AUSTIN COMMERCIAL & RESIDENTIAL REALTY INFORMATION GUIDE
You can sit down with an Austin Commercial & Residential Realty real estate agent and discuss your needs, whether they are Commercial which include Industrial, Office, Multi-Family, Land, or Retail types of property. Residential which includes the type of area, style of home, amenities and everything you really want in your next home, or if you are looking for that one of a kind ranch with all the amenities to suit your lifestyle, Austin Commercial & Residential Realty Real estate agents can help you in your search. We have access to the Commercial, Residential & Ranch Listing Services which cover properties listed for sale within a specific area. Together, you can select the properties you would like to see, set appointments and preview properties in a short period of time. An Austin Commercial & Residential Realty agent can guide you through the entire process.
Buying your home | Refinancing your home | Getting a home equity credit line
If you're like most people, buying a home is the biggest investment you'll ever make. Annual mortgage, taxes and insurance costs can range from 25% to 40% of your gross annual income. By reading the information on this page, you're on your way to protecting yourself, and making the home-buying process easier by becoming an informed consumer. Read, talk to family, friends and real estate professionals. You'll be glad you took the time to understand the process.
Buying a home
1. Looking for a home without being pre-approved.
Pre-approval and pre-qualification are two different things. During the pre-qualification process, a loan officer asks you a few questions, then hands you a "pre-qual" letter. The pre-approval process is much more thorough. During the pre-approval process, the mortgage company does virtually all the work associated with obtaining full-approval. Since there is no property yet identified to purchase, however, an appraisal and title search aren't conducted.
When you're pre-approved, you have much more negotiating clout with the seller. The seller knows you can close the transaction because a lender has carefully reviewed your income, assets, credit and other relevant information. In some cases (multiple offers, for example), being pre-approved can make the difference between buying and not buying a home. Also, you can save thousands of dollars as a result of being in a better negotiating situation.
Most good Realtorsｮ will not show you homes until you are pre-approved. They don't want to waste your, their, or the seller's time.Many mortgage companies will help you become pre-approved at little or no cost. They'll usually need to check your credit and verify your income and assets.
2. Making verbal (oral) agreements!
If anyone tries to make you sign a written document that is contrary to their verbal commitments, don't do it! For example, if the seller says the washer will come with the home, but the contract says it will not--the written contract will override the verbal contract. In fact, written contracts almost always override verbal contracts. When buying or selling real estate, abide by this maxim: Get it in writing!
3. Choosing a lender because they have the lowest rate.
While rate is important, you have to consider the overall cost of your loan. Pay close attention to the APR, loan fees, discount and origination points. Some lenders include discount and origination points in their quoted points. Other lenders may only quote discount points, when in fact there is an additional origination point (or fraction of a point).
This difference in the way points are sometime quoted is important to you. One lender will quote all points, while another lender may disclose an extra point, or fraction thereof, at a later time--an unwelcome surprise.
4. Not getting a written good-faith estimate.
Within 3 working days after receipt of your completed loan application, your mortgage company is required to provide you with a written good-faith estimate of closing costs. You may want to consider requesting a GFE from a few lenders before submitting your application. With a few GFEs to compare, you can get a feel for which lenders are more thorough, and you can educate youself regarding the costs associated with your transaction. The GFE with the highest costs may not indicate that a particular lender is more expensive than another--in fact, they may be more diligent in itemizing all fees.
The cost of the mortgage, however, shouldn't be your only criteria. There is no substitute for asking family and friends for referrals and for interviewing prospective mortgage companies. You must also feel comfortable that the loan officer you are dealing with is committed to your best interests and will deliver what they promise.
5. Not shopping around for a mortgage.
We recommend shopping for a loan with at least three mortgage companies before you make a decision. There are countless stories of consumers who ended up paying higher rates, or got a loan that wasn't right for them.
6. Not getting a rate lock in writing.
When a mortgage company tells you they have locked your rate, get a written statement detailing the interest rate, the length of the rate lock, and other particulars about the program.
7. Buying a home without professional inspections. Taking the seller's word that repairs have been made.
Unless you're buying a new home with warranties on most equipment, it is highly recommended that you get property, roof and termite inspections. These reports will give you a better picture of what you're buying. Inspection reports are great negotiating tools when it comes to asking the seller to make repairs. If a professional home inspector states that certain repairs need to be made, the seller is more likely to agree to making them.
If the seller agrees to make repairs, have your inspector verify the completed work prior to close of escrow. Do not assume that everything will be done as promised.
8. Not shopping for home insurance until you are ready to close.
Start shopping for insurance as soon as you have an accepted offer. Many buyers wait until the last minute to get insurance and find they have no time left to shop around.
9. Signing documents without reading them.
Do not sign documents in a hurry. As soon as possible, review the documents you'll be signing at close of escrow--including a copy of all loan documents. This way, you can review them and get your questions answered in a timely manner. Do not expect to read all the documents during the closing. There is rarely enough time to do that.
10. Making moving plans that don't work.
You expect to move out of your current residence on Friday and into your new residence over the weekend. Also on Friday, your lease terminates and the movers are scheduled to appear.
Friday morning arrives: bags packed, boxes stacked, children under arm and the dog on a leash; you're sitting on your front door stoop awaiting the arrival of the movers.
Your phone rings. Your loan closing is delayed until the following Tuesday. The new tenants turn into your driveway with a weighted-down U-Haul and the movers pull up across the street.
You ask yourself, "Where's the nearest Motel 6 and storage facility? How much will the movers charge for an extra trip? Can we afford it?"
How can you avoid such a disaster? Cancel your lease and ask the movers to show up five to seven days after you anticipate closing your transaction. Consider the extra expense an insurance policy. You're buying peace of mind--and protecting yourself from expensive delays.
Refinancing your home
1. Refinancing with your current lender without shopping around.
Your current lender may not have the best rates and programs.
Believing it's easier to work with your current lender is a common misconception. In most cases, they'll require the same documentation as other lenders and mortgage brokers. This is because most loans are sold on the secondary market and have to be approved independently. Even if you've been good at making payments to your existing lender, they'll still have to process the verifications all over again.
2. Not doing a break-even analysis.
Determine the total transaction costs and how much you'll save each month by lowering your monthly mortgage payment. Divide the transaction costs by the monthly savings to determine the number of months you'll have to stay in the property to recoup your refinancing costs.
For example, if the costs of refinancing total $2000, and you save $50 per month, you break-even in 2000/50 = 40 months. In this case, you should only refinance if you plan to stay in the home for at least 40 months.
Note: The above example is suited to comparing two similar loans when the intent is to lower your monthly payment and recoup transaction costs relatively quickly. Other refinancing transactions require different kinds of analyses which are beyond the scope of this document. Other types of refinancing transactions include exchanging a fixed rate for an ARM, or a 30 year mortgage for a 15 year mortgage.
3. Not getting a written good-faith estimate of closing costs.
Within 3 working days after receipt of your completed loan application, your mortgage company is required to provide you with a written good-faith estimate of closing costs.
4. Paying for a home appraisal when you think the appraised value may be too low.
Have the appraisal company conduct a desk-review appraisal (typically at no charge) and provide you with a range of possible values. Your mortgage company can ask an appraiser to do this for you.
Do not waste your money on a complete appraisal if you believe the home is unreasonably priced.
5. Using the county tax assessor's value as the market value of your home.
Mortgage companies do not use the county tax assessor's value to help determine if they'll originate your loan. They, like real estate agents, usually use the sales comparison approach (formerly known as the market data comparison approach).
6. Signing documents without reading them.
Do not sign documents in a hurry. As soon as possible, review the documents you'll be signing at close of escrow--including a copy of all loan documents. This way, you can review them and get your questions answered in a timely manner. Do not expect to read all the documents during the closing. There is rarely enough time to do that.
7. Not providing your mortgage company with documents in a timely manner.
When your mortgage company asks you for additional paperwork--get cracking! They're trying to get you approved! If you don't quickly respond to your broker's requests, you could end up paying higher rates should your rate lock expire.
8. Not getting a rate lock in writing.
When a mortgage company tells you they've locked your rate, get a written statement detailing the interest rate, the length of the rate lock, and other particulars about the program.
9. Drawing against your home equity credit line before you refinance your first mortgage.
Many lenders have "cash-out" seasoning requirements. If you draw against your credit line for anything other than home improvements, they'll consider your first mortgage refinance transaction a "cash-out" refinance. This creates stricter lending requirements and can, in some cases, break your deal!
10. Getting a second mortgage before you refinance your first mortgage.
Many mortgage companies look at the combined loan amounts (i.e., the sum of the first and second loans) when you are refinancing only your first loan. If you plan on refinancing your first loan, check with your mortgage company to see if having a second loan will cause your refinance to be turned down.
Getting a home equity credit line.
1. Not checking to see if your credit line has a pre-payment penalty clause.
If you are getting a "NO FEE" credit line, chances are it has a pre-payment penalty clause. This can be very important (and expensive) if you are planning to sell or refinance your home in the next three to five years.
2. Getting too large a credit line.
When you get too large a credit line, you can be turned down for other loans. Some lenders calculate your credit line payments based upon the available credit, even when your credit line has a zero balance. Having a large credit line indicates a large potential payment, which makes it difficult to qualify for loans.
3. Not understanding the difference between an equity loan and a credit line.
An equity loan is closed--i.e., you get all your money up front, then make payments on that fixed loan amount until the loan is paid. An equity credit line is open--i.e., you can get an initial advance against the line, then reuse the line as often as you want during the period the line is open. Most credit lines are accessed through a checkbook or a credit card. Credit line payments are based upon the outstanding balance.
Use an equity loan when you need all the money up front--e.g. home improvements or debt consolidation.
Use a credit line if you have an ongoing need for money or need the money for a future event--e.g., you need to pay for your child's college tuition in three years.
4. Not checking the lifecap on your equity line.
Many credit lines have lifecaps of 18%. Be prepared to make high interest payments if rates move upwards.
5. Getting a credit line from your local bank without shopping around.
Many consumers get their credit line from the bank with which they have their checking account. Shop around before deciding to use your bank.
6. Not getting a good-faith estimate of closing costs.
Within three working days after receipt of your completed loan application, your mortgage company is required to provide you with a written good-faith estimate of closing costs.
7. Assuming that the interest on your home credit line/loan is tax deductible.
In some instances, the interest on your home credit line is NOT tax deductible.
It is beyond the scope of this document to provide tax advice or quote from the IRS code. Contact an accountant or CPA to determine your particular situation.
8. Assuming a home equity line is always cheaper than a car loan or a credit card.
A credit card at 6.9% can be cheaper than a credit line at 12%, even after the tax deduction. To compare rates, compare the effective rate of your credit line with the rate on a credit card or auto loan.
Effective rate = rate * (1 - tax_bracket)
Example: If the rate of the home equity credit line is 12% and your tax bracket is 30%, your effective rateis12% * (1 - 0.3) = 12% * 0.7 = 8.4%
If your credit card is higher than 8.4%, the credit line is cheaper.
Besides the interest rate, you may also want to compare monthly payments and other terms of the loan.
9. Getting a home equity credit line if you plan to refinance your first mortgage in the near future.
Many mortgage companies look at the combined loan amounts (i.e., the first loan plus the equity line/loan) even though they are refinancing only the first mortgage. If you plan on refinancing your first loan, check with your mortgage company to determine if getting a second line/loan will cause your refinance to be turned down.
10. Getting a home equity credit line to pay off your credit cards if your spending is out of control!
When you pay off your credit cards with your credit line, don't put your home on the line by charging large amounts on your credit cards again! If you can't manage the plastic, get rid of it!
Getting a home-equity loan/line
1. Not knowing if your loan has a pre-payment penalty clause. If you are getting a "NO FEE" home-equity loan, chances are there's a hefty pre-payment penalty included. You'll want to avoid such a loan if you are planning to sell or refinance in the next three to five years.
2. Getting too large a credit line. When you get too large a credit line, you can be turned down for other loans because some lenders calculate your payments based upon the available credit--not the used credit. Even when your equity line has a zero balance, having a large equity line indicates a large potential payment, which can make it difficult to qualify for other loans.
3. Not understanding the difference between an equity loan and an equity line. An equity loan is closed--i.e., you get all your money up front and make fixed payments until it is paid if full. An equity line is open--i.e., you can get numerous advances for various amounts as you desire. Most equity lines are accessed through a checkbook or a credit card. For both equity loans and lines, you can only be charged interest on the outstanding principal balance.
Use an equity loan when you need all the money up front--e.g., for home improvements, debt consolidation, etc. Use an equity line when you have a periodic need for money, or need the money for a future event--e.g., childrens' college tuition in the future.
4. Not checking the lifecap on your equity line. Many credit lines have lifecaps of 18 percent. Be prepared to make payments at the highest potential rate.
5. Getting a home-equity loan from your local bank without shopping around. Many consumers get their equity line from the bank with which they have their checking account. By all means, consider your bank, but shop around before making a commitment.
6. Not getting a good-faith estimate of closing costs. See item number four above.
7. Assuming that your home-equity loan is fully tax-deductible. In some instances, your home-equity loan is NOT tax deductible. Do not depend on your mortgage company for information regarding this matter--check with an accountant or CPA.
8. Assuming that a home-equity loan is always cheaper than a car loan or a credit card. Even after deducting interest for income tax purposes, a credit card can be cheaper than a credit line. To find out, compare the effective rate of your home-equity line with the rate on your credit card or auto loan.
Effective rate = rate * (1 - tax bracket)
Example: The rate of the home-equity line is 12 percent,your tax bracket is 30 percent, your effectiverateis: .12 * (1 - .3) = .12 * .7 = .084 = 8.4 percent.
If your credit card is higher than 8.4 percent, the equity loan is cheaper.
9. Getting a home-equity line of credit when you plan to refinance your first mortgage in the near future. Many mortgage companies look at the combined loan amounts (i.e., the first loan plus the second) when refinancing the first mortgage. If you plan on refinancing your first, check with your mortgage company to find out if getting a second will cause your refinance to be turned down.
10. Getting a home-equity line to pay off your credit cards when your spending is out of control! When you pay off your credit cards with an equity line, don't continue to abuse your credit cards. If you can't manage the plastic, tear it up!
Should I refinance?
The most common reason for refinancing is to save money. Saving money through refinancing can be achieved in two ways:
1. By obtaining a lower interest rate that causes one's monthly mortgage payment to be reduced.
2. By reducing the term of the loan, thus saving money over the life of the loan. For example, refinancing from a 30-year loan to a 15-year loan might result in higher monthly payments, but the total of the payments made during the life of the loan can be reduced significantly.
People also refinance to convert their adjustable loan to a fixed loan. The main reason behind this type of refinance is to obtain the stability and the security of a fixed loan. Fixed loans are very popular when interest rates are low, whereas adjustable loans tend to be more popular when rates are higher. When rates are low, homeowners refinance to lock in low rates. When rates are high, homeowners prefer adjustable loans to obtain lower payments.
A third reason why homeowners refinance is to consolidate debts and replace high-interest loans with a low-rate mortgage. The loans being consolidated may include second mortgages, credit lines, student loans, credit cards, etc. In many cases, debt consolidation results in tax savings, since consumers loans are not tax deductible, while a mortgage loan is tax deductible.
The answer to the question "Should I refinance?" is a complex one, since every situation is different and no two homeowners are in the exact same situation. Even the conventional wisdom of refinancing only when you can save 2% on your mortgage is not really true. If you are refinancing to save money on your monthly payments, the following calculation is more appropriate than the rule of 2%:
1. Calculate the total cost of the refinance末example: $2,000
2. Calculate the monthly savings末example: $100/month
3. Divide the result in 1 by the result in 2末in this case 2000/100 = 20 months. This shows the break-even time. If you plan to live in the house for longer than this period of time, it makes sense to refinance.
Sometimes, you do not have a choice末you are forced to refinance. This happens when you have a loan with a balloon provision, but with no conversion option. In this case it is best to refinance a few months before the balloon comes due.
Whatever you choose to do, consulting with a seasoned mortgage professional can often save you time and money. Make a few phone calls, check out a few web sites, crunch on a few calculators and spend some time to understand the options available to you.
Should I pay points? Does a zero-point/zero-fee loan really exist?
The best way to decide whether you should pay points or not is to perform a break-even analysis. This is done as follows:
1. Calculate the cost of the points. Example: 2 points on a $100,000 loan is $2,000.
2. Calculate the monthly savings on the loan as a result of obtaining a lower interest rate. Example: $50 per month
3. Divide the cost of the points by the monthly savings to come up with the number of months to break even. In the above example, this number is 40 months. If you plan to keep the house for longer than the break-even number of months, then it makes sense to pay points; otherwise it does not.
4. The above calculation does not take into account the tax advantages of points. When you are buying a house the points you pay are tax-deductible, so you realize some savings immediately. On the other hand, when you get a lower payment, your tax deduction reduces! This makes it a little difficult to calculate the break-even time taking taxes into account. In the case of a purchase, taxes definitely reduce the break-even time. However, in the case of a refinance, the points are NOT tax-deductible, but have to be amortized over the life of the loan. This results in few tax benefits or none at all, so there is little or no effect on the time to break even.
If none of the above makes sense, use this simple rule of thumb: If you plan to stay in the house for less than 3 years, do not pay points. If you plan to stay in the house for more than 5 years, pay 1 to 2 points. If you plan to stay in the house for between 3 and 5 years, it does not make a significant difference whether you pay points or not!
Zero-Point/Zero-Fee Loans
Whatever happened to the conventional wisdom of waiting for the rates to drop 2% before refinancing?
You have a 30-year fixed loan at 8.5%. A loan officer calls you up and says they can refinance you to a rate of 8.0% with no points and no fees whatsoever.
What a dream come true! No appraisal fees, no title fees and not even any junk fees! Is this a deal too good to pass up? How can a bank and broker do this? Doesn't someone have to pay? Whose money is being used to pay these closing costs?
No末this is not a scam. Thousands of homeowners have refinanced using a zero-point/zero-fee loan. Some refinanced multiple times, riding rates all the way down the curve in 1992, 1993 and, more recently, in 1996. Some homeowners used zero-point/zero-fee adjustable loans to refinance and get a new teaser rate every year.
The way this works is based on rebate pricing, sometimes also known as yield-spread pricing, and sometimes known as a service-release premium. The basic idea is that you pay a higher rate in exchange for cash up front, which is then used to pay the closing costs. You will pay a higher monthly payment末so the money is really coming from future payments that you will make.
You can also think of this as negative points! For example, a 30-year fixed loan may be available at a retail price of :
8.0% with 2 points or
8.25% with 1 point or
8.5% with 0 points or
8.75% with -1 point or
9% with -2 points
On a $200,000 loan, the loan officer can offer you 8.75% with a cost of -1 point, which is a $2,000 credit towards your closing costs. A mortgage broker can use rebate pricing to pay for your closing costs and keep the balance of the rebate as profit.
What are the benefits of a zero-point/zero-fee loan?
The main benefit is that you have no out-of-pocket costs. As a result, if the rates drop in the future, you could refinance again even for a small drop in rates. So if you refinanced on the zero-point/zero-fee loan to get a rate of 8.75% and if the rates drop 1/2%, you can refinance again to 8.25%. On the other hand, if you refinanced by paying 1 point and got a rate of 8.25%, it may not make sense to refinance again. Now, if the rates drop another 1/2%, a zero-point/zero-fee loan can drop your rate to 7.75%, whereas if you paid points, you may have to do a break-even analysis to decide if refinancing will save you money.
The zero-point/zero-fee loan eliminates the need to do a break-even analysis since there is no up-front expense that needs to be recovered. It also is a great way to take advantage of falling rates.
Some consumers have used zero-point/zero-fee loans on adjustable loans to refinance their adjustables every year and pay a very low teaser rate.
What are the disadvantages of a zero-point/zero-fee loan?
The main disadvantage is that you are paying a higher rate than you would be paying if you had paid points and closing costs. If you keep the loan for long enough, you will pay more末since you have higher mortgage payments. In the scenario where you plan to stay in the house for more than 5 years, and if rates never drop for you to refinance, you could wind up paying more money. If, on the other hand, you plan to stay at a property for just 2-3 years, there really is no disadvantage of a zero-point/zero-fee loan.
Whose money is it?
Since you are being paid "cash" up-front in exchange for a higher rate, it really is your own money that will be paid in the future through higher payments. Investors who fund these loans hope that you will keep the loans for long enough to recoup their up-front investment. If you refinance the loans early, both the servicer and the investor could lose money.
To summarize, zero-point/zero-fee loans in many cases are good deals. Make sure, however, that the lender pays for your closing costs from rebate points and NOT by increasing your loan amount. So if your old loan amount was $150,000, your new loan amount should also be $150,000. You may have to come up with some money at closing for recurring costs (taxes, insurance, and interest), but you would have to pay for these whether you refinanced or not.
Zero-point/zero-fee loans are especially attractive when rates are declining or when you plan to sell your house in less than 2-3 years.
Zero-point/zero-fee loans may not be around forever. Lenders have discussed adding a pre-payment penalty to such loans, however few lenders have taken steps to implement such a measure.
What is a FICO score?
A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair, Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrowers credit history into a single number. Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable.
Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information which best predict future credit performance. Developing these models involves studying how thousands, even millions, of people have used credit. Score-model developers find predictive factors in the data that have proven to indicate future credit performance. Models can be developed from different sources of data. Credit-bureau models are developed from information in consumer credit-bureau reports.
Credit scores analyze a borrower's credit history considering numerous factors such as:
ｷ Late payments
ｷ The amount of time credit has been established
ｷ The amount of credit used versus the amount of credit available
ｷ Length of time at present residence
ｷ Employment history
ｷ Negative credit information such as bankruptcies, charge-offs, collections, etc.
There are really three FICO scores computed by data provided by each of the three bureaus末Experian, Trans Union and Equifax. Some lenders use one of these three scores, while other lenders may use the middle score.
Frequently Asked Questions (FAQs)
How can I increase my score? While it is difficult to increase your score over the short run, here are some tips to increase your score over a period of time.
ｷ Pay your bills on time. Late payments and collections can have a serious impact on your score.
ｷ Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.
ｷ Reduce your credit-card balances. If you are "maxed" out on your credit cards, this will affect your credit score negatively.
ｷ If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.
What if there is an error on my credit report? If you see an error on your report, report it to the credit bureau. The three major bureaus in the U.S., Equifax (1-800-685-1111), Trans Union (1-800-916-8800) and Experian (1-888-397-3742) all have procedures for correcting information promptly. Alternatively, your mortgage company may help you correct this problem as well.
Why Do Mortgage Rates Change?
To understand why mortgage rates change we must first ask the more general question, "Why do interest rates change?" It is important to realize that there is not one interest rate, but many interest rates!
ｷ Prime rate: The rate offered to a bank's best customers.
ｷ Treasury bill rates: Treasury bills are short-term debt instruments used by the U.S. Government to finance their debt. Commonly called T-bills they come in denominations of 3 months, 6 months and 1 year. Each treasury bill has a corresponding interest rate (i.e. 3-month T-bill rate, 1-year T-bill rate).
ｷ Treasury Notes: Intermediate-term debt instruments used by the U.S. Government to finance their debt. They come in denominations of 2 years, 5 years and 10 years.
ｷ Treasury Bonds: Long-debt instruments used by the U.S. Government to finance its debt. Treasury bonds come in 30-year denominations.
ｷ Federal Funds Rate: Rates banks charge each other for overnight loans.
ｷ Federal Discount Rate: Rate New York Fed charges to member banks.
ｷ Libor: : London Interbank Offered Rates. Average London Eurodollar rates.
ｷ 6 month CD rate: The average rate that you get when you invest in a 6-month CD.
ｷ 11th District Cost of Funds: Rate determined by averaging a composite of other rates.
ｷ Fannie Mae-Backed Security rates: Fannie Mae pools large quantities of mortgages, creates securities with them, and sells them as Fannie Mae-backed securities. The rates on these securities influence mortgage rates very strongly.
ｷ Ginnie Mae-Backed Security rates: Ginnie Mae pools large quantities of mortgages, secures them and sells them as Ginnie Mae-backed securities. The rates on these securities influence mortgage rates on FHA and VA loans.
Interest-rate movements are based on the simple concept of supply and demand. If the demand for credit (loans) increases, so do interest rates. This is because there are more buyers, so sellers can command a better price, i.e. higher rates. If the demand for credit reduces, then so do interest rates. This is because there are more sellers than buyers, so buyers can command a lower better price, i.e. lower rates. When the economy is expanding there is a higher demand for credit, so rates move higher, whereas when the economy is slowing the demand for credit decreases and so do interest rates.
This leads to a fundamental concept:
ｷ Bad news (i.e. a slowing economy) is good news for interest rates (i.e. lower rates).
ｷ Good news (i.e. a growing economy) is bad news for interest rates (i.e. higher rates).
A major factor driving interest rates is inflation. Higher inflation is associated with a growing economy. When the economy grows too strongly, the Federal Reserve increases interest rates to slow the economy down and reduce inflation. Inflation results from prices of goods and services increasing. When the economy is strong, there is more demand for goods and services, so the producers of those goods and services can increase prices. A strong economy therefore results in higher real-estate prices, higher rents on apartments and higher mortgage rates.
Mortgage rates tend to move in the same direction as interest rates. However, actual mortgage rates are also based on supply and demand for mortgages. The supply/demand equation for mortgage rates may be different from the supply/demand equation for interest rates. This might sometimes result in mortgage rates moving differently from other rates. For example, one lender may be forced to close additional mortgages to meet a commitment they have made. This results in them offering lower rates even though interest rates may have moved up!
There is an inverse relationship between bond prices and bond rates. This can be confusing. When bond prices move up, interest rates move down and vice versa. This is because bonds tend to have a fixed price at maturity末typically $1000. If the price of the bond is currently at $900 and there are 10 years left on the bond and if interest rates start moving higher, the price of the bond starts dropping. The higher interest rates will cause increased accumulation of interest over the next 5 years, such that a lower price (e.g. $880) will result in the same maturity price, i.e. $1000.
Effect of economic data on rates
Number of arrows indicates potential effect on interest rates. 1 arrow=least effect, 5 arrows=max. effect
Economic Event Effect on Interest Rates Significance of event
Consumer Price Index (CPI) Rises Indicates rising inflation.
Dollar Rises Imports cost less; indicates falling inflation.
Durable Goods Orders Increase Indicates expanding economy
Gross National Product Increases Indicates strong economy
Home Sales Increase Indicates strong economy
Housing Starts Rise Indicates strong economy
Industrial Production Rises Indicates strong economy
Business Inventories Rise Indicates weak economy
Leading Indicators (LEI) Increase Indicates strong economy
Personal Income Rises Indicates rising inflation
Personal Spending Rises Indicates rising inflation
Producer Price Index Rises Indicates rising inflation
Retail Sales Increase Indicates strong economy
Treasury Auction Has High Demand High demand leads to lower rates
Unemployment Rises Indicates weak economy
What is the difference between pre-qualifying and pre-approval?
A pre-qualification is normally issued by a loan officer, who, after interviewing you, determines the dollar value of a loan you can be approved for. However, loan officers do not make the final approval, so a pre-qualification is not a commitment to lend. After the loan officer determines that you pre-qualify, he/she then issues you a pre-qualification letter. This pre-qualification letter is used when you are making an offer on a property. The pre-qualification letter indicates to the seller that you are qualified to purchase the house you are making an offer on.
Pre-approval is a step above pre-qualification. Pre-approval involves verifying your credit, down payment, employment history, etc. Your loan application is submitted to an underwriter and a decision is made regarding your loan application. If your loan is pre-approved, you are then issued a pre-approval certificate. Getting your loan pre-approved allows you to close very quickly when you do find a house. A pre-approval can help you negotiate a better price with the seller, since being pre-approved is very close to having cash in the bank to pay for the house!
What is a rate lock?
You cannot close a mortgage loan without locking in an interest rate. There are four components to a rate lock:
1. Loan program.
2. Interest rate.
3. Points.
4. Length of the lock.
The longer the length of the lock, the higher the points or the interest rate. This is because the longer the lock, the greater the risk for the lender offering that lock.
Let's say you lock in a 30-year fixed loan at 8% for 2 points for 15 days on March 2. This lock will expire on March 17 (if March 17 is a holiday then the lock is typically extended to the first working day after the 17th). The lender must disburse funds by March 17th, otherwise your rate lock expires, and your original rate-lock commitment is invalid.
The same lock might cost 2.25 points for a 30-day lock or 2.5 points for a 60-day lock. If you need a longer lock and do not want to pay the higher points, you may instead pay a higher rate.
After a lock expires, most lenders will let you re-lock at the higher of the original rate/points or current rate/points. In most cases you will not get a lower rate if rates drop.
Lenders can lose money if your lock expires. This is because they are taking a risk by letting you lock in advance. If rates move higher, they are forced to give you the original rate at which you locked. Lenders often protect themselves against rate fluctuations by hedging.
Some lenders do offer free float-downs末i.e. you may lock the rate initially and if the rates drop while your loan is in process, you will get the better rate. However, there is no free lunch末the free float-down is costly for the lender and you pay for this option indirectly, because the lender has to build the price of this option into the rate.
What do you do if the rates drop after you lock?
Most lenders will not budge unless the rates drop substantially (3/8% or more). This is because it is expensive for them to lock in interest rates. If lenders let the borrowers improve their rate every time the rates improved, they spend a lot of time relocking interest rates, since rates fluctuate daily. Also they would have to build this option into their rates and borrowers would wind up paying a higher rate.
Lock-and-shop programs.
Most lenders will let you lock in an interest rate only on a specific property. If you are shopping for a house, some lenders offer a lock-and-shop program that lets you lock in a rate before you find the house. This program is very useful when rates are rising.
New-construction rate locks.
Most lenders offer long-term locks for new construction. These locks do cost more and may require an up-front deposit. For example, a lender might offer a 180-day lock for 1 point over the cost of a 30-day lock, with 0.5 points being paid up-front, as a non-refundable deposit. Most long-term new-construction locks do offer a float-down末i.e. if rates drop prior to closing, you get the better rate.
Can my loan be sold? What happens if my lender goes out of business?
Your loan can be sold at any time. There is a secondary mortgage market in which lenders frequently buy and sell pools of mortgages. This secondary mortgage market results in lower rates for consumers. A lender buying your loan assumes all terms and conditions of the original loan. As a result, the only thing that changes when a loan is sold is to whom you mail your payment. If your loan has been sold, your existing lender will notify you that your loan has been sold, who your new lender is, and where you should send your payments from now on.
If your lender goes out of business, you are still obligated to make payments! Typically, loans owned by a lender going out of business are sold to another lender. The lender purchasing your loan is obligated to honor the terms and conditions of the original loan. Therefore, if your lender goes out of business, it makes little difference with regards to your loan payments. In some cases, there may be a gap between the date of your lender's going out of business and the date that a new lender purchases your loan. In such a situation, continue making payments to your old lender until you are asked to make payments to your new lender.
What is PMI? Can I get rid of the PMI on my loan?
PMI or Private Mortgage Insurance is normally required when you buy a house with less than 20% down. Mortgage insurance is a type of guarantee that helps protect lenders against the costs of foreclosure. This insurance protection is provided by private mortgage-insurance companies. It enables lenders to accept lower down payments than they would normally accept. In effect, mortgage insurance provides what the equity of a higher down payment would provide to cover a lender's losses in the unfortunate event of foreclosure. Therefore, without mortgage insurance, you might not be able to buy a home without a 20% down payment.
The cost of PMI increases as your down payment decreases. Example: The cost of PMI on a 10% down payment is less than the cost of PMI on a 5% down payment. Your PMI premium is normally added to your monthly mortgage payment.
The decision on when to cancel the private insurance coverage does not depend solely on the degree of your equity in the home. The final say on terminating a private mortgage-insurance policy is reserved jointly for the lender and any investor who may have purchased an interest in the mortgage. However, in most cases, the lender will allow cancellation of mortgage insurance when the loan is paid down to 80% of the original property value. Some lenders may require that you pay PMI for one or two years before you may apply to remove it.
To cancel the PMI on your loan, contact your lender. In most cases, an appraisal will be required to determine the value of your property. You will probably also be required to pay for the cost of this appraisal. Another way of cancelling the PMI on your loan is to refinance and to get a new loan without PMI.
What is an Annual Percentage Rate (APR)?
The annual percentage rate (APR) is an interest rate that is different from the note rate. It is commonly used to compare loan programs from different lenders. The Federal Truth in Lending law requires mortgage companies to disclose the APR when they advertise a rate. Typically the APR is found next to the rate.
Example: 30-year fixed 8% 1 point 8.107% APR
The APR does NOT affect your monthly payments. Your monthly payments are a function of the interest rate and the length of the loan.
The APR is a very confusing number! Even mortgage bankers and brokers admit it is confusing. The APR is designed to measure the "true cost of a loan." It creates a level playing field for lenders. It prevents lenders from advertising a low rate and hiding fees.
If life were easy, all you would have to do is compare APRs from the lenders/brokers you are working with, then pick the easiest one and you would have the right loan. Right? Wrong!
Unfortunately, different lenders calculate APRs differently! So a loan with a lower APR is not necessarily a better rate. The best way to compare loans in the author's opinion is to ask lenders to provide you with a good-faith estimate of their costs on the same type of program (e.g. 30-year fixed) at the same interest rate. Then delete all fees that are independent of the loan such as homeowners insurance, title fees, escrow fees, attorney fees, etc. Now add up all the loan fees. The lender that has lower loan fees has a cheaper loan than the lender with higher loan fees.
The reason why APRs are confusing is because the rules to compute APR are not clearly defined.
What fees are included in the APR?
The following fees ARE generally included in the APR:
ｷ Points - both discount points and origination points
ｷ Pre-paid interest. The interest paid from the date the loan closes to the end of the month. Most mortgage companies assume 15 days of interest in their calculations. However, companies may use any number between 1 and 30!
ｷ Loan-processing fee
ｷ Underwriting fee
ｷ Document-preparation fee
ｷ Private mortgage-insurance
The following fees are SOMETIMES included in the APR:
ｷ Loan-application fee
ｷ Credit life insurance (insurance that pays off the mortgage in the event of a borrowers death)
The following fees are normally NOT included in the APR:
ｷ Title or abstract fee
ｷ Escrow fee
ｷ Attorney fee
ｷ Notary fee
ｷ Document preparation (charged by the closing agent)
ｷ Home-inspection fees
ｷ Recording fee
ｷ Transfer taxes
ｷ Credit report
ｷ Appraisal fee
An APR does not tell you how long your rate is locked for. A lender who offers you a 10-day rate lock may have a lower APR than a lender who offers you a 60-day rate lock!
Calculating APRs on adjustable and balloon loans is even more complex because future rates are unknown. The result is even more confusion about how lenders calculate APRs.
Do not attempt to compare a 30-year loan with a 15-year loan using their respective APRs. A 15-year loan may have a lower interest rate, but could have a higher APR, since the loan fees are amortized over a shorter period of time.
Finally, many lenders do not even know what they include in their APR because they use software programs to compute their APRs. It is quite possible that the same lender with the same fees using two different software programs may arrive at two different APRs!
Conclusion :
Use the APR as a starting point to compare loans. The APR is a result of a complex calculation and not clearly defined. There is no substitute to getting a good-faith estimate from each lender to compare costs. Remember to exclude those costs that are independent of the loan.
Overview of the Buying & Selling Process.
Benefits of Home Ownership.
Finding the Right Home.
Home Shopping Tips.
Home Inspections.
Evaluating Property.
Answers to Frequently Asked Questions.
Selecting A Real Estate Agent
Buyer1 Considers purchasing a home
2 Selects a real estate agent
3 Determines needs and wants
4 Discusses financial issues
5 Views & researches target homes
6 Makes an offer to buy
Seller1 Decides to sell property
2 Selects a real estate agent
3 Determines needs
4 Prepares home for marketing
5 Agent markets the home
6 Accepts, rejects or counters offer
7 Offer Accepted
8 Loan Application
9 Inspections
10 Title Search
11 Appraisal
12 Loan Approval
13 Closing Papers Signed
14 Documents Recorded
15 Funds Available To Seller
16 Seller Moves Out
17 Buyer Moves In
Credit:Owning a home helps you establish financial credibility.Independence:Owning your own home provides you with independence and more privacy than renting. You are free to paint walls, plant flowers, keep pets and anything else within legal bounds.Investment:As you make more payments and own more of your home, you add to its investment value. Most improvements you make will also add to its value.Pride:A home reflects its owner's values and lifestyle. Owning a home can provide you with a source of pride, enjoyment and satisfaction.Security:A home can provide security against inflation because the value of your home increases as prices go up.Stability:Being established in a community provides a sense of belonging, stability and security.Tax Advantages:Interest on your mortgage loan is deductible on your yearly personal income tax return. Many of the closing costs associated with purchasing your home are deductible, as are your property taxes.
Real Estate Agents.
You can sit down with an Austin Commercial & Residential Realty real estate agent and discuss your needs, whether they are commercial which include Industrial, Office, Multi-Family, Land, or Retail types of property. Residential which includes the type of area, style of home, amenities and everything you really want in your next home, or if you are looking for that one of a kind ranch with all the amenities to suit your lifestyle, Austin Commercial & Residential Realty Real estate agents can help you in your search. We have access to the Commercial, Residential & Ranch Listing Services which cover properties listed for sale within a specific area. Together, you can select the properties you would like to see, set appointments and preview properties in a short period of time. An Austin Commercial & Residential Realty agent can guide you through the entire process.
Newspaper Ads/Internet
Many people go through the real estate classified section or browse the Internet to find a property that appeals to them. However, your Austin Commercial & Residential Realty real estate agent will have many listings available that may not appear in the newspaper or Internet on a continuous basis. New listings come on the market daily.
Ask questions about the property.
Ask questions and discuss any objections or concerns you may have. o Ask about the community - schools, shopping and transportation. o Ask specific questions about the construction of the property; electrical, plumbing, heating, cooling systems, etc. Finding your specific property can be a rewarding experience. Have a good time and enjoy the process.
Check For Properly Working Appliances/Fixtures:
o Bathroomo Sinks o Showers/tubs o Toilets o Vent fan o Heating fan o Appliances o Dishwasher o Stove o Oven o Ice maker o Garbage disposal o Range hood o Refrigerator o Freezer o Microwave o Trash compactor o Kitchen o Kitchen cabinet doors o Drawers o Sinks o General o Lights (interior & exterior) o Windows o Heating system o Ceiling fans o Hot water system o Air conditioning system o Electrical outlets o Door bells o Doors o Water purifier o Fireplace damper o Garage door
Ensure House Is Well-Built & Systems Are In Working Condition:
o Exterior o Brick bulging or cracking o Shingles missing or broken o Siding rotted or missing o Gutters damaged or need to be cleaned o Concrete cracked in sidewalks/driveway o Basement o Water seepage in basement o Cracks in foundation o Poor ventilation o Interior o Sub-flooring damaged or loose o Cracked walls or ceiling o Cracked tiles o Loose plaster o Flooring damaged o Soft, springy floors o Water stains near windows o Water stains on ceiling below bathroom o Water stains in attic o Pipe insulation missing
What is an inspection?
There are numerous types of inspections. An inspection is meant to evaluate, at minimum, the structural and mechanical condition of a property. It is not the same as an appraisal which evaluates the market value of a property. Persons involved in real estate transactions need unbiased information about the physical condition of property they plan to buy or sell and your contract should include a contingency that you obtain a satisfactory inspection report. Talk with your agent about the types of inspections available.Home Inspectors vs. EngineersHome Inspector: A person who examines any component of a building, through visual means and through normal user controls, without the use of mathematical sciences.Engineering: Analysis or design work requiring extensive preparation and experience in the use of mathematics, physics, chemistry and the engineering sciences.Finding a qualified Inspector o Referrals from satisfied customers o Referral from a local real estate agent or mortgage company o Local consumer affairs office o Yellow Pages under "Building Inspection Services" Ask if she/he is a member of the American Society of Home Inspectors (ASHI). The ASHI has established standards of practice which include the specific services, limitations and exclusions that can be expected from private home inspectors.What the inspection, at minimum, includesEvery inspection should include, but not be limited to, an evaluation of at least the following:o Foundations o Plumbing and electrical systems o Doors o Ceiling, walls and floors o Roof o Hazardous materials concerns o Heating and air conditioning systems o Common areas (in condominiums) o Insulation o Ventilation
Property Evaluation Form
Contact AUSTIN COMMERCIAL & RESIDENTIAL REALTY to obtain a form to use to rate different features of each property you view.
What is the difference between "pre-qualified" and "pre-approved"?If you are "pre-qualified" you have determined, with a loan officer, what price you can afford based on the down payment, your debts and the amount the mortgage company will approve for your mortgage. Being "pre-qualified" is only a determination of your probable credit. If you are "pre-approved", your credit, employment and funds have been approved by the lender.What are closing costs?Closing costs are an accumulation of charges paid to different entities associated with the buying and selling of real estate. For buyers, they are usually about 4-6% of the total sales price of a property. Some of the closing costs you might encounter are: application fees, appraisal fee, county taxes, credit report, discount points, documentation fee, escrow fees, homeowners' association fees, loan fees, mortgage insurance, origination fees, tax registration and title insurance premium.What is a point?One point is equal to 1% of the new loan amount. Whenever government regulation, state usury laws and/or competitive practices prohibit the lender from charging a rate of interest that would make the real estate loan competitive with other fields of investments, the lender must seek some method of increasing the yield for the investors. By charging "points", the lender can bring the real estate loan up to those other investments.What is earnest money?When you make an offer, you will need to put up an earnest money deposit as a sign of good faith that you are seriously interested in buying a home. That deposit becomes a part of the purchase price and is held in a trust account until there is full acceptance of the offer. Typically, an earnest money is 3-5% of the offer amount.What is title insurance?Title insurance protects the named insured against loss because of defects, liens, encumbrances, adverse claims or other matters not shown or disclosed to the new owner that attach before date of policy.Is VA or FHA financing unfair to sellers?FHA and VA loans provide purchasers the opportunity to buy homes with minimal cash investment and at lower interest rates. The result is a larger market for sellers, who also benefit by receiving all cash for their equity.
The effort put into repairing and cleaning your property is likely to be returned in a fast sale at an attractive price.
As buyers approach your property the first time, impressions are formed quickly. o Paint house - this can do more for sales appeal than any other factor. o Yard - Remove all toys, garbage, garden tools and other items from view. o Mow lawn and keep edged. o Close garage doors. o Put colorful flowers in front of house. Often, while waiting to be let in, the first thing a buyer looks at closely is the front door. o Put new paint on the front door. o Buy a new door mat. o Buyers take a close look at the basement of a home. They will look for bad wiring, leaky pipes and signs of decay. o Clean out basement and dispose of everything you are not going to move. o Ensure that there is plenty of lighting. o Sweep or vacuum floor. o Stack items neatly against walls. The kitchen is often the most important room in the house. Make it bright and attractive. o Put a vase of fresh flowers on the table. o Replace curtains or clean existing ones. o Remove appliances from counters. o Create a pleasant fragrance in the kitchen (i.e. vanilla, cinnamon). It is important that bathrooms are clean, bright and smell fresh. o Install a new shower curtain and replace worn throw rugs. o Polish all fixtures. o Open windows. o Hang bright, fresh towels. o Remove stains from toilets and bathtubs. o Use air freshener. o Display colorful soaps. The living room o Clean out the fireplace and place logs in it. o Polish all woodwork. o Put big furniture in storage so rooms are not cluttered or crowded.
o Front Door: o Newly painted o Doorbell operating o Door brass polished o Hinges oiled o Exterior of House: o House recently painted o Gutters recently cleaned o Exterior lights operating o Missing shingles replaced o Moss removed from roof o Windows: o Window trims painted o Windows operating freely o Cracked windowpanes replaced o Windows washed o Driveway: o Resurfaced o Potholes patched o Recently sealed o Patios: o Wood stained or painted o Fencing secure o Lawn: o Lawn in good condition o Grass mowed o Edges trimmed o Trees/Shrubs: o Dead branches pruned o Dead shrubs replaced o Overgrown shrubs pruned o Entry: o Entry lights operating o Floors cleaned o Closet cleaned o Closet light operating o Living Room: o Recently painted o Cracks in ceiling/walls repaired o Leaks repaired & watermarks covered o Wallpaper secured o Woodwork repainted o Curtains/drapes/blinds cleaned o Drapes/blinds opened o Carpets cleaned o Furniture positioned to show space o Kitchen: o Sink free of stains o No dripping faucets o Appliances in good working order o Walls, cabinets free of stains o Countertops cleared and cleaned o Pantry neatly arranged o Pantry hardware replaced o Refrigerator defrosted o Family Room: o Cracks in ceiling/walls repaired o Leaks repaired & watermarks covered o Wallpaper secured o Woodwork repainted o Windows washed o Curtains/drapes/blinds cleaned o Windows operating freely o Drapes/blinds opened o Carpets cleaned o Hobby supplies put away o Bedrooms: o Cracks in ceiling/walls repaired o Leaks repaired & watermarks covered o Wallpaper secured o Woodwork repaired o Windows washed o Curtains/drapes/blinds cleaned o Floor waxed/refinished o Carpets cleaned o Beds made o Laundry put away o Floor free from clutter o Basement: o Cracks in ceiling/walls repaired o No evidence of water penetration o Dampness removed o Cold water pipes covered o Dehumidifier installed o Sump pump installed o No musty odors o Drains cleared o Furnace cleaned o Storage neatly arranged o Excess storage removed o Floor swept o Light fixtures operating o Handrail secure o Stairway runner secure o Dining Room: o Cracks in ceiling/walls repaired o Leaks repaired & watermarks covered o Wallpaper secured o Woodwork repaired o Windows washed o Drapes/blinds open to view o Floor waxed/refinished o Carpets cleaned o Bathrooms: o Sink stains removed o Leaky faucets repaired o Grouting stains removed o All joints caulked o Missing tiles replaced o All fixtures operating o Floors cleaned o New shower curtain o All supplies stored o Guest towels
The following is a list of some possible work orders. The work orders must be completed prior to closing and the seller is responsible for having them done. Check with your local authorities for specific requirements.The following conditions may require a work order: o Broken windows. o Debris in crawl space. o Dry rot or deteriorated wood. o Earth-wood contact. o Overgrown shrubbery. o Electrical not in working condition. o Gutters and downspouts blocked or missing. o A hot water tank without a 3/4" discharge line. o Inadequate foundation ventilation. o Inadequate attic ventilation. o Less than four feet of waterproof material around tub enclosures (tile, formica, etc.). o Less than 18" clearance between soil and floor joists under entire house. o Peeling or missing paint. o Plumbing not in working condition. o Single oil or gas space heaters to heat entire house. o Water damage inside home. You might have to: o Paint the exterior and interior if in bad condition. o Hook up to public water or sewer if available. o Get county certification if home is on septic or well. o Remove unused oil tanks or fill with cement-slurry or polyurethane foam. Other items to remember: o Inspectors will need access to the attic. o Leased equipment cannot be included in the sale (i.e. hot water tank, alarm system, etc.). o All assessments must be paid. o Joint maintenance agreements will be required for common road easements for maintenance on home where property line is within 3' of structure. * Check with local authorities for specific requirements.
Before Your House Is Shown
Tag or remove items not included in sale (i.e. water conditioner, chandeliers, plants, drapes). o Open shades and curtains to let in light. o Turn on enough lights so home is well-lit during showing. o At night, turn on porch light and outdoor lighting. o Tidy all the rooms. Neatness makes a room easier to view. o Clean dirty dishes in the sink and put away any dishes on counter. o Keep toys in the children's rooms. o Put away items in the yard such as bicycles, gardening tools and skateboards. o If fall or winter, light a fire in the fireplace. While Your House Is Being Shown o When possible, leave while the property is shown. If not, remain in an area not being shown by the sales associate. o Let the real estate expert show your house. Answer questions candidly when asked, but avoid questioning potential buyers. o Refer inquiries about seeing your house to your Realtor to take advantage of the agent's professional skills in selling your home. o Don't mention items you wish to dispose of unless asked. o It is best to be away when your agent is holding an open house. o Keep pets outdoors or in one area. o Keep children quiet and in one area. o Keep radio, stereo or TV on low volume. o Keep money and other valuable items out of sight.
What is title insurance?
Title insurance protects the named insured against loss because of defects, liens, encumbrances, adverse claims or other matters not shown or disclosed to the new owner that attach before date of policy.
What is a wood-destroying organism inspection report?
A wood-destroying organism inspection report is a written opinion by a qualified state licensed structural pest control inspector based upon what was visible and evident at the time of inspection. The inspection report does not in any way represent or guarantee the structure to be free from wood-destroying organisms or their damage, nor does it represent or guarantee that the total damage or infestation is limited to that disclosed in the report. Wood-destroying organisms include subterranean termites, dampwood termites, carpenter ants, wood boring beetles and wood decay fungus.
What are the hazards of lead-based paint?
All buyers and sellers are required by law to receive and read a pamphlet outlining the hazards of lead-based paint for homes built before 1978. Be sure to ask your real estate agent for a copy.
What are closing costs?
Closing costs are an accumulation of charges paid to different entities associated with the buying and selling of real estate. For sellers, they are usually about 9.5-10% of the total sales price of a property. Some of the closing costs you might encounter are: discount points, escrow fee, documentation fee, homeowners' association fees, pest/rot inspection, real estate commission and title insurance premium.
What is the difference between "pre-qualified" and "pre-approved"?
If a buyer is "pre-qualified" it has been determined, with a loan officer, what price the buyer can afford based on the down payment, debts and the amount the mortgage company will approve for the mortgage. Being "pre-qualified" is only a determination of probable credit. If "pre-approved", credit, employment and funds have been approved by the lender.
What should a home inspection include?
Every inspection should include, but not be limited to, an evaluation of the following: 1. Foundations 2. Roof 3. Heating and air conditioning systems 4. Ventilation 5. Common areas (for condominiums) 6. Septic tanks, wells or sewer lines* 7. Insulation 8. Plumbing and electrical systems 9. Ceiling, walls and floors 10. Doors 11. Hazardous materials concerns* * There may be an additional fee for this.
What property details are usually included by Listing Services?
Usually, properties listed will include the following details: o Location o Photograph o Price o Utilities o Amenities o Annual property tax o Current financing (when assumable) o Listing company What pages are generally included in the Purchase and Sales Agreement? o Agency Disclosure o Financing Addendum/Clause o Earnest Money Receipt o Inspection/Clause o Conditions/Disclosures Addendum o Contingency o Addendum Outlining Special Conditions o Lead-Base Paint Notification o Property Disclosure Form (completed by Sellers)
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