Cathy Lomasney's Blog
As a homebuyer, you likely want to do everything you can to ensure you can seamlessly navigate the property buying journey. Yet problems may arise that hamper your homebuying aspirations. Lucky for you, we're here to help you analyze the property buying journey and ensure you can avoid complications along the way.
Now, let's take a look at three tips to ensure you can minimize the risk of problems as you search for your dream residence.
1. Learn About the Homebuying Journey
There is nothing quite like buying a home. As such, you'll want to do whatever you can to prepare for the property buying journey to ensure you can limit the risk of encountering potential pitfalls.
Oftentimes, it helps to review housing market data related to residences in your preferred cities and towns. This information can help you assess the prices of available houses in your area and find out how long residences typically stay available before they sell. Plus, this housing market data may help you differentiate a buyer's market from a seller's market.
You also should establish realistic homebuying expectations before you enter the real estate market. In some instances, homebuyers require many weeks or months to find the perfect residence. But if you set realistic expectations for the homebuying journey, you may be better equipped than ever before to overcome myriad property buying challenges.
2. Get Pre-Approved for a Mortgage
A mortgage is essential for most homebuyers. If you secure a mortgage before you start your home search, you'll know precisely how much you can spend on a residence. Then, you can narrow your home search accordingly.
It generally won't take long to get pre-approved for a mortgage, either. If you meet with local banks and credit unions, you can review your mortgage options and select a mortgage that complements your finances.
3. Hire a Real Estate Agent
There is no telling what may happen as you pursue your dream residence. However, if you have a real estate agent at your side, you'll be able to prepare for any homebuying challenges that might come your way.
A real estate agent is a homebuying expert who is happy to teach you about all aspects of the housing market. He or she will help you craft a homebuying strategy, as well as respond to your homebuying concerns and questions. Furthermore, a real estate agent will maintain constant communication with you to ensure you can get the homebuying support you need, exactly when you need it.
For homebuyers who want to minimize complications, hiring a real estate agent is crucial. This housing market professional will set up home showings, help you analyze properties and enable you to submit a competitive offer to purchase your dream home. And as your home closing day approaches, a real estate agent will do whatever it takes to help you quickly finalize your house purchase.
Ready to buy a home? Use the aforementioned tips, and you can streamline the property buying cycle.
While buying a home is a huge decision that should entail a lot of planning and preparation, applying for a mortgage can be surprisingly easy. Just like with other lenders and creditors, a mortgage lender will want to know that letting you borrow money will be a safe investment. Applying for a mortgage is all about ensuring just that.
In today’s post, we’re going to breakdown the home loan application process to help you have the best chances at a smooth and successful mortgage approval. We’ll also define some of the common terms used in mortgages that might leave you scratching your head so you have a better idea of what your options are.
Prequalification and Preapproval
Getting prequalified and preapproved for a mortgaged can both be helpful steps toward securing your home loan. The two terms mean two entirely different things, however.
In order to be prequalified for a mortgage, you typically need to only fill out a simple form (sometimes directly through a lender’s website). On this form, you won’t need to provide specifics or official documents.
Why is this process so simple? Well, that’s because getting prequalified for a loan doesn’t ensure that you’ll actually receive one. Rather, it is simply the first step toward finding out what type of mortgage and interest rates you could receive.
The next step after prequalification is preapproval. To get preapproved, you’ll have to fill out an official mortgage application. Your lender of choice will request a few pieces of information from you, including tax returns, proof of employment for the last two years, and a list of your debts. The lender will also perform a credit check to determine your loan eligibility.
At this phase, lenders will also run your credit report. This is a type of “hard credit inquiry” that details your payment history, the number of accounts you have open, and other factors that help make up your credit score.
To secure the lowest interest rate possible, it helps to have a high credit score. So, in the years and months leading up to your mortgage application, focusing on building credit will pay off.
To increase your credit score, you’ll need to focus on paying your bills on time each month. You should also avoid opening new accounts within a few months of applying for a mortgage because this will count as a new credit inquiry. New credit inquiries--including applying for a mortgage--lower your score temporarily, so it’s best to avoid them when possible.
Additional paperwork required for mortgage applications
Not every mortgage application will be the same. Depending on the type of income you receive, you may need to provide different forms of income verification.
Each person will also have to claim different debts and assets. When buying a home with a spouse or partner, it’s important to consider your debts, assets, and credit scores to determine if it’s better to apply jointly or separately.
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Buying a home should be a problem-free experience. Yet issues may arise that make it tough to acquire the perfect house at an affordable price.
Common problems that come up during the homebuying journey include:
1. Lack of Home Financing
Before you search for a home, it generally is a good idea to get pre-approved for a mortgage. That way, you can kick off a house search with a budget in hand.
To get pre-approved for a mortgage, you should meet with banks and credit unions. These financial institutions can teach you about a variety of mortgage options and help you get approved for home financing in no time at all.
Of course, if you have questions as you pursue a mortgage, don't hesitate to ask a lender for assistance. Lenders employ courteous, knowledgeable mortgage specialists who are happy to respond to your queries without delay.
2. Temptation to Submit a Lowball Offer to Purchase
Once you find your ideal residence, you may be tempted to submit an offer to purchase at or below a house seller's initial asking price. But doing so may be problematic, particularly for a homebuyer who wants to acquire his or her dream residence as quickly as possible.
If you submit a lowball offer to purchase a house, a seller likely will reject the proposal. Worst of all, a rival homebuyer may swoop in with a competitive offer to purchase this residence – something that may cause you to miss out on the opportunity to buy your ideal home.
Ultimately, it is beneficial to submit a competitive homebuying proposal. If you allocate time and resources to learn about a home's condition and how a residence stacks up against comparable houses in the same city or town, you can craft a competitive offer to purchase. And as a result, a competitive offer to purchase may receive an instant "Yes" from a home seller, leading to a fast, successful homebuying experience.
3. Failure to Identify Problems During a Home Inspection
A home inspection is paramount because it gives you the opportunity to walk through a residence with a property expert and learn about any underlying house issues. Then, if you discover major problems with a house, you can ask a seller to complete property repairs, reduce your initial offer to purchase or walk away from a residence altogether.
Hire a home inspector who possesses comprehensive expertise – you'll be glad you did. With the right house inspector at your side, you can get the help you need to identify problems during a property inspection.
Lastly, as you get ready to search for a house, you may want to hire a real estate agent as well. This housing market professional can provide extensive guidance throughout the property buying journey and ensure you can mitigate homebuying problems before they escalate.
Reach out to a real estate agent today, and you can receive plenty of support as you navigate the homebuying journey.
When you purchase a home, your lender charges you for a title insurance policy. You are also given the option to buy your own title insurance policy. Depending on your agreement with the seller, the seller might purchase the buyer’s title insurance policy. Before a seller can sell his or her property, it must have clear title. However, the title searchers could miss something. Title insurance protects the buyer and the mortgage company against financial problems that might come with a “dirty” title.
What Is a Title Search?
A title search looks at public records to determine the legal ownership of a property. The title search should uncover any liens against the property in addition to easements and other problems with the title. Building code violations, unpaid taxes and erroneous surveys are just some of the items that cause a title to be “dirty.” If a title has issues, the seller must rectify those issues before they are allowed to close on the deal.
What Is Title Insurance?
The title insurance protects the holder of the policy from any defects in the title. When you think of insurance, you generally think of being insured against things that will happen in the future. Title insurance protects you against things that happened to the title in the past. The insurance policy usually covers fraud concerning title documents, forgery on title documents, ownership by someone else, incorrect signatures, flawed record-keeping, flawed records, terms that reduce enjoyment (such as unrecorded easements) and encumbrances (such as liens and outstanding lawsuits).
The Cost and Types of Title Insurance
The cost depends on the title insurance company, but is usually around 1 percent of the purchase price of the property. The types of title insurance are owner’s insurance and lender’s insurance. As previously mentioned, the buyer buys the policy for the lender. The buyer or seller purchases the owner’s (buyer’s) policy.
The lender’s policy does not protect the buyer from loss – it protects only the lender. If you want to be covered against losses, you should always purchase your own policy if the seller doesn’t do it for you. Never rely on a title search, as it is easy enough to miss something that clouds the title.
For example, if the title search does not show that the seller has unpaid taxes and the closing goes through, the buyer is now responsible for those unpaid taxes. A title insurance policy protects the buyer against situations such as this.
If you are purchasing a home that was in foreclosure, the title is more likely to have issues because the sellers might not have more liens against the property in addition to the foreclosure. For example, if a seller does not pay a $20,000 hospital bill, the hospital could place a lien on the property. If the title search does not find that lien because someone erred in recording it, the buyer is responsible for that hospital bill once they close on the property. It is recommended that you always buy your own title insurance policy, whether you or the seller pays for it.