Should I talk with a bank before looking at homes?
The answer to the question is YES! There are tons of reasons why you should talk with a bank and get pre-approved before looking at homes. First and foremost, talking with a bank before looking at homes can help you understand exactly how much you can afford. There is no reason to look at homes that are listed for $250,000 if you can only afford up to $200,000.
If you’re a first time home buyer, talking with a bank before looking at homes is strongly suggested, as there are many first time home buyer programs available. These programs can vary from state to state and county to county, so knowing exactly what’s available to you, is critical.
Another important reason to talk with a bank before looking at homes is so you understand exactly what costs are associated with buying a home. There are many home buyers who don’t understand the difference between a down payment, pre-paid items, and escrows, which can be thoroughly explained by a mortgage professional. If you are in need of a few trusted recommendations for a mortgage professional, let me know!
Should I buy or continue to rent?
Buying a home can be a very solid investment. This being said, renting can also be a better option for some, depending on the circumstances. The current interest rates are incredible. A 30-year FHA mortgage can be locked in at a rate of around 3.5%. Since the interest rates are so low, it actually can be cheaper to pay a mortgage right now than paying rent.
There are questions that you should ask yourself before deciding to buy a home. One of the most important things to consider is the length you plan on staying in a home, if you were to purchase. If the answer is only a couple of years, it’s likely the better decision is to continue renting. Another question to ask yourself is whether you are ready to take on the additional “responsibilities” of owning a home. When owning a home there will be general home maintenance that should be done, are you ready for that?
Buying a home is a great option in many cases, but not always. I am happy to have an open discussion with you and chat about the pros and cons of each!
I own a home, should I buy another before selling my current home?
There is truly no concrete “correct” answer to this question. There are pro’s and con’s to buying a home before selling your current home and the same can be said about selling your current home before buying another.
Buying a home before selling your current home
The biggest benefit to buying a home before selling your current home is the fact that you have a suitable property lined up. This can reduce the stress and pressure of having to find a home once your current home is sold. This however also can create disappointment and heartbreak. If you are unable to purchase a new home without having to sell your current home, you’re purchase offer is going to be contingent upon sale and transfer of title of your current home. If your current home does not sell in a timely manner, this can lead to you getting “bumped” by a non-contingent buyer and you losing out on the home you’re looking to purchase, which can be devastating.
Selling your current home before buying a new home
The time it takes to sell your current home is unpredictable. There is no crystal ball that exists that can tell you exactly how many days it will take. Selling your current home before buying a new home will put you in an ideal position to negotiate on the new home you’re purchasing due to the fact you are purchasing without the sale contingency of your current home.
One risk of selling your current home without buying a new home first is the chance of not being able to have a place to live. There are options if your current home sells before buying another though. A “lease-back” can sometimes be negotiated with the buyer of your current home. A “lease-back” would allow you to retain possession of your current home for a certain number of days after closing at the expense of paying the buyers mortgage. A “lease-back” allows for additional time to find a new home!
If you need to sell in order to buy, click here to receive exclusive access to 10 creative solutions that can allow you to do exactly that – sell then buy!
Do I really need a Realtor when buying a home?
Do you know the ins and outs of a real estate transaction? Do you understand Real Estate Law? Do you know what paperwork to complete, when to complete it, and who to submit it too? Do you study strategy and negotiation in the real estate industry? Do you study the real estate market and have access to properties that no one else may? Do you have training, experience and a network of professionals that can help you at every step of your real estate transaction? These are are just a few simple reasons why a Real Estate Professional is strongly recommended when buying a home. There are many reasons why you should have a Realtor represent your best interests when buying a home. Keep in mind, all Realtors are NOT the same! It’s important to interview an agent and select one that you trust, connect with, has great communication skills, and accurately showcases their value and your options when purchasing a home. Attempting to buy a home without a Realtor can really make the home buying process more difficult. At the end of the day, we don’t know what we don’t know – knowledge is power!
Who pays the Realtor fees when buying a home?
One reason why buyers ask the question about the need of having a Realtor when buying a home is because they don’t understand who pays the Realtor fees when buying a home. There are no guarantees, however, in most cases the seller pays the Realtor fees for both the buyers agent and sellers agent. There may be a scenario where this is not the case and sellers/sellers agent is only providing a certain percentage of compensation to a buyers agent. It is important to discuss commission in your initial consultation with your Realtor so you are aware of their commission requirements.
Questions Asked While “House Hunting”
What is a short sale?
Before getting involved with a short-sale, it’s important you understand exactly what it is and what to expect from a short sale. The easiest way to understand a short sale is the sale of a home in which the proceeds from the sale are less than the balance of debts secured by liens against the property and the home owner cannot afford to pay the liens in full.
Before purchasing a short sale, you should consider things such as the time it can take for a short sale response, the fact that a foreclosure is still possible, and that many short sale properties are in disarray. Short sales are not impossible to buy but you must be patient and be in no immediate rush to move.
What is a foreclosure?
Believe it or not, foreclosures can actually be a smoother transaction than a short sale. A foreclosure, sometimes referred to as a REO, is a property that is owned by a lender. If you’re considering the purchase of a foreclosure, it’s important to understand that most are sold “as-is.” Foreclosures, if not purchased by an owner occupant, are often purchased by investors, fixed up, “flipped,” and sold to a owner occupant.
How is the neighborhood/area?
When buying a home, a common question home buyers have is regarding the neighborhood/area. As a real estate professional, there are rules against steering and providing personal insight into specific areas and neighborhoods. This doesn’t mean that your Realtor cannot provide you with tips to help you choose the right neighborhood when buying a home. Many buyers wonder about the growth of the local economy, crime statistics, taxes, and local amenities. If you have a top Realtor when buying a home, you should be able to receive all of the pertinent information to allow you to make an educated decision on areas and neighborhoods.
How are the schools?
This is another question that Realtors should tread very lightly with. There is no doubt that schools impact property values. Just like tips for selecting a neighborhoods, a top Realtor should be able to provide you with names or websites where you can find information on the local schools so that you can determine whether or not the schools are acceptable to you or not.
What are the average utility bills?
When buying a home, it’s important to know what additional costs will be in addition to the monthly mortgage payment. Utility bills are just one of the additional costs to consider when buying a home. Utility bills can be obtained from the home owner and in some cases, from the local utility company, who can provide averages over the past 12 months. Keep in mind, everyone prefers to have their home temperature different, so the average bill could be different if you were to purchase the home.
What’s the age of the…____?
When looking at homes, many buyers want to know the ages of specific items in a home. The most popular items in a home that buyers want to know about are the major mechanical items, such as the roof, furnace, water heater, and air conditioning (if applicable). An experienced Realtor should be able to find the dates of a furnace, water heater, and air conditioning unit by looking at the serial numbers. The roof age is often known by the home owner. If not, the age usually can be approximately determined by looking at the roof characteristics, such as the sagging areas and the way the shingles are laying.
How many homes should I look at before putting in a purchase offer?
This question is often asked and is a simple answer. The answer is, there is no specific number of homes you should look at before buying a home. Don’t feel that if you were to purchase the first home you look at that you’re making a mistake. Same can be said if it takes you looking at 25 homes. Generally speaking, the average home buyer knows if they are interested in purchasing a home within the first 15 seconds of walking into the home. If it feels like home, it may be the one!
Questions Asked While Placing A Purchase Offer
How much should I offer the sellers?
When buying a home, you are the only one who can determine how much you should offer a seller. Certainly it’s suggested you ask for your Realtors advice and thoughts, but ultimately you are the only person who can determine how much you should offer. What I offer as a Pricing Strategy Advisor is insight on what a fair market value range would be on the prospective home. This can provide great value so you that way you are aware if you are overpaying for the property or not.
What is an earnest money deposit?
An earnest money deposit is also frequently referred to as a good faith deposit. When a buyer purchases a home, they provide the seller’s real estate company a deposit to hold in their escrow account. The primary purpose of this deposit is to show a seller you are serious about purchasing their home. The amount that is deposited is subtracted from the final figure that a buyer pays at the closing table. Sellers generally look for a well qualified buyer when reviewing purchase offers. In most cases, the larger the deposit, the stronger a purchase offer looks to a seller.
What is a sale contingency?
Some buyer’s decide when buying a home that they would like to find a suitable property before selling their existing home. A sale contingency means that the potential buyer of a home must sell their existing home, before being able to purchase the “new” home. Inspection and mortgage contingencies are other common contingencies that buyers write in their purchase offers. If the inspection report comes back and for some reason you do not want to proceed with the sale or if you are unable to obtain the mortgage for the home or sell your current one to purchase the new home, a contingency provides you with an “out” and allows you to back out of the deal and receive your deposit back.
How long does the seller have to respond to my offer?
There is not a standard answer to this question. A purchase offer will have a “life.” The “life of the offer” can vary from 12 hours to 3 or 4 days. There are many circumstances that can effect the length of the “life of the offer.” Your Realtor should know how long of a “life” to give to your offer. If you’re looking to purchase a home that is newly listed and the possibility of multiple offers exists, a shorter life is recommended. If the home you’re looking to purchase has been on the market for 3 months and the seller is located out of town, a 2-3 day “life” maybe necessary and/or recommended. It’s important to know that unless stated, the sellers can take their time in responding to your offer.
What if my offer is rejected?
When a purchase offer is submitted to the seller there are generally four possible responses. The first is an accepted offer, the second is a counter offer, the third is a rejected offer, and the final is an offer that is not responded to. If your offer is rejected, meaning the seller says no and doesn’t counter, you have the right to place another offer. It’s not very common an offer is rejected or not responded to, unless a seller is offended by a low-ball offer.
Do I have the option to have any inspections?
When buying a home, you have the option to perform several types of inspections. The purchase offer you write can be contingent upon a satisfactory home inspection, pest inspection, chimney inspection, radon test, and many other inspections. In most cases, it’s recommended that when buying a home, you at the bare minimum have a home inspection. There are home inspection findings that are more common than others, however, no two homes are the same so it’s a great idea to get the home inspected. It is also important to expect the home inspector to find things during their inspection. Depending on the price point, there can be certain items that come up in an inspection that are expected. It’s best to speak with your Realtor to determine expectations and whether or not you plan on requesting the seller to remedy the items identified in the inspection report, request a concession, or accept the report in full.
Questions Asked After A Purchase Offer Is Accepted
What’s the next step?
Congratulations! Your offer was accepted, now what? Between offer acceptance and the closing date, there are many things that need to be completed. In a nutshell, after an offer is accepted, generally any inspections will be completed. After the inspections, you complete a formal contract and mortgage application. Then last but not least, the title, abstract, survey, and any miscellaneous paperwork is completed. When buying a home, finding the perfect home is only one part of actually becoming a homeowner. Throughout the mortgage process, you should expect the bank to require documentation, letters, and other items from you to satisfy the bank conditions, so don’t be upset or surprised when this happens.
What happens if the appraised value comes in too low?
In addition to ensuring there are no safety hazards at a home, the bank appraiser is also making sure that the home value is at least what a buyer and seller agree too. This isn’t always possible though. If an appraiser determines the value of the subject property is lower than the agreed purchase amount, there are a couple different scenarios.
Seller Makes Concession
This is the most common result when an appraisal comes in too low. The seller must agree to sell the home for what the appraiser determines as the acceptable value.
Buyer Comes Up With Difference
The buyer must bridge the difference between the purchase price and the appraised value. This scenario is fairly uncommon as many buyer’s find it hard to pay more for a home than their bank appraisal indicates it’s worth.
The Transaction is Cancelled
Unfortunately for both the seller and buyer, this is a common result from a property under appraising. If the buyer does not want to bridge the difference and the seller does not want to make the concession and adjust the sale price, the transaction is cancelled.
Challenging an appraisal is not an easy task. It is something that must be done with much care and consideration, otherwise the chances of an appraised value being changed, is slim.
How much are closing costs?
In addition to your down payment, you will need to pay closing costs the day of closing. Average closing costs for a home buyer can run (about) 2% and 5% of the loan amount . That means, on a $300,000 home purchase, you would pay from $6,000 to $15,000 in closing costs.
Your mortgage professional and Realtor can help in determining how much in closing costs you will pay. It’s important to note, that closings costs vary on the home itself, location, time of year, down payment amount, lender, attorney, etc. Before closing on your new home, you will receive an “Initial Closing Statement” from your lender that will breakdown your closing costs in an itemized list.
Do I need to do a final walk-through?
As a buyer, you have the option to perform a final walk-through. Is a final walk through a requirement? NO. Is a final walk through recommended? YES. Generally when buying a home several weeks go by between when you last walked through your home. Lots of things can change during that time. When doing a final walk through a few things you should check is that furnace is working, the toilets are flushing properly, all the lights work, that there is hot water, and (if applicable) any previous inspection requests was completed.
When is the closing date?
When buying a home, the excitement level is extremely high. It’s important to understand that the closing date in the purchase offer is a target and not a guarantee. Before you hire the movers and take time off from work, know that the closing date in the contract isn’t necessarily the date you will own your new home. Many buyers will ask their Realtor this question, however, it isn’t up to the Realtors when a closing will be. The attorney’s are the ones who have to set the closing date and time.
When buying a home, being prepared and well educated can really make a huge difference. Again, “no question is a dumb question” and if you are unsure of something, ask! The home buying process begins before you ever look at one home and the process continues all the way up to the closing. When buying a home, it’s critical you’re on your game, stay organized, and remain focused throughout the entire process. After reading these frequently asked questions, you should now have a stronger understanding of what to expect throughout the process.
Are you purchasing a home in the Hudson Valley/Catskill Region of NY?
If so, the above frequently asked questions should help you be more prepared for the process. If you’re unsure where to begin your Hudson Valley/Catskill, NY home search, contact me and we can put together a winning plan and strategy.