Credit · Financing · Real Estate · Selling

Saved By The Net

You’re ready to list, but are you ready to sell? Let’s say that on the first day your home is for sale, your agent shows it to prospective buyers. They love it, and sign a purchase offer on the spot. You were asking $750,000, and they offered $720,000. Because they are relocating, they need an answer right away, by 6:00 pm. What do you say?

You don’t say, “We just can’t give you an answer that soon.” These buyers are motivated and prepared to buy your home, with a written offer and earnest money deposit.

So how do you make up your mind so quickly? You must simply decide what your rock bottom price is before your home is even shown. Be prepared to negotiate on-the-spot by first asking your agent for a “Net” sheet based on your asking price.

The sheet will show what expenses must be paid out of the gross sales price, i.e. closing costs, brokerage fee, the payoff on your existing mortgage, etc.—resulting in the “net” proceeds that you will receive at closing.

Next, ask the agent to figure other net sheets based on receiving 95% or even 90% of the asking price. This helps you determine the absolute lowest offer you can accept. Once you know that figure, keep it to yourself and be prepared for all possibilities!

This article was originally published on this site on April 23, 2012. It has been updated reflect the current home market.

Buying · Credit · Financing · Real Estate

Don't Pay for Their Mistake

An important early step in purchasing a home is to get a lender’s “pre-approval” for financing. Then you’ll know how much home you can afford before you start your search. You’ll also make a strong impression on sellers, because they’ll know that your offer is solid.

Another step to take before you talk to the lender about pre-approval is to get copies of your credit report and review them thoroughly. Smart consumers shop around for the best prices, and you want the best interest rate possible. If your credit report contains errors, you jeopardize your chances for the best rate.

Lenders review reports from The Big Three – Equifax, TransUnion and Experian – and you should, too. Interest rate tiers are based on your credit score – the higher your score, the lower the rate. The lower the rate, the more home you can afford!

Get a copy of your credit report a couple months before you start looking at homes. Creditors usually have thirty days to correct errors, but give yourself some wiggle room. Verify that the debts are correct and belong to YOU (not someone else at the same address or with the same name). Your realtor will work closely with the lender to take this important step to prepare you for the home buying process.

You’ll be amazed how many doors open for you with a clean credit report and low interest rates. Now you’re ready for some happy house hunting!

Don’t Pay for Their Mistake

Note:This article was originally published on this site on June 9, 2016. It has been updated reflect the current home market.

Buying · Credit · Financing · Real Estate

Keep Your Good Credit

You might assume that the fewer credit cards you have, the higher your credit score could be. Because of that assumption, some buyers preparing to apply for a home loan mistakenly cancel one or more credit cards. Why would this be a bad idea?

It has to do with the ratio of your debt to your available credit. Here’s a simple example: Let’s say that you have four credit cards, each with a $10,000 limit, giving you $40,000 available credit. If you have a total of $20,000 charged to those accounts, you are using 50% of your limit.

By canceling one of those cards, you now have $30,000 available credit. That $20,000 in charges now equates to over 66% of your total credit, which represents an adverse effect on the debt-to-credit ratio. You have essentially reduced your credit without reducing your debt, possibly raising a red flag on your mortgage application.

By canceling the credit account, you reduce your “wiggle room” and cut your credit score, which could result in the lender demanding a higher interest percentage or offering a smaller loan amount.

Real estate agents are not all necessarily loan specialists, but most do work very closely with such individuals. Ask the agent you work with for a recommendation, and get in touch with a lender well in advance of your first showing.

Marcia Kies Article – Keep Your Good Credit

Note:This article was originally published on this site on June 2nd, 2016. It has been updated reflect the current home market.

Buying · Credit · Real Estate

Buy The Loan Before The Home

Ready to buy a home?  More to the point, ready to finance a home?  Begin by finding the right lender, using these guidelines to make a wise choice.

The biggie is the interest rate, and whether variable or fixed.  If variable, determine when you can lock it in and if it will cost you anything to do so.  If you have excellent credit, you should get the lowest rate offered.

Establish what points you will pay, and if there is any penalty for prepayment.  A “point” equals one percent of the loan’s value, and when paid up front, can reduce your overall interest rate.  Sometimes accepting a prepayment penalty also allows you to negotiate a lower rate.

Get quotes for closing costs and minimum down payment. The more you can pay down the better, but expect to pay 5 to 20 percent of the purchase price. Closing costs include appraisals, recording fees and more, but the lender should provide a “good faith estimate” of all out-of-pocket expenses.

Ask how long it will take to process your application, and what factors might cause delay.  A lender may say two weeks, but 45 to 60 days is a more realistic time frame.  Provide the required documentation and let the lender know of any changes during the process.

Compare lenders before you start comparing homes, and experience a happier purchase!

Buying · Credit · Financing · Real Estate

Crash Course

When you’re buying a home, who do you think is the most important person in the transaction? YOU, of course! That doesn’t mean you won’t need experienced professionals for guidance and assistance, but quite frankly, if YOU choose not to buy, the entire process comes to a halt.

While homeownership is called the American Dream, it’s a shame that nobody teaches it in school. Most folks face the biggest purchase of their life without any experience. That’s why it’s critical for someone to help you understand everything that happens during the process, whether it’s your accountant, your banker, or your trusted real estate columnist!

Demand explanations to questions like how much home can you afford? How do you get the best loan? Do you choose a new home or a resale? Which properties will increase in value? Where do you begin?

Since YOU are in charge, take command of the situation, and surround yourself with a team of experts in every aspect of the transaction, all of whom can be coordinated by a local real estate agent.

Plan from the very beginning to educate yourself and approach your purchase with confidence and intelligence. Then you’ll be sure to find the home of your dreams and the peace of mind that comes with knowing that you’ve made the right decisions all along. Flex those buying muscles!