Insider Tips on How to Win the Competitive Edge When Buying a Home

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With our all-time low interest rates and prices so low it’s no wonder that buyers are lining up trying to take advantage of the great deals out there right now.  But if you are one of those buyers that are finding it tough to deal with the competition, what can you do better to make sure you get the home of your dreams?  There are a few things that many buyers, under the guidance of their savvy agents, are doing to stand apart from the rest.  Here we’ve shared them with you to make your real estate buying endeavors both fruitful and as seamless as possible!

Be Prepared In Advance and Know What to Expect

Too often when prospective homeowners walk into a new property, they do not take into consideration the all-important fact of how much they can actually afford.  It’s one thing to have a ballpark figure in mind but it’s another to have an actual preapproval letter from your bank.  Buyers that have a preapproval are taken far more seriously by sellers than the buyers that express an interest in the home but then have to start from square one. 

Know what the market holds when you go to make an offer on a property? Many times a buyer will not have studied the area’s market trends and as a result ends up suffering the consequences.  For example, in a strong market where there are good homes at desirable prices, buyers find themselves competing against others in what ends up to be bidding wars.  Being prepared in advance and being willing to offer more than the asking price is sometimes what is necessary to get you that dream home.  Keep in mind that eventually, the market will experience an upswing so you will see some return on your investment.  By focusing on what you are getting now with the best of what the market has to offer, you will end up with a winning transaction.

Adding a Personal Touch To Appeal to Sellers

The transaction of buying or selling a house can be very impersonal at times but it does not have to be that way.  One of the best ways that highly successful real estate agents succeed in helping their clients get their dream properties is to add a personal touch – especially when it comes to communication with the sellers.  An example is sending a letter introducing the family that is vying for the property, with details about them, why they love the house, or what makes them the perfect fit for the home.  When sellers come across this type of thing, it gives them a warm glimpse into the people that could be moving into their home – a home that they are undoubtedly very attached to and would like to see go to only the perfect new owners.  Another thing that works well is complimenting the sellers on how they have maintained the home or on other aspects of the house you find very appealing.
At the end of the day, if the house is meant for you it will likely become yours but not without you and your agent doing the best possible to stand out from the rest.  For a customized consultation on how we can help you buy the perfect home, we invite you to visit us soon!

What Are FHA Loans and How Do They Benefit Me As A Consumer?

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The Federal Housing Agency (FHA) doesn’t directly offer loans. Instead, its purpose is to provide mortgage insurance for Americans to purchase or refinance a principal residence.
To put it another way, the mortgage loans are funded by private lending institutions (mortgage companies, banks, savings and loan associations, etc.), and those mortgages are then insured by FHA/HUD.

The Benefits of FHA Loans

If you qualify as a prospective homeowner, these loans have three great benefits. First of all, your down payments are lower. Second, closing costs are also lower. And, finally, it’s easier to qualify for credit.

Who Qualifies?

FHA has programs for:

• First-home buyers
• Seniors
• Fixer uppers
• Manufactured housing and mobile homes
• Energy efficiency, etc.

If you’re a first-time home buyer, a FHA loan can be a good deal for you. See the eligibility requirements below. Later, I’ll cover the fixer-upper category requirements. Check with the FHA on other programs.

First-Home Buyer Programs

These programs have the following eligibility requirements:

• You must meet standard FHA credit qualifications (judged by the individual’s credit record).
• You’re eligible for approximately 97% financing.
• You’re able to finance the upfront mortgage insurance premium into the mortgage.
• You’re also responsible for paying an annual premium.
• Within this category, the eligible properties are one-to-four unit structures. As of this writing, the highest maximum FHA mortgage is $362,790 while the lowest maximum amount is $200,160.

The 203(k) Program for Fixer-Uppers
The 203(k) program issues loans to allow you to buy or refinance a property. In the loan, you can also include the cost of making the repairs and improvements.

The loans are provided through approved mortgage lenders nationwide, and they’re available to buyers wanting to occupy the home.

The down payment requirement for an owner-occupant (or a nonprofit organization or government agency) equals about 3% of the acquisition and repair costs of the property.

There are several steps to obtaining such a loan:

• You find a fixer-upper and sign a sales contract after doing a feasibility analysis of the property with a realtor.
• The contract should state that you’re seeking a 203(k) loan. It should also state the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.
• You then select an FHA-approved 203(k) lender and arrange for a detailed proposal showing the scope of work to be done. The proposal should include a detailed cost estimate on each repair or improvement of the project.
• The appraisal determines the value of the property after renovation.
• If you pass the lender's credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs.
• The amount of the loan also includes a contingency reserve of 10% to 20% of the total remodeling costs. It’s used to cover any extra work not included in the original proposal.
• At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.
• The mortgage payments and remodeling begin after the loan closes.

You can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it’s estimated to take to complete the rehab.

• Escrowed funds are released to the contractor during construction through a series of draw requests for completed work.
• To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines there will be no liens on the property.

Whew, somewhat complicated, isn’t it? Well, we’re dealing with a government program! But, FHA loans can be a good deal for you, and I’m available to guide you throughout the entire process. Just give me a call today!