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More videos below that can help you!
Once you are under contract, your lender will send out an appraiser to verify the purchase price is in line with the property’s value. Here are the two most important things to know about the appraisal process.
1. Appraisals help guide mortgage terms. The appraised value of a home is an important factor in the loan underwriting process. Although lenders may use the sale price to determine the amount of the mortgage they will offer, they generally only do so when the property is sold for less than the appraisal amount. Also, the loan-to-value ratio is based on the appraised value and helps lenders figure out how much money may be borrowed to purchase the property and under what terms. If the LTV is high, the lender is more likely to require the borrower to purchase private mortgage insurance.
2. Appraisers use data from the recent past. Appraisals are often considered somewhat backward-looking because they use sold data from comparable properties (often nicknamed “comps”) to help come up with a reasonable price.
If for some reason, the property does not appraise for the contracted price then you’ll generally have the ability to renegotiate the terms of the contract or walk away from the deal.
As always, if you have any questions about the home buying process, please call, text, or email us today!
A homeowners insurance policy will protect you against certain losses and damage to your new home and is generally required by lenders prior to closing. Some lenders will collect the money you owe for homeowners insurance as part of your monthly mortgage payment and place it in an escrow account, paying the insurer on your behalf when the bill is due.
Let’s talk about the five most important things to know about homeowners insurance.
● Coverage exclusions: Most insurance policies do not cover flood or earthquake damage as a standard item. You may need to buy these types of coverage separately.
● Dollar limitations on claims: Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
● Replacement cost: If your home is destroyed, you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll still receive only $150,000.
● Actual cash value: If you choose not to replace your home when it’s destroyed, you’ll receive replacement cost minus the depreciation. This is what’s referred to as actual cash value.
● Your liability: Generally, your homeowner’s insurance covers your liability for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that amount is sufficient, especially if you have significant assets.
As always, if you have any questions about the home buying process, please call, text, or email us today!
Here are five tips that can increase your chances of getting your dream house in a competitive housing market.
1. Get prequalified for a mortgage. A pre-qualification letter from a lender shows a firm commitment to buy and makes your offer more desirable to the seller.
2. Be ready to make a decision. Spend plenty of time in advance deciding what you can afford and what your must-haves are in a home so you won’t hesitate when you have the chance to make an offer.
3. Bid competitively. Your first inclination may be to start out offering something less than the absolute highest price you can afford, but if you go too low in a tight market, you will likely lose out.
4. Keep contingencies to a minimum. Restrictions such as needing to sell your home before you move can make your offer unappealing. Remember that, if the market is tight, you’ll probably be able to sell your house rapidly. You can also talk to your lender about getting a bridge loan to cover both mortgages for a short period.
5. Don’t get caught in a buying frenzy. Just because there’s competition for a home doesn’t mean you should buy it. And even though you want to make your offer attractive, don’t neglect inspections that help ensure the house is a sound investment.
As always, if you have any questions about the home buying process, please call, text, or email us today!
Here are five tips for navigating the home buying process.
1. Talk to mortgage brokers. Many first-time homebuyers don’t take the time to get prequalified. They also often don’t take the time to shop around to find the best mortgage for their particular situation. It’s important to ask plenty of questions and make sure you understand the home loan process completely.
2. Be ready to move. This is especially true in markets with a low inventory of homes for sale. It’s very common for home buyers to miss out on the first home they wish to purchase because they don’t act quickly enough. By the time they’ve made their decision, they may find that someone else has already purchased the house.
3. Make a good offer. Remember that your offer is very unlikely to be the only one on the table. Do what you can to ensure it’s appealing to a seller.
4. Factor maintenance and repair costs into your buying budget. Even brand-new homes will require some work. Don’t leave yourself short and let your home deteriorate.
5. Find a trusted partner. It’s absolutely vital that you find a real estate professional who understands your goals and who is ready and able to guide you through the home buying process.
As always, if you have any questions about the home buying process, please call, text, or email us today!
If you are planning on buying a home using a home loan then these three tips will help you get prepared for the financing process.
1. Reduce debt. Lenders generally look for a debt load of no more than 36 percent of income. This figure includes your mortgage, which typically ranges between 25 and 28 percent of your net household income. So you need to get monthly payments on the rest of your installment debt which are things like car loans, student loans, and revolving balances on credit cards, down to between 8 and 10 percent of your net monthly income.
2. Save for a down payment. Designate a certain amount of money each month to put away in your savings account. Although it’s possible to get a mortgage with 5 percent down or less, you can usually get a better rate if you put down a larger percentage of the total purchase. Aim for a 20 percent down payment. Also, don’t forget to factor in closing costs, which can average between 2 and 7 percent of the home price.
3. Obtain a copy of your credit report & establish a good credit history. Make sure it is accurate and correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments. Get a credit card and make payments by the due date. Do the same for all your other bills, too. Pay off entire balances as promptly as possible.
As always, if you have any questions about the home buying process, please call, text, or email us today!
A credit score is a number between 300–850 that depicts a consumer’s creditworthiness. The higher the score, the better a borrower looks to potential lenders with scores above 620 considered desirable for obtaining a mortgage.
The following factors affect your score:
1. Your payment history. Did you pay your bills on time? Bankruptcy filing, liens, and collection activity also affect your history.
2. How much you owe and where. If you owe a great deal of money on numerous
accounts, it can indicate that you are overextended. However, spreading debt among several accounts can help you avoid approaching the maximum on any individual credit line.
3. The length of your credit history. In general, the longer an account has been open, the better.
4. How much new credit you have. New credit—whether in the form of installment plans or new credit cards—is considered riskier, even if you pay down the debt promptly.
5. The types of credit you use. Generally, it’s desirable to have more than one type of credit—such as installment loans, credit cards, and a mortgage.
As always, if you have any questions about the home buying process, please call, text, or email us today!
Every lender requires documents as part of the process of approving a mortgage loan. Here are documents you’re generally required to provide…
● W-2 Tax returns — or business tax returns if you’re self-employed — for the last two or three years for every person signing the loan.
● At least one pay stub for each person signing the loan.
● Account numbers of all your credit cards and the amounts for any outstanding balances.
● Two to four months of bank or credit union statements for both checking and savings accounts.
● Lender, loan number, and amount owed on installment loans, such as student loans and car loans.
● Addresses where you’ve lived for the last five to seven years, with names of landlords if appropriate.
● Brokerage account statements for two to four months, as well as a list of any other major assets of value, such as a boat, RV, or stocks or bonds not held in a brokerage account.
● Your most recent 401(k) or other retirement account statement.
● Documentation to verify additional income, such as child support or a pension.
As always, if you have any questions about the home buying process, please call, text, or email us today!
Credit scores play a big role in determining whether you’ll qualify for a loan and what your loan terms will be. So, keep your credit score high by doing the following:
1. Shop for mortgage rates all at once. Having too many credit applications can lower your score. However, multiple inquiries about your credit score from the same type of lender are counted as one if submitted over a short period of time.
2. Check for errors in your credit report. Thanks to an act of Congress, you can
download one free credit report each year at annualcreditreport.com. If you find any errors, correct them immediately.
3. Pay down credit card bills. If possible, pay off the entire balance every month.
Transferring credit card debt from one card to another could lower your score.
4. Don’t charge your credit cards to the max. Pay down as much as you can every month.
5. Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less severely for problems after a year.
6. Don’t order items for your new home on credit. Wait until after your home loan is approved to charge appliances and furniture, as that will add to your debt.
7. Don’t open new credit card accounts. If you’re applying for a mortgage, having too much available credit can lower your score.
8. Avoid finance companies. Even if you pay off their loan on time, the interest is high and it may be considered a sign of poor credit management.
As always, if you have any questions about the home buying process, please call, text, or email us today!
After your offer gets accepted, you’ll have an inspection period. This is your opportunity to have a licensed inspector canvas the home looking for common issues prior to moving forward with the home purchase.
Here are the four main areas the inspector will check.
1. Roofing. A good inspector will provide very important information about your roof, including its age, roof draining systems, buckled shingles, and loose gutters and downspouts. They should also inform you of the condition of any skylights and chimneys as well as the potential for pooling water.
2. Plumbing. They will examine the water supply and drainage systems, water heating equipment, and fuel storage systems. Drainage pumps and sump pumps also fall under this category. Poor water pressure, banging pipes, rust spots, or corrosion can indicate larger problems.
3. Electrical. The inspector will check the condition of service entrance wires, service panels, breakers and fuses, and disconnects. They also inspect the outlets in each room.
4. Heating and air conditioning. The home’s vents, flues, and chimneys should be
inspected. The inspector should be able to tell you the water heater’s age, its energy rating, and whether the size is adequate for the house. They should also describe and inspect all the central air and through-wall cooling equipment.
As always, if you have any questions about the home buying process, please call, text, or email us today!
If you have questions or are ready to begin the home buying process, just complete the form below, and a member of our team will be in touch shortly!
Kerby & Cristina Real Estate Experts | RE/MAX Results | 1143 South Shore Dr Plymouth, MN 55441 | 763-634-0073 | © 2023
Kerby & Cristina Real Estate Experts | RE/MAX Results | 1143 South Shore Dr Plymouth, MN 55441 | 612-812-9262 | © 2023
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