You’ve done the right thing. Taken the advice of your realtor and gotten a pre-approval from a lender. Now on to the buying process! However, are you really approved? Has your file gone through the underwriting process? Did you provide documents to verify your income and assets? If not, then you might not really be “pre-approved.” This is considered more of a pre-qualification process when those two things don’t happen. If so, then you shopping for a home could potentially end in disaster and you not purchasing that home of your dreams!
So what do you do to avoid potential disaster? Ask your lender the following questions:
- What documents do you need from me to get me pre-approved by your underwriter?
- When will my file go into underwriting?
- How long will it take to get an answer back from underwriting?
- How quickly will I be able to close after I get an accepted purchase agreement?
- When can I lock my rate and for how long?
- What could delay my approval or closing?
These questions are crucial to a successful purchase and closing of a home. If any of those questions cannot be answered easily by your lender of choice, then you may want to consider shopping around. Of course, other things are important also: loan type, rate and costs. However, none of that will matter if you are not able to close the loan.
In today’s market, most lenders are going to be close when it comes to costs and rates. Where you see higher costs and rates is typically lenders who market online and in the media. Someone has to pay for the costs of all that marketing. Who do you think they are going to pass it on to? In most cases it’s the consumer.
With that in mind, your ultimate goal is homeownership. That’s why who you choose to do business with is so important. You want a lender who has proven over and over again that they can get the job done. Also, they can get it done within the timeframe you need it done. Anyone can talk a good game, but can they perform. So don’t be afraid to ask the questions above. This will ensure a smooth process and the end result of you buying the home of your dreams.
IN 23815; KY MC81345
Louisville, KY 40216
For more articles and updates, subscirbe below.
If you want to start an argument, announce to a crowd that the economy is recovering: half will agree with you, half won’t. Certainly an economic downturn can impact many, leading to short sales, foreclosures, and bankruptcies. And plenty of people are asking about buying a property that was involved in a bankruptcy. To answer that, the key issue is what type of bankruptcy was filed, and how long will it take to close?
Since most such sales come with no representations, warranties or indemnifications, attorneys representing buyers should make due diligence their number one priority. Section 363 of the U.S. Bankruptcy Code allows parties involved in a Chapter 11 or Chapter 7 (most common for consumers) proceeding to dispose of real property in order to help pay off their debts through a highly structured process aimed at getting the most out of each asset while retaining the least liability.
As such, properties are sold "free and clear" from all liens and encumbrances, but it's not uncommon to later discover hidden issues, experts say, and the buying process itself can present various other hurdles. The buyer should conduct exhaustive due diligence. The trustee or debtor-in-possession rarely has access to all of the materials a buyer would typically need to see before making a decision to purchase property; sometimes a debtor has destroyed the documentation prior to the bankruptcy, or not kept it in good enough shape.
A buyer should take advantage of the property being “Free and Clear”. Although the transfer of the property comes with no representations or warranties, it also comes with no liens or encumbrances. A buyer should enlist a knowledgeable lender and real estate professional, and be prepared to move quickly in what could be a competitive bidding environment.
The main goal under any filing in bankruptcy is to give one, who is burdened with debt, a fresh start. A debtor files a petition with the court, along with a schedule of assets and creditors; a trustee is appointed to administer the sale of nonexempt property. The primary role of the trustee is to pay the secured and sometimes unsecured creditors, from the proceeds of the sale of property, and this may take up to 45-60 days to wind its way through courts – but could very well be worth it to the buyer!
Calculate your monthly payment with applicable finance charges, PMI, hazard insurance, and property taxes.
How much can you borrow from a lender? Use this calculator to calculate the amount you can afford from the lender's point of view.
This calculator will help you to determine your savings if you make larger monthly payments.
Purchasing a new home is an exciting milestone in your life — but it also can be an intimidating responsibility. Most buyers put an offer on a home that appeals to them for a variety of different reasons, whether it's the location or the features inside the home or the land that surrounds the house. After their offer is accepted, they rely on the advice and insight of a home inspector who provides them with more details about the health of the home.
Despite the fact that buyers do their homework prior to closing on their new home, many are left with unexpected issues after the closing. There's so many anecdotes about buyers whose basements flood the day after they move in or who are faced with an HVAC system that doesn't work once summer arrives.
A home warranty may be able to provide some security and peace of mind, but these protection plans can carry with them a high price tag. This leaves many buyers wondering if they are really worth it?
Here's how you can decide if a home warranty is right for your home purchase:
Consider the Benefits of a Home Warranty
A home warranty provides an extra layer of protection for buyers who may have used much of their cash to fund the purchase of a home. Most people are not prepared to put out a significant amount of money for repairs and replacements immediately after closing on a house, so a home warranty protection plan may be appealing.
When a repair is covered by a home warranty, the homeowner is able to quickly call a representative who can provide a list of recommended contractors to complete the job. This can expedite the repair process, which minimizes the inconvenience to the new homeowner.
Home warranty benefits are renewable. Homeowners who invest in a home warranty plan can extend the benefits past the first year, which allows them to take advantage of benefits in the years to come.
Home warranties typically cover the repair and replacement of major appliances that often experience issues. Kitchen appliances, such as the refrigerator, and HVAC systems are commonly covered under home warranty plans. The costs of these replacements is significantly higher than the warranty plan itself, so many home buyers find it worth it to purchase a plan based on this fact alone.
Recognize the Disadvantages of these Protection Plans
Home warranty plans will typically only cover a repair if the homeowner uses one of their previously-approved contractors. This limits who can be contacted to complete the repair, and homeowners who use a contractor that was not approved by the warranty company likely won't get coverage for the repair or replacement.
Some policies limit the amount of coverage the individual will receive. If a homeowner has a particularly bad year with several significant repairs, they may not receive additional coverage if their quote has been met. Many plans cap coverage between $1,500 and $2,000.
Home warranty policies are notorious for their fine print. Home buyers who are considering purchasing one of these protection plans need to read the fine print carefully in order to fully understand what their coverage will be. For example, some repairs are only covered under specific circumstances that are outlined in the policy. If the failure of the equipment is the result of a circumstance that is not identified, it likely won't be covered under the home warranty.
Buyers who want the peace of mind that comes along with a home warranty but don't want to pay hundreds of dollars for the protection may consider using it as a negotiation tool. Many sellers are willing to include a home warranty with the purchase of a home, particularly if the home inspection highlights issues that may become larger problems in the future. For them, it might be cheaper to purchase a home warranty than to fix the potential problem. Sellers are able to appease the buyer and move forward with the purchase agreement, while buyers are able to rest easy knowing that they have the protection of a home warranty plan if an unforeseen issue arises shortly after the purchase of the property.
Ultimately, it's up to the individual buyer to determine whether a home warranty is worth the cost. Find out more about home warranty plans and the protection that these plans offer by contacting a real estate agent today.
As we get move into the spring home buying season, most locations throughout the country have turned into a seller’s market. Although loan officers typically deal with buyers, or people refinancing, LO’s also come in contact with sellers who are buying in the same community. There are several buyer “turn-offs” that sellers should avoid at all costs.
First and foremost is a dirty house. Whether it be replacing carpets for stains and particulates or steam-cleaning tile and grout, the home should be as debris free as possible. The next area for an impression to go awry is smell. The old saying is buyers buy with their noses. Sellers should make sure their home smells fresh and inviting. From kitchen to pet odors as well as anything else, what a seller may perceive to be homey could quickly turn off a buyer.
Sellers should know that old fixtures are another way to scare off buyers, and for new cabinet hardware and doorknobs, the cost is all of $400 or $500, but it makes a huge difference. The same holds true for dated ceiling fans, light fixtures and kitchen appliances. Buyers can take care of these things after closing escrow, but it's going to impede the seller from getting the highest price possible for their home. Also avoid clutter, which can be a distraction.
It appears that today's buyer wants no part of wallpaper. Wallpaper is a pain to remove and simply adds another chore to a buyer's to-do list. Another pain-in-the-rear are popcorn acoustic ceilings; once the must-have for fashionable homes in the '60s and '70s, but now an accessory that badly dates the space.
Also, if your house is cluttered with too many personal items, it's like the buyer is trying on those clothes with you still in them: a fit is unlikely. Decorating to live and decorating to sell are different, and sellers should try to eliminate personal items, including family photos, personal effects and even unique colors.
Loan officers often tell sellers that another bothersome item is owners who want to walk around with the potential buyer and provide advice. On the other hand, curb appeal is critical – it is your house’s first impression. Experienced lenders know that buying, selling, or refinancing a home is very important, and are more than happy to assist and provide recommendations based on their experience.
It is important for anyone buying a home or refinancing to understand a couple basic concepts. For example, the two most important considerations for homebuyers are debt to income ratio and the price vs. rent calculation. Homebuyers first must understand their affordability using a debt-to-income ratio, and then they can evaluate their housing options in their local market by comparing cost to rent vs. buy.
Debt-to-income analysis tells you what percentage of your income you’re going to spend on housing and all other monthly obligations. This is how all U.S. mortgage lenders make loan approval decisions, and although there are other quantitative measures lenders use for loan decisions (such as credit scores or the percentage of the home’s value that will be financed - LTV), the debt-to-income ratio is by far the most important because it looks at the most data.
For housing, monthly debt payments mean highest-case principal and interest on a mortgage payment and property taxes (before tax deductions), homeowners insurance, and mortgage insurance if applicable. For non-housing it means payments on present and future student loans, credit cards, car loans/leases (the present versions of these items come from credit reports) plus child support, alimony, and countless other types of non-housing debt people have hidden in their credit reports, tax returns, and asset account statements. Lenders allow you to spend 40-50% of your income on your debt obligations depending on the loan size and type.
The next step is to understand whether it’s cheaper to rent or buy. Like debt-to-income, it’s all about the numbers at which you are looking. The reason is because people use national figures for home prices and rents, but monthly mortgage payment assumes a 20% down payment at prevailing 30-year-fixed-rate mortgage rates. Their analysis is based on median national asking prices for rents and median mortgage payments based on national listing prices, so when taking this into consideration, know exactly what the numbers mean!
Calculate your monthly payment with applicable finance charges, PMI, hazard insurance, and property taxes.
Still renting an apartment and thinking about a home purchase? This calculator can help you make the final decision.
Content on this site is for informational purposes only. It is not to be construed as legal, financial, personal or other advice. Information and opinions offered are those of independent sources and may not be endorsed by American Mortgage Service Company and/or AmericanMortgage.com. We make no representations as to the suitability or validity of information in a blog on this site. We are not liable for any errors or content of blogs or for any losses, injuries or damages arising from its display or use. There is no obligation to update information provided in a blog on this site.