Tuesday, December 10, 2013

Mortgage Do's and Don'ts

Here is a statistic that may shock you: almost 30% of homes purchased are cash deals. Higher than you thought, right?

However, for the rest of the buyers, securing a mortgage is the most popular way to achieve home ownership. Here are some do's and don'ts when it comes to a mortgage.

Pay your bills on time and cut down on any debt. Credit scores are crucial. Your credit score will determine if you are able to get a loan and your interest rate. Many loan officers now have the tools to evaluate exactly what you can do to improve your credit score in real time!

Save now for a down payment. It's no secret that the more you are able to put down, the less you have to borrow. However, it is important to note that it may make more sense to pay off high interest debt first. In other words, pay off your credit card debt and settle for less of a down payment because your mortgage interest rate should be less on the property loan.

Shop lenders. Compare interest rates and closing costs, such as application fees and appraisals. Learn about the different types of mortgages before meeting with lenders. You would always get a second opinion when shopping for a car, right? Do the same with your mortgage!

Don't make any large purchases or career changes right before the closing.
Your lender will recheck your employment status and credit profile again shortly before the closing. If they are not satisfied, they can pull the plug just when you are about to close on the house of your dreams.

Get pre-approved for a mortgage, not just pre-qualified. This will expedite the home buying process and give you negotiating strength and credibility. Sellers will sometimes accept lower offers from qualified buyers, who can show they can close the deal.

Don't get in over your head. Borrow what you can afford, not what the lender is willing to lend. Scrutinize your budget and factor in property taxes, utilities and maintenance. For condominiums and planned unit developments (PUDs), do not forget to factor in the monthly association fees!

It seems daunting at first to find out exactly how much you can afford. What if it isn't as much as you thought? I believe that the sooner you know, the better. If your credit score isn't where it should be, you are now in a position to do something about it. Take charge of your finances!

Please contact me if you would like more details on mortgages or on any other real estate related subject! If I don't know the answer, I will strive to find someone who can!

Wednesday, December 4, 2013

Negotiating Your Way Into Your Dream Home

You could be looking to buy your first home, or maybe downsizing after retirement. Regardless of the circumstances, you of course want to be able to negotiate the best possible price for your new home.

The first crucial step of negotiating for homebuyers is getting pre-approved. Not only does it make sense to sit with your lender in order to have an idea of what you can afford, it also turns you into a cash buyer in the seller's eyes. It doesn't feel like you are negotiating, but you really are in a passive way. For example, if you are putting in an offer on a property in a multiple offer situation, even if your offer is slightly less than the competitors, you can see how a solid pre-approval can sway the sellers into accepting your offer instead of a competitor's offer which does not include a pre-approval.

Getting a pre-approval also saves time and can speed up the financing, which can bring forward the closing date and that is usually very appealing to a seller.

Before making an offer, do your homework! Work with a Realtor, who will be able to establish how much a property is worth. Your Realtor will be able to research comparables, the neighborhood and the market, all of which will help you make a realistic offer. If you come to negotiations with facts to back up your offer, the seller may be more willing to meet your price.

A listing agent will not be able to disclose the motivation or bottom line of the sellers. However, do your due diligence to find out as much as you can. Speak to neighbors. Is the property vacant? It might be that the owners are anxious to sell in order to make their next move.

The attitude you bring at the beginning of the process makes a lasting impression. If you go into it with a positive and win-win attitude, then if required, any negotiations needed further down the line will be much easier with both parties being receptive. Using facts instead of feelings also helps defuse a difficult negotiation. Sellers are emotionally invested into their house. Backing up your offer with facts (for instance, a general quote for repairing broken tiles, or a leaky chimney) shows that you are a serious buyer and will help avoid hurt feelings and resentment, which can lead to deals turning sour. And ultimately getting you in your dream home!

Do you have any negotiation tricks? Do you enjoy negotiating?