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Featured Listing
Clarksville Home for Lease – 801 Patterson Austin, TX
One of a Kind Townhouse in Downtown Austin
For Rent $2,200
One of a Kind Townhouse in Downtown Austin
For Rent $2,200
Buyers
Below are Frequently Asked Questions for potential home buyers. The home buying process is very complex. If you are considering buying a home in the future, these questions may help you better understand the steps for buying a home. If you have questions regarding the information below or the home buying process in genera, please feel free to contact me.
It’s been said that entering into a real estate transaction alone is similar to performing surgery on one’s self. It’s not something most people would do. Buying and selling real estate is the largest investment most people will ever make. It is more than a business transaction; it involves a lot of money, which means a lot of emotion as well. You want someone who can negotiate on your behalf removed from the emotional stress; your real estate professional will help accomplish your set goals and guide you through step by step. The home buying process is more involved that it appears on the surface. A trusted real estate professional will help you resolve issues as they arise.
Getting pre-approved for a loan is important for several reasons. First, it will give you an idea of how much you can afford, the current state of your credit, and what price range you should concentrate on. Second, it greatly improves your real estate professional’s ability to help you find the right home. Third, it is a courtesy for the sellers whose homes you decide to visit. Sellers want to know that qualified buyers are viewing their home. Lastly, it will make any offer you present on a home much stronger, as the sellers will know you are ready, willing, and able to purchase their home. For more information about getting approved for a loan, contact your trusted mortgage professional.
Credit issues are one of the biggest obstacles to home ownership. In today’s ever-changing lending world, credit is a critical component to buying real estate. Damaged credit can prevent your loan application from being approved. However, it is very important to remember – damaged credit is temporary. It can be improved. There are several programs that can help you improve your credit score. It requires commitment, but it is possible. Contact your trusted mortgage professional for more information.
It is critical that any prospective buyer conduct a thorough inspection of any property they are considering for purchase. Hire a licensed inspector to examine the property. The inspector will provide you with a detailed report of the overall condition of the home. It is important to remember that homes do not pass or fail inspections. Rather, the components of the home are either considering “operating properly” or “deficient”. It is recommended you work with an experienced inspector who can explain the extent of any issues with the property and how they may be remedied.
Buying a new home from a builder has several advantages. Builders often offer many incentives to prospective buyers – such as discounts on interest rates, rebates for closing costs, upgrades on the home, and much more. You may have less room to negotiate the overall price as the builder has a threshold they must stay within to maintain the overall values of their homes and make a profit (let’s face it, they are a business with a bottom line just like everyone else). Working with a real estate professional is always important whether buying a new home or a resale.
A short sale is an agreement between a home owner in default on their mortgage and the bank that holds the loan. The bank agrees to allow the home owner to sell the home for less than the value of the loan. Foreclosing on a property can cost the bank well over half the value of the home, and damages the owner’s credit for many years. A short sale allows the bank to take a smaller loss on the property and the owner can get out of default without damaging their credit status. Short sales can present opportunities to prospective buyers. However, it is very important to consult with a trusted real estate professional to explain the process in its entirety. A short sale can take up to 6-12 months to complete successfully.
Like short sales, foreclosures can be opportunities for prospective buyers. It is important to consult with a knowledgeable real estate professional prior to purchasing a foreclosure property. Some home loan programs do not allow lending on foreclosures. Buyers may be required to provide a larger down payment. Also, the bank usually does not know the condition of the property, thus unaware of unforeseen issues; also, they may not have a survey showing where the property boundaries lie. Always perform a thorough inspection and survey before pursuing a foreclosed property.
Appraisals are an important part of the loan approval process. Before a lender will agree to fund a home loan, they require an appraisal of the property to ensure it is worth the amount of money being borrowed. An appraiser inspects a home and reviews a set of criteria on the home to determine value. The appraiser also compares the property to similar properties that have sold within the same geographical area within a set period of time. The appraiser makes a professional determination of the value of the property based upon the current condition and comparative sold properties. The appraisal is a critical set in the lending process and determines whether or not a home loan will be approved by the lender.
In the state of Texas, the option period is a time period agreed upon by the buyer and seller in a real estate transaction that allows the buyer an unrestricted right to terminate the contract. The seller may require an Option Fee along with an Earnest Money deposit from the buyer. The buyer usually conducts a home inspection during this time. The buyer may renegotiate terms of the contract with the seller based upon conditions of the property. If the buyer and seller cannot reach an agreement from the renegotiation, the buyer may terminate the contract within the allotted time of the option period. If a buyer terminates the contract, the seller may keep the Option Fee but is required to return the buyer’s Earnest Money.
Different properties require different insurance policies. Which policy you need will depend upon the type of property and its location. Most lenders require a home owner’s policy on all single family homes. If the property is located in a flood plain, it will often require flood insurance (note: flood insurance is almost always separate for the home owner’s policy). With condos, the home owners association may have a policy for the exterior of the property, and owner’s supply personal policies for their possessions within the condo. It is always best to speak with an insurance professional to determine which policies fit your needs.
Tax values are determined by the county appraisal districts. These values are assigned yearly based on other similar homes in the same geographic area. The purpose is to determine the taxes owed for the given year. Tax appraisal and market value are two separate things. The market value may be above or below the tax value. It is based off comparable sold properties in the area within a given time period along with any improvements the owners have made, location within a community, and other aspects that add intrinsic value. The tax value typically resembles more of a general estimate, while market value is determined by more factual, up-to-date information.
Home Owners’ Associations provide services to residential and condominium communities. The purpose of an HOA is to provide comminuty services, regulate activities, collect assessments for projects, and issue fines. HOAs often maintain common areas throughout the community, and keep general guidelines that determine the rights of home owners. It is always important to review the terms of the HOA prior to purchasing property. Overall, the HOA maintains the integrity and values of a community and the people who live in it.
FHA loans are a lending program through the Federal Housing Administration. The program’s purpose is to provide an opportunity of home ownership to individuals who may not qualify for conventional lending. FHA requirements have changed over the last few years. Today, all FHA loans require a 3.5% down payment and have a maximum loan amount (around $280,000 in the Austin area). Applicants must have a minimum credit score, verifiable employment and income, and other criteria. All FHA home loans require the borrower to pay Private Mortgage Insurance (PMI), which insurers the loan in the event of default. FHA loans are a great source of lending for first time home buyers, and in recent years, have made up nearly one-third of all home loans produced in the U.S.
The USDA home loan program was created through the efforts of the U.S. Department of Agriculture to encourage home ownership in rural areas. USDA loans provide a great opportunity to purchase homes outside of urban areas. They do have strict geographical requirements, so you must check with your real estate and mortgage professional to ensure a desired property qualifies. However, most USDA loans allow 100% financing and allow borrowers to roll their closing costs into the loan (making it 100%+ financing).
VA loans are a great opportunity for active and retired U.S. service men and women to purchase homes. VA programs offer up to 100% financing is many circumstances and other great incentives. Speaking with a trusted mortgage professional will help assess which loan program works best for you and your family.
Closing costs are the expenses associated with closing on the purchase of a home. They consists of the initial principal and interest payments (i.e. the mortgage), fees the lender charges for originating the loan, taxes, insurance, and title office fees. Closing costs are not the same as a down payment. Closing costs and a down payment are almost always required when closing on a property. A common strategy for home buyers is to negotiate with the seller of a property to pay a portion or all of the buyers’ closing costs. The type of home loan you receive will determine how much the seller may contribute. Consult with your real estate and mortgage professionals when determining what your closing costs are, and strategies for limiting your out of pocket expenses at closing.
The amount of money that you should put toward a down payment on a home is based on two things: 1) what your lender requires based upon the type of loan you are receiving and 2) what you are comfortable putting down. For example, many conventional loans require a 20% down payment. In this circumstance the borrower creates instant equity in the home and does not have to pay mortgage insurance. However, many people cannot afford that much down. FHA loans require a minimum of 3.5% down. This makes home ownership more accessible. However, the borrower has less equity in the home and is required to pay mortgage insurance. The best advice is to speak with a trusted lending professional and determine what best fits your needs and goals.