When you're in the market for a home, I'm here to help you find the best mortgage terms around. But I also want you to be a fully-informed consumer!
As you already know, buying a home may be the largest purchase of your life so you should go into it with eyes wide open!
In this article, I'd like to provide you some proven and common-sense guidelines that can save you time, money and hassle during the mortgage-hunting process. Guideline 1: Look Beneath the Surface of the Interest Rate! If you're like most prospective home buyers, you call lenders or use the Internet to shop for the best interest rates. That's a good first step, no doubt about it! But, the mistake many buyers make is that they stop there and don't consider the fees that may be added on to the loan later by the cheapest lender.
In other words, it's the lenders' game, and they may want you to play by the rules you're not even aware of. The answer, of course, is to know those rules ahead of time so you know exactly what you're getting when you buy that mortgage. More on this subject later! Guideline 2: Chose the Type of Lender That Works Best for You! There are several different sources of lenders - banks, credit unions, mortgage brokers, etc. They all have their advantages and disadvantages in terms of the rates and services they can offer you. For example, credit unions often provide the best value and service, but, of course, you have to belong to one in order to receive their services. Regular banks and "big lenders" (Bank of America, Citigroup, etc.) also provide competitive rates and services. Of course, they only offer products their companies provide. You can also use a mortgage broker. This person is a "wholesaler" who uses several lenders to give service to their customers.
The advantage of a broker is that he or she offers a greater selection of rates and products. However, they also tend to be more expensive than regular banks and big lenders.
Brokers make money in two ways. One is origination fees ("yield spread" or "rebate"). Essentially, the origination fee is a commission paid by the bank to the brokers to encourage them to use their firm. The second way is by selling a higher interest rate to you. This means there's room for you to negotiate that interest rate down! When a broker quotes you an interest rate, ask him or her to tell you what the origination fee, rebate or yield spread on that rate is. For a broker, a reasonable amount would be a total of 1% of the loan amount from yield spread, origination or combination of the two. Most brokers usually want to make at least 2%.
Tip: Don't pay an origination fee unless the broker informs you that he or she isn't getting anything on the back end of the deal. The bottom line: you can (and should) shop among all these lenders to find the lowest rate. It can save you thousands of dollars over the life of the mortgage. Guideline 3: Review the Good Faith Estimate with an Eagle Eye!
By law, lenders are required to provide you with a Good Faith Estimate or GFE. In essence, the GFE gives you a general summary of all the costs and expenses you'll incur at the time you close on your new home.
The document should cover closing costs and the amount of cash you need to close on the agreement. It should also spell out which if any prepaid expenses must be handled and the average monthly payment you'll have to make in order to keep up with the loan. Most lenders provide complete and straight-forward information on these forms; however, there's no reason for you to accept the GFE at face value.
Comb through the information and if you don't understand a particular item or fee, ask for an explanation. If you still don't understand them, you may want a lawyer to review them for you so you have complete understanding.
Remember: A GFE is only an estimate. Changes may occur through no fault of the lender. A reputable lender will let you know if fees are going up substantially. In general, however, if those fees go up by more than approximately 16%, then a red flag should go up in your mind. Guideline 4: Negotiate, Negotiate, Negotiate! When confronted with the expertise and "prestige" of banks, we all have a tendency to think they know best, and we should, therefore, agree to their terms. Never think this way! Banks are like any business; you can and should negotiate with them! Want more information on banks and other lenders? Contact me atsclark@deebrealesate.com or call 402.305.4335.
No, you don't need the fictional detective inspector. However, you do need a home inspector! Think of this as a "pre-emptive strike" to maintain or increase your home's value before you put it on the market. Here are the benefits an inspector provides you: Benefit 1: The inspector can uncover any problems that need fixing, and you can correct them before any potential buyers enter your home. Such an inspection can prevent your sale from falling through!
Benefit 2: With an inspection, you can show prospective buyers receipts to prove the work has been done. Buyers love proof! In reality and in their eyes, it underpins the value of your home and the asking price.
Benefit 3: You may be able to factor the cost of the inspection into the asking price for your home!
Benefit 4: When you have a presale home inspection completed, you're able to estimate if the discount the prospective buyer is asking is reasonable. In other words, you can refuse unreasonably low offers if you know the value of your house, including the degree of its defects.
So, How Do I Find a Qualified Home Inspector? I can recommend a certified home inspector who will do a great job for you. However, if you decide you want to do it on your own, make sure he or she is qualified!
Con artists sometimes pose as home inspectors, taking your money and giving you nothing but grief in return. Here's how to know if an inspector is the real deal:
Ask your friends for referrals. If they've had a good experience, go with that home inspector.
I’d recommend you interview a minimum of two or three inspectors before choosing one. Make sure they’re full-time professionals conducting several inspections a year.
If possible, select a home inspector who’s a member of The American Society of Home Inspectors (http://www.ashi.org/) or the National Association of Home Inspectors http://www.nahi.org/. These association members follow a stated code of ethics. In addition, they’re prohibited from having a professional interest in the sale, repair or maintenance of a property they inspect. They’re also forbidden from using their inspection business as a way to find customers for a handyman service that they “happen” to own. You may want to go on the Internet and use ASHI’s “Find a Home Inspector” link to identify potential candidates in our locality.
As part of the interview process ask for samples of comprehensive reports (about 20-50 pages in length). The samples should be painstakingly done and backed up with complete details, including photos and diagrams. If an "inspector" refuses to give you a report or provides only a sloppily written 2-to-5 page sample, run the other way!
What Does a Home Inspector Cost?Frankly, the rates vary. On a national level, the rates fall in the range of $200 to $400.
As part of the interview process, I recommend you ask several inspectors for their rates so you can get an idea of the price range.
In the end, keep in mind that while the cost of an inspection may seem high, it can actually add several thousand dollars to the value of your home! So, don't think of it as a cost; think of it as an investment!
What Exactly Does a Home Inspector Evaluate? In general, he or she will look at the following areas:
Electrical System Wiring, Service Panel, Devices, and Service Capacity
Plumbing Systems, (fixtures, supply lines, drains, water heating devices, etc.)
Property Drainage/Landscaping
Roof, Roof Shingles, Chimneys, Attic
Walks and Drives
Windows, Doors, Cabinets, Counters, etc.
Should I Be Present During a Home Inspection?You bet! A typical inspection takes three hours or more, so I recommend that you be present for at least the first 30 minutes to make sure the job is being done thoroughly.
At the end of the inspection, the home inspector should give you a point-by-point summary of what needs to be corrected in order to add value to your home!
Hope you enjoyed this information! If you have more questions, contact me at 402.305.4335 or sclark@deebrealestate.com.
Susan Clark - PJ Morgan Real Estate
sclark@pjmorgan.com
(402) 305-4335 (cell phone)
Hello! I'm Susan Clark in Omaha, NE and I guarantee, if you hire me, you'll get the best value on your home if you're looking to buy or sell. So, when you're looking to make a decision in real estate, or you know anyone who's looking to buy or sell, call me today at 402.305.4335 or email me and let's talk about your dream home!
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