Marc Davis, provided by
Investopedia
Wednesday, May 25, 2011
If you're planning to buy a house right now, the next few months may be the best time to buy. Waiting for both housing prices and interest rates to fall may not be a good strategy for potential homebuyers since analysts don't expect any significant declines in these two most important home-buying factors. Here's nine real estate trends that suggest you should get into the housing market sooner than later. (To learn more, check out 5 Tips For Recession House Hunters)
TUTORIAL: Buying a Home
1. Lowest Housing Prices in Years
Nobody knows when the housing market will hit bottom, but prices are at their lowest in several years and may soon start inching back up again. So buying now or in the near future may be the right time. An abundance of bargain-priced housing is now available because of foreclosures and falling prices.
2. Interest Rates at a 50-Year Low
Interest rates are near a 50-year low, according to housing analysts. By the second week of May, 2011, 30-year fixed mortgage rates had fallen to their lowest rates of the year at 4.63%. Although mortgage rates vary from day to day, the 30-year rate at this level is an attractive inducement to first-time buyers, or buyers who want to either move up to larger residences, or others, including many empty-nesters wanting to sell and move to smaller houses or condos.
3. Interest Rates Expected to Go Up
As the economic recovery gains momentum, interest rates are expected to increase, making mortgages more expensive. Even a half-percent increase in mortgage interest can add a hundred dollars or more to your monthly payments, depending on the amount of your loan. (To learn more about interest rates, read Forces Behind Interest Rates.)
4. Adjustable Rate Mortgages at Record Lows
Adjustable Rate Mortgages (ARMs) are also lower now, although there are risks that interest rates may increase over the life of the mortgage and the balloon payment due at the end of the mortgage life, usually three or five years, could be substantial. Nevertheless, for new buyers who are sure they'll have enough income to meet payment obligations, an ARM may be the best way to buy a house. Keep in mind that payments may increase on a monthly basis. For a full explanation of advantages and risks in an ARM, visit the federalreserve.gov.
5. Low Down Payment Mortgages Available
Low-down-payment financing through Federal Housing Administration-insured mortgages is available as an additional inducement to buy a house now. Down payment minimum requirements also fluctuate and may increase as the market heats up, so potential buyers with less cash to consummate a deal may be well-advised to buy now.
6. Easy to Qualify, Easy to Borrow
Lending standards have become less rigid recently, so qualifying for a mortgage may be easier. Experts advise that a potential buyer become pre-approved for a loan by a lending institution - meaning that a lender guarantees to make the loan contingent on an appraisal of the property. But the good news in seeking pre-approval is that lenders are now willing to let a potential buyer take on more debt than the previous formula allowed - a percentage of monthly income. (For more on getting a cost effective mortgage, see Score A Cheap Mortgage.)
7. Lenders Offer No-Fee Mortgages
Many banks and other lending institutions are waiving mortgage loan generation and other fees and points (each point represents 1% of the loan amount), thereby reducing the cost of buying.
8. Home Builders Eager to Sell, Offer Incentives
Home builders, competing with the resale market, are offering incentives to potential buyers to reduce their inventory of unsold new homes. Incentives may include cash for furniture or free refrigerators, washers and dryers. In Seattle, for example, builders have offered opportunities to win iPads or Smart phones, and $3,000 buyer bonuses. Specific demographic groups, including military personnel, police, firefighters and health-care workers, have been targeted by builders for special offers. But virtually anyone who can qualify for a mortgage is likely to get a good deal from a homebuilder who is eager to sell.
9. Motivated Home Owners Desperate to Sell
Desperate sellers of existing homes have also been offering attractive inducements to potential home buyers, including warranties on appliances, air conditioners and furnaces. Some sellers are even offering cash or have included furnishings, refrigerators, washers and dryers as a bonus to potential buyers. With so many existing homes in foreclosure or underwater - bargain prices are abound in this depressed market. (For help on buying a house, read Top Tips For First-Time Home Buyers.)
The Bottom Line
With a convergence of the factors above, all of which are favorable to the prospective home buyer, there may not be a better time to buy than right now. It's a buyer's market, but like everything else in life, the bargain deals won't last. (To help determine if it is the right time to buy, read Are You Ready To Buy A House?)
Original story - 9 Reasons To Buy A House Now
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Thursday, May 26, 2011
Monday, May 16, 2011
What is the home buying process all about?
What is the home buying process all about? Where do you start?
Your Agent: First you need a good, honest and very knowledgeable Realtor. Someone like me for instance, who has sold homes in the area you are looking in for a good long time, knows the market very well and can give you good feedback. An experienced agent, like me, can help interpret that “disclosure package” for you and have good recommendations for scheduling your Wood Destroying Pests and Organisms inspection and your contractor inspection. Explain what title insurance is and why you need it. A good agent, like me, will be able to explain the purchase contract in ways you will be able to understand and provide you with an accurate timeline for satisfying contingencies within the contract.
So, this is how it goes down:
Initial consultation with a Realtor to define relationships, determine wants and needs, discuss financial qualifications and lenders, and fill out a basic worksheet
Loan Qualification: this is a big step and one you should do before looking at homes. I will give you recommendations of Loan Officers I know who can provide you with good service and reliable information. There are a lot of charlatans out there who will lure you in with the promise of some super low rate but when it comes time to deliver, they rarely can. Staying close to your Realtor’s advice will keep you away from the pitfalls, and having a pre- approval letter from a direct lender like a bank also helps to make your offer stand out.
Home shopping: Tour properties that meet most of your qualifications. In the San Francisco market, because of the scarcity in some neighborhoods and varying housing styles it may be wise to remain somewhat flexible about some needs.
Making the offer: I will sit down with you and prepare the offer. I will discuss with you the contingencies and the disclosures that are due from the seller. If a disclosure package was supplied prior to writing the offer we will go over the disclosure package and sign off on them. Signing off on any inspections does not preclude you from having your own inspections. In fact, I highly recommend that you have your own inspections.
I then present the offer to the listing agent and in some cases directly to the seller. The offer has a 24 hour acceptance window for the seller to accept, counter your offer or reject it.
When your offer gets accepted we will open escrow at the title company. You will deposit your 3% initial deposit at the title company. The title company holds the money “in escrow” until closing.
Final Loan approval: You then will contact your loan officer and let him/her know that you have an accepted offer. The loan officer will order the appraisal and tell you what documents he still needs from you to complete your file.
I will get the loan officer a copy of the fully executed offer, and give him or her, the title company information and the name of the
escrow officer. The title company will send to the loan officer a copy of the Preliminary title report.
Inspections and other contingencies: I also schedule appointments for inspections according to your schedule. Most inspections are done during the week during regular business hours. It is highly recommended that you attend your own inspections. You will gain knowledge of your new home through another set of eyes.
Escrow Period: During the escrow period of usually 30 days you will be having inspections, reviewing the reports, removing contingencies, reviewing additional documents and you will also need to get homeowners insurance, accept of course, if it’s a condominium. The bank will require that you have it in place when you close.
The Closing: Once your loan is fully approved the bank will draw up all the documents to close on the loan. That is the Note and Deed of trust and other documents that support the loan. Once the loan documents are drawn the bank sends them to the title company. When the title company receives them the escrow officer will call me to help schedule an appointment for you to come in to sign. At this time she will also be able to prepare an estimated closing statement for your review. The closing statement will have an estimate of the final amount you need to bring to close on the property. The funds need to be in a cashier’s check or you can wire transfer them into the title company. If you elect to do a wire transfer I will get you the information to give to your bank or you will get it directly from the escrow officer. At the appointment you will need to bring identification, i.e. driver’s license or passport.
Recording and Getting Keys:: When you have signed everything the escrow officer will provide you with a copy of everything you signed. Once she has your funds and the banks funds she can reconcile the account and distribute the money to the seller and refund any money you may have paid in excess of what was finally required. When that is completed the escrow officer releases the deed to record. The deed is recorded and you now own the home and you receive the keys. CONGRATULATIONS!!!!!!!!!!!!
Your Agent: First you need a good, honest and very knowledgeable Realtor. Someone like me for instance, who has sold homes in the area you are looking in for a good long time, knows the market very well and can give you good feedback. An experienced agent, like me, can help interpret that “disclosure package” for you and have good recommendations for scheduling your Wood Destroying Pests and Organisms inspection and your contractor inspection. Explain what title insurance is and why you need it. A good agent, like me, will be able to explain the purchase contract in ways you will be able to understand and provide you with an accurate timeline for satisfying contingencies within the contract.
So, this is how it goes down:
Initial consultation with a Realtor to define relationships, determine wants and needs, discuss financial qualifications and lenders, and fill out a basic worksheet
Loan Qualification: this is a big step and one you should do before looking at homes. I will give you recommendations of Loan Officers I know who can provide you with good service and reliable information. There are a lot of charlatans out there who will lure you in with the promise of some super low rate but when it comes time to deliver, they rarely can. Staying close to your Realtor’s advice will keep you away from the pitfalls, and having a pre- approval letter from a direct lender like a bank also helps to make your offer stand out.
Home shopping: Tour properties that meet most of your qualifications. In the San Francisco market, because of the scarcity in some neighborhoods and varying housing styles it may be wise to remain somewhat flexible about some needs.
Making the offer: I will sit down with you and prepare the offer. I will discuss with you the contingencies and the disclosures that are due from the seller. If a disclosure package was supplied prior to writing the offer we will go over the disclosure package and sign off on them. Signing off on any inspections does not preclude you from having your own inspections. In fact, I highly recommend that you have your own inspections.
I then present the offer to the listing agent and in some cases directly to the seller. The offer has a 24 hour acceptance window for the seller to accept, counter your offer or reject it.
When your offer gets accepted we will open escrow at the title company. You will deposit your 3% initial deposit at the title company. The title company holds the money “in escrow” until closing.
Final Loan approval: You then will contact your loan officer and let him/her know that you have an accepted offer. The loan officer will order the appraisal and tell you what documents he still needs from you to complete your file.
I will get the loan officer a copy of the fully executed offer, and give him or her, the title company information and the name of the
escrow officer. The title company will send to the loan officer a copy of the Preliminary title report.
Inspections and other contingencies: I also schedule appointments for inspections according to your schedule. Most inspections are done during the week during regular business hours. It is highly recommended that you attend your own inspections. You will gain knowledge of your new home through another set of eyes.
Escrow Period: During the escrow period of usually 30 days you will be having inspections, reviewing the reports, removing contingencies, reviewing additional documents and you will also need to get homeowners insurance, accept of course, if it’s a condominium. The bank will require that you have it in place when you close.
The Closing: Once your loan is fully approved the bank will draw up all the documents to close on the loan. That is the Note and Deed of trust and other documents that support the loan. Once the loan documents are drawn the bank sends them to the title company. When the title company receives them the escrow officer will call me to help schedule an appointment for you to come in to sign. At this time she will also be able to prepare an estimated closing statement for your review. The closing statement will have an estimate of the final amount you need to bring to close on the property. The funds need to be in a cashier’s check or you can wire transfer them into the title company. If you elect to do a wire transfer I will get you the information to give to your bank or you will get it directly from the escrow officer. At the appointment you will need to bring identification, i.e. driver’s license or passport.
Recording and Getting Keys:: When you have signed everything the escrow officer will provide you with a copy of everything you signed. Once she has your funds and the banks funds she can reconcile the account and distribute the money to the seller and refund any money you may have paid in excess of what was finally required. When that is completed the escrow officer releases the deed to record. The deed is recorded and you now own the home and you receive the keys. CONGRATULATIONS!!!!!!!!!!!!
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