Buyer's Agent (Working with a realestate agents)
- What is the importance of a buyer's agent?
Traditionally, all residential real estate agents represented
the home seller, including the agent who helped the buyer find
their home. Under that system, they buyer had no representation.
But now buyers can have representation. Like the seller, buyers
like you can have someone on your side liiking after your best
interests while representing you during your home search and purchase.
More and more informed home buyers are electing to choose a buyer's
agent. In fact, 71% of home buyers surveyed in a recent poll for
the National Association of Realtors said they would use a buyer's
agent next time they purchased.
- Who Needs a buyer's agent?
Selecting a buyer's agent is the best way to go if:
* you want to make sure you are getting the best buy for your
money
* you're relocating, or unfamiliar with the local real estate
market
* you're buying for investment and desire negotiating assistance
* you need to purchase anonymously
- How can a buyer's agent help me?
A buyer's agent is legally required to provide you with full disclosure,
loyalty, confidentiality, diligence, and accounting information.
Additional services include showing you available homes, property
features, preparing & submitting the offer to purchase, and
sharing valuable information such as:
* the lowest price a seller would accept
* how long a house has been on the market
* price for which homes in the community have sold for
* the ins and outs of purchasing new construction property
* how to best negotiate repairs
- Can a seller's agent or subagent help me buy?
A seller's agent can offer buyers some services, but keep in mind
that the seller's agent is actually working for, and is loyal
to, the seller. By law, the seller's agent must negotiate on behalf
of the seller, and that means s/he cannot disclose to you information
that is not in the best interest of the seller. Also, you, as
a buyer, should be careful not to disclose any information (financial
or personal) that could be used against you. This is one of the
main reasons home purchasers elect to work with a buyer's agent.
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Home Buying Basics
Congratulations on your decision to buy a new home! There are
many important things to consider throughout the process, especially if you're a first-time
homebuyer. Here's some information that will keep you on track.
In General....
A home purchase may be your largest financial
transaction to date, so it's important to make the right decisions
and to keep an eye on the details. With the assistance of your Real
Estate Agent and Loan Officer, it should be an efficient, pleasant,
and ultimately rewarding experience.
Count On Your Real Estate Agent To:
- Preview available homes to weed out those
that are overpriced, or undesirable in some other way.
- Present the homes that suit your needs as
you've defined them.
- Help you determine the difference between
a "good buy" and a property which, because of its nature (neighborhood,
market appeal, etc.), might have to be discounted if you decide
to sell in the future.
- Negotiate the best deal for you. With a Pre-Qualification
letter from your mortgage service in hand, your Real Estate
Agent will be able to demonstrate that you are a qualified and
capable borrower. This will strongly influence the Seller, and
may make the difference between the Seller accepting your offer
or someone else's -- even if your offer is lower!
Count On Your Mortgage Broker and Loan Officer To:
- Assist you in selecting the best loan to meet
your personal situation and goals. (This single decision can save
you thousands of dollars throughout the years!)
- Keep you informed of your loan status throughout
the entire process.
- Keep your Real Estate Agent informed of our
loan progress (Note: your personal information is always kept
confidential between you and your mortgage services; only deal
points and progress are shared).
- Get the appropriate loan for you at the best
rates and fees. This will save you significant money "up front"
and throughout the years to come.
Count On Yourself To:
- Keep your Real Estate Agent informed of any
questions or concerns as they develop.
- Keep the process moving by providing documentation
and decisions as soon as reasonably possible. By doing so, many
of the details are taken care of early in the process so you can
comfortably concentrate on any last-minute details or events that
require your attention.
- Enjoy purchasing your home, but do remain
objective throughout -- to make the business decisions that are
best for you.
- Make sure you are pre-approved as early as
possible. This will put the power of financing behind you so you
can concentrate on selecting your home.
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Financial
Opportunities
- Adjustable Rate Mortgage (ARM):
Because the initial interest rate on an ARM is lower than a conventional
loan, monthly payments can be significantly reduced. The rate
rises or falls within predetermined controlled limits, but only
after a three or five year period, then adjusted annually after
that. Shopping among several lenders is usually required to find
the best terms.
- VA Fauranteed Loan:
The Department of Veteran Affairs requires no downpayment (up
to a specific sales price) on VA mortgages awarded to eligible
veterans.
- FHA 203(B) Insured Loan:
Your loan, obtained through an established lender, and insured
by the Federal Housing Administration (FHA), requires a lower
downpayment and interest rate then most other mortgages. Downpayment
is generally 3 to 5% of the appraised value, depending on the
value of the house.
- Buydowns:
A third party (i.e., builder, seller, or investor) agrees to put
additional cash "up front" at settlement in exchange
for a lower interest rate for the buyer.
- Tax-Free Gift:
A tax-free gift from your parents or others, documented by a simple
gift letter starting that no repayment is required, will result
in a lower downpayment for you. Children can receive up to $10,000
each, tax free, from each parent in one year. Thus, from four
parents, a couple can get gifts up to $40,000 without any gift
tax consequences.
- Finance Closing Cost:
Some lenders allow you to pay closing costs from your mortgage
loan proceeds. This method will free some additional cash for
a downpayment.
- Sale of Assests:
You may want to consider selling some of your other owned properties
(real estate, jewelry, collectibles, automobile, etc.) securities
(sotck, bonds), or other assests, in order to ease your downpayment
amount.
- Tax Refund:
Buyers anticipating an income tax refund can use it to increase
their downpayment funds, especially in the spring.
- Securities Loan:
If you own bonds, an IRA, vested pension, or profit sharing, some
banks will lend you cash against these as collateral. The portfolio
must be negotiable, even though not immediately available.
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Ideal Lifestyle
Loans
Choosing the right mortgage for
your lifestyle could have substantial impact on your retirement,
your net worth, and your family's future lifestyle. It is critical
that you choose a loan program that fits your needs as well as you
future goals. Here are a few choices you may want to consider.
- If you plan to move
or refinance within the next 5 to 7 years...
Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)
These increasingly popular ARMS -- also called 3/1, 5/1 or 7/1
-- can offer the best of both worlds: lower interest rates (like
ARMs) and a fixed payment for a longer period of time than most
adjustable rate loans. For example, a "5/1 loan" has a fixed monthly
payment and interest for the first five years and then turns into
a traditional adjustable-rate loan, based on then-current rates
for the remaining 25 years. It's a good choice for people who
expect to move (or refinance) before or shortly after the adjustment
occurs.
-
If you plan to stay
in your home for at least 7 years...
Thirty-Year Fixed Rate Mortgage
The traditional 30-year fixed-rate mortgage has a
constant interest rate and monthly payments that never change.
This may be a good choice if you plan to stay in your home for
seven years or longer. If you plan to move within seven years,
then adjustable-rate loans are usually cheaper. As a rule of
thumb, it may be harder to qualify for fixed-rate loans than
for than adjustable rate loans. When interest rates are low,
fixed-rate loans are generally not that much more expensive
than adjustable-rate mortgages and may be a better deal in the
long run, because you can lock in the rate for the life of your
loan.
Fifteen-Year Fixed Rate Mortgage
TThis loan is fully amortized over a 15-year period and features
constant monthly payments. It offers all the advantages of the
30-year loan, plus a lower interest rate -- and you'll own your
home twice as fast. The disadvantage is that, with a 15-year
loan, you commit to a higher monthly payment. Many borrowers
opt for a 30-year fixed-rate loan and voluntarily make larger
payments that will pay off their loan in 15 years. This approach
is often a safer than committing to a higher monthly payment,
since the difference in interest rates isn't that great.
- If your income varies
throughout the year...
Negative Amortization (Neg. Am) Loan
This is a deferred-interest loan which is very powerful -- and
the most misunderstood mortgage program because of its many options.
Basically, the lender allows the borrower to make monthly payments
that are less than the accruing interest. Therefore, if the borrower
chooses to make the minimum monthly payment, the loan balance
will increase by the amount of interest not paid on the loan.
The power of this loan lies in the borrower's ability to choose
between making the full loan payment, or the minimum payment,
or any amount in between. If a borrower's income varies throughout
the year (due to commissions, bonuses, etc.), the borrower can
make a lower payment during the "lean times", and then make higher
payments when funds are readily available.
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What to bring to
an Application Interview?
Knowing what documentation to bring when you're
ready to apply for your mortgage will give you a head start on getting
your loan commitment. Use this list as a guide for the information
you need to provide to your loan officer.
INCOME:
- Most recent pay stub(s) covering 30 days of
earnings
- Last 2 years of W2 forms
- Last 3 years of Federal Tax Returns, if you
are a first time home buyer
- Last 2 years of Federal Tax Returns, if you
are self-employed, own 25% or more of the company you work for
using commission income to qualify for your mortgage or if you
work for a "family" business
- Copy of awards letter from Social Security,
VA, pension, child support, etc...
- Copy of last 2 years IRS Form 1099 if you
are using retirement income to qualify for your mortgage
LIABILITIES:
- Name, account numberm monthly payment and
balances owned on all open installment and credit accounts.
- 401K loans and credit union accounts are included
in your list of liabilities.
CREDIT:
- Prepare a "written" credit explanation
for any adverse ratings reported in the last 12-24 months of your
application date. If you have a former bankruptcy, foreclosure
or entered a payment plan with Consumer Credit Counceling, provide
a copy of your discharge and filing papers.
CURRENT HOUSING:
- A 12-month rental or mortgage history is required.
Provide the name and phone number of your landlord or current
mortgagee. If you are living with relatives, a written statement
is required from them to verify the terms of your residency and
whether or not you are required to pay rent.
CLOSING COSTS:
- Provide the most recent 3 months of bant statements
to verify that the money you have available to close this transaction.
If you will be receiving "gift funds" then a Gift Letter
signed by the donor is required. Your loan officer will provide
this form along with instructions on transferring the money.
SUBJECT PROPERTY:
- Copy of fully executed Purchase Contract with
all attachments
- Name and phone number of your homeowner's
insureance agent
- Copy of your latest real estate tax bill
APPLICATION FEES:
- $375 - Complete Package (must have purchase
contract)
- $100 - Pre-Approval Only (do not have a purchase
contract)
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Why use a Mortgage
Broker?
In the past 20 years, independent mortgage brokers
have had a significant positive impact on the lending industry.
Today the use of a professional mortgage broker is one of the key
stategies used by sophisticated borrowers.
- What is a Mortgage Broker?
A mortgage broker is an independent real-estate financing professional
who specializes in hte origination of residential mortgage loans.
Mortgage brokers normally pass the actual funding and sercising
of loans on to "Wholesale Lending Sources." A mortgage
broker is also an independent contractor working with (on average)
as many as 40 lenders at any one time. By combining professional
expertise with direct access to hundreds of loan products, your
broker provides the most efficient way to obtain financing tailored
to your specific financial goals.
- What do Mortgage Brokers do?
In the volatile home-lending market, Mortgage Brokers can serve
as "police", offering their clients security, safety,
and peace of mind. One of the Broker's most important functions
is escorting your loan application through the entire process,
constantly patrolling the component transactions for possible
breakdowns. A professional mortgage broker can wade through the
mountains of rate data and program options, researching current
market conditions to find the most accurate and up-to-date information
about cost-effective loan options.
- Brokers handle the Details!
There are literally thousands of variables which can affect the
outcome of your mortgage transaction. That's why you need a mortgage
broker to act as a liasion between the title and escrow company,
real estate agent, lender, appraiser, credit agency, the underwriters,
the processors, attorneys, and any other services which may effect
your transaction.
A mortgage broker also:
* Discusses and explains financing program options
* Informs you, in writing, of lock-in options
* Explains all documents of the loan application
* Explains all associated costs of the loan application
* Explains the disbursement of all loan applications
* Explains the loan process, from application to closing
* Provides you with a good faith estimate of cost and fees
* Communicates with you throughout the loan process in a timely
manner
* Coordinates the final closing of your transaction
Brokers and loan officers are your resource for questions or concerns
after your transaction closes.
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What Buyer's
Need to Know
- AmeriDream Charity downpayment gift program:
Many people dream of owning a home but don't think it's possible
because they lack the resources for a downpayment. The AmeriDream
Downpayment Assistance Program was set up specifically to help
these prospective homeowners. AmeriDream is designed to give more
people the opportunity to buy a hoem by providing the downpayment
for people who can't provide it themselves.
The AmeriDream Program gives the propect the downpayment
-- up to 5% of the home purchase price -- so that they can become
homeowners. Thus recipients of the downpayment doesn't have to
pay it back.
- How do Buyer's qualify?
Buyers must qualify for a loan that allows gift funds.
Buyers must purchase their home from a Builder/Seller who has
enrolled his or her home in the AmeriDream Program. Builders/Sellers
have the option of enrolling their homes in AmeriDream's Gold,
Silver or Bronze Program.
Gold Option Program: Buyers are eligible
to receive up to 5% of the home's purchase price to apply towards
their downpayment and closing costs.
Silver Option: Buyers are eligible
to receive up to 3% of the home's purchase price.
Bronze Option: Buyers are eligible
to receive up to 2% of the home's purchase price.
- Does the downpayment
assistance come from the Builder/Seller?
No. The downpayment funds come from a pre-existing pool of money
raised by the AmeriDream Charity, Inc.
- How do I get the
money?
After you qualify for the loan and purchase an "enrolled"
home, the lender requests the funds. AmeriDream then sends the
money for your downpayment to the closing company? Also, keep
in mind that there are no income limits; the program is not limited
to first-time buyers and that AmeriDream will gift up to 5% of
the purchase price of the home.
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If you have any questions regarding any of the
options or programs avaiable here, please don't hesitate to contact me and I will help you as best I can.
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