How to get the best deal on a mortgage

 

As the old saying goes, it is always important to “start off on the right foot” and this is especially true with buying a home. The very first step in buying a home is deciding how you are going to pay for it and what you can afford. There are so many different loans out there, it can seem overwhelming at first and we are here to help clear the smoke. 

Where is the best place to get a loan? 

There are several different options for where to go such as: home builder or real estate agency lender, bank, thrift, internet lender, mortgage broker or mortgage bank and it is easy to get confused with the differences. We will break down the most commonly used options for obtaining a loan. 

1. Bank Loan Officer: works at a bank or credit union and works to sell and process mortgages originated by their lending institution. They often have several loan options to choose from,  FHA and conventional being the most common.  They will take your application and find the loan that best fits your needs. Also, if there is a problem with your credit they will attempt to help you overcome the obstacle and continue with the process. Local lenders usually have their underwriters available in their office, which means they are able to be hands on with the loan officers when questions or hurdles arise.  Sometimes, if you are a regular customer with an established relationship with the bank, you may be able to get better terms or interest rates. However, don’t assume your bank is automatically going to be the best fit for you - always weigh your options!

 

2. Mortgage Bank: a direct lender, meaning the bank employees (and only the bank employees) review your application and they make the decision to lend or not lend you money and will usually then sell your loan on the secondary market (this is a whole other topic in and of itself).   These banks are regulated by state and federal agencies and are usually strongly tied within the communities they are located. With a mortgage bank, you deal directly with the source of your loan. However, mortgage bankers only offer their own programs which can prove troublesome for many buyers.

 

3. Mortgage Brokers: a professional who brings together lenders and borrowers and they work to find the best fit for a borrower’s needs. The better deal they achieve for the lender, the more they are paid. If you choose this route, tell the broker the interest rate you want and they will shop around to find the best terms. A skilled broker will know what lenders are offering discounts and deals, but remember they don’t work for free and often charge a fee between 1%-2% of the total mortgage and sometimes a portion of this falls on the borrower and not just the lender. 

Once I decide on where to get my loan, then what? 

Finding out what you can afford is often determined by getting pre-qualified or pre-approved. There is a difference between the two: a pre-qualification is what the lender thinks you will be able to borrow based on income and credit profile, while a pre-approval requires filling out a full loan application which is typically reviewed by an automated underwriting system. We recommend getting a pre-approval before beginning to search for your new home. 

What should I expect from my lender? 

Your lender should be able to give you a break down of all your loan options along with feedback on how to improve your credit profile if necessary. Don’t be afraid to walk into a lender with bad credit, it is their job to help guide you & help get to where you need to be in order to get approved for the loan you want. A lender will be able to go over what fees to expect and many times they are able to provide you with a Good-Faith-Estimate (GFE) for your specific purchase. They should walk through each step with you, keep you informed and continue to move things forward throughout the process.

What will my lender expect from me?  

No beating around the bush, the more able you are to give your lender what they ask of you, the easier and smoother the entire process will be. Lenders will usually require tax returns, W2s, bank statements, employer names and addresses, length of employment (2 years is preferred) and landlord information if applicable. The most important advice it to be available because once the process begins you do not want to be the reason anything is held up, especially since your deposit for your new home is on the line! 

What else? 

Here are a list of a few more helpful tips we think are worth mentioning:

• Get a recommendation: Your Realtor should be able to recommend at lease 3 different lenders and we recommend calling and comparing results. 
• Check your credit before the lender does: Bringing your personal copies with you allows the lender to get a good idea of where you stand and can give you a good estimate on your numbers until you decide on which lender to go with. Also, requesting your own credit does not negatively affect your scores if its pulled form an outside course. We recommend Credit Karma or FreeCreditReport.com if you do not wish to pay for the actual score. There are 3 credit bureaus which provide 3 different scored and lenders typically qualify based on the middle score. To obtain the scores from these sources, there is a small additional fee.
• Watch for e-scams: Online deals might look pretty but there are sharks in those waters so don’t get suckered. 
• When possible, stay local: No-one knows you like those closest to you, lenders are no different. Local lenders know their surroundings best, they know the market and the ins and outs of the homes on their home turf. Usually, out of town lenders don't understand local classifications and terms used by appraisers or agents and this can seriously slow down the process while they are trying to understand just what is happening.

Getting a loan doesn't have to be scary or stressful, there are lots of options out there, and your team at Regal Homes is always happy to help guide you in the right direction as well as answer any questions that you may have! 

 

Additional Resources: 

http://www.realtor.com/advice/get-a-mortgage-preapproval/

http://homebuying.about.com/cs/mortgagearticles/a/home_lenders.htm

http://www.bankrate.com/finance/mortgages/which-type-of-lender-is-right-for-you--1.aspx

Out with the Old and In with the New! The Essentials of Buying New Construction in Today's Market

If the word “custom” and the phrase “brand new” sound like music to your ears, buying new construction is probably the right choice for you! While it might sound like a lot of work, if you are in the right situation, it can be the perfect fit. However, just because a new house is shiny and never been lived in, does not mean that new construction is without it’s obstacles to overcome and checkpoints to hit. We’ve gathered up some major points that we consider the foundation to buying new construction: 



 

1. Do your homework:

Just like searching for a home on the market, you want to research different areas of town to see where you would like to plant your roots, but researching your potential builder can be just as critical. It isn’t hard to find out if a builder has a bad reputation, but if you don’t ask you won’t know. Bad news spreads fast, so driving around the neighborhood you are interested in is a great idea. You might be able to catch a homeowner working in the garage or taking the dog out who will most likely be enthusiastic about sharing their experience building their home. The most effective way to research a lousy builder is to verify in the public records for lawsuits against a particular builder; you can easily check for any liens because if subcontractors aren’t getting paid, houses aren’t getting built.  Another avenue for researching a potential builder is go take a trip to previous work the builder has done and ask around to see if the homeowners are still satisfied and if their houses are standing the test of time. Also, once you decide on a builder, get the scoop on the HOA, if there is one. We suggest knowing the laws of the land before planting roots - especially if those rules are expensive and strict!

2. Don’t feel forced to use the Builder’s Lender:

Just because a builder has a lender all set up for you to use, does not mean that you have to use them. Builders prefer their own lender, because they can keep a close eye on your personal progress. However, this lender may not be able to give you the best deal, especially if the builder owns the lending company! Just like financing any other type of house, there are many options: credit unions, mortgage brokers, banks, etc.

3. Verify Option and Upgrade Pricing:

When looking at new construction, buyers may have an option between a semicustom home built as part of a development (built on spec) where the buyer can choose finishes and upgrades and other final touches or the option of having an entirely custom home built to a specific design. Builders bank on the upgrades, literally! For the most part, builders profit heavily from the upgrades due to the high profit margins. Also, buyers will want to confirm that their financing will cover any upgrades they choose to have done. If the lender will not finance all of the upgrades, the buyers will have to pay cash on top of their loan and down payment. It may be smart to look into a builder’s cancellation policy as well. Buyers may change their mind and be held liable for items the builder is unable to return.  We recommend asking as many questions as it takes to understand what features are standard, and which ones will cost a little extra.                                         

4. Hire a Home Inspector:

This is a rule of thumb for any substantial purchase, always get the product inspected…and a newly built house is no exception. Hiring a LICENSED home inspector is a non-negotiable in our books. Many think that because the house is new, that everything was installed correctly - however, this is not always the case. Everyone makes mistakes, and it is important to catch them while the seller is still on the hook, or in this case, the builder. It isn’t hard to go and fix a poorly installed pipe or missing insulation, but it is hard to get the other side to correct these items after keys and money have changed hands.

5. Hire an Agent

If you haven’t picked up on it by now, buying new construction isn’t any easier than buying a lived in house on the market. There are loopholes and legal traps that are easy to fall in if you don’t buy a house every day. Working with an agent usually won’t cost you anything, just be sure to let the builder know at the beginning that you have a licensed Realtor assisting you and the seller will almost always pay the commission. Also, if a builder’s agent asks if you would like their representation, remember they are working FOR the builder and may not always have your best interest in mind. Your agent will be able to walk you through until closing is over and you are the owner of your dream home!

Other resources:

http://www.frontdoor.com/real-estate/how-to-buy-in-new-construction?offset=1

http://homebuying.about.com/od/buyingahome/qt/BuyNewHome.htm

The Art of Negotiation

A top buzzword in Real Estate is "Negotiation".Despite what many may think, negotiation isn’t just something Realtors do on a gut or a whim. There are several factors to consider when coming to an agreeable price between a buyer and seller. We can’t get into every aspect of negotiation but we can share some helpful angles our team always looks at from the buying and selling sides when negotiating a deal.

1. Know your market:

- The market's condition is the single most important factor in real estate negotiation. The overall market and a specific market within a city or subdivision might be completely different and it is imperative to know what the “climate” is surrounding the property you are buying or selling.

- Buyer's market:  This is when there is a surplus of supply compared to the demans- this means that there are more home than there are buyers for them. A strong indicator for this is longer listing times. Properties in a buyer's market can take longer to sell and sellers are usually more wiling to give on things they had not planned on in hope of not losing a potential sale. 

- Seller's market: The table turn here for the sellers. We have seen houses get listed and sold within the same hour if the market is ripe! Buyers should try to make an offer quickly, if not on the spot, if they find something they like and try to "make it good" so as to avoid entering into a counter situation if possible. 

- Balanced market: This is just what it sounds like. Neither side has the upper hand, so it is safe to expect a back-and-forth counteroffer phase and prepare to land somewhere right down the middle on terms and pricing. 

Factors that help determine the type of market:

- Look at the average time properties are on the market in that area. This will help determine how quickly an offer needs to be made or accepted. If the subject property has been on the market substantially longer than others like it in the area, this could mean red flags such as overpriced, non-negotiable sellers or deeper issues with the house itself.  

- Get a Comparative Market Analysis (CMA) with the full MLS (multiple listing system) details of comparables.  This will reveal what has recently sold (within the past 6 months) and what is currently on the market similar to the subject property in the same area.  

- List-to-sale ratio: this ratio is found when the sale price is divided by list price. If the percentage is above 100, that indicates a house selling for more than it was listed and a percentage under 100 indicated a house being sold for less than it was listed for. When the list-to-sale ratio is calculated for a specific area, it reveals which was the market is moving and what types of offers would be acceptable at a given time. 

2. History of the listing:

- Price reductions: The amount of any price reduction as it relates to the overall purchase price may indicate the seller's desire to attract an offer.

- Other offers: As the buyer, it is good to understand what the sellers were presented with before you and the reasons why they were not accepted.  This information isn't always disclosed but it doesn't hurt to ask.

- Seller’s motivation: If a seller has all the time in the world or if they are relocating for work in the next month then this could really change what type of offer they would be willing to accept. A potential buyer shouldn't count on the seller giving the property to them if they are in a bind but it could put the negotiating power more in the buyer's favor.

3. How to respond:

- A general rule of thumb is to respond quickly and wisely. Keep the big picture in mind and try to avoid any terms that could potentially be deal breakers, especially if the market is not on your side.  Also depending on the market, a slow response leaves an open door for other offers which could lead to a multiple offer situation - at this point, a bidding war could break out which is not what any buyer wants. 
- The best negotiation is where everyone walks away feeling good about the transaction commonly referred to as "the meeting of the minds". This is usually the case in a balanced market and while each side may not get everything they want, both are happy with what they have. Like they say: pick your battles and focus on winning the war! 

4. Trust the experts:

- While this might be your first experience in the bull pen, your agent has been here before so let them do the talking. It is best to go through your real estate agent who will communicate on your behalf to the other side of the bargaining table. It is essentially my people will talk to your people and it might seem over the top if it is your first time but a HUGE beginners mistake is to contact the other side yourself.  Not only is it taboo but if the other agent throws out a few terms that you don't quite grasp which are usually legally sensitive and the LA (listing agent) could have you paying for WDO (wood destroying organism) repairs on the IA (inspection addendum) and all of a sudden you lose your EMD (earnest money deposit)! These slight changes could leave you in trouble with your lender and the terms for financing! However, your agent is well versed and prepared to make sure you don't get stuck between a rock and a hard place. Regal Homes always puts the emphasis on the importance of having a strong team to back you up!

Some might consider themselves sharks and others can play the good cop bad cop routine; no matter the style, true real estate negotiation is based on the facts! Know your market, have a holistic picture of the property at hand and work with an agent you can trust. That is the Art of Negotiation! 

Read more: 

http://www.realestateinfo.com/www/docs/174.216/home-purchase-negotiation.html 

http://www.ehow.com/about_6506786_list-sale-ratio_.html

http://www.realtor.com/advice/how-to-negotiate-the-best-real-estate-deal/

Signs you have hired a great Real Estate Agent

When you want to buy or sell property, the smartest thing you can do is hire a great agent which is harder than it sounds. You want to find an agent who you like and trust, who knows what they are doing and can prove it!  

We recommend asking two basic categories of questions to help determine if an agent is right for you:

 
1.     The first category is all about the agent: What can you tell me about your experience as an agent?

-       Do you work full time or part time? Full time means real estate is their livelihood; agents who work full time will typically be better to work with because they are not juggling more than one job & they have flexible schedules to be present throughout the entire home-buying process. However, an agent who is working full time but they are not local won't be as helpful as an agent who is locally based; local agents have knowledge of schools, community happenings, connections with local lenders, etc. and this can often be the key to finding the right fit.

-       How long have you been licensed? The longer the better; more experienced agents know how the business works and how to overcome obstacles that a newer agent may get stuck on. However, some new agents are hungry for work and can have experienced teams behind them to help them with snags. 

-       Is your license in good standing? You want to know if your agent has ever been subject to a client complaint, if they are part of their local board and if they have access to the MLS (multiple listing system - nationwide database of houses, regardless of what company is listing the home; agents who only have access to their company’s website, will not be able to help you remotely as much as agents with access to MLS), this will allow them to have the best resources available to buy or sell your home. 

-       Can I contact recent past clients for recommendations? You will want to ask your agent for past client referrals and testimonials; ideally you want this information from current or recent clients they have worked with and more than one if possible. 

-       Do you have a website & any social media that I can preview? A well-connected agent means they are operating in the 21^st century and will be able to use all avenues of technology to your advantage for marketing or finding properties.  

-       How did your last 2 deals surprise you? It's helpful to know how your agent resolves conflicts that arise; an agent who is good a problem solver is ideal with a market that is filled with unexpected hurdles! 

2.     The second category is all about your specific circumstance: What will our contract entail? 

-       What are your fees? It is important to know from the start what you are getting yourself into. Agents typically work for a percentage (usually paid by the selling side of the transaction), however some agencies tack on a bunch of other fees that other agencies don’t.

-       What do you expect from me? Real estate transactions require all hands on deck. If your agent has not mentioned “your part” of the process, be sure to ask. When selling, there will be things like staging, communicating available times for showings, disclosing known facts about your property, etc. and same goes for the buying side as well. It is also helpful to know how often they will be contacting you, you want someone who is in constant contact and updating you at least weekly with progress. 

-       What aspects of the transaction will you personally handle and which will be delegated to others? Nothing is better than having a totally hands-on agent, except having a team of hands-on agents. Working with an agent who has a strong team to help get the job done ensures that you will always have someone available to you who knows your transaction just as well as your primary agent.  

-       What is your plan? If you are using an agent to sell your home, ask what their marketing plan is; your agent should provide you with a CMA (comparative market analysis) which includes current listings & recent sales and the more data they can show you the better! If you are using an agent to help you find a home, they should be able to send you property reports and CMA's for houses you are interested in. 

-       What are you working on currently? It is good to have a full time agent but you don’t want one who is stretched too thin. Agents usually represent a few people at any given time and it is important to know their availability for you and your needs. Ask when they are not available, how much time they spend on their current clients and how much they plan to dedicate to you. 

-       Can you explain the process to me? Ask to see all documents you will be required to sign and if there is something you don’t understand then have them explain it. An agent should be able to walk you through a step-by-step process of what the buying or selling side of a transaction will typically look like. It is always better for you to have a head’s up about deadlines and other things that will eventually come your way. A good question to end on here is: What haven't I asked you that I need to know?

Finding an agent may be more difficult than you originally thought, but by asking the right questions, you can be sure to find the right match! Remember: anyone can be an agent, but a good agent is hard to come by. The Real Estate Professionals at Regal Homes welcome you to ask us questions or share your concerns, we are always happy to help in any way that we can.  

Read more:

http://www.bankrate.com/finance/real-estate/7-tips-for-picking-a-real-estate-agent-1.aspx#ixzz3PZc8gYJ8
http://www.wikihow.com/Find-a-Good-Real-Estate-Agent

http://www.foxnews.com/leisure/2013/09/13/how-to-hire-perfect-real-estate-agent/

Tis' the Season for Taxes!

       If you live in Florida, “Homestead Exemption” does not just cover one small facet of real property. In addition to exemption from taxation it also provides an exemption from  forced sale before and at death, restrictions on devise and alienation, protection to surviving spouse or minor child as well as many other things. However for this blog, the part we are all most concerned with is: the property tax exemption clause of Article VI, which “renders property tax-free to the extent of certain dollar amounts in the value of the homestead”.  

      With this exemption homesteaders in Florida are able to save on property taxes because we may exclude a portion of our home's value from its assessment. To qualify you must own real property in Florida on January 1^st and the amount of tax owed is calculated based on the difference between a home’s value and the exemption amount. For Floridians, on Jan. 29, 2008 voters approved an amendment to the Florida Constitution raising this exemption to $50,000 (the first $25,000 applies to all property tax), which is a nice change from the original $5,000 when the amendment was first passed in 1933…not too bad! 

      It is important to know that while the provisions apply automatically when one establishes a primary residence in FL, in order to benefit from the exemption, it must be claimed by a filing with the local county property appraiser's office. Another good thing to note is that the annual increase in assessed value for one’s homestead limited to the lesser 3% of the percentage change in the Consumer Price Index, which basically means there is a cap on the rate at which property assessments may be increased annually and we have the "Save Our Homes" Amendment to thank for this; it was passed by voters in 1992, and went into effect in 1995.  

        For our purposes, remember that the homestead exemption only applies to principal residences and can only be claimed by mortgage holders. They are only available for a primary residence; they don’t apply to businesses, rental property, second homes, homeowners claiming permanent residency-based exemptions or tax credits in other states or homes with owners that do not claim Florida as their primary residence. Again we have “Save Our Homes” to thank for allowing homesteaded owners to move up to $500,000 of the benefit from one Florida home to the next. New buyers make a note: acquiring a house that had a homestead exemption does not entitle the new owner to retain the low tax rate from the previous homesteaded resident homestead exemptions cannot be inherited or purchased. Also, under Florida law, the homestead exemption is only available to US citizens, permanent resident aliens or others who are legally able to form the intent to remain permanently under immigration laws. If something changes and your home is no longer your primary residence, you should notify the county tax assessor's office. In some states, failure to do so is considered fraud and can result in a criminal charge.

Here is a helpful link to help you file for your homestead exemption:

http://dor.myflorida.com/dor/property/taxpayers/exemptions.html

Other links that may be helpful are:

http://money.howstuffworks.com/personal-finance/personal-income-taxes/homestead-exemption.htm

http://finance.zacks.com/homestead-exemption-work-5597.html

Happy Tax Season to all! With love from your friends at Regal Homes!

The Keys to Keeping Your New Year Resolution

     Every year we set out to make positive change in our own lives by declaring our “resolutions”. You may be the exception, one of the minuscule percentiles who have never defaulted on a resolution but chances are…you fall into the category with the rest of us, who begin to fall off by the end of January. To help our friends this year, we have put together some “keys” to keep your resolution all year long, and then some!

Key #1: Keep it simple. Don’t overwhelm yourself with a list of 25 different goals. We suggest no more than 3 resolutions…this might sounds crazy but 3 resolutions means 3 life changes to put into practice for the next 365 days, which equals at least 1,095 intentional decisions that you did not make last year…not so simple anymore, huh?

Key #2: Don’t try to do it alone. We all need a little help from our friends now and then, especially when we want to make positive differences in our lives. Let your social media friends know, or if you like to be more low key, let your inner circle know so they can help to hold you accountable and help keep you moving in the right direction. No lone ranger can travel the path to sustainable habit change!

Key #3: Be your best ally, not your greatest foe. You’ve heard it said, “We are our own worst critics”; personal reflection often leads to harsh criticism of ourselves but remember: this is not about perfection, it is about growth. If and when you mess up, don’t throw the baby out with the bath water; each day and every moment is a chance to begin again.

     And remember, if your resolution includes owning keys to your new home, we are always here to help. Happy New Year!

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