Posts Tagged ‘Home Buyers’

Understanding Home Loan Types

When it comes home loans, there are many types to choose from. Figuring out which loan is best for your new property purchase can be confusing. So here are some of the most popular home loan types.

Mortgages:

Conforming Loan: When a loan conforms to the guidelines of FNMA/FHLMC (Fannie Mae/Freddie Mac) in both terms that may be purchased by FNMA or FHLMC it is conforming (currently up to $612,950 in San Diego county). Loans that do not match these guidelines are obviously non-conforming loans. If the loan does not conform due to its amount, it is a Jumbo Loan. Conforming loans may have either fixed interest rates or adjustable interest rates.

  • Conventional Mortgage Loan: When the loan amount is within the FNMA/FHLMC guidelines, and the federal government does not insure or guarantee the lender payment through the FHA or VA, the loan is conventional). They can have either fixed interest rates or adjustable interest rates.
  • FHA Insured Loan: Loans insured by the Federal Housing Administration. Borrowers must meet specific criteria to qualify. FHA loans often require lower down payments of normally 3.5% and will go up to $612,950 in the amount borrowed.mortgage broker or direct lender
  • VA Loan: A VA loan is a mortgage loan offered to American Military and veterans guaranteed by the Department of Veterans Affairs (VA), typically at preferred interest rates with little or no down payment required.

Specialty Loans

Reverse Annuity Mortgage or reverse mortgage is a special type of mortgage created for retirees on fixed incomes. They use the loan to generate income from the equity in their homes (and thus adding it to their principal balance). They continue to live in the home but ownership goes to the lender when the last borrower moves from the home.

Mortgage Rate Terms

  • Fixed-Rate Mortgage: A loan secured by real estate that has a fixed interest rate and payment amount for the term of the loan (usually 15 or 30 years) is a fixed rate mortgage.
  • Adjustable Rate Mortgage also called ARM or variable rate mortgage: ARMs have interest rates that can vary or adjust at pre-determined yearly intervals. The starting rate and payment is lower, allowing borrowers to qualify more easily. The adjustment basis is an index, often the LIBOR (London Interbank Offered Rate), or on the prime rate—the lowest rate of interest banks will offer their most credit-worthy customers.
  • Fully Amortizing Mortgage: A fully amortizing mortgage is a mortgage with scheduled uniform payments that will fully pay-off the loan over the term of the mortgage. At the beginning of the loan term, most of the loan payments go towards interest payments. As time goes on, more of the payment amount goes towards paying off the principle balance.
  • Balloon Mortgage: This was most popular before the housing collapse of 2006. Balloon mortgage have balloon loan mortgageshort terms (only a few years) with fixed principal and interest payments at a reduced rate that do not fully amortize (or pay off) the loan. At the end of the term, the entire balance of the mortgage is due in a single payment. Balloon mortgages offer lower payments during the term, because the big lump sum is due at then end. A balloon is useful for buyers that hope to sell within the term or expect to be able to pay the full amount or qualify for a better loan by that time.
  • Graduated Payment Mortgage (GPM): A graduated payment mortgage has payments that are lower in the early years but increase on a scheduled basis until they reach a level of amortization and the borrower can (hopefully) afford to make larger payments.

Short-Term Loans

  • Bridge Loan: When a buyer is also selling and the purchase of the new property depends on the equity in the old property, a bridge loan allows the purchase to complete before the sale is complete. Once the older property sells, the borrower must repay the bridge loan.
  • Construction Loan: Short-term loans to funds construction or improvements are construction loans. Typically, the construction loan is repaid with the mortgage.
  • Home Equity Loan: A home equity loan (or a home equity line of credit) is a loan made against the equity in a home. The borrower may utilize some or all of the loan and pays interest only on the portion used.
  • Nonrecourse Note: A nonrecourse note is a type of note in which the borrower has no personal liability for payment.
  • Open-end Mortgage: An open-end mortgage is a mortgage that may be refinanced without rewriting the actual mortgage contract.
  • Refinancing: Refinancing are the proceeds of a new loan used to pay off an existing mortgage on the same property. This is often done by a homeowner to lower their interest rate and monthly payments.

Any good lender will help walk you through the complicated mortgage world and fit you into a loan program the best fits your needs!

 

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com
Visit my Website: http://ryanyourrealtor.com

Home Warranty Companies-What Do They Do?

home warranty when buying a san diego homeWhat Exactly Is A Home Warranty Company And What Do They Do?

If you’re purchasing a re-sale home in San Diego be sure to ask for a home warranty. They normally cover you, the home buyer for one full year. Companies like American Home Warranty, Old Republic, and First American Buyer’s Protection are some of the more common ones.

Home Warranty programs are normally paid by the seller. They cover most mechanical systems in a home. They cost from $300.00 to $800.00 depending on the size of the home, options such as a pool/spa, and the company. Most will have a service call fee of around $30.00 to $60.00 per visit.  Home warranties don’t cover structural issues and should never be used in lieu of getting a professional home inspection.

Home Warranties benefit home sellers as well because it reduces their post-sale liability. At times, disputes arise when something goes wrong after close of escrow. Rather than argue about a non-disclosure issue, the home warranty will fix the problem for a nominal fee.

Benefits for buyers include peace of mind knowing that appliances, heating systems, and plumbing are covered.  It’s nice to know there will be no unexpected expenses for that first year. Let’s say your garbage disposal stops working a month after moving into your new home. Instead of paying for a new one along with installation, for the cost of a service call, you now have a brand new one installed!

Home Warranty options can include the following (depending on the plan):

  • Refrigerator – normally considered personal property unless a built-in like a Sub-Zero.
  • Washer & dryers.
  • Roof leaks (Limited)
  • Garage door openers – some provided in upgraded coverage.
  • Pool and spa.
  • Central air conditioning.

The basic warranty plan is normally around $350.00 for a standard size home.  Options run around $150.00 for pool and spa coverage, $75 for washer and dryer, $25 for refrigerator, and central air conditioning around $60.00.  Each company is different, however.

Check the fine print on each Home Warranty Company for coverage and exclusions. Here are three that I have had satisfactory service from.

  1. American Home Shield.
  2. Old Republic Home Warranty.
  3. First American Home Buyer’s Protection.

Notice that I said only SATISFACTORY service.

Just do a Google search on Home Warranty programs to find out many customers are unhappy. This is likely from higher expectations of coverage and the various sub-contractors that the services use.  Sometimes you get lucky, other times you don’t.

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com
Visit my Website: http://ryanyourrealtor.com

Don’t Stress Out When Buying A Home

Buying a home can actually be fun, not stressful. As you look for your dream home, keep in mindno stress these tips for making the process as peaceful as possible.

1. Find a real estate agent who you connect with. Home buying is not only a huge financial commitment, but also an emotional one. It’s critical that the REALTOR® you chose is both highly skilled and a good fit with your personality.

2. Just remember, there’s no “right” time to buy, just as there’s no perfect time to sell. If you find a home now, don’t try to time interest rates or the housing market by waiting longer — you risk losing out on a home you love. The housing market usually doesn’t change fast enough to make that much difference in price, however, a good home won’t stay on the market long.

3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it even harder to make a decision. Focus on the wants and needs of your immediate family — the people who will actually be living in the home.

4. Accept that no house is ever perfect. If it’s in the right location, but perhaps the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs some repairs. Make a list of your top priorities and focus in on things that are most important to you. Don’t sweat the minor ones.

don't stress out when buying a home5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to get that extra-low price or by refusing to budge on your offer may cost you the home you love. Negotiation is give and take.

6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in all the physical aspects of the house itself — room sizes, kitchen, etc. — that you forget about important issues such as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.

7. Plan ahead. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate home insurance, and consider a schedule for moving. Making an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers. Preparation goes a long way.

8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be some costs. Don’t leave yourself short and not be able to afford upkeep.

9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a huge financial commitment. But it also yields big benefits. Don’t lose sight of why you wanted to buy a home and what made you fall in love with the property you bought.

10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4% annually over from 1998 to 2002, a home’s most important role is to serve as a comfortable, safe place to live first, an investment second.

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com

Steps to Buying a Home

If you are buying a home for the first time, buying a second home or considering investment property, taking some simple steps to protect your investment and financial health. No matter what type of property you’re eyeing, here are some basic precautions as you navigate the process of purchasing any home.

Before Shopping for Property:

Look at your finances. Before contacting a real estate agent and starting to look for a new home, steps to buying a home in san diegofigure out what you can afford. Taking a simple inventory of your wallet can help your understand your financial ability and speed up the mortgage pre-approval process. A mortgage affordability calculator can help with this.

Know your credit card limits and review your usage to prevent loan approval issues. According to Equifax, the closer you get to using all your available credit, the less likely you are to have a good credit score or seem like a low-risk mortgage candidate to a potential lender.

Start with financing. Obtaining pre-approval for a loan will make the process of negotiation and loan approval process smoother from the start. Most sellers may even require you to be pre-approved before they accept an offer anyway, so doing this step ahead of time is a no-brainer.

Find a real estate agent. The seller is the one who pays the commission to both agents, so there’s no reason not to get the professional guidance of an agent. Look for a professional who is both familiar with the local area you’re considering and its property values. A good agent will also be well versed in the laws, timelines and deadlines in your state. This can be the difference between losing your dream home, deposit, and time.

Before Making an Offer:

Visit the city/county planning department. There one in every city and county. If the home you’re interested in is within city limits, you should visit the city planning department. Homes in rural unincorporated areas will normally fall under the control of county planning departments. The planning department can present any permits for the home you are interested in, and investigate that neighborhood. You can learn about what building applications are in the works (more homes, commercial buildings, industrial parks) and which schools your children would attend (it’s not always the school nearest your prospective home). There will also be information on traffic, crime reports (which can affect auto insurance prices), and more.

Review past utility bills. The monthly mortgage payment isn’t your only expense. Ask to review past utility bills before putting in a purchase offer to understand how heating and cooling the house will affect your finances.

During the Negotiation Process

Read the contract. When you’re ready to submit a purchase offer, your real estate agent should review the purchase contract with you. If the agent moves through it too quickly, ask to get an explanation of every paragraph (or at least the most important parts) of the contract. Have your Realtor explain in detail the circumstances in which your deposit can be withheld or kept, the contingency periods, and buyer expenses.

Ask for exact dates. Your contract might state you have 17 days to perform your inspections or 30 days to fulfill all contingencies. Ask your Realtor for the exact dates, not just the number of days, to make sure you don’t miss any important deadlines. This will also tell you when you’re supposed to receive various documents and reports.

get it in writing steps to purchasing a homeGet it in writing. If you negotiate any extras (the seller will leave various furniture or appliances, you can move into the house the day before closing, etc.) make sure that they’re documented in writing and that all parties sign off on these items.

Have a home inspection. Home inspections can spare you from a purchasing a unknown “fixer.” Have an inspection, even if the property appears to be in great condition or is relatively new. Without catching problems during the inspection period, any potential for negotiation with the seller will be lost.

The Bottom Line:

Don’t do it alone. Purchasing real estate is a large financial investment. Having the right professionals on your side, along with some common sense, can spare you costly mistakes.

 

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com

Buying A Home In One Market While Selling In Another

If you end up being transferred for work or making a major move for personal reasons, you could end up selling in one market and buying in another. The ideal scenario would be to sell in a sellers market like the San Francisco Bay area or Seattle, and buy in a buyers’ market, such as Providence, RI. The worst-case scenario, of course,  is to do the opposite.

Here are some tips for buyers and sellers in any market:

Know before you go

Today, real estate markets can vary by state, town, city and even block by block. But most people don’t realize this. So it’s important to start by researching the market of the cities and neighborhoods that interests you. Read local news and blogs. Watch the number of days a home is on the market before it sells. Note the sale price to list price ratio in the town where you’re looking to buy. This research can save you a lot of time and headaches. You don’t want to rely entirely on your real estate agent to tell you about that market. Get informed and make your own conclusions as well.

Selling in a buyers’ buying a home in a buyers marketmarket

Selling your home in a buyers’ market can be a tough road. This market could be slow due to a high level of inventory, low buyer demand, or simply slow economic times. If you need to sell in a buyers’ market, it will take extra effort. Make sure your home is priced competitively. You may not be able to wait for months to test the market. Homes will sell, no matter the market, when priced correctly.

Spend time removing junk and prepping your home for the market. You’ll have to pack up when you move, so it makes sense to start packing and organizing before listing your home. Not only will it save time later, but it will help open up the house, make more space available and help the home show better during open houses and regular showings. Consider any suggestions your agent makes for slight cosmetic fixes, staging, and minor repairs.

Buying in a buyers’ market

Who doesn’t love being a buyer in a buyers’ market? You have lots to choose from and motivated, if not desperate sellers. Take your time to see as many homes as possible. Focus on the most motivated sellers, as this is where you may find the best deals. With handful of homes meet your needs, ask questions such as: Why is the seller selling? What is their time frame for moving? How long have they lived in the home? You can ask these questions through your agent. The more questions you ask, the more information you will uncover.

Selling in a sellers’ market

Along the West Coast, sellers are overwhelmed with buyers at open houses and private showings. Demand is high, and properties sell quickly. But you still have to work a bit at selling.If you fail to clean the home and make it look it’s best, you could very well leave money on the table for the buyer who is desperate for a great deal.

If you are lucky enough to receive multiple offers, focus on the best buyer and the besselling a homet terms, and not so much on the bottom line. You want the most qualified buyer who is going to close on time. The last thing you want is to have to go back on the market again. When this happens, everyone will wonder what’s wrong with your home.

If you aren’t sure who is the best buyer, ask your agent. The best buyer is the one who has seen the home multiple times, is pre-approved with a lender, has been in the market and has even lost out on recent home purchase to another buyer. This buyer is working with a local agent and committed to buying. Your agent should know who they are.

Buying in a sellers’ market

Buyers in a sellers’ market will likely find themselves frustrated over the lack of homes for sale. The one’s that are for sale sell very fast. The competition is intense, and they need to invest a good chunk of their time on buying a home.

For serious buyers, finding a home becomes a part-time job. Work closely with a good local agent and mortgage pro. When a home hits the market, don’t wait. Don’t wait for the open house, because more aggressive buyers might get in and get it before you do.

When competing with other buyers, try to do as much due diligence as possible before making an offer. An offer with few or no contingencies is what sellers love. They want to be sure the deal will close for the most money, and as quickly as possible. Give sellers what they want and you will likely win the war!

 

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com
Visit my Website: http://ryanyourrealtor.com

San Diego Housing Market Update August 2014

The end of summer is here and inventory levels (the number of homes on the market “actively” for sale) continues to climb. This San Diego housing market update shows there are currently 8350 active listings in San Diego county, up slightly from 8295 last month.

Activity Snapshot:

One-year change in closed sales

One-year change in median sales price

One year change in homes for sale

-23.7%

8.3%

-4.8%

How's the market 2According to Bankrate.com, interest rates are currently at 4.20% for a 30-year fixed loan. This is well below the historical average of 6% or so, which is great for home buyers. To calculate your potential mortgage payment, go HERE. Finally, as you will see on the chart below, prices are starting to take on a more normal pattern. There are much more modest changes than the previous year, with a 8.3% increase in median prices, compared to over 20% a few months earlier. However, these higher prices are now resulting in a slow-down of the number of homes sold over a year ago.

The San Diego Association of Realtors analyses housing market date for San Diego county every month. Below is their monthly report. The figures combine both condos and townhomes, as well as single-family homes.

San Diego House Market Stats August 2014

Click for full size

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com
Visit my Website: http://ryanyourrealtor.com
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