Why use a closing attorney?

Today we interviewed a great closing attorney, Brad Legare, with Weissman Law. We based our questions off of the those we have gotten from our clients and from inquiries on facebook, instagram and the like. If you didn’t find the answer to YOUR questions in this video link, drop either myself or Greta a line and tell us what burning question you have so we can get it answered for you. The thing is, if you have a question on your mind, it is likely there are others who also wonder the same thing but are afraid to ask! So help them out.

Watch our video interview of closing attorney Brad Legare.

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How Loan Estimates Work

Okay. You have been doing some online house hunting and found a few homes in an area you like. This gives you the confidence you need take the next steps.

1. You see an ad on TV and call for a mortgage loan.

They take some basic information from you – your social security number to run a credit report, how much you make, how much you owe, and generally how much home you want to purchase. You begin getting all the back up documents together to provide to the loan officer.

2. You select a Real Estate Agent to represent you as you move forward locating the right home, making an offer, and completing all the things that have to be completed before you close on the deal.

But did you know?

Loan officers normally provide best-case scenario loan estimates. Depending on your credit score, there may be credit-score adjustments down the road that cause you to take a hit on the interest rate. The lower the credit score, the higher the interest rate adjustment. So ask what the likelihood of an adjustment is when you get the good faith estimate (fee sheet). Ask if this estimate is firm.

Shop Around!

I’ve had clients tell me that they don’t want to have multiple loan companies pulling their credit scores since everyone knows that multiple hits can negatively affect your credit score and if they are borderline, they don’t want the hits themselves to leave them out in the cold without a loan.

Well, guess what? If the credit score hits are mortgage-based, and done within a same 90 day period, only the first hit shows up as a hard hit. The others are considered to be within the same category of hits. Don’t go crazy though. To be safe, only shop around with two or three mortgage companies. More than that and you could (not will, but could) find yourself with more hard hits than are recommended. The credit companies take into consideration that smart loan shoppers are likely to check rates with two or three mortgage companies rather than going with the first one they talk to. Your Agent may be able to provide you with a list of other companies to shop your loan request to.

You have a good mortgage rate and company…

Now be disciplined! Do not increase your debt by taking out any other loans, buying or leasing cars, buying new furniture for the house, or running up your credit cards. Continue to pay your bills faithfully. Once you enter into a contract on a house, it will be another 30-60 days before you actually close on the deal and are able to move in. You should probably move your needed down payment and moving money in a separate savings account and out of your checking account so you don’t accidentally spend it. And it can earn interest for you in the meantime.

 

 

Is Buying a Foreclosure a Good Idea for You?

Foreclosures occur when a home owner has fallen into arrears on their mortgage payments and the bank is taking over. Banks don’t really like taking over. They prefer to remain in the money lending business, not the home ownership business. If you are falling into arrears, or anticipate the possibility of not being able to meet future payments due to some change in your financial status, reach out the your lender immediately. Don’t  wait until you are months in arrears. I don’t know of any that won’t work with you to come up with a solution that will keep your credit in good shape and keep your payments coming until you can get back on your feet. But that isn’t the topic of today’s blog. Today we will discuss the stages of foreclosure and whether or not buying a foreclosure is a good idea for you. The pros and cons of buying a home involved in foreclosure vary with the phase of foreclosure the property is in when purchased.

More for Less

Buyers interested in purchasing foreclosed homes can often buy more house for their money. That’s because foreclosures are usually priced below market value. The banks and other financial institutions that take over foreclosures want to sell the properties as quickly as possible. They often price them low so that a greater number of buyers will make offers.

Lower Down Payments

Foreclosures may also present opportunities for first-time home buyers. Traditionally, down payments can prove a serious hurdle to new home buyers. Most conventional mortgage lenders require buyers to come up with down payments of 10 percent to 20 percent of a home’s purchase price. Because foreclosures tend to have lower price tags, buyers have to come up with smaller down payments when purchasing them.

Nicer Neighborhoods

Buyers may be able to move into higher-priced neighborhoods that they otherwise might not be able to afford. A house in a neighborhood of $250,000 homes might go on the market for $190,900 when it is sold as a foreclosure.

Investment Opportunity

The foreclosed home can be an ideal investment for the amateur or professional handyman. You can often make a number of improvements to the property yourself before selling the house for a handsome profit. If you have experience fixing up homes, the foreclosure auction is a place where you can get your foot in the door of real estate investment. Your sweat equity can pay off in real dollars when you sell the house.

Phases of Foreclosure

1.  The Owner has started missing payments.

In this case, a seller wants to sell before the lender gets involved. They will be motivated to achieve a fast sale and may create an opportunity for a below market purchase price. In this case the seller may be more likely to do repairs and might even be able to assist the buyer with some major closing cost credits or other concessions. As a buyer, you can use use regular mortgage financing and you can obtain desired inspections within standard due diligence/contingency period. The seller must legally provide a complete history of property’s condition, problems, repairs, etc.

Having said that, the seller probably won’t be able to negotiate a price below the outstanding balance of their mortgage. And since they are likely living in the home, they still have to find somewhere to move in which case you will not be able to move in on closing day and will have to rent the house to the previous owner until they move out.

2.  Pre-Foreclosure/Short Sales

In this case, the missed payments have gone on long enough that the Lender has filed a Notice of Default (NOD) or Lis Pendens and the Seller is now attempting to complete what is known as a Short Sale.  This seller will be motivated for a fast sale, increasing the buyer’s bargaining power. As before, the Buyer can do all the standard inspections during the due diligence/contingency period. Unless the purchase price will pay the mortgage and closing costs in full, the lender’s approval of price and terms of sale will be required (i.e. short sale). The Lender may not approve the price, seller concessions or closing cost credits and short sales generally take longer to close. They may take 45-90 days longer than a normal purchase. And in this case, the sellers still have to move out.

3.  The Foreclosure Auction

The short sale process hasn’t worked or the owner has walked away from the property and isn’t trying to work with the lender, so the property is now being offered up in a Foreclosure Auction. As a buyer the advantages are that the property will be sold for the outstanding mortgage balance owed to foreclosing mortgage holder and because auctions require cash payments, there is generally less competition for the purchase.

The obvious disadvantage is that the auction purchase price must be paid in cash on the same day as the auction and no mortgage is usually allowed. In addition to this, auctioned homes are “as-is” which means no inspections are allowed and the property condition might be suspect due to damage done by upset homeowners. And the buyer needs to do some research on the state of the title before bidding since the house may come complete with other liens, back taxes and mortgages. No commissions or attorney’s fees are paid and the buyer must pay for their own representation.

If the bank believes the auction will not recover a good price it may buy the property at auction.

4. Post-Foreclosure. The Bank now owns the property.

This is known as an REO property (Real Estate Owned by Lender). Remember I said banks don’t like to be in the property owning business so they are generally motivated to get it sold and will negotiate prices, down payments, closing costs, escrow length and a myriad of other concessions. The title will be clear, so the buyer won’t have to worry about any other liens or back taxes. Inspections and mortgage financing are allowed within normal due diligence/contingency periods. The house will be vacant and can be moved into immediately after the closing ceremony. REO sales close within a normal escrow period of time.

The properties are usually listed on MLS and the bank will pay real estate agents’ commissions.

What is the down side? Well although you can do normal inspections, they are just for your information because the Bank will not agree to do any repairs treating this as an as-is sale. Banks will usually require additional paperwork. And because they have never lived there, they cannot provide disclosures as to property history/condition issues.

Alternatives to the Foreclosure

Okay, that is the story behind foreclosures. But is it a good deal for you? Think about this.

1.  New Homes

When you purchase a new home you are protected by a warranty. Builders provide a one-year limited warranty on workmanship and materials, as well as a ten-year structural warranty.

When buying a new home, many builders have special incentive programs to assist buyers. These incentives may include below market financing or help with closing costs and they can save you thousands of dollars and make it easier for you to qualify for your home purchase.

If you need a quick response to your offer, a new home is a smart way to go. In most cases, you’re dealing directly with the builder, which ensures a prompt reply and as long a the new home is ready for you to move in, you can expect to close in a timely manner and move in.

Of course, the main benefit of buying new is that everything is pristine, sparkling, and brand new. In many cases you can work with the builder customize the home, selecting items like cabinetry, countertops, and flooring.

2. Resales

By law, conventional sales on new or resale homes require full disclosure of any known details or drawbacks on the property. The seller can be held liable if a problem arises as a result of an issue that wasn’t fully disclosed at the time of the sale. With foreclosures, it’s always “let the buyer beware.”

Resales homes are generally in pretty good shape. The sellers are moving because they want to. Perhaps they are moving up in size or downsizing, or maybe they are moving because of better paying job opportunities or to be closer to an aging family. Whatever the reason for selling their home, they normally work with an agent to sell it at fair market price and take a little profit out to use as a down payment on their next home. Real Estate Agents working with buyers help determine what is a good price to offer, walk them through the inspection, and work with them through every step of the home buying process. The inspection will point out everything from major to minor issues a home buyer should be aware of and offers an opportunity to re-negotiate the terms of the sale or for the seller to make repairs before the closing ceremony. And you can always get a home warranty to cover unexpected equipment malfunctions within the first year of purchase. I recommend to my buyers that they make the purchase of a home warranty a condition of the sale. It actually benefits both the buyer and the seller since it covers the house on behalf of the seller up to the day of closing and then one-year after that for the buyer.

Hopefully, this has given you something to think about. Just remember – whatever your decision, I am here to help you with you Real Estate needs.

 

Get Pre-Approved

Once you have decided to buy a home, you will want to know how much of a home you can afford. Once you know that, well, you can truly begin looking in earnest. All the search engines out there on the internet allow you enter a minimum and maximum price range, filtering out the homes you cannot afford and focusing on those you can. I recommend you download my mobile application to use as one of your search engines. It draws its information directly from the GA Multiple Listing Service (GAMLS), which has the most up-to-date information. But what is better than that, it has a scan feature you can use from your smartphone. As you are driving around looking at neighborhoods or see a particular house you are interested in, you can point your phone at it, hit scan, and it will pull up that home and any others within a 1 mile radius. Cool, huh? To get my mobile application, simply text “scarroll” to 678-400-6100 and follow the directions.

Let’s step back a moment. If you are just curious what’s out there, look at everything. Dare to dream.

But if you are seriously searching, don’t be one of the many buyers who starts looking for a new home without taking the time to find out how much they can afford.  That’s like going to the grocery store without your wallet! How do you figure out how much home you can afford? Well you can use what is called an Affordability Calculator.

Now call me and while you are getting pre-approved, we will start looking for the right home for you.

But I digress. The purpose of this blog is to tell you how to get pre-approved. A pre-approval is generally a written statement from a lender stating the lender’s preliminary determination that a borrower would qualify for a particular loan amount under that lender’s guidelines. The determination and loan amount are based on income and credit information. Most pre-approval letters are good for 60 to 90 days.

Don’t confuse a pre-approval with a pre-qualification. With a pre-qualification, the lender relies on information provided by the buyer to estimate how much the borrower could qualify for. With a pre-approval, the lender verifies the borrower’s information and documentation to determine exactly how much it would be willing to lend to that borrower.

There are many reasons why you should get pre-approved. The most important reason is that you will get an accurate idea of how much home you can afford. This can help to target your home search and ensure you only look at houses that are truly in your price range. A pre-approval letter also helps you prove to real estate agents and sellers that you’re a credible buyer and able to act fast when you find the home you want to buy. Some sellers might even require buyers to submit a pre-approval letter with their offers, though having a pre-approval letter does not guarantee that your offer will be accepted by a seller. A pre-approval letter can make you stand out in a competitive real estate market. If you make an offer on a house without a pre-approval, your offer may not be taken as seriously as an offer from another person with a pre-approval.

So how do you get Pre-Approved?

Gather Essential Information (gather supporting financial documents – don’t guess)

Financial: Income, asset and expense information
If buying: Estimated purchase price and down payment amount
If refinancing: Estimated property value and loan amount

Select a Loan Company. Feel free to email me if you are stumped. I can send you some contacts who I feel comfortable working with and help you identify one matching your particular situation. My email is susan.carroll@bhhsgeorgia.com.

Begin the Pre-Approval Process

Contact a local mortgage consultant by phone or email.
Complete their online application form.
Your mortgage consultant will ask for the financial and property information you’ve gathered. To complete your request, you’ll need to submit your supporting documents before they issue the Pre-Approval letter.

Complete the Loan Application Process

Once you have found the home of your dreams, you will need to complete your application. If they have not already done so, your home mortgage consultant will probably ask you for Pay stubs, your last two years’ W-2s, last two federal returns, two months’ worth of bank statements of all types of accounts, and permission to pull your credit report.

Based on this information, they will provide a Loan Estimate shortly after receipt of your application. The Loan Estimate provides an estimate of the costs of obtaining your loan and the anticipated cash needed to close. After you review the Loan Estimate, you must indicate in writing your intent to proceed with the transaction. Avoid delays by submitting all pages of legible documents as soon as possible, along with any required fees.

There are more steps in the real estate process which must be followed until you actually close on your new home and walk out with the keys. But they are the topic of other blogs.

Here are some of the sources I used to draft this blog in case you want to read more……

http://www.bankrate.com/finance/mortgages/do-you-need-mortgage-preapproval.aspx

https://www.credit.com/loans/mortgage-questions/how-to-get-pre-approved-for-mortgage-home-loan/

The Bidding War

Just in case purchasing a house was not enough anxiety for you, let us create a little bit more, by adding another person wanting to buy the house. So now we have entered into a bid war. One dollar more or less, one change suggestion more or less, and the house is not yours. No stress though, this is not the only house for you no matter how much you love it.

Helpful tips:

Do your homework and research. Make sure this house is definitely the one you want. Look at the community, schools, grocery stores, salons, activities, etc. that you know you use now and make sure the area around the home fits your lifestyle.

Make sure your finances are in order. If they are not and the other bidder has their finances ready to go, pre-approval with money to put down they are more likely to win the bid.

Create an escalation clause. This puts a limit on how much yo are willing to pay on the house and protect you from the sellers expecting you to pay exceedingly higher than the other bidders.

Show the sellers your appreciation. Write a letter, send a picture with your family all excited in front of the home, or video your kids walking through it for the first time dreaming about their bedrooms. This will help the sellers know you will take responsibility for the home, care for it, and take care of it, they will see you in the home and be more likely to pick your bid.

No matter if you win or lose the bid, there is a reason. I hope these small tips help out and help you win your Bidding War and be able to move into your new home!

What Do I Need in a Home?

The hardest decisions we have to make are those that require our minds alone, no feedback, no one else’s opinions. Purchasing a home for you and your family is included in a difficult decision. Everyone wonders what will happen if you make a wrong decision. How will it impact your future? Your family? All of the home buying decisions are very, very, important, but  adding more stress to them only makes the decision making harder. Thought, time, research, and planning are the key. This is one of the reasons why having an Real Estate Agent is so important. They are there as an outside perspective, to oversee, to encourage, to research, to be there if you have questions. Real Estate Agents are your home buying and selling confidant and conscience in this respect.

So just like in Tuesday’s blog about selling the home we are going to answer some of the same questions but in reverse order.

First, take a look back at my post called “Preparing for The Move” on August 24th, 2015. Those questions all need to be considered with great thought.

Second, think about your lifestyle. What stage of life are you in? Are you moving by yourself, with kids, hoping to have roommates, or are you a newlywed, newly retired? The differences in who you will be living with changes so much about the floor plan, the room type needs, the style of the home, the yard, etc.

Let’s start with the simple questions:

How many bedrooms and baths?

How many levels do you want your home to have?

How much closet space do you need?

Are you a cook or chef; professionally or do you just enjoy it?

What size laundry room do you need or want? On what floor would you prefer it?

Do you need office space, a “special room” such as a library, practice space for instruments, exercise room, etc.?

Do you need a shop or work space not attached to the house?

Do you want an enclosed garage or a car port? How many vehicles do you need space for?

How much property do you want? Do kids need room to play? Do you have pets that need room to run?

What is different about you that means you have different needs or wants that other people might not have?

Location is also a very large factor. Take a look at “Location, Location, Location” from September 8th, 2015 to get questions you need to think about in that area of buying a home.

Third, as you consider your wants and needs in a home, realize your Realtor will do their best in making sure you have the most off of your checklist, but sometimes, especially if you are geographically bound, not every need or want cane be met. So make sure you prioritize what is most important and stress those 3-5 things. Talk through all of them with your Realtor, with their research abilities and referrals, they can dig deeper to try and find your dream home.

What is my Job in Helping my Realtor?

Guess what? Your job is the same as your Realtors.

Yes. I am telling you that you need to do your research too, even though you are paying your Realtor to do it, because at the end of the day the more you know about your home or about what you want in a home, the more you realtor knows about the same things.

So. YOU need the following as well as your Realtor:

• Trust
• Knowledge and Uniqueness
• Clarity

Trustworthiness is a scary thing sometimes, especially when your potentially largest asset is on the line. But this is why you find a Realtor you can trust in. So you CAN trust them. Yes, you do your research, but do not overstep your bounds. Let them do the work and leave it in their hands once you know what you want in a home or in your area to sell your home.

Knowledge. Let me explain what I have said about you as a buyer or seller needing to do research and I will also tie that into the uniqueness category.

Buyers: Know what you want in a home! You do not need to know what paint colors you will want on the walls yet, but you need to know how many bedrooms, bathrooms, appliances, location, desired extra rooms, space, and desired local amenities you want for you and your family. If there are any unique features you have on your need list your realtor needs to know so they can research for that in your home or amenities. Your one unique need or desire can be the most difficult part for your Realtor to succeed in finding for you.

Sellers: Know what unique features your home has to offer in comparison to the homes in the local area. Know what your market area is selling for so you and your Realtor can decide on a reasonable price for your home. Know what unique and desirable amenities your community has for potential buyers moving to your area do not know about: any of these amenities could be a very large selling point to buyers and could be a very large marketing point for your Realtor to use.

Clarity has been scattered out throughout the last two points but I want to make sure that it is clear that you need to be clear. 🙂 Know your needs, wants, and timeline for selling or buying your home and express those to your Realtor.

Develop a relationship with your Realtor, one of trust, respect, and enjoyment. They are here to help you and long to make the selling and buying easier for you! Do not take advantage of them but appreciate them.

This blog post was co-authored by Christy Bonner.

How Do I Find a Realtor that Best Suits my Needs?

In order to have the best experience when selling or buying a home, a Realtor is needed. A realtor can work so many wonders, help in so many ways, provide so much comfort, relieve so much stress. The only “problem” is finding the right one for you and your home, whether you are buying or selling it.

There are many things you need from your realtor including:

• Trust
• Knowledge
• Uniqueness
• Clarity

You are deciding to trust one person or team with your potentially largest asset financially and most prized possession- a roof over your family’s head. You need to be able to trust in every step of the way.

You need your Realtor to have knowledge whether you are buying or selling your home.

For Buyers: You need your Realtor to know exactly what you want in a home, in location, and in timing. They need to know the area you are wanting to purchase a home in, to know the current market values, the market trend for the area is, and any special circumstances affecting the area that could potentially increase or decrease the value of your future home.

For Sellers: You need your Realtor to know your home in order to be able to market it efficiently. They need to know the area your home is located to be able to sell it in a timely manner to a buyer. Marketing is key for your Realtor when selling a home, they need to know the in and outs of your local community to sell its key features, to know the current market values, what the market trend for the area is to correctly help you price your home, and any special circumstances affecting the area that increases or decreases the value of your home to potential buyers.

Uniqueness is such a essential characteristic of a good Realtor. If a realtor has a unique advertising front in their technique it can make the timing of you selling or buying a house be much quicker than if they are doing simple and average methods. If the Realtor is working as an individual Realtor under a large Home Services Business, the tools they are given can potentially help the selling or purchasing a home tremendously if the Realtor knows how to take advantage of them.

Last but not least in the list, Clarity. As a buyer and seller you need to fully know and comprehend the steps you and your Realtor need to take to buy your new home or sell your old home. If your Realtor is vague in the steps that need to be taken, then that is not a good sign, they need to be able to tell what you need to do when to prepare your home or to view your potentially new home. There are too many legal steps and paperwork that needs to be completed for your Realtor to not have a complete and clear concept of what needs to occur when. If you are already working with a Realtor and your mind is fuzzy on what is happening in this fast, whirlwind of events, ask to meet and discuss everything that has already happened and what your next steps are. I am sure they will be more than happy to clarify with you the productivity they have made on helping you buy or sell your home already and what they plan on accomplishing next.

What do you need to do for your Realtor? Come back and Read our next Tuesday’s Post! October 6, 2015.

This blog post was co-authored by Christy Bonner.

The Home Buying Process

Ever wonder what steps need to be taken to buy a new home? Well, here is a chart that gives a quick outline of things you need to be thinking about. If it looks complicated, don’t worry. It is my job to help take the confusion out of it. There are a lot of things that happen in each step, but with a knowledgeable Realtor at your side, your home purchase can flow, just like the chart.

I am standing by to be your guide through the process. Just text me at 404-903-7653.

Susan