyers part of their commission. This is called a commission rebate or refund and it can help you save money on your home purchase, which is really great. You can find other ways to save money on your home purchase following this link.

This practice is totally legal in 40 states and you don’t want to miss out on this offer! It could save your many thousands of dollars that you can use to pay your furniture, contractors, etc.

Don’t be embarrassed to ask if your agent gives commission rebates. Some professionals tell you outright that they offer a rebate program. Even if your agent doesn’t advertise about it, it never hurts to negotiate a commission rebate.

Contact us to get a list of the agents in your area that can offer you a commission refund.

c. What contracts do you need to sign and what do they mean?

Most first time home buyers are not aware that there are contracts between buyers and buyers agents.

Most agents request home buyers to sign a buyer’s agency agreement. Also known as buyer representation agreements, prospective buyers sign this contract to authorize a licensed brokerage firm, and usually a specific real estate agent at that firm, to represent the buyer. This agreement also:

  • informs you of the agent’s duties and responsibilities and
  • confirms the buyer’s commitment to the agent
  • assures the agent that he or she will be compensated if a sale occurs

The terms of this agreement are completely negotiable. Ask the agent to go through the agreement with you so you can ask questions before signing the contract.  

2. How long have you been in the real estate business?

Length of experience counts a lot when it comes to hiring an agent. The longer you have been working as an agent, the more proficient you become in the process. This is also true for buyers agents. 

Agents who closed more transactions while helping clients buy properties will be better equipped to handle different scenarios.  And this will be beneficial for you. You can start the conversation casually by asking the agent how long he or she has been in this line of work. You may also ask how many homes the agent has sold in the previous year.

When interviewing a realtor, ask if real estate work is his or her full-time or part-time job. The whole process of buying a home can be time-consuming. If you and your agent are both busy with work, family and other things, it may be difficult to find a schedule that is convenient for both parties. 

If your buyer’s agent is a part-timer, it may be harder for your agent to dedicate time to you. He or she may not have the necessary availability to accompany you to meetings or open houses because of another job.

Word of caution: Do not interview two agents from the same real estate brokerage because they work for the same company. It is best to try and talk to agents who work for different real estate companies. 

3. Can I ask for some references?

Sometimes, it’s not enough to learn how to interview a realtor when buying a home. You also have to ask for references. 

Confident real estate agents should be more than willing to provide references you can talk to. Even if you’re tempted to slack off after you receive a bunch of names and contact details, don’t! It’s better to set up a call with those people and listen to their feedback about a certain agent.

These references can help you have a better idea of how the agent helped clients find their dream home. It will well help you assess how familiar the agent is of a certain area. 

Buying a home may be the biggest purchase of your life and you want to make sure you are working with the best realtor there is!

4. How many clients are you servicing right now? 

As part of the interview, try to figure out how many clients is the agent is actively working with and how many are buyer against sellers. This is another way to tell how good an agent is at what they do. More clients like to work with agents with a strong sales history. The real estate industry is very active. So, if your agent is working exclusively on your case, dig deeper into finding out why.

Don’t forget to ask where his or her clients come from. If most of his clients are referrals from previous clients, you can rest assured that he is a first-class agent. If on the contrary most of his clients come from online marketing, and he has few or none referrals, you should be concerned.

5. Before looking at homes, do you first require a client to get a pre-qualification letter from a lender?  

Answers to this question may vary depending on the real estate agent. But in most cases, buyers agents would say – Yes! If you are going to finance your property you need a pre-qualification letter. This is important because: 

  1. It shows the agent that you are serious about buying a property
  2. It shows the agent and the seller that a lender is willing to finance your purchase
  3. You will need it when sending an offer on a property.

To get a pre-qualification letter, you have to talk to a lender and provide him with information about your financial situation. To find a mortgage lender, you can:

  • Ask your friends and family for recommendations (recommended)
  • Ask your real estate agent
  • Find lenders on the internet who are willing to give you a pre-qualification letter

It is important to know that:

  • you are NOT committing to use the lender who issued the pre-qualification letter for your final mortgage and
  • the lender shouldn’t need your social security number to pull your credit score. If your lender asks for one, make it clear that you only want a pre-qualification letter (not a pre-approval letter) because this first enquiry could have a negative impact on your credit score which will end up in you having to pay more for your mortgage. The loan officer, at this point,  doesn’t need your social security number so, please don’t give. However, if you are requesting for a pre-approval letter, it’s a different story and lenders have to pull your credit records for verification. 

6. Can you recommend mortgage lenders and other trustworthy professionals? 

The financial aspect of buying a home is always important. You can start reading this article: how much house you can afford to  know if you are ready to purchase your new home. Some real estate agents can help you with this process but they can also do something even better – recommend other professionals to help you in your home buying journey. So, don’t forget to ask if your agent can recommend a real estate attorney. You may ask the agent to refer an inspector but it would be better to avoid an independent inspector to avoid any conflict of interests. 

7. How familiar are you with my target location? 

This part is really important and this is one of the most important questions when you, as the buyer, interview a realtor when buying a home. You need to work with an agent who knows your target location. It’s better to hire someone with a solid knowledge of property values and real estate trends in a certain area. 

The agent should be able to give you an overview of the real estate market without making you feel lost in the technical terminology.  It would also be great if the agent has lived in your target location or at least closed deals for clients in the area for several years. 

Agents should be local market experts. It is good if they can provide more property data, including sale price, history, community information, and home sales comparables. It is also good to know if they have access to a lot of information – down to the neighborhood. The more information you have at your fingertips, the more confident you’ll feel about your realtor and the more confident you’ll be that it’s the right home for you. 

8. How do you assist buyers in closing the deal? 

There are a lot of moving parts when you close on your home. There’s actually a long list of things that needs to be done. 

If you’re buying a co-op, a good agent will help his or her client to go through the process and prepare the board package, which is a very sensitive and time-consuming process. When you’re buying a home, you also need an agent who can help with the purchase application and in processing required documents to close the deal. 

9. How can I communicate with you?

When interviewing a realtor, it is also important to ask how you can contact your agent on a regular basis. If you like a particular agent, he or she must provide the best means for constant communication. Buying a home entails back and forth consultations sometimes every single day.    

You can ask the realtor whether he or she is available for calls and at what specific times. You can also ask for an email address or instant messaging contact details. Don’t forget to inquire about his or her average response time and if they work during the weekends.

Prompt communication is crucial in closing a real estate deal and an agent must relay information quickly so that closing moves along at the expected pace. This way you can get things done faster. Sticking to an agreed timeline would also benefit all parties involved.  

10. Can you explain the whole buying process in detail?

As a buyer, you need to understand what goes on from the beginning until the end of the home buying process. Asking this question helps you assess how proficient the agent is on the process. To a buyer who is not very familiar with the complexity of buying a home, knowing how the process works where you live helps you manage your expectations.

A sincere and helpful realtor will let you know other important but otherwise not so obvious aspects of the home buying process. That realtor will also volunteer certain information that he or she thinks will help you in terms of your finances and other details that you need to watch out for when buying a home. This might be a good question to ask when interviewing realtors.  

You interview Realtors. They interview you too. 

Realtors who are serious with their work are selective of clients too. You should also be ready to answer a few questions pertaining to your budget, timeline, and property requirements. It would be good if you can set a time frame and realistic goals in finding the kind of home you want. Never be afraid to give your feedback as this is also healthy in a buyer-agent relationship. 

We’re positive that you’ll find an honest and upfront realtor to represent you. The kind who is easy to call and communicate with, dedicated, and knowledgeable about the entire process. You just need to know how to interview a realtor when buying a home and ask the right questions. There might still be a few challenges along the way. Having the right kind of realtor can be the key to help you achieve a relaxed first-time home buying experience.

open houses

5 Important Things to Consider When Going to Open Houses

When searching for a new house, going to open houses is an experience that is both fun and enlightening.

There is no better way for first time home buyers to immerse themselves in the home-buying journey than going to open houses. Whether you are eager on making that purchase, or just plainly starting out, exploring different homes in your target location is an interesting and important step in shortlisting potential homes to bid for and purchase.

Admit it, we all get curious and a little bit excited in checking out different houses. This is actually the most engaging and fun part of searching for a new home. Not only that but going to open houses is also a learning experience for home buyers like you, to know more about:

  • Houses that are for sale and where to find that dream home
  • Important things to watch out for when choosing a house
  • The overall community or neighborhood that you are buying into

1. Knowing Your Options

As first time home buyers, you may not feel 100% prepared and maybe a little reluctant in going to open houses. We understand how you feel since as potential new buyers, you’re still not familiar with what goes on in the process and you don’t know what to expect. You might also be wondering what should be done in open houses and how you should behave. Others might be afraid of being pressured into buying or making hurried decisions.

Relax. Don’t worry. We’ll lay down some details to help remove any doubts or hesitations that you might have in going to open houses.

Do your own research

Once you decide that you want to purchase a new home, how do you then find out what’s out there and where these open houses are? It would be good to do some research first on your own. There are various ways of doing so.

Real estate listing websites

You can check out websites such as zillow.com for listings on open houses. You just need to indicate the location (address, neighborhood, or ZIP code) and your requirements, and several options will be provided for you. You can also narrow down your search to zoom in on your specific area of interest.

Newspapers (broadsheet ads or online publications)

Newspapers such as The New York Times or its online publication contains open house advertising which you can easily browse through. You can check out open house schedules on the present day or the coming weekend, whichever is more convenient for you. 

Word of mouth

Ask around. Ask friends if they know of any properties for sale. Check out social media platforms and search for listings on those hosting open houses. 

Drive around your desired neighborhood

Sometimes, going on a road trip and checking out different houses and designs can be a nice past time. Interestingly enough, you might just get lucky, and stumble upon an open house along the way.  

Consult Real Estate Professionals

As a first time home buyer, agents can help you with the ins and outs of the home buying process and notify you about properties that are for sale. They can provide you with a detailed list of bank-owned properties, newly built houses, and resale houses within your area of choice They will gladly inform you of open house schedules which you can check out for yourself or with them. And they can set up a private viewing so that you can take all the time you need in exploring a potential home.

Moreover, seeking the help of a friendly buyer’s agent gives you the advantage of learning about the benefits for first time home buyers. The partnership will also give you the upper hand on some relevant information regarding a property that a seller’s agent won’t readily divulge, such as:

  • Are there any offers already made on the property?
  • How competitive is the pricing of this home?
  • What are the prices of other homes that are sold in the area recently?

2. Explore and see what’s out there

Going to open houses is your hands-on experience in the search for a new home.  Prior to checking out several properties, it is always a good idea to list down your must-haves or if you have a partner or spouse, discuss your needs and wants. Also, keep in mind your budget and know how much house you can afford. Balance your expectations vs what’s in the market for your budget.

Get a feel of the type of homes that are up for sale. Do some trend spotting when it comes to newly built or newly renovated houses. See the latest designs and maybe you’ll get inspired in terms of your desired home arrangements. You can also try to ask the seller for contact details of their designer or contractor if you’re really interested.  

Going to open houses also gives you the opportunity to check out parts of the home which works and doesn’t work for you and your needs. Seeing fixer-upper properties first hand can give you an idea or a ballpark figure on renovation costs. It is also much better to see a house for yourself since certain flaws can be edited when posted online.    

The fun is in the exploration. Try to soak it in and enjoy the experience of going to open houses. Take note of the things you like and those that inspire you. The seller and the agents expect you to look around. Don’t be shy to ask questions to help you decide on whether it is the right home for you.

3. What to expect and what is expected from you

When you go to an open house, keep in mind that it is another family’s home that has been opened up for others to see. There are certain open house etiquette that guests need to observe. These are just simple reminders and things we know that you already practice in your daily lives.

Sign-in and introduce yourself

When you go to open houses, the seller’s agent usually has a sign-in sheet where you enter personal details to help them track visitors and potential customers. Other agents make use of an open house app. This is the information that they will most likely ask you:

  1. Your name
  2. Your contact number
  3. Your e-mail address
  4. If you have an agent and if so, his or her name

The reason why seller’s agents ask if you already have an agent is that open houses are a great place to find home buying clients for them. If you already have an agent, you should enter his/her name and contact information so they can course questions and follow-ups through your agent. What’s more, if you do not enter your agent’s details, they may not get paid if you buy that home.

Adults only, please  

When possible, leave the kids or your pets behind when you go to open houses. This way, you’ll be able to appreciate the activity and give your full attention to the house details. If your spouse or partner can’t be with you and you want them to see the house you like, ask permission from the seller’s agent if you can take pictures to share with your partner or if you can schedule a private showing later on. 

Be mindful of the neighbors. Soon, they might be your neighbors too

Don’t block driveways. Be friendly and respectful. Avoid being nosy with the neighbor’s property. It’s not their house that is up for sale.

Follow the rules that the seller’s agent might mention prior to the house tour

Always give a good impression. Though you are free to roam around, be mindful of limitations and of personal space. Avoid overcrowding certain areas with other prospective buyers.

Feel free to look at the property

Walk into the rooms. Open the closets. Check sinks. Take a seat at the living room (when permitted). Check out the backyard, and stay a while if you are truly interested.

Be tactful in mentioning problem areas to the seller’s agent

No house is perfect. When you go to open houses, you’ll see certain repairs needed here or there. But it is best to discuss certain concerns privately with your partner or with your agent. If there are damages, you can take this into account when sending an offer with your price.

4. Important details to watch out for 

When you go to open houses, there are certain things that you might want to ask the seller’s agent. But try to keep it casual. Reserve the more pertinent questions for your own agent and they will gladly get all the information for you. It is important to remember that though the listing agent may answer most of your questions, he or she has the seller’s best interest in mind.  

There are certain things though that you can ask the seller’s agent straight up so you will know a little bit more about the property and provide you with details to help you decide whether to bid or not.

Why are the owners selling the house?  

It might be because of a new job opportunity or a change in the family lifestyle. You can also ask when the seller is planning to move. If it’s a rush sale then you might get the chance to bid at a lower cost.

Sometimes the seller agent may not be able to give you all the information to protect his clients’ confidentiality. For example, if the sellers are getting a divorce and this is why they are selling, the agent may not want you to know as this means clients could potentially accept a lower price to move faster in the process, and if you know this information, you may offer that lower price first.

When is the seller looking to close?

When you see a house and want to buy it, you can strengthen your offer with a competitive settlement date. In most markets, the standard closing is 60-90 days. Certain sellers might need more time if they’re still in the process of finding or purchasing their next home.

How long has the property been on the market?

You can actually get this information online but the seller’s agent can provide you with more information why this is so. When the house has been very long in the market, it may be because there are problems with the property. Perhaps there’s a tenant who doesn’t want to move out, or the price is too high. Just be cautious when the property has been in the market for too long.

Any issues, repairs or renovations?

It is important to check home features like the roof, electrical wiring, as well as the piping. If you’re looking at a relatively old property and no recent updates have been done, then this might set you up for some costly upgrades or renovations.

If you are very interested in the property, you can place an offer that is contingent on a property inspection, so you don’t commit to buying the property until you know exactly its condition. This is really common and is a very good practice!

Is the seller flexible on the price?

There is no harm in asking as some sellers give their agents the authority to make price negotiations. If the price dropped, then the agent can also tell you the reasons why.

How many offers have been made?

If there are already multiple offers, then the property might sell fast. But do not forget to stay within your budget. You don’t want to get into a bidding competition with a cost that’s way above your comfort zone.

Side note: Try to be memorable. Make an effort and a good impression so the agent will remember you. This might give you an advantage when you bid for the house that you really like.

5. What kind of neighborhood are you buying into?

The advantage of going to open houses is that you get a feel of the neighborhood  – the kind of neighbors, establishments, and schools that are in the area of the property you would like to check out. Observe the community and try to talk to the people there. This is one of the best ways you’ll get first-hand information. Better to know about certain details early on rather than finding things out the hard way. You wouldn’t want to move in a community with a rising crime rate or schools with low ratings, now would you?

What are the neighbors like?

You need to take into account the type of people you’ll be interacting with on a daily basis. It is important that you live in a community that you feel comfortable in.

What are the schools like?

Schools have always been a major consideration for families moving into a new home. You can check online for local school district ratings. However, it is best to ask around how the people there feel about the local schools. The quality of the school district would also have a huge impact on the resale value of your future home.

Are there establishments close by that fit my needs? 

It’s not just the property you’ll eventually be buying, it’s a lifestyle. When going to open houses, it is also a good idea to go to the commercial areas and check out the local shops, groceries, and eating places. Hospitals and police stations are other important service facilities that should be accessible.

Ready or not, going to open houses is always a good idea

Going to open houses is a good learning experience, not to mention fun too. If it’s your first time, there is no need to get intimidated. Think that it’s also the first time for other people. And don’t worry about agents being too pushy. The majority of agents know when to give you space and let you explore a property at your own pace. An open house is always a good starting point and it gives you the opportunity to unfold certain questions you might have as a first time home buyer. So get out there and explore!

SONYMA

5 Facts About SONYMA The State Of New York Mortgage Agency

State of New York Mortgage Agency (SONYMA)

How First Time Home Buyers can get closer to acquiring a property in New York

They say that if you want to live a life of excitement, diversity, and creativity then look no further than New York City. This city boasts of a vibrant 24-hour life. Apart from that, it is also a very convenient place to live in. Almost anything you need – from groceries, restaurants, shops, banks to drug stores, pet stores, and salons – you name it and it’ll just be a few blocks away from your place. Although, all these advantages come at a price. That is why the State of New York Mortgage Agency (SONYMA) is here to help. 

As most people know, New York is a very expensive city to live in. This is especially true when it comes to real estate. Next to San Francisco, New York is noted to be the second most expensive place to rent in the USA. According to Zillow, the median price of rent in New York is $2,895. Moreover, for those wanting to get a piece of the Empire State, the median price of properties or homes presently listed in New York is $799,000. However, the farther you get from New York City, the more rural it becomes. In these areas, prices of homes get less expensive.  

Time to buy a home in New York

So, when you are at this life stage where you feel it’s time to buy a home in the lovely state of New York, then by all means, invest in that property! But just to keep it real, buying a home requires a lot of money up front. Most lenders would want buyers to place 20% down payment on a house. However, buyers would often place down payments that are lower than that. Apart from this, you also have the closing cost. Then, there are also other additional costs that come with your home purchase, such as cost of utilities, property taxes, and monthly maintenance cost.  

In line with this, there are programs that can help first time home buyers like you when it comes to making that down payment and getting closer to acquiring your new home. These mortgage programs are provided by the State of New York Mortgage Agency (SONYMA).  

1. All about the State of New York Mortgage Agency (SONYMA)

The State of New York Mortgage Agency (SONYMA) is a corporation formed by the New York State government. The group helps the low to moderate-income residents purchase a new home. They also want to make homeownership easy on the pocket for first time home buyers by providing:  

  • Options for minimal down payment (as low as 3% down payment)
  • More attractive interest rates (provides fixed-rate mortgage)

SONYMA offers what they call a “vanilla wafer” mortgage loan. This is a fixed-rate mortgage (FRM) where the interest rate remains the same throughout the loan term. Other loans have floating interest rates that adjust from time to time. But with this fixed-rate mortgage, first time home buyers have the advantage of planning their budget based on a fixed cost.  

SONYMA programs are there to help borrowers from all walks of life. Apart from competitive interest rates and low down payment, their programs also offer the following features:

    • No Prepayment Penalty – A prepayment penalty or prepay is an agreement between borrower and lender wherein the lender regulates the amount the borrower is allowed to pay off plus the schedule of payment. So no prepay means you have more freedom to pay more of your loan and at an earlier time if you want to.
    • Down payment assistance – SONYMA offers this feature with all of its mortgage programs

2. So how does SONYMA work?

The State of New York Mortgage Agency (SONYMA) partners and contracts with a network of lenders in New York State. SONYMA purchases mortgage loans from these lenders and in turn, the lenders offer SONYMA’s programs to the borrowers.

SONYMA mortgage programs are intended for primary residence only and not for commercial purposes. Similar to other loans, there are certain requirements that need to be submitted to SONYMA, such as:

  • History of employment
  • List of assets
  • Proof of rental
  • Good credit history

There are certain limitations though when it comes to availment of the mortgage programs. So, who can benefit from SONYMA?

  • First-time home buyer in New York
  • Those with low to moderate income
  • In search of a primary residence
  • In need of down payment assistance

3. State of New York Mortgage Agency (SONYMA) Programs

There are 4 mortgage programs offered by SONYMA.

  • Achieving the Dream
  • Low Interest Rate
  • Conventional Plus
  • FHA Plus Program

These programs help qualified buyers acquire a primary home at a price that is affordable. All these mortgage programs have an optional down payment assistance offer and can also be used together with other grants and subsidies.

Achieving the Dream

This program is open to first time home buyers with lower income. It aims to help maximize the value of their money by requiring just minimal down payment. This program provides a 30-year fixed rate mortgage, with down payment as low as 3%. Interest rates for this program is also lower than other SONYMA programs.  

Low Interest Rate

This is a standard SONYMA mortgage program designed for first time home buyers who plan on purchasing a newly constructed home or an existing one. It provides qualified buyers with low down payment options (as low as 3%) and attractive interest rates. The program also allows for the purchase of 1-4 family homes, among other properties.

Conventional Plus

This mortgage program combines Fannie Mae’s HomeReady Mortgage with SONYMA’s Down Payment Assistance Loan (DPAL). It is primarily intended for borrowers with incomes that are  below the program limits. The combined features of this program offer lower monthly payments compared to other mortgages.

FHA Plus Program

This is a mortgage program involving the combination of the 30-year fixed rate mortgages with the SONYMA Down Payment Assistance Loan (DPAL). The program is open not just to first time home buyers, but to previous homeowners as well. The fund can be used to purchase a primary home or to refinance a primary home’s existing mortgage. This program meets the needs of a broader range of borrowers.

For more detailed information on the different features, benefits, eligibility requirements, and other considerations, you can check out the page on the SONYMA programs.      

4. Other Add-on Features from SONYMA

Here are other SONYMA features that can help with your home loan. These programs or type of loans can be the answer to whatever home-related needs you have on a particular life stage that you are in.

  • Down Payment Assistance LoanAs we all know, the biggest chunk of home payments are with the down payment and closing costs. This can help home buyers, who avail of a SONYMA mortgage program, with their budgets. This can also be used by those who are required to have mortgage insurance. The fund can help you cover the entire premium amount or a portion of it.
  • Remodel NYThis program can help you purchase a property and pay for minor or major house repairs so you can turn that house into your dream home.
  • Homes for VeteransSONYMA also has a low-interest mortgage product that is designed to make homeownership easier and more affordable for veterans and active service members.
  • Graduate to Homeownership The program offers homebuyer education, assistance for down payments, as well as low-interest mortgages for recent college graduates. This can help them start a new life, with new opportunities ahead.
  • Neighborhood Revitalization This helps qualified buyers get the funding to purchase and restore vacant properties affected by the foreclosure crisis.  
  • ENERGY STAR – SONYMA, in partnership with the New York State Builders Association (NYSBA), the New York State Energy Research and Development Authority (NYSERDA), and the Long Island Power Authority (LIPA), helps give incentives to home buyers who will purchase an ENERGY STAR certified home.

5. How to Apply for a SONYMA Mortgage Program

Most of the time, applying for a mortgage can be overwhelming. There are a lot of paperwork with dozens of mortgage requirements and information to sift through. SONYMA partnered with a host of participating lenders all over the State of New York. The network of lenders know all about the SONYMA mortgage programs, as well as the requirements for application, the varied options, and the benefits.

The lenders can help guide home buyers through the process, from start to finish. Essentially, these are the steps you should follow in applying for a SONYMA mortgage program:

  1. Secure a pre-qualification with a Mortgage Lender within the SONYMA network. When you’re pre-qualified, this puts you in a much better position to negotiate with potential sellers.
  2. Look for a home and once you’re absolutely decided, then sign a contract. When negotiations are done and you agreed on a price, go ahead and seal the deal. Moreover, place that good faith deposit to secure the home.
  3. Don’t forget to update your application and lock in the rates. Once contract is signed, you need to work closely with your lender to streamline your SONYMA mortgage application and pin down your interest rates.
  4. Keep an open line of communication with your lender and your attorney. The success in buying a home stems from good collaboration from all sides. You might also need some information or advice from time to time.

New York state of mind

They say that anything is possible in New York. So keep that dream of owning your own home and worry less about the challenges that come with it.  It is true that property investments may be heavy on the pocket, especially in New York. But as we just outlined for you, there are various opportunities and programs that can help ease that financial challenge. You’ve got to keep moving and striving (with a little help along the way) so that one day, you’ll make it in New York with a place to call you own.

First Time Home Buyers New Jersey

12 Steps to Guide First Time Home Buyers in New Jersey

First Time Home Buyer New Jersey

A step-by-step process to guide you through your home buying journey in New Jersey, the Garden State

Before anything else, congratulations! The fact that you’re reading this article means that you are on your way to finding and eventually owning a new home. We know that you seek to find all, if not most of the answers to your questions as a first time home buyer in New Jersey. And that is why we are here. So that first time home buyers like you will have a wonderful home buying experience and that the process will hopefully go smoothly for you.

Buying a new home is no simple task especially for first time home buyers in New Jersey, or in any state for that matter. But this we can tell you. Once you read through this article and you’ve familiarized yourself with all the protocols, documents, and procedures in home buying, then all will make sense.

Moreover, we’ll help you learn more about the financial programs in New Jersey, such as the mortgage and assistance programs. Consequently, you’ll have a better understanding, as well as appreciation for the whole process. Then you’ll know, if indeed, it is the right time for you to buy. After all, buying a home truly is a major life decision.

Where to start?

When you have made up your mind that it is time to buy a house versus to continue on renting, then that is already a big step. And once you have established that mindset, what should you do first? Here are a few steps that can help first time home buyers in New Jersey get started on the home buying journey.

  1. Set your mind on a budget and determine what you can comfortably afford
  2. Know your credit score
  3. Get a pre-approval letter for your mortgage
  4. Look for a reliable team (realtor, lawyer, inspector)
  5. Prepare your timeline and decide when you want to move in
  6. Search for your dream home in New Jersey  
  7. Submit your offer and work on contract negotiations
  8. Undergo attorney review during the contract phase  
  9. Final inspection and other negotiations
  10. Sign your mortgage
  11. Hire a home insurance
  12. Closing time

1. Budget-setting

You might think that it is fairly easy to figure out a budget based on your current income. But first time home buyers in New Jersey have to consider this – the Garden State is noted to be a really expensive state to live in. Not only that, it has some of the highest taxes in America. New Jersey also has two of the wealthiest counties in the U.S. namely Hunterdon County and Somerset County. We’re not saying these facts to intimidate you but for you to take it into account. This state really has a lot to offer and is a good location for a home. Apart from its proximity to New York, New Jersey has a strong economy and boasts of really good schools in the Northeast area.

Just so you know, first time home buyers in New Jersey must expect some pricey homes in most of its counties. In New Jersy, the median home value is around $360,084. In Jersey City, the median home value is higher at $448,778 and even much higher in Montclair, at $803,973. You can check out this New Jersey mortgage calculator to help you figure out your budget and monthly payments when you apply for a mortgage for your home.

2. Knowing your Credit Score

Knowing your Fico score or credit score will help you a lot in the process. Being familiar with your credit score and keeping it high gives you an advantage when choosing among certain loan options. Credit scores range from 300 – 850. It is important to note that first time home buyers in New Jersey need to have a credit score of 620 or higher to quality for certain mortgage programs. If you’re interested to know more about credit scores, check out our other article on How much house can i afford.

3. Securing Pre-approval on Mortgage

Checking out financing options and securing approval on your mortgage early on will help reduce your worries. We want to get this time-consuming, but essential step out of the way as soon as possible. Also, doing it early in the process gives you the advantage of being a qualified buyer when you bargain for the terms and the price of your target property.

Lucky for you, there is the New Jersey Housing and Mortgage Finance Agency (NJHMFA), which is an organization that works to help families and first time home buyers in New Jersey become capable of owning good quality and affordable homes.

First-Time Home buyer Mortgage Program

First time home buyers in New Jersey may avail of a competitive 30-year, fixed-rate, government-insured loan provided by the New Jersey Housing and Mortgage Finance Agency (NJHMFA). To qualify for the program, you need to:

  • Be a first time home buyer. This means that you have not owned a home in the past 3 years.
  • Must have a credit score of 620 or higher
  • Planning to buy a home in any of the New Jersey counties
  • Your income and purchase price of the home are within the prescribed income and purchase price limits

Below are the Purchase Price and Income Limits within the New Jersey Statewide Area. The area of purchase and size of family determine the income limits. This should not exceed 140% of Area Median Income.  

Here are the Purchase Price and Income Limits in the Urban Target Area. Higher income limits are awarded to properties that are in the Urban Target Area (UTA).

Down Payment and Closing Cost Assistance

The New Jersey Housing and Mortgage Finance Agency recognizes the difficulties that first time home buyers in New Jersey go through. So, they came up with yet another form of financial assistance program. This is what they call the NJHMFA Down Payment Assistance Program and it provides the following to qualified buyers:

  • $10,000 interest-free loan
  • It’s a second loan that has no monthly payment
  • May be used as down payment or closing costs
  • Can be combined with the First-Time Homebuyer Mortgage Program

The NJHMFA also provides a list of their Participating Lenders.

NJHMFA Police and Firemen’s Retirement System loan

First time home buyers in New Jersey who are active members of the New Jersey and Firemen’s Retirement System (PFRS) may also get a 30-year fixed interest rate loan from the NJHMFA. This can be used by first time home buyers to purchase a property or refinance an existing home. To qualify for the program, you have to:

  • Have at least one year of creditable service
  • Price of home is below $453,100

4. Need for a reliable Team

We understand that as a first time home buyer in New Jersey, it would be great to get all the help you can get. You need a good team who can be there for you, to answer all your questions and give you proper advice.

More importantly, you need a Realtor who can be trusted and one whom you know has your best interests in mind. After all, New Jersey homes come at a high price and you wouldn’t want to be working with someone who might end up costing you more money.

Here are a few things you might want to consider in choosing your Realtor:

  • Has ample experience in the real estate industry. It would be good if the person has at least 5 years of experience dealing with buyers, sellers, lawyers and other agents. He or she should be able to explain to you clearly all in the ins and outs of the home buying process in New Jersey.
  • Must be really knowledgeable on the area. Your real estate agent should be very familiar with the neighborhood where you want to buy your property. It would be good if he or she knows what’s around, like hospitals, schools, groceries, other establishments, and has a good feel of the community.
  • You want someone who understands your needs, can guide you properly through the buying process and most of all, someone who can represent you well. You can assess  someone’s personality by how they deal with you in meetings and with the amount of patience they have when it comes to your unending queries.
  • Vast knowledge in the business is a major plus and you want to ensure that your Realtor is keeping up with the times and is continuously keeping himself / herself updated with all the personal, legal, environmental, and other issues related to real estate.
  • Must abide by the National Association of Realtors Code of Ethics to ensure that your Realtor treats you and others fairly. This also serves as a guide in dealing with people in the industry.

5. Set your timetable and your target moving-in date

Setting a timetable helps make the process more organized and helps you reach your goal of owning a New Jersey home in your desired date. Depending on the area, most people find a home in around 6-8 weeks. The average time it takes from locating a property in New Jersey to closing is 2 months or 60 days. Other times, you can close a deal as fast as 30 days. But do not easily be discouraged as other deals take around 90 days to close.   

6. Searching for your New Jersey dream home

So here you are and you have decided to buy a home in the Garden State. It’s a really nice place to live in and a wonderful advantage is the easy commute to New York City, if you happen to work in Manhattan. Searching for your new home is the most exciting part of the process. Just trust your taste and your instincts when deciding on what to buy. More importantly, do not get ahead of your planned budget, so that you can still go out (or stay at home) to party when all has been finalized. Just a few suggestions to help in your search for your dream home:

  • Have a list of things/requirements for your new home. What do you need and want in a new home? Needs are the non-negotiables. These are the basics depending on the size of your family, the place and nature of your work, or the kind of family gatherings that you have.You might have the need for at least 3 bedrooms, a spacious open kitchen, or an outdoor barbeque area. The wants may include a pool or a game room, but things that you can compromise on.
  • Seek referrals and ask around. A friend or family member might just know of a property that suits you and your needs.
  • Do your own research. There are various websites that have home listings in the New Jersey area.
  • Ocular inspection. Visit the areas which you really love in New Jersey. Check out the nearby establishments, shops, restaurants, and schools. Talk to the people there so you’ll get a feel of the community.
  • Ask your Realtor or agents. They have lived or worked in the area for some time so they already have a feel of what suits your considerations when it comes to purchasing a home.

7. Submit your offer and work on contract negotiations

Once you have found that dream home, be ready to place an offer and to put it in writing. Your Realtor needs to fill out a contract which includes the following details:

  • Location of the property / Address
  • Price
  • Mortgage Terms
  • Provision of title / ownership
  • Closing date
  • Earnest money deposit – cash, check, or promissory note
  • Arrangement on taxes, utilities, etc between buyer and seller
  • Agreement and provisions on which party will take up payment for insurance, other inspections
  • What type of deed will be granted
  • Other requirements such as Attorney review for the state of New Jersey
  • Provision on a walk-through inspection prior to closing
  • Timeline on offer
  • Other contingencies

Most of the time, an initial offer is not accepted by the seller. So here is where the negotiations come in. The Realtor acts as the liaison between the buyer and the seller in terms of discussing the price and terms. Once the parties have come up with an agreement, both the buyer and the seller will sign the revised contract.

8. Undergo attorney review during the contract phase 

The state of New Jersey requires an attorney review. This is the period where after both buyer and seller has signed a contract, it still has to undergo a legal review. The deal only becomes final  after the attorney review has been concluded. This process can take just a few days to weeks or even months. The downside with this process is that while in attorney review, either party can still back out. So to get you through this process as quickly as possible, we suggest that you take a proactive role.

  1. Be as involved as you can in the buying process. Ask your agent about his or her assessment of the sellers and what they are looking for in a buyer. This way you and your agent can work as a team to create a good pitch.
  2. Be honest and transparent in your negotiations, as communicated by your agent. This will make the sellers feel that you’re not trying to one up them.
  3. Be represented well by your agent. As much as possible, ask your agent to formally give the offer in person and not to just email it. It would also be good if the document will be supported by your other qualifications as a buyer. This would make the seller feel that you’re really intent on the purchase.
  4. Be focused on what you want to accomplish. Inform your agent and the attorney that you would like to breeze through the review as soon as possible.

When the attorney review is completed, this makes your contract official and you can now buy your New Jersey home. You just need to undergo the mortgage processing, appraisals, and coordinating inspections with a licensed New Jersey inspector.

9. Final inspection and other negotiations

You really can’t expect a property to be in perfect condition. Basically, you need it to be structurally sound, leak-free, and with utilities in good working capacity. There will most likely be some needed home repairs or upgrades. But that’s part of the experience, right? Some aspects you can compromise on, but on others, you can negotiate with the seller through your attorney and realtor.  After which, you’ll be done with mortgage appraisal and then you’ll be provided with the date wherein you must fulfill the mortgage commitment. Then your attorney will order the other documents needed for closing. .

10. Sign your Mortgage

Prior to signing your mortgage contract, make sure to review all the fees. At closing, here are some of the common inclusions:

  • Attorney fee
  • Appraisal fee
  • Home inspection
  • Partial property tax (if closing happens mid-month
  • Courier fees
  • Percentage of loan amount
  • Government recording fee
  • Transfer tax

It would be good if you check with the mortgage company if they received all the needed documents related to your application. If you have already agreed on a rate, you want to make sure that there are no delays in the processing.

11. Hire Home insurance

As a first time home buyer in New Jersey, it is also important to protect your new investment. This means getting a homeowner’s insurance policy. It is important to keep in mind that when you calculate monthly mortgage payments, you must also include the cost of home insurance.

Factors such as location, type and features of your home will affect the type of insurance that you will need. Choosing your home insurance policy depends on your most important considerations, be it coverage, price or service. Prior to closing, you need to have your home insurance policy ready. A statement that an insurance policy has been issued, as well as the paid receipt, need to be presented at closing time.    

12. Closing

Usually, the final walk through inspection is conducted by the buyers 2 days before closing. Ideally, this is done when the sellers have already moved out. When it comes to payments, you should consult with your attorney on the process and needed amount at closing time. Payments are usually done through bank wire, bank checks, or certified funds.  

Being a first time home buyer in New Jersey involves a lot of steps. You would often find yourself thinking, planning, researching, consulting, searching, then re-thinking again before you actually come up with a final decision. It might be intimidating at times, considering New Jersey home prices. But all it takes is that one big leap. Armed with the basic knowledge and available financial programs and support team, your first time home buying process can be a walk in the park.

 

Mortgage Calculators

5 Things You Need To Know About Mortgage Calculators

While thinking whether you are ready to buy a house or if you’ll qualify for a mortgage, you can’t help but think about the cost. Before taking that big leap, it’s always better to use mortgage calculators to figure out the additional expense you’d take on if you buy a new home. When you buy a house you want to be sure that the timing is right and that it is the best decision among other options. 

While there’s no shortcut to solving all your apprehensions, you can, at least, be an informed buyer. Knowing what you’re entering into helps you feel more confident about any home-buying decision.

Awareness And Preparation Is Key

There are several benefits to buying your own home. When done right, you’ll save money and improve your living situation.

For starters, you can kiss renting goodbye. You can finally drill holes where you want to and put wallpaper in any part of the house you own. But before you get carried away, you have to take a step back and look at your current financial situation. When buying a house, you want to make a sound decision and mortgage calculators can help you with that.

Mortgage calculators put the numbers in your face. This way, you will have a more realistic projection of the price range of the house you can afford.  

When purchasing a new home, most people would consider their current savings or how much rent they are currently paying for. This serves as an effective gauge on the monthly mortgage payments you can afford. However, the decision will ultimately lie with how much lenders are willing to lend you.

So, consider getting a pre-qualification online or by calling a certain lender. Bring out your income documents for reference and think about these things first: 

  • Your pre-tax income
  • Pre-tax income of your co-applicant
  • Your current monthly debts (credit cards, car loan, student loans, etc.)
  • Kind of home you would like to purchase
  • Location of the home you would like to purchase
  • Your preferred amortization period
  • Kind of mortgage you wish to get

Tip: List the relevant figures for your income and debt. You can use these numbers to come up with a realistic budget for buying a house.

1. What Is A Mortgage Calculator?

Mortgage calculators, as the name implies, helps you calculate the monthly interest and principal payments you need to make when you get a loan. You need to input certain information like the loan term, amount you need to borrow, and interest rates 

2. Details To input In A Mortgage Calculator

A mortgage calculator provides a clearer picture of your finances and makes you feel more confident about the loan amount to apply for. It can help you compute the price of your loan in terms of monthly payments and as a whole.

Mortgage calculators usually require the same data inputs. You can play around with the figures to see the impact on your monthly payments.

Here are the detailed items you’ll see in a mortgage calculator:

  • Price of home: The market price or purchase price of the property
  • Downpayment: How much cash you can pay outright
  • Size of the mortgage: Loan amount which is the purchase price minus the downpayment
  • Interest rate: Usually determined by the lender based on your credit score and the current market rates
  • Amortization period:  Also known as the loan term. This determines how many years you plan to pay off your loan
  • Start date: The period you plan to make the first payment on the loan
  • Property tax:  Applicable taxes on the property 
  • Private mortgage insurance:  Usually applied if downpayment is less than 20% of the purchase price
  • Home insurance:  Financial protection for the home and personal property
  • Loan type:  Kind of loan program you want to apply for

Now that you’re familiar with the details and numbers to put in a mortgage calculator, you only need to complete the empty fields and click “calculate.” 

If you want to learn more about the inputs in the mortgage calculator, check out this guide.

3. Mortgage Calculator 

Now, what?

It’s time to put your new knowledge to test with our accurate and easy-to-use Mortgage Calculator 

This is a detailed mortgage calculator. It a comprehensive breakdown of monthly payments with accompanying graphs and extra costs that you can add, like maintenance and HOA fees.

4. What Are The Advantages Of Using A Mortgage Calculator?

The online mortgage calculator may serve as your starting point in searching for a new home. With this tool, you can have a clearer view of the financial obligations when you start making mortgage payments.

There are a lot of prospective homebuyers who are not prepared to deal with a mortgage because they took out the loan without making the necessary plans. 

If you have a mortgage broker, you can also ask for advice as to the best mortgage product for you. Mortgage brokers usually ask for information like your net income and expenses to help you better. 

5. Meant To Be Used As A Guide

Yes, mortgage calculators are useful. Most lending websites have a calculator you can use but remember that these are just tools to help you estimated your mortgage payments. When you actually apply for a loan, your final mortgage payment would most likely be different.  Remember that lenders consider your current employment, credit history, and property appraisals before they make a loan offer.

Here’s another word of advice — keep it real. Try to make your inputs as close to your actual budget as possible. When trying to check if your financial budget can take on the added expense, study your financial records. This way, you’ll know exactly where your money goes and if it’s possible to cut some spending to accommodate potential mortgage payments.

Don’t forget to consider the financial benefits of having your own property. You may be eligible for first time home buyer grants which can cover your down payment and closing costs. If you itemize, you can also take the mortgage interest deduction.

Common Apprehensions That Make Homebuyers Take A Step Back

After using a mortgage calculator,  you realized that you can afford a mortgage. But you may still have reservations that are holding you back from buying a home. 

Don’t worry, you’re not alone. In fact, even home buyers have regrets. Here are some of the most common apprehensions people have about buying a home.

I Need A Higher Credit Score

The average FICO score varies depending on the type of loan you’ll get. For conventional loans, you will need a FICO score of around 751. The good news is, the score is usually lower for VA loans and even lower for FHA loans. Of course, higher scores make you eligible for better rates.

I Don’t Want To Be Rejected In My Application For A Loan

Before you start home shopping, it’s always better to ask a mortgage company or a bank to evaluate your finances. It’s even better if you secure a preapproval for a mortgage. The process is usually free. Getting a preapproval also gives you that extra confidence when bidding for a house.

My Earnings Are Not Enough

When lenders look at your loan application, they consider whether you can afford to allocate 28% of your income on housing costs. Your total debt should also be 36% or less.

If you can’t manage to keep these ratios, check whether the price range of your dream home is too high. When the problem lies with your earnings and not your property options, maybe it’s time to rethink buying a home.

I Can’t Make The Downpayment

There are some home buyers who put down 20% of the purchase price as a downpayment. However, most homebuyers don’t put down 20%. Depending on the kind of loan you apply for, you can actually make a smaller downpayment. Depending on the lender, you may have to get private mortgage insurance if you decide on making a lower down payment.   

I’m Buried In Debt

Sometimes, buying a home is more cost-effective even if you have other debts. Don’t assume that just because you already have a lot of debt then no one will be willing to lend you more money. If you spend less than 36% of your total income on debts, then you can still make the cut. 

If you have other loans, always look at the bigger and more cost-effective picture.

I Can Barely Afford My Rent, How Will I Even Pay My Mortgage

Whether it’s better to buy a home or rent depends on where you live. In some cities, owning a home is more affordable than renting. Before you judge which option is better, check the average price for renting and buying.

Be On The Lookout For The Best Deals

Mortgage calculators are tools that help you determine if you are in a good position to buy a house and if you can afford the monthly mortgage. We all want to have that financial flexibility. And depending on our own personal considerations, we want to be able to make sound decisions, especially when it comes to big investments.

Mortgage calculators may guide you in determining whether you’re ready for a home or not and what the best financing options are. Play around with the figures. Decrease the downpayment, increase the term, go for a bigger downpayment or shorter the term. Doing this helps you plan ahead especially if you have a clear idea of how your financials will change in the future. 

And here’s one final tip — take note of mortgage lenders offering the lowest interest rate and lender fees.  This information could be handy once you decide that it’s time to start the home buying process. 

 

first time home buyer

3 Awesome Benefits for First Time Home Buyers

Renting is convenient. And it’s not like you’re throwing away your money. It puts a roof on your head. It gives you a place to bathe and somewhere to store your stuff. But just think about this —if you already have a well-paying job, one that you’ll most likely keep, then maybe it’s time to consider buying a house. After all, there are many benefits for first time home buyers.

Buying your first home can be a long-term investment. We’re not saying just because you have a steady job then go ahead and buy the house of your dreams. We’re saying that it might just be the right time to start considering that real estate investment.

Should I Buy A House?

First off, you should buy a house for the right reasons and with the right mindset. Don’t let anyone force you into making a decision before you are absolutely ready. Buy that house because:

  1. You know and you feel that it’s a smart financial decision
  2. It is the right thing to do as the next step in your life
  3. It is going to improve your quality of living.

The Right Time to Buy a House

While buying a house is a good investment, do not pursue it solely for the hopes of increasing market value and hoping to earn from it after a few years. Your property would most likely increase in value 10 years down the line. The more important thing now is to start building a home for yourself and reaping the benefits of owning your home.

You also need to make sure you understand whether you are in a good position to buy a house. Your finances are not your only consideration either. If your social and professional life is in order, then now is most likely the right time to finally buy a place to call your own!

Benefits for first time home buyers

Being a first time homeowner gives you a sense of pride and accomplishment.  Some would even consider it as their official introduction to adulthood. And there are many benefits too!

Having your own property gives this feeling of security, permanence, and rootedness. You can have full control when it comes to fixing and remodeling your living space. And, you will most likely take better care of your home because it’s yours.

Renting vs Buying

As the home owner, you will also have fewer worries. You won’t be stressed out that your landlord might suddenly decide to stop renting out the property.

It’s easier to call the shots when it comes to interior designing if you’re the house owner. If you’re renting, you need your landlord’s consent even for simple wallpaper attachments or drilling holes on the wall.

You’ll be shelling out money whether you rent or own your home. But if you take out a mortgage instead of paying rent, the property will eventually belong to you. This means that you’re free to do anything you please.

Here’s a quick comparison between buying a home and renting.

 

BUYING A HOME

 RENTING

  • Mortgage payments lead to home ownership. But you have to wait at least 10 years to regain your investment as the first few years of payment only goes to interest.
  • The property will never be yours no matter how long you stay and pay.
  • If you’re in a fixed-rate loan, your monthly mortgage will always stay the same. But interest rates can go really high if you have an adjustable-rate. You have the option to refinance your mortgage if interest rates go down.
  • Rent is subject to increase every year or every renewal period. Most states have no rent control law but some cities impose a rent cap.
  • Mortgage interest and property tax can be deducted on your income tax return if you itemize.
  • Rent cannot be deducted from your tax return. However, some states offer renter’s credit to qualified individuals.
  • As long as you pay your mortgage on time, you can stay in the house for as long as you want
  • The landlord can decide not to renew the contract.
  • You can take an equity loan against your home for renovation or for other reasons. Home equity loan interest rates are usually  lower interest than the interest rate for commercial loans
  • There are lots of restrictions in doing alterations to the property.
  • Getting a loan can be quite difficult at times
  • Landlords may have a stringent process for screening tenants. Renters should also abide by the terms and conditions of the rental contract.
  • Must always allocate budget for maintenance.
  • Maintenance fees are usually included in rental payments but you have to pay for small repairs.
  • Selling your home might be difficult during the downturn of the economy
  • It is cheaper to rent than pay for mortgages. There is usually no need for a downpayment

 

Choosing between renting a home or buying one is among the biggest financial decisions you’ll ever make. You have to take several things into consideration, like how much money you saved. You need to know how much you can allocate to living expenses each month. Don’t forget to consider how long you are planning to stay in one place.

Thinking about all these things might make it hard to decide whether buying or renting is the better deal. Renting provides much flexibility but the benefits for first time home buyers are attractive as well.

To help answer your questions, you can access this renting vs buying calculator to guide you through and make the decision-making process easier for you.

If there are a lot of benefits for first time home buyers, then why are people not buying houses?

Renting is perceived to be better than owning a home. Job security is also one of the reasons why the younger generation tends to hold back on buying their first homes.

Data from the University of Minnesota reveals that Americans in their 20’s prefer to rent than to buy a home and understandably so since buying your first home requires more money. Moreover, individuals in this age group are more mobile and less likely to settle down yet.

Millennials are also less likely to buy a home compared to their parents and grandparents at the same age.

If you are a millennial who is yet to buy a home —what’s your reason for not buying a home?

Why are you hesitating? Could it be because of your student debt? Is it the feeling of not wanting to settle down in one place yet? Or is it simply because you’re not financially ready? Or are you into the backpacking lifestyle?

Despite having hesitations, it never hurts to consider the thought of buying a new home. Purchasing the right property now may improve your financial security when you enter retirement.

What To Look For When Buying A House

There will be moments when you think that – This is it! This is my dream home!

However, when you’re buying your first home, always act logically and rationally. Don’t fall head over heels in love with the first house that checks off all the boxes.

When you think you found the one, take a step back and reassess. It’s rare to find the house that meets all your needs for sure. But, think with your head. Going in for the kill tends to make you overbid which is never a good thing.

Important Factors When Purchasing A Property

Location, Location, Location

Properties in the right location always see the highest price appreciation and home valuation. For instance, homes in a good public-school district tend to be on the pricier side.  Since there would be a high demand for access to schools offering quality education, expect home prices in these areas to cost you more.

Aside from choosing a location with great investment potential, consider the safety and security of the town or neighborhood. It’s also important to find a place that is easily accessible to and from your school or office.

Financing Options

Check different financing options to find the one that you can afford. Research on the best mortgage lenders and see which ones offer benefits for first time home buyers. Find the loan product that provides enough flexibility and reasonable loan rates.

When buying your home, don’t just focus on loans. Look for first time home buyer grants too! There are a lot of grants that may help you pay for your down payment and closing costs.

Evaluate The Overall House Condition

Your home of choice should be at least 75% ready to welcome a new family. Avoid buying a fixer-upper home as you may end up spending more than what you’ve budgeted for.

While at it,  make sure that the home’s size is enough not only for your current needs but also your plans in the near future. Think of these factors before you list down the ideal bedrooms and baths, storage space, backyard or outdoor space.

Know What You Can Afford

It’s true that homeownership comes at such a high price. You may have high hopes but you may eventually realize how expensive it is to pay the down payment especially if you’re a first time home buyer. Here are some important things to note to help you reap the benefits of buying your first home.

Pre-approvals

Always get pre-qualified before checking out properties. Talk to a fee-only financial planner to understand what you can afford and then talk to a lender to get a pre-approval letter for your mortgage

Buyer’s Agent

You want someone trustworthy on your side to guide you through the process and transactions. Look for a trustworthy buyer’s agent in your area to assist you. And, do be cautious with listing agents.

Ocular Inspections

Properties may look way different online and in real life. Always look at the properties in person and check out the details of the house personally.

Maintenance Expenses

For home maintenance, it’s more convenient to follow the 1% rule. This rule suggests that setting aside1% of the property’s purchase price for repairs and yard work each year.

So, if your home costs $500,000, you should set aside at least $5,000 each year.  When you own the property, you need to pay for repairs and it’s better to expect the unexpected.

Tax Benefits Of Owning A Home

Did you know that owning a property comes with tax benefits?

When buying a home, it may also be useful to consider the tax benefits like the mortgage interest deduction and tax-free profits for qualified homeowners.

Mortgage Interest Deduction

You can deduct the interest for the first $750,000  you borrowed to buy a primary or secondary home. If you’re single or married filing separately, you can only claim an interest deduction for the first $375,000.

Here’s a quick example.

If you borrowed $400,000 to buy your first home, you can deduct the interest on this loan on your tax return IF you itemize.

For instance, you borrowed another $500,000 to buy your second home. This will bring your total mortgage loans to $900,000. Since you are only allowed to claim the interest deduction on the first $750,000, you can’t deduct the interest on the $150,000 ($900,000 less $750,000).

Tax-free Profits

Are you planning to buy a house an use it as a primary residence?

If you do and, later on, you decide to sell it, you may be exempt from paying capital gains tax.

Homeowners who lived for at least 2 years in the home for the last 5 years get to enjoy certain tax privileges. The first $250,000 profit is tax-free for single filers and the exemption doubles to $500,000 for joint filers.

While these benefits for first time home buyers can be attractive, there are tons of other things to consider before you invest in a new house.

If you’re still unsure, there is no need to rush but it never hurts to start planning for that purchase. Stay on top of your finances and check out properties to get a better idea of the most reasonable budget to buy a house. This way, you’ll be prepared for the costs involved when you finally decide that it’s time to buy a home of your own.