Tag: buying a house

How To Read Disclosures

Congratulations –  you’ve found a home you’d like to write an offer on.  This is very exciting!  The first step before writing an offer is to review the disclosures that have been provided by the seller in advance (if given the opportunity).  Here are the instructions on how to go about reviewing the disclosures package & preparing yourself to write an offer.

1. Grab a highlighter, pen, paper & post-it notes.

2. You will need to read & review the entire disclosure package before we get together.

3. We will review your questions & concerns before we write an offer & answer them as best we can & make notes to ask the seller, inspectors & the listing agent during your contingency period.

4. Please DO NOT WRITE on the disclosures – it is OK to use a highlighter.  Write you questions & concerns on a separate piece of paper & use post-it notes.

5. As you read each page, most forms will have a “Buyers Initials” or “Buyers Signature” at the bottom of each page.  PLEASE SIGN & INITIAL WHERE REQUESTED after you have read & reviewed the page.  Please note – regardless if you “like or dislike” what you are reading – you will need to initial & sign where necessary.  The purpose of the disclosures package is to inform you of any known defects upfront.  How we (your buyers agents & you) go about repairing/correcting said issues is part of the contract & negotiations.

6. You will need to sign ALL upfront disclosures before we write the offer – doing so in advance will shave 1 to 2 hours from our appointment.  Giving us more time to discuss your options.

7. Once we’ve discussed your questions & concerns you can make an educated decision on how much you want to offer & what issues you want clarified or corrected.

8. Please allow 2-4 hours for our offer appointment.

9. Bring the signed Disclosure Package to our appointment.

Please Bring With You the Following:

  • Copy of you Bank Statement showing Proof of Down Payment & Closing Costs
  • Loan Approval Letter
  • CHECK BOOK!!!!!  Please remember that your good faith deposit of up to 3% of the Purchase Price must be available funds

Got Questions – The Caton Team is here to help.  Email us @  Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/

To read my personal journey through homeownership – visit http://ajourneythroughhomeownership.wordpress.com/  Enjoy!

A Quick Review on the Different Real Estate Markets…

Google buying a home and words like short sale, REO, bank owned, or regular sale pop up.  All these terms can be a bit confusing.

Right now, on the San Francisco Peninsula market we are experiencing three very different niche markets.

  • Regular / Normal Sale
  • Short Sale
  • Bank Owned Sale

Allow me a moment to explain what these three niche markets are and how they affect the buyer.

Regular / Normal Sale

These may feel like transactions of the past – but a normal sale is when the seller owns their property and the mortgage on the home is below the current home value.  In other words – the seller has equity in their home.  Equity is the profit for the seller.  The best part of a normal sale is working with living breathing humans who will respond to a buyers offer within a normal period of time and provides the buyer with disclosures upfront that sometimes include a recent home or pest inspection.  A quick glance at Redwood City last week (July 2011) showed 73% of the homes on the market are normal sales!  Wow – not what you expect if you listen to the news!

Short Sale

These transactions are trickier than the rest.  A short sale means, the seller owes MORE on their mortgage than the home is currently worth.  They have negative equity.  If circumstances change in the sellers life and they now need to sell their home – the home is placed on the market like a normal sale, however, when an offer comes in and the seller accepts it – it is their bank (where the mortgage is held) that needs to agree to take a shortage on their loan – thus the term Short Sale.  Doing a short sale hurts a seller’s credit less than allowing the bank to foreclose.  For a buyer it means patience since the response time for a bank to review their offer is anywhere between 3-6 months. Generally the seller still resides in the home and can provide disclosures upfront, though money is tight and the seller may opt to have the buyer pay for their own inspections.  In Redwood City last week 17% of the homes on the market were known short sales.

REO (Real Estate Owned) or Bank Owned Sale

The REO or Bank Owned property is a post foreclosure property.  That means the bank has foreclosed on the seller and now the bank owns the home and is selling it themselves.  The good news – a bank can respond to a buyer’s offer within a week – instead of the 3-6 months on a short sale.  The bad news, there are NO additional disclosures on the property aside from the CA mandatory disclosures.  The buyer holds the burden of conducting their own home and pest inspections (plus any other investigating they desire) during their contingencies.   Since the bank has never lived on the property they do not complete a Transfer Disclosure Statement that covers – along with many other items – neighborhood nuisances that a seller would have to disclose.  Have no fear – as the buyer you are protected and will have time to inspect the home to ensure it is in satisfactory condition.  Last week in Redwood City – 8% of homes for sale were bank owned.

(The remaining properties were 1% Auctions, 1% Court Confirmation /Probate Sales)

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/

Please enjoy my personal journey through homeownership at http://ajourneythroughhomeownership.wordpress.com/

Ready to Get Pre-Approved? Here is your checklist…

The first step in becoming a home owner is getting pre-approved for a home loan.

These days, a  minimum of 3.5% is required  for FHA loans up to $417,000.

Otherwise you’ll needed between 10% and 20% for a down payment for purchases above $417,000.  Depending on your financial picture.   Note you will also need about 3% of your purchase price for closing costs.  We’ll review what closings costs are when we sit down together.

Before you contact a lender, gather the following items:

  • 3 months worth of pay stubs per person or other proof of income
  • 3 consecutive & most recent months of Bank Statements:  Checking, Savings, IRA’s, 401k, Retirement & Investment Accounts
  • Most recent Tax Return
  • Social Security numbers

To prepare for your appointment, take time to calculate your monthly/yearly household budget and determine you comfort level.  This will help you decide whether or not purchasing a home is right for you and your family.  Prepare a:

  • Household Budget
  • Bills & Expenses Budget
  • Future Budget factoring in your new home expenses.

We are here to help you each step of the way.

Got Questions – we’re here to help.  Email us at Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/

 

Visit us on Facebook: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

To read my personal journey through homeownership – visit http://ajourneythroughhomeownership.wordpress.com/  Enjoy!

All That Real Estate Jargon

When considering the purchase of a home many factors come into play. Budget, Goals, Needs and Wants are all key players when deciding your next step.

Here are a few things to remember and consider:

Determine your Budget. Lenders will allow up to 30% of your monthly income to go to all debt. That includes your car loan, student loans, credit card debt and the mortgage.

When talking about your monthly mortgage payment – we uses the term PITI:

PRINCIPLE: How much of your monthly payment that goes towards your loan principle

INTEREST: How much of your monthly payment goes towards your interest rate

TAXES: Property Tax is 1.25% of your purchase price (and rises yearly), we divided it by 12 and add it to the monthly cost of homeownership. (It is actually paid in two installments, Feb & Nov)

INSURANCE: A home or condo needs homeowners insurance, we estimate the yearly premium and add the monthly cost to the total.
This gives the borrower and accurate picture of the monthly cost of the home, even though many of the payments are annual or semi-annual.

DOWN PAYMENT: These days a borrower needs a minimum of 3.5% for their down payment to qualify for an FHA loan. FHA loans do have strings attached and Private Mortgage Insurance is an expensive cost of putting less than 20% down. It’s best to sit down with a lender to discuss your loan options. We have several trusted lenders you can work with.

CLOSING COSTS: Many borrowers expect the need for a down payment but do not understand what “closing costs” are. Closing Costs are the fees associated with purchasing a home. Closing costs run about 3-4% of your purchase price and must be liquid and available. Closing Cost Fee’s included:

Lender Fees: Costs for your loan, including but not limited to, appraisal fees, credit report fee, points (1% of loan amount to pay down your interest rate up front), doc prep, underwriting, administration fees, and wire transfers to name a few.

Title & Escrow Fees: When purchasing property you will also purchase two Title Insurance Policies to ensure the property is yours and no one can stake a claim to your property. The Title & Escrow companies also charges Escrow Fees for handing the monies, loan docs, and recording the property with the county.

Inspections Fees: There are also fees that are paid outside of escrow, such as Inspections on the property that are often given a discount if paid at time of the inspection.

Gift Funds: When a borrower is receiving monies for the home as a gift, the lender will require a paper trail, including a Gift Letter signed by the person giving the gift expressing the money is not a loan and will not expect the money to be paid back. Also, it is best to get that Gift Money upfront to “season” the money in the borrowers bank account. Banks like to see 3-6 months of “seasoning”.

Got Questions – we’re here to help.  Email us @  Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/

Visit us on Facebook: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

To read my personal journey through homeownership – visit http://ajourneythroughhomeownership.wordpress.com/  Enjoy!

Tips on How to Manage and Repair Your Credit

Establishing good credit is essential in today’s consumer environment.  It is most critical when considering the purchase of a home and acquiring a mortgage.

5 Key Steps to Managing Your Credit

  • Make your payments on time!

o   A late payment affects your credit quickly!

  • · Don’t max out your credit card – try to keep the balance at 50% or less.

o Its best to have a few cards at a half balance than 1 card maxed out

§ This rule is particularly true when you are shopping for a home loan

  • · Don’t close ANY OLD credit cards!

o You will loose your “start” date and never get it back.  The longer you have a card open the better it is for your credit score.

  • · Do NOT open Store credit cards (i.e. A department store or music store)

o However, if you already have some open – DO NOT CLOSE THEM EITHER – just keep them active and paid on time!

  • · Keep your credit open & active.  For the cards you do have – use them every 3 months – allow them to send you a statement and then pay if off!

o It does you no good to use it and then pay it off online when you get home – you need the credit company to report the use to the bureaus and this happens every 30 days (when you get your statement).

  • · Check your credit report every 3 to 6 months to prevent identity theft.

o Try http://www.annualcreditreport.com

  • · Do not pay for your credit score – too many inquires done yourself will bring your score down!

Key Steps to Repairing Your Credit

Much like managing your credit well – repairing your credit requires the same rules.  If you are shopping for a home loan and your score is too low here are some key steps to heal your credit.

  • · Start making ALL your payments ON TIME no matter what!

o Your credit score can heal itself every 30 days

  • · Start to consolidate your debt by paying off the high interest cards first while maintaining monthly    payments on the other cards.
  • · DO NOT OPEN any new lines of credit at all.

o When shopping for a home loan you could ruin your credit score and debt to income ratio with too many lines of credit.

  • · DO NOT use a “credit repair” company
And SPEND WISELY – being a homeowner is like being a squirrel – sock away that money for a rainy day and create a budget you can live with and save with.
Got Questions – The Caton Team is here to help – email us at Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/
To read my personal journey through homeownership – visit http://ajourneythroughhomeownership.wordpress.com/  Enjoy!