Home Buying Tips |
| With inventory diminishing
daily and multiple offers being extremely common, it is of great importance
that you position yourself to have the "Best Chance" to
get your offer accepted. You enhance your chance of getting the home
of your choice by doing the following: |
- Get pre-approved for the purchase: This
takes very little time and is of great value. At this time, identify
the price range for which you qualify and which fits your lifestyle.
- Submit a strong competitive offer: Submit
the offer as if there will be multiple offers.
- Include substantial earnest money deposit:
Acceptance of an offer is sometimes determined by the amount of
the deposit. A larger amount may signify a bigger commitment to
the seller.
- Minimize or eliminate contingencies:
The fewer contingencies, the stronger the offer.
- Make a buyer profile available: Time
on the job, flexibility, reason for purchasing seller's home,
etc..
- Be prepared to preview a new property quickly:
Homes sell sometimes in hours. Be prepared to make decisions quickly
and be accessible to change the terms instantly.
|
| Buyer and
Agent to have instant communication access: Let us maintain instant
access to each other via office phone, voice mail, fax, pager or cellular
phone. Mortgage Application
Checklist
|
- Copy of your Purchase
& Sale Agreement.
- Your present mortgage
information.
- Two year history of employment
and verification of all income sources.
- If self-employed, copies
of past two years Federal Income Tax Returns.
- Information about your
checking, savings and credit card accounts.
- Name, account number and
outstanding balance of each of your debts.
- Application deposits.
- Information about any assets.
- Information regarding
any other assets that will be used as funds to close.
- If FHA - Copy of Social
Security card and photo ID.
- If VA - Certificate of
Eligibility or DD214.
- If Employee Relocation
Client - include relocation information and copy of offer, promissory
note and copy of check on bridge loan.
|
| Questions For
Your Lender |
- Are both fixed-rate and
adjustable mortgage loans available?
What is the interest rate?
- How long can I "lock-in" the financing
at the current interest rate?
- Is a float down lock available
in case rates drop after I have locked in?
- What are the other fees
a lender may charge me in conjunction withmy loan?
- Are funds for a second
mortgage available?
- Is there a pre-payment
penalty clause? This involves extra charges for paying off the
loan before maturity. About 80% of all loans in the United States
are paid off early.
- What is the "grace"
period? How late can a monthly payment be made before a late charge
is assessed? What will happen if a payment is missed?
- Information about any assets.
- If you sell your house,
will the new buyer (if he/she qualifies) be able to assume your
mortgage at the same interest rate?
- Do you have to pay "points" to get
your new mortgage? Usually lenders charge points for the cost
of giving you a mortgage loan. A "point" is 1% of the
loan.
- Will the lender require mortgage insurance?
- Is the loan serviced locally or is the servicing
sold?
Ask for a written "good faith deposit".
|
| On adjustable
loans: |
- How often will the interest
rate be adjusted?
- Is there a maximum limit
on each rate change?
- How often will the monthly
payment be adjusted?
- Is there a ceiling on
payment adjustments?
- Can the term of the loan
be extended?
- What is the maximum rate
that can be charged over the life of the loan?
- Is there any potential
for negative amortization?
|
| Financing Options |
Fixed Rate Mortgage
The interest rate stays the same throughout the term of the loan -
usually 15 or 30 years - so the principal interest portion of your
payment remains the same. Payments are stable but initial rates tend
to be higher than adjustable rate loans and often cannot be assumed
by a subsequent buyer.
Balloon Mortgage
This is a loan, which must be paid off after a certain period. The
advantage they offer is an interest rate that is lower than a mortgage
that is made for 30 years.
Adjustable-Rate Mortgage (ARM)
The interest rate is linked to a financial index, such as a Treasury
security or a cost of funds - so your monthly payments can vary up
or down over the life of the loan - usually 25 to 30 years. Interest
rates can change monthly, annually, or every 3 or 5 years. Some ARMs
have a cap on the interest rate increase, to protect the borrower.
Other terms relating to adjustable-rate mortgages:
|
- Adjustment period: The
length of time between interest rate changes. Example: one year
ARM-interest changes annually.
- Cap: The limit on how
much an interest rate or monthly payment can change at each adjustment
or over the life of the loan.
- Conversion clause: A provision
in some loans that enables you to change an ARM to a fixed rate
loan, usually after the first adjustment period. This may require
additional fees.
- Index: A measure of interest
rate changes used to determine changes in the loan's interest
rate over the term of the loan.
- Margin: The number of percentage points
a lender adds to the index rate to calculate the ARM's interest
rate at each adjustment.
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