Q1. Is being loan pre approved an advantage when buying a home?
A. This is an easy question to answer. YES! Put yourself in the shoes of a home seller. Two offers are presented on the home you are selling on the same day. Both for your asking price. One borrower has already seen a lender and has their financing in order. They have given you a pre approval letter. The other buyer has yet to see a lender. Which offer will you accept? A pre approval helps you negotiate the terms you want and more important, it gives you peace of mind. You know that all the issues that can pop up when applying for a loan have addressed. Information provided by Eric Larsen, ITC.
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Q2. How are interest rates determined?
A. Loans that have been funded are secured and sold on the open market much like stocks. These are known as Mortgage Backed Securities. Rates are determined each day by looking at what price the investors are willing to pay for mortgage backed securities on that day. This rate actually fluctuates constantly, just like stock prices. Investors determine what they will pay by looking at various economic indicators, such as unemployment, new housing starts, etc. The price of the 30 year Long Bond plays a key role in this determination also. So...if a loan for $100,000 at 7% will fetch a price of $100,000 the borrower pays nothing (no points) for that rate. But if that same loan is requested at 6.75% the investor might only pay $98,000 for it. The borrower must pay $2,000 (2 points) to get that rate. The lower the rate, the less interest the investor will earn over time, the less he will pay for that loan. Information provided by Eric Larsen, ITC.
Q3. Would you recommend buying a home with a Homeowners Association or without one?
A. This is strictly a personal preference. I can express, however, some of the pros and cons of each. A neighborhood with a HOA tends to be a newer tract and very conscious of the overall neighborhood appearance. i.e.; No RV's on the street or in sight, the paint color of the home must be approved, certain conditions, covenants, and restrictions (CC&Rs) apply. On the other hand, persons not wishing so many restrictions placed on them may choose an area with no Homeowners Association. Please note that almost all tracts in Santa Clarita have some kind of CC&R's. they just may not have an association to enforce them.
Q4. What is the minimum commission an agent will take to sell my home?
A. That is a very difficult question to answer. Real Estate commissions are negotiable, however, remember the old saying "You get what you pay for". The most important thing when hiring a Real Estate Professional is to interview several agents. Find someone compatible with your needs and can partner with you to establish the most effective marketing campaign to draw the most buyers to your home. Some questions to ask your prospective Realtor may be 1) Do you work as a full time Realtor? 2) Do you have references that I may check? 3) What 4 or 5 Marketing Systems do you offer that no one else has available and why? This is by no means a complete list but may help you select the right Realtor, and also get you the very best from the one you choose...
Q5. When buying a house, what parts of the Santa Clarita Valley should I consider?
A. Consider them all. They all have pluses. A good Realtor will listen to your wants & needs.
Q6. What are the top 5 things I should do to help sell my house?
A. The best chance for selling your property is within the first seven weeks.
- It is very important to price your property at a competitive market value at the signing of the employment contract. The market is so competitive that even over-pricing by a few thousand dollars could mean that your house would not sell.
- Make sure your home is easily accessible to show buyers. Top selling agents will not show your home if both the key and access are not readily available.
- Keep your home squeaky-clean. Most people are turned off by even the smallest amount of uncleanness or odor when buying a home. If your house is squeaky clean, you will be able to sell your home faster and net hundreds, if not thousands, of dollars more.
- Paint & carpet is your best improvement investment for getting a quick & profitable sale. Many houses do not sell because of this problem. Don’t think that buyers have more money that you have to replace carpet. They don’t. They simply buy elsewhere.
- Curb appeal immediately reflects the inside condition of your house to the buyer. Our area has a good climate, therefore outdoor activities are important. People enjoy their yards. Make certain that the trees are trimmed so the house can be seen from the street. Have the grass mowed, trimmed and edged. Walkways should be swept. Clean away debris. If needed, paint the trim of the house, remove parked cars. This all adds up to curb appeal. If a buyer does not like the outside, that person simply drives on.
Q7. What kind of things should my Real Estate Agent be doing to sell my house?
A. Your chances of a successful home sale will increase dramatically when you work with your agent as a partner toward the common goal of meeting your clearly defined objectives. A competent Real Estate Agent will be able to develop a marketing campaign specific to an individual property. By determining whom the most probable buyers your agent can give your home the most effective exposure. The right agent can overcome buyer objections and help buyers see how easy it is to purchase your home with financing that is tailored to their needs. A competent Real Estate Professional will develop a good sales contract based on the principals ability to perform and which addresses all likely contingencies, and, your agent will provide you with the proper way to make all legally required disclosures. There are a great many details involved in selling a home and mistakes can be made at every turn. Select the right agent and avoid the majority of things that can cost sellers time and money.
Q8. Are open houses a good idea when trying to sell a home?
A. About 1% of persons that attend an open house actually purchase that house. Open houses are simply a good way for Realtors to prospect for new buyers.
Q9. What is a contingency sale?
A. On the buyer’s side it means that the purchase of a home is conditional on the sale of the buyer’s current property. On the seller’s side it could mean that the sale of the property is subject to the seller finding their home of choice. Other contingencies include financing, appraisal, property inspections, termite reports, title and other disclosure documentation
Q10. What can first time home buyers do to make the home search process less stressful?
A. You can whittle days off the house hunting process if you set your priorities. First, decide what you need, what you would like and what you don't want. Then you and your real estate agent can sort through the available home listings more efficiently. Ask yourself: Do you want a single family home, a condominium or a townhouse? Do you want to buy new or resale? What kind of neighborhood do you want to live in? Calculate
how much you can afford (the best way to do this is to see a mortgage lender). You can expect to spend a few days to a few months shopping for a home. This depends on how well the available homes match your needs and expectations.
Q11. How can I be a smarter buyer?
A. If you understand current market conditions, you will position yourself as a better buyer. It helps to know if you are in a seller's market (where housing demand is high and supply is low) or a buyer's market (where housing demand is low and supply is high). In a seller' market , you may have to make a full price offer or higher just to beat the competition. In a buyer's market, you have more room to negotiate.
Q12. What does it really mean to "Make an Offer" on a property?
A. When you make an offer, you commit to one home. You sign a contract to purchase, which is legally binding if the seller accepts. You also write out your first check for a good faith deposit, which you can apply to the down payment at closing. Focus on the facts when making an offer:
Are you making an offer that you can afford? Have there been, or are there, any other offers? What is the apparent condition of the property? Whey does the seller want to sell? What contingencies, or conditions, do you need? Writing up the actual contract is simple and can take as little as an hour to fill out.
Q13. How do I choose a lender so I can get pre-approved for a home loan?
A. Many buyers already understand the financial benefit of being pre-approved and will immediately contact a lender before they begin their home search. Sophisticated buyers have found that their Realtor is an important source of information on the subject of financing. Your Real Estate Professional deals with a variety of lenders on a daily basis. Many lenders tend to specialize in a narrow range of loan products. By speaking with your Realtor first and describing your situation, you can find out who in the loan industry is most capable of providing the type of financing that is best suited for your individual needs.
Q14. What is PMI (Private Mortgage Insurance)?
A. Private mortgage insurance is a type of insurance required by the home loan lender. It help protect lenders against loss due to foreclosure. This protection is provided by private mortgage insurance companies and enable lenders to accept lower down payments than would normally be allowed. The average cost of mortgage insurance is between $300 and $900 per year based on the amount and terms of your loan. As a home buyer, borrowers who make down payments of less than 20 percent of the home price must have PMI. This protects the lender from losses if the borrower defaults on a low down payment loan. The good news is that PMI can probable increase the size of the loan for which you could qualify, as well.
Q15. There are some changes effecting PMI (Private Mortgage Insurance), what are they?
A. The Homeowners Protection Act of 1998, which took effect July 29, 1999, requires mortgage companies to cancel the coverage automatically once a homeowner build up a certain level of equity in their home. Even before the new law, homeowners could drop their PMI, if they met certain requirements. But, they had to contact their lender to request cancellation and jump through hoops to remove it. Many homeowners didn't even know to ask and they continued to pay longer than they needed to. While the new law benefits mostly people who take out mortgages July 29 or later, those with existing mortgages can still benefit. Freddie Mac and Fannie Mae, two big buyers of mortgages, both said private mortgage insurance for existing homeowners will be automatically cancelled when the mortgage reaches its midpoint. The PMI on a 30 year mortgage will automatically end in the 15th year, for example. Those new guidelines won't kick in until 2001. Please note that the new law does not apply to the government mortgage insurance program which is run by FHA (Federal Housing Administration). Information courtesy of Derrick LeBlanc, Commonwealth Land Title Company.
Q16. My appraisal costs me more than in years before. What's the deal?
A. The U.S. Department of Housing and Urban Development's (HUD) new Home buyer Protection Initiative took effect on September 10, 1999. The new law requires federal appraisers to provide more detailed information in their appraisals of homes being purchased through the Federal Housing Administration (FHA). Appraisers say that the new law increases their work load significantly and forces them to act as inspectors and field questions they may not be qualified to answer. They also say the most damaging effects of the new law will be placed on home buyers, who will be forced to pay twice as much for an appraisal.
Q17. Are credit repair companies on the up and up?
A. Over the past year, the Federal Trade Commission has shut down dozens of con artists over their claims to repair poor credit ratings. Typically, these swindlers peddle kits costing $100 or more that promise to help consumers "fix" blemished credit records or even create entirely new credit files. Unfortunately, most for their so-called solutions are illegal - such as obtaining a new social security number or driver's license to hide previous credit problems or bankruptcies. Obviously, following such advice will only compound the consumer's troubles. If you suspect a company is marketing bogus credit repair services, contact the Federal Trade Commission at (202) FTC-HELP. Information courtesy of Adam Ford, Norwest Mortgage, Inc.
Q18. When is the best time to place my home on the market?
A. Too many people sell their house at the wrong time. Basically, you want to sell when there's the largest potential pool of buyers - causing prices to go up. This occurs when the following are present; Your area is considered attractive - because of location, schools, low crime rate, etc.; Mortgage interest rates are low; The economic climate of your region is healthy and people feel confident about the future; There's a jump in house buying activity. These are all situations that are happening now in our area. If you are planning on selling NOW is a great time to place your home on the market.
Q19. What are the costs involved in selling my home?
A. You can expect such costs as escrow and title fees, broker fees, termite reports, zone disclosures, transfer taxes, pro-rated interest, home warranty fees, etc.. You can figure approximately 9-10% of sales price of your home. Please contact your real estate agent to prepare an estimated net sheet especially for your personal situation.
Q20. If I list my home with a Realtor, won't I be bothered with a lot of people?
A. There will certainly be more people looking at your home, but you should look at this as a positive thing if indeed you want to sell your property. And if you work with a Realtor, you can be assured that all of the prospective buyers who come through your home will be seriously interested, financially qualified buyers.
Q21. How do I know if a buyer is financially qualified to purchase my home?
A. Realtors rely on the results of financial qualification forms filled out during the prospective buyer's appointment with a professional area lender.
Q22. How can a Realtor actually save me money when selling my home?
A. Realtors have greater ability to negotiate and to impress upon buyers the fair market value of homes. Because of this, Realtor-sold homes sell for 9.5% more money than owner-sold homes. And since the difference is more than the Realtor's fees, you receive more money for your home.