The Importance of Mortgage Pre-Approval and Finding a Legitimate Lender

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In the past, potential home buyers would often do their house shopping before they secured their financing. This method of putting the “cart before the horse” is not very effective in today’s mortgage market because you are potentially setting yourself up for disappointment if you cannot actually afford to buy the dream home you have selected. So, why not avoid the disappointment by simply getting pre-approved for a mortgage before you start home shopping? Most lenders can pre-qualify you for a mortgage over the phone or even online. The lender will ask basic questions about your financial history and income situation and then estimate how much you will be given for a mortgage. However, it is important to remember that getting pre-qualified is not the same as being pre-approved. For example, a pre-qualified letter is simply an estimate which gives you a “ball park” figure of what a lender will give you for a mortgage. An application is not completed and financial information is not verified so there is still no guarantee on the amount you can borrow. Being pre-approved means you have actually applied for a mortgage by filling out an application, you have received a credit report, and you have verified your income situation. Upon pre-approval you will know exactly how much you can spend on your new home. You also gain more credibility with sellers if you are pre-approved because both of you know exactly how much you can afford to spend on your dream home. So taking the time to get pre-approved with a legitimate lender (a bank, savings and loan, a mortgage broker, etc.) before you start home shopping will make your home buying experience less stressful and more effective. Just ensure that you do find a legitimate lender and try to avoid those who seem disorganized and informal. If a lender cannot provide the right information that is relevant to the current mortgage market, simply look for another reputable lender. 

Published in: on December 17, 2007 at 5:58 pm Comments (0)

How to Hire a Home Inspector

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If you’re purchasing a property and thinking about choosing a home inspector based on price, take a moment to consider the possible consequences. A home will be one the biggest purchases you will ever make, its best to make sure you’re making a sound investment. Hiring a qualified home inspector will help you make a knowledgeable purchase.

Here are some tips for choosing a qualified building inspector:

1) Speak with the inspector to find out what kind of training they have. In Maine, no qualifications are needed to become a home inspector therefore, the more training an inspector has the more qualified for the job they will be.

2) Find out if the home inspector is full time or part time. You should be looking for someone who is up to date on industry standards and preforms inspections on a regular basis.

3) Ask if the Inspector is a member of the Better Business Bureau or other professional organizations. This shows that the inspector is committed to keeping a good standing in the community and  is interested in maintaining a good reputation.

4) Find out how an inspector will report their findings. Verbal reports are generally not recommended. Ideally, the home inspector will provide you with a detailed report with photos and recommendations.

5) Ask your inspector what they won’t include in the report, and decide if you need to hire someone else to cover whats not done, or if there is someone who can do all of the inspections you want.

6) Ask for testimonials from past customers, or ask your Realtor, they can usually connect you with someone who is reliable and well qualified.

www.brettdavisrealtors.com

Published in: on December 13, 2007 at 9:27 pm Comments (0)

Maine & National Real Estate Sales Data for October 2007

The following information was provided by the Maine Association of Realtors. The data reflects properties reported as sold in the Multiple Listing Service within the time periods indicated.

South Portland—- Sales of Maine real estate continued to drop in October 2007, while prices for single-familiy, existing homes dipped a slight 1.95 percent. Realtors reported 1,041 sales across Maine last October. Thats down 12.23 percent compared to 1,186 sales during the month of October 2006.

The median sales price for a single-family existing home was $188,500 in October, down slightly from $192,250 one year ago. The median sales price indicates that half of the homes were sold for more and half sold for less.

The National Associaton of Realtors found that nationally, sales of existing single family homes dropped 20.8 percent in October. The national median price of a single family existing home decreased by 6.3 percent in one year to $2 05,700.

Regionally, in the Northeast, sales were down by 12.6 percent. The Regional median sales price rose 1.3 percent to $205,700.

This data backs up the idea that its now more important then ever to price a home appropriatly to the market and to commission it appropriatly. Its also a great time for buyers as there are far more choices and lower prices.

Below are two charts showing statistics for Maine and its 16 counties. The first chart lists statistics for the month of October only, statewide. The second chart compares the number of existing, single-family homes sold (units) and volume (MSP) during the months of August, September and October of 2006 & 2007.

                                                       Statewide October Only Chart

  Units Sold ‘06      Units Sold ‘07    Change       MSP ‘06     MSP ‘07     %Change

         1186                        1041                  -12.23%         $192,250    $188,500      -1.95%

                                                  

          

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Published in: on December 4, 2007 at 6:21 pm Comments (0)

Types of Deeds

In Real Estate there are 4 types of deeds that are commonly used. Below is a brief explanation of each.

General Warranty Deed: In this type of deed the seller conveys a property with warranties or covenants and is legally bound to these grantees.  A General Warranty Deed provides the most protection to a buyer. Some basic warranties include:

-Covenant of seisin: This basically means that the seller owns the land and has the    right to convey it.

-Covenant against encumbrances: The seller guarantees that the property is free from any liens or encumbrances that are not stated in the deed.

-Covenant of quiet enjoyment:This states that the buyer’s title will be good against any third party attempting to establish title of the property.

-Covenant of further assurance: This means that the grantor will provide any documents or information necessary to make the title good.

A warranty deed does not just cover the time a grantor owned the property, but it extends for the entire life of the property. The grantor of a warranty deed is liable for title problems that occur before and during their ownership.

Special Warranty Deed: This type of deed conveys just two warranties: that the grantor has received title and that  no encumbrances occured during ownership that are not included in the deed. The grantor of this deed is not liable for any problems with the title that have occurred prior to their ownership.

Bargain & Sale Deed:  This type of deed does not grantee against encumbrances on the property. All this deed guarantees is that the grantor holds title. This type of deed is most commonly used in tax sales & foreclosures. The grantor of this deed can not be held liable for any problems that later arise with the property.

Quitclaim Deed:This is the least protective type of deed for a buyer. This deed only conveys whatever interest the grantor has in the property. These types of deeds are typically used to fix defects in the title or to transfer property between family members.

Published in: on November 30, 2007 at 7:36 pm Comments (0)

Points in Real Estate Explained

 

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If you’re entering into a contract on a home you may be asked or have to pay ”points”. Below is an explanation of what points are, as always we welcome your comments and questions!

 

 What is a Point?

A point is equal to 1% of the new loan amount.

Why do Lenders Charge Points?

Whenever government regulation, state usury laws and/or competitive practices prohibit the lender from charging a rate of interest which would make the real estate loan competitive with other fields of investments, the lender can bring the real estate loan up to those other investments.

Are Points Called Different Names?

Yes. Loan Origination Fee, Commitment Fee, Discount Fee, Warehousing Fee. Funding Fee are some of the more common names used.

Who Pays the Points?’

FHA: Buyer is usually charged with the loan Origination Fee. The Discount Fee can be paid by buyer or seller.

VA: Buyer is usually charged with eh Loan Origination Fee & Funding Fee. Discount Fee must be paid by seller.

Conventional: Points can be paid by the buyer, seller, or split between the two.  This will be stated on the contract of sale!

City/County/State Government Sponsored loans: as published by them.

Do the Number of Points Charged Fluctuate?

Yes. If rates on mortgage loans are lower than other investments,( such as stocks, bonds, etc.) then funds will be drawn away from the mortgage market. Also, when there is heavy demand upon the money market because of business needs, military requirements or other government borrowing, the result is that money for home mortgages becomes scarce and more expensive. When this occurs, more points can be charged. Points balance the market. Points are not set by government regulation but by each lender individually.

Is FHA or VA Financing Unfair to Sellers?

No. Homes can sell faster because more buyers can qualify with the lower down payment requirement, lower interest rate-long term loans with lowest monthly payments. Sellers receive all cash for their equity to reinvest in a new home or other investment. The purpose of these loans is to provide purchasers the opportunity to buy homes with minimal cash investment thus providing a bigger market for sellers.

Are Points Deductible for Income Tax Purposes?

Points on a home mortgage are deductible currently if points are generally charged in the geographical area where the loan is made and to the extent of the number of points generally charged in that area for a  home  loan. If you are in doubt about points being deductible, you should contact your accountant or the person who prepares your tax returns.

Published in: on November 28, 2007 at 2:42 pm Comments (0)

Reasons To Hire a Buyer’s Agent

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If you’re thinking about buying a home, you may be wondering whether or not you should hire a Buyer’s Agent. Buying a home is one of the biggest financial decisions you’ll have to make, are you sure you’re ready to handle the transaction on your own? Below are some great reasons to hire a Buyer’s Agent.

Purchasing a home is a big decision. The average person spends around 1/3 of their income on their home.  When Buyers attempt to “go at it alone” they risk the possibility of making mistakes. A good Buyer’s Agent can mean the difference between a wonderful transaction, and a nightmare.

Access to the Multiple Listing Service (MLS)

The MLS is a powerful resource that all Realtors have access to.  It’s a database of homes and represents approx.  99% of the homes for sale in any given market. The MLS has  evolved into a very precise search engine that allows an agent to enter in search criteria to produce the homes that match those specific parameters. While its true that buyers can use real estate search engines, the information they provide is minimal to what the MLS has and the criteria used for searching is minimal in comparison.

Your Time in Important to You

While driving through neighborhoods is an one way of deciding which locations you prefer, its not very time efficient. Gas prices are going up, and how much time do you really have to spend? A Buyer’s Agent can ask questions to find out what it is you’re looking for and then provide you with a list of homes that are the best match. A buyer’s agent has significant experience finding homes for buyers, and they can help narrow down your choices.

Your Very Own Advocate

Listing Agents have a legally binding agreement with their sellers that require them to have the seller’s best interests in mind at all times. This means, that they have no interest in helping you get a good deal. However, a buyer’s agent is there to help you and only you in the transaction. With a buyer’s agent on your side, you have someone who will make sure you’re getting a fair price, guide you, and advise through the entire transaction.

Negotiating

A Buyer’s Agent can provide you with a Comparable Market Analysis using the MLS’s stored sales data. With this in hand they can help you make an offer that is supported by firm, clear data- allowing you to get the best price possible.

 Experience

How many homes have you purchased? The average person owns 3-5 homes in their lifetime. A Realtor helps with the purchase of 3-5+ homes every month! They have the experience to know what can go wrong, and how to make things go right. Things that may be a deal breaker to the un-represented buyer can actually be dealt with and overcome with an experienced Realtor assisting.

Contacts

There are a lot of people involved in the purchasing process and your Realtor knows who will do the best job. Whether it’s a loan officer, home inspector, title company, or appraiser, your Realtor will put you in touch with someone they trust the transaction with. This is vital for a smooth transaction.  

 They Will Put you at Ease

Purchasing a home is one of the biggest financial decisions you will every make. Knowing you have someone who is looking out for your best interests and is prepared to handle whatever arises can help you sleep easy at night.

Published in: on November 19, 2007 at 5:46 pm Comments (1)
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