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The 10 Most Common Mistakes People Make When Buying Their First Home

Getting ready to purchase your first home?

Here are 10 things to avoid:

  • Not Budgeting for a Home Loan: Owning a home may be cheaper than renting in the long run, but it’s a hefty up-front investment if you’re planning to take out a loan. Make sure you know how much you can afford to pay each month.
  • Ignoring Your Credit Score: A solid credit score will help you go from renter to homeowner. Even if you’re great at budgeting and earn a decent income, a poor credit score may hurt your chances of qualifying for a loan.
  • Not Paying Attention to Housing Trends: The housing market fluctuates. Sometimes it favors the buyer, sometimes it favors the seller. Read up on housing supply and demand, as well as interest rates and price history in your desired neighborhood.
  • Shopping Before You’re Qualified: Don’t shop for a home before you’re pre-qualified for a mortgage loan. It will just lead to frustration and heartache. Meet with an accredited lender or mortgage advisor so you have a clear understanding of your price range.
  • Overlooking a Home’s Resale Value: It’s rare to buy a “forever” home these days. Therefore, it’s good to consider ahead of time whether you’ll be able to re-sell the home for a decent price – or maybe even a profit! – in the future.
  • Trusting an Unqualified Realtor: Hiring the right realtor is the most important step in your home search. Make sure that you’re working with someone who is savvy and well-versed not just in real estate, but the neighborhood of your dreams, too.
  • Betting on a Verbal Agreement: Nothing in home-buying is legitimate until you’ve got a signed contract. Don’t hang your hopes on someone’s word and a handshake. Get all details – requirements, agreements, prices and dates – on paper.
  • Disregarding Hidden Costs: Budget for all of the fees – obvious and hidden! – in the homebuying process. What’s a hidden fee? One example is the closing cost, which can include everything from attorney to title search fees.
  • Forgoing a Professional Home Inspection: Don’t rely on the seller or their real estate agent to point out any issues with the home. Hire a professional home inspector to check for damages, pest problems or any issues with the property.
  • Forgetting Other Related Costs: Just like buying a car, owning a home comes with long-term financial responsibility. Prepare yourself for things like association fees, insurance, taxes, utilities, and regular maintenance and upkeep.

Are you you in the process of looking for a first-time home? Let Cardinal Financial (formerly RedStone Mortgage) assist you in finding loan options that meet your individual needs. Call us today at 480-759-1500.

Meet Your Neighborhood Lender: Matt Askland, RedStone Mortgage

 

Today we’re sitting down with our very own Matt Askland to get his professional insight on the current Phoenix real estate market. An expert in the mortgage business since 2000 and the main driver here in our Southwest region, he’s been a vital component to RedStone’s success. Let’s jump right into our chat with Matt.

First, let’s have a bit of fun. Finish this sentence: You know you’re officially a Phoenician when…

…you’ll park at the far end of the lot just for that tiny piece of shade. Also, when you can pronounce cities like Ajo and Gila Bend, and when you don’t need GPS because you speak in directional language – NEC, SEC, NWC and SWC.

So true! Speaking of shade, what are some of your favorite family-friendly ways to beat this summer heat?

I just broke the bank on a backyard for my family to enjoy our own little slice of paradise. I have a pool in my life again! We also love Top Golf, Main Event and the water parks.  If you really want to beat the heat, travel north and enjoy the cool mountain air.

Alright, switching gears to the professional now. What is one piece of advice you’d give to homebuyers about the financing process?

You really should get pre-qualified. Don’t dabble in this market unless you really understand what you can afford. We also advise people on what NOT to do when shopping for a home. For example, don’t go buy a new car, change your job or how it pays you, and definitely don’t take on a new credit card or move large sums of money in or out of your bank account.

And how can Realtors best help clients qualify in today’s market?

Ask them these three questions: 1) How much cash do you have saved for the down payment? Their answer will tell you if they need help. 2) How would you rate your credit? If they don’t say excellent, let us know so we can dive into why. They may not tell you, but they’ll tell us. 3) How long have you been at your job? This will tell you about their stability as a borrower and buyer.

Are there any under-the-radar lending and financing options consumers should be aware of at the moment?

Yes, definitely. Many of our senior clients are finding financial freedom in reverse mortgages. This program allows you to convert a portion of your home equity into cash and use the wealth they’ve built in ways that are truly beneficial to their lives. Also, the HomeReady® program by Fannie Mae is ideal for today’s borrowers who have limited savings. With as little as 3% down, you can qualify for a competitive rate and mortgage.

What kind of questions do you have about qualifying for a home loan in today’s market? Leave them in the comments below and we’ll do our best to answer!

What NOT To Do: 5 Pitfalls to Avoid When Applying for a Mortgage

Here at RedStone Mortgage, we often advise our clients on the things they need to do as part of the homebuying process, but it’s just as important to understand what NOT to do. Here are just a few of the things you need to avoid if you’re in the market for a mortgage.

Skipping the pre-qualification stage. It may sound like a shameless plug for our services, but we promise you, it’s not. One of the biggest mistakes you can make as a homebuyer is beginning the shopping process without understanding just how much house you can afford. Going through pre-qualification will help you set a realistic budget and create an action plan for any negative marks on your credit report.

Racking up debt. We can’t stress this enough – pay off your debt before you begin looking for a mortgage. Carrying too much debt can seriously affect your chances of qualifying for a loan as well as the final details of your loan – like interest rate. Besides paying off your credit cards, you’ll also want to be careful of just how much you’re using them as even a single purchase can significantly alter your credit utilization ratio.

Making any other major purchases. Hold off on buying that car or taking that grand vacation. Auto, student and personal loans all play into credit score, too, because they contribute to your debt load. When you apply for a home loan, lenders will take into account your total debt and compare it to your gross monthly income.

Making any major career moves. Now’s not the time to begin your entrepreneurial journey or become a free agent. Mortgage lenders want to see a steady history of employment – in most cases, they’ll review your income from the past 2 years. Unless your career change comes with a big – and immediate – pay raise, avoid making any major moves until after you’ve secured the loan.

Blowing your savings. The down payment and closing costs are just two of the out-of-pocket expenses you can expect during the homebuying process, but there could be even more. For this reason, most lenders would prefer that you don’t spend all of your savings on the down payment. It’s always good to have extra reserves for the unexpected costs of homeownership.

Are you in the market for a new home? Let RedStone Mortgage assist you in finding loan options that meet your individual needs. Call us at 480-759-1500.

3 Ways For Homebuyers to Qualify a Realtor Online

If you’re looking to buy or sell a home, you’re likely researching potential real estate agents online. With all of the different review sites out there, the hunt can be an overwhelming one. Do you know what to look for? Here are just a few of our expert tips.

Google Reviews

We should start this section off by saying – take all online reviews with a grain of salt. Don’t toss a possible Realtor to the side just because they have a couple of negative reviews or if they don’t have any online reviews at all. Not all stellar real estate agents will have a slew of online referrals. Likewise, don’t base your choice 100 percent off of these online reviews.

Instead, use Google Reviews as a starting point in your research and then follow-up with over-the-phone or in-person questions. You should also learn how to spot fake online reviews. In Google Reviews, check the profile of the reviewer to confirm that they’re active on the platform. Read through some of the other reviews that they’ve left to ensure that they’re not just using templated cut-and-paste feedback.

Zillow

The first thing you’ll see when you land on a Realtor’s Zillow page is their star-rating and the number of sales they’ve finalized in the last 12 months. While these metrics are important in qualifying a Realtor online, they only scratch the surface. Dive a little deeper and read their professional bio.

Take a look at their Listing & Sales map. Where are the majority of their “sold” dots located? Do they cover the area you’re considering? Moving down to the “Recent Reviews” section, note just how “recent” the latest entry is. If there is a good mix of dates in those client reviews, then it’s likely the agent is active and fast-moving.

The Realtor’s Website & Social Media Channels

This may seem like an obvious way to qualify realtors online, but there are a few things you should look for that you may not have considered yet. Number one, is it obvious that the real estate agent is an expert in your desired neighborhood or the neighborhood in which you’re selling?

Do they have a track record of selling the style of home that matches yours? And, do they have an active community on social media that is engaging with their content or asking questions about the homes that they’re listing? You can also learn a lot about a potential Realtor by reading any industry-related articles they’re featured in or blog posts that they’ve published.

Before we wrap up this blog post, we just want to reiterate one more time: Just because a Realtor has stellar online reviews, doesn’t mean they’re the best match for you. We recommend using your online search to narrow down a list of 3 to 5 real estate agents and then scheduling a call to see if one is a match. And, of course, your loan advisor is always a great resource for referring top Realtors in your area!

What kind of questions do you have about finding and working with a real estate agent? Ask them in the comments below and we may just turn your questions into a future Realtor Q&A!

How To Distinguish Between Needs & Wants When Buying A Home

Imagine your dream home. Can you see it? What does it look like? Where is it located? And now, the most important question: Can you afford it? If so, great for you! But if you’re like most people, you’ll likely need to make some compromises. It’s time to decipher between the must-haves and the things that would be nice to have. Here are some areas to consider.

Lifestyle & Location

These are the basics – decide which items on your checklist are deal breakers and which are “nice-haves.” Consider the distance from the home to your job, nearby amenities and shops, whether the home has a swimming pool, if you like the countertops and finishings of the home, etc. Which aspects of the home can you “live with” for the time being and which absolutely must be in place for you to consider purchasing it? Will you take a longer commute for a larger yard or more square footage? It’s an important call to make.

If You’re a Pet Owner…Or Not

No doubt if you have four-legged and furry members of your family, you’ll have certain requirements. For example, is the yard large enough for your dog to run around in? Is there a fence to keep him safe? If not, how far is the nearest dog park? On the contrary, if you’re a person who prefers a pet-free life, you’ll want to know whether the previous or current owners had animals in the house. Does this turn you off to the idea of buying the home?

School Districts

Whether you have a family already or are planning to have children in the future, you’ll no doubt need to take school districts into account. Is it important to have a good school within walking distance? Or, would a short drive or commute to and from school not present too many difficulties in your everyday routine? Even if you don’t plan on having kids, living in a good school district will increase the value of your home when and if you decide to sell down the line.

Neighborhood

Different neighborhoods have different personalities. Choose an area that closely matches the lifestyle you want to lead. It may not be perfect, but hopefully it ticks off at least the majority of your “wants.” There’s a good chance you’ll need to make some compromises when it comes to the neighborhood, but some things to take into consideration include: Budget, personal preferences, size of the garage, community and distance to your favorite grocery store, restaurants and other amenities.

Are you in the market for a new home? Let RedStone Mortgage assist you in finding loan options that meet your individual needs. Call us at 480-759-1500.

5 Must-Do’s For First-Time Homebuyers

Buying a new home? Here’s how to go into the house hunt fully prepared.

Prepare For Home Viewings

Assuming you’ve already done the work to determine down payment, mortgage approval and other financial considerations, the first thing you’ll need to do when searching for a new home is decide what, exactly, you’re looking for. What is your main criteria? How many bathrooms and bedrooms do you need? Do you want a small or large backyard? Will you consider homes outside of your ideal neighborhood?

Give Yourself Plenty Of Time

You’ll likely spend years living in your new home, so allow yourself plenty of time on the tour to view its ins and outs. Do a proper inspection. Open drawers, cabinets and cupboards. Look behind furniture, even lift up rugs if necessary. This is a big investment! You should know what you’re getting yourself into. Remember, sellers aren’t obligated to inform you of every little defect in the home. The legwork is your responsibility.

Look At The Bigger Picture

View the home multiple times and at different times in the day. Also, don’t just view the property on its own. Consider the bigger picture – its location. What is the area like? Is the home close to a noisy intersection or a train track? Is there loud nightlife nearby? You’re not just buying a home, you’re buying a location. Consider whether it fits into your current or desired lifestyle.

Let Your Realtor Do Their Job

Don’t view homes on your own. Doing so may make the seller’s agent think you’re underrepresented and you’re vulnerable to a poor deal. If you come across a home that your realtor hasn’t already presented to you, it’s likely that it doesn’t match your criteria. They’re the experts, after all. However, if you really like the look of a particular home, share the address and phone number with your realtor so that they can arrange a proper tour without the owner being present.

Know The Property’s History

Ask your realtor for complete and detailed information on the home and its surrounding property. Don’t just settle for the real estate listing. You’ll want to know: How long the home has been in the market, whether it was previously listed or re-listed for a lower price and mortgage history. Also ask for information on property taxes as well as any public records that may detail previous sales, property deeds, judgements or liens. You can get all of this information through your real estate agent.

Are you in the market for a new home? Let RedStone Mortgage assist you in finding loan options that meet your individual needs. Call us at 480-759-1500.

10 Necessary Steps to Any Successful Home Closing

10 Necessary Steps to Any Successful Home Closing - myarizonaloan.com

You’ve finished the exhaustive search for a new home and have finally made an offer on the place of your dreams. Now what? Closing on a new home can be a lengthy process, but the steps are necessary to success. Here’s what to expect in the final stages of buying a house.

Open an Escrow

The first step to unlocking the door of your new home? It’s opening an escrow. During escrow – which lasts for approximately one month – your mortgage advisor will make any required payments on your behalf to property bills that are separate from the loan payment. These payments are made out of a designated escrow account and can go toward things like property taxes, HOA fees and insurance costs.

Lock-In Your Interest Rate

If you’ve found a home and are in the process of obtaining a mortgage, it’s highly recommended that you lock in an interest rate. Exactly when you choose to lock in the rate is up to you, but a solid mortgage advisor will be able to guide you in the right direction. Some people choose to do this immediately and others prefer to wait until just before closing in the hopes that rates will fall during that time.

Schedule a Home Inspection

The last thing you want is for something to go wrong in your new home just days after moving in. That’s why it’s smart to schedule a home inspection before closing. During an inspection, specialists will check things like the air conditioning system, plumbing and electricity. New homes should be thoroughly evaluated, too; even homes that have recently passed municipal inspections by the builder. It’s always a good idea to get an objective third-party review.

Have a Pest Inspection

Hire a licensed pest inspection company to check for issues with flies, mosquitoes, cockroaches, fleas, rats, mice, bed bugs, termites, ants…pretty much any type of pest! Make sure they evaluate the home for any possible environmental health threats caused by lead, fungus and asbestos, too. Presence of any type of contamination is a subject of renegotiation of terms and possibly even a reason to rethink the deal completely.

Address Any Issues

Did your inspection reveal any problems? It’s time to troubleshoot! You may want to discuss dropping the price or asking the seller to fix the problems that were unearthed. Nevertheless, you’ll want to obtain the estimates for repairing the issues and schedule a time to do so as soon as possible.

Ask for Title Search and Insurance

Title insurance is needed to eliminate the third party ownership on the property that you are buying. A title officer will make sure there are no legitimate claims from relatives, collectors and the like on the home. Your title insurance is legal proof that everything is clear and that you have a green light for closing on – and owning! – your new home.

Conduct a Home Appraisal

A home appraisal determines the estimated market value of your soon-to-be property, based on factors like general condition, geographic location, proximity to points of interest, value of nearby homes and recent neighborhood sales or growth. Typically, a mortgage lender will need this information to make sure you’re asking for the right amount of money. Occasionally, you’ll run into the issue of a low appraisal. As a buyer, this isn’t necessarily a bad thing. But if you’re a seller who’s already negotiated a certain price, this could present a major financial problem. To help prevent this issue, make sure that the appraiser is from your county, and has a residential appraiser certification and professional designation.

Set the Day and Time of Closing

First thing’s first – you’ll want to set aside enough time in your day to finish the closing. An hour or two may not be enough time if unexpected issues arise. We recommend allocating at least a half-day’s time for the home closing. Schedule it toward the end of the month, but not on the last day – aim for a day between the 20th and 25th. That way, you’ll still have some padded time should there be any disputes. If you schedule a closing and don’t complete it by that day, you could face increased closing costs for the next month in addition to penalty payments.

Be Present at Final Walk-Through

Don’t miss your chance for a final look at your home before paying for it! Most final walk-throughs are scheduled 24 hours before closing. Make sure the home is in the condition that’s specified on your final sales contract. Confirm that any necessary changes were made post-inspection. Check if everything is in order and that any additional necessary replacements were made. If you do run into an issue, you’ll want to shift the closing day. Or, upon mutual agreement, the repair costs will be submitted to the escrow account.

You Did It! Now Prep for Closing Day

You’ve completed the escrow marathon and it’s officially time to sign the paperwork and get your keys! Prepare in advance all paperwork you collected during the process, such as title search and insurance, inspection reports, bank statements, home appraisal reports, checks for down payment closing costs, etc.

There’s likely to be quite a few people present for closing, including your attorney, a seller (or their representative), the seller’s attorney, real estate agents (for both parties), a lender’s representative, a title company employee, the closing agent and even a public notary.

You’ll be signing a string of documents – do not sign anything at this point that is unfamiliar to you. By now, if you’re working with a competent buying team, you should have seen and read all of the closing documents in advance. Make sure that you understand what you are signing and how your payments will be distributed over the designated time.

Are you you in the process of selling your house and looking for a new home? Let RedStone Mortgage assist you in finding loan options that meet your individual needs. Call us at 480-759-1500.

First Time Buyer Mistakes

#1. Failing to Budget for a Home Loan

Home ownership is a cheaper alternative to renting in the long run. But in the beginning, it can be much pricier. This is especially true if you intend to get a loan to purchase your dream house.

If you do acquire a loan, remember that you will be making monthly mortgage payments for a number of years.

Therefore, it is important to budget for a home loan, beforehand. You need to determine whether your income can accommodate an extra expense or not.

If you are unable to afford making monthly payments on your home loan, it would be a mistake to try to own a house at this time.

#2. Ignoring Your Credit Score

If you thought that finishing school meant being done with competitive scoring, think again!

Apparently, your creditworthiness can be summarized in just 3 digits. Those three numerals will draw the line between owning a house and renting one.

Even if you have an impeccable sense of financial responsibility right now, your credit past can haunt you. You could have a hard time getting a home loan if your past record shows problems with payments, or if there’s an error in your credit report.

If you go ahead and apply for a mortgage loan without checking your credit score, you could end up paying a lot more than you expected.

It’s best to perform a credit check beforehand.  This way, you will be allowed to get loans without being obligated to pay hefty amounts in interest.

#3. Disregarding Housing Marketing Trends

Just like other financial markets, the housing market fluctuates from time to time. Sometimes it favors the buyers, and sometimes it favors the sellers.

There are a number of factors that affect housing marketing trends. This includes the ratio between supply and demand, interest rates and the overall condition of the economy.

It’s also imperative that you consider how the housing market changes in your ideal location, as home prices vary from one location to another.

If you disregard housing marketing trends when hunting for a house for sale, you might end up signing for a deal that favors the seller.

#4. Lack of a Preapproved Home Loan

Some people are anxious to shop for a house and want to do it quickly, before they are financially able to afford it.

If you have already started talking to sellers before having a hard talk with home loan lenders, you are making a mistake. In fact, not many sellers will want to work with you if you promise them a certain amount and then can’t fulfill that promise.

To avoid any disappointments, it’s wise to have your home loan pre-approved first, then go ahead and look for a house to buy.

#5. Overlooking the Home Resale Value

Another huge mistake you can make when buying a house is not considering the fact that you may need to resell the house you intend to buy.

There are lots of unexpected changes that can occur, such as job transfers, financial problems, or falling in love with another bigger or prettier house.

When this happens, you might find the need to sell your house, obviously at a profit. You should never overlook the resale value of the home you intend to purchase.

What you need to do is to ask yourself several questions such as: Will it be easy to sell this house? Will buyers be interested in buying it? Will this house fetch me a good amount if I decide to buy another one? Is it situated in a preferred neighborhood? Etc. 

#6. Trusting an Unprepared Realtor, not getting a Good One

Involving a realtor is highly recommended in the home buying process.

There are pros and cons to dealing with real estate agents. A real estate agent can take a huge burden off your shoulders when it comes to looking for the right house, but there’s a danger in trusting a realtor too much. An unprepared realtor can cost you money and set the deal back.

Also, if you talk to the seller’s agent, he will be representing the seller and he may not be truthful about the negative aspects of the house.

If you trust this kind of realtor blindly, you may have regrets later on. Make sure your realtor is prepared and well versed.

#7. Settling on a Verbal Agreement

Double crosses are bound to happen when agreements are made verbally. It would be difficult for you to prove in court that a promise was made or a handshake was made.

Therefore, it’s best that you and the seller get everything down in writing to avoid future miscommunications.

This way, you will have something to present in court should the seller fail to keep their word.

#8. Disregarding Hidden Costs

This is another common mistake that many first-time homebuyers often make.

If you neglect to prepare for hidden fees, you might be in for a big surprise. Closing costs are a good example of hidden fees, which usually include a number of fees that cover final housekeeping matters.

Before signing the homebuyer’s agreement, it would be wise on your part to determine what hidden fees are there.

#9. Ignoring Professional Home Inspection

You will be making a costly mistake if you rely on the seller or real estate agent to inform you about the house problems you should expect.

Before you make any payment towards the purchase of the house, it’s imperative that you first hire a professional home inspector to ascertain that the house is in good condition.

#10. Following your “Love-at-First-Sight” Gut

Not everyone or everything that you fall in love with at first sight ends up being your one true love. A house may appear to be everything you ever dreamed of, but it might not live up to your expectations.

Before following a dream-house blindly, be sure to check it out thoroughly. Make sure it presents you with all the right qualities that make it a perfect home for you and your loved ones.

#11. Being Indecisive

As much as it is unwise to rush into making a purchase, it is equally imprudent to take too long without making up your mind. If you take too long to make a decision, another home buyer will take advantage of your indecisiveness and buy your dream house.

Since market trends change from time to time, you could also find out that the house you took too long to buy has a new (and higher) price tag attached to it. 

#12. Relying on Online Services Only

Now that many services are obtainable at the click of the mouse, most people have become too dependent on them.

It’s true that loans can be obtained online and houses can be bought online as well.

But failure to establish personal touch with lenders or home sellers could present a huge and costly misunderstanding in future.

#13. Forgetting the Costs Associated with Owning a Home

Just like a car, a home requires money to maintain. The pain of parting with your hard-earned cash will not end on the day you finish your last mortgage payment.

You have to brace yourself for other costs for maintaining a safe, secure, and environmentally friendly home.

You have to also be ready to meet certain costs such as association fees, insurance, taxes, utilities, maintenance and major/minor repairs, etc.

#14. Entering into Multiple Agreements

While it’s a smart thing to compare different houses before buying, you might end up biting off a lot more than you can chew.

This is especially true if you meet up with sellers and make offers or promises that you don’t intend to honor.

Before entering into any agreement with a seller or a realtor, it’s imperative you ensure that you are ready to honor your end of the deal.

If you can avoid the above mentioned mistakes that are commonly made by first-time buyers, you will be more like a pro homebuyer instead of a rookie.

Avoiding these mistakes can help you make the right choices when it comes to finding a home you and your family can take pride in. Keeping in mind the resale value will also help you avoid problems moving on in the future.

First Time Buyer Searching For Home

Viewing a Home

For most people, the prospect of going to view homes they fancy is thrilling and it’s tempting to think that that is the very first step to buying a home. But, it is not.

Assuming you have your down-payment, mortgage pre-approval and other financial issues handled, the first thing you need to do before viewing any home is to determine what you’re looking for.

What is your criteria?

Do you need a set number of bedrooms and bathrooms?

Do you want a yard?

Do you want property only in particular neighborhoods?

How much are you willing or able to spend?

Answering these questions will save you a lot of time and effort running around to view homes that do not suit you.

Once you’ve decided on your criteria, call your Realtor. Let him or her know what you’re looking for and what your price range is.

He or she will get to work on your behalf, shortlisting the properties that meet your criteria so you can start your viewing from there. Then comes the fun part – finding that perfect home you’ve been dreaming of!

Schedule Adequate Time

When going to view homes, make sure you’ve got plenty of time on your hands.

Always schedule enough time to do a proper inspection. It’s possible you’ll be living there for years to come, so five minutes strolling around isn’t going to cut it. Schedule about two hours to view your potential house. Research suggests that when buyers spend a longer time viewing a home, they are more likely to pay below the asking price.

Be Thorough

Be thorough when checking out the home. Open drawers, cabinets and cupboards, look behind furniture, lift up rugs if necessary. While this may seem rude, it is not. You are about to make a substantial investment and you need to know exactly what you’re getting.

Sellers are not obliged to inform you of or show you every single defect in the home so you need to find them yourself. An artfully positioned chair could be hiding something, so feel free to look where you need to.

Of course, if you already hate the home from the get go, by all means do only a minimal inspection or don’t bother with the inspection at all. But if it’s something you like, open every door and look in closets.

Rest assured that the sellers have had sufficient notice of a potential buyer and would have straightened up those spaces knowing you will be poking around.

What comes with the Property?

Confirm what comes with home. For example, whether the garden is for the exclusive use of that apartment or not. Make sure to get confirmation in writing if you do decide that you would like to buy the property.

 

Don’t be Fooled by Staging

Sellers have been known to use clever tricks to make a home more appealing. They can strategically light a room to draw attention from a problem or apply fresh coats of paint to cover a mold issue.

While you are viewing the house, try to look beyond the immediate aesthetics of the interior décor. Focus your attention on what you will get when the furniture and interior décor are gone.

Keep Emotion Away

When viewing a home initially, try not to get attached immediately. Keep emotions aside and only consider it as a building you need to inspect.

If you get attached from the get go, you might make an emotional decision and overlook major problems.

View Multiple Times

If you like a particular home, view it multiple times. You’re more likely to identify potential problems if you view it several times at different times of the day.

This way you will know what traffic is like in the area and the noise levels that occur at different times.

Consider the Overall Context

When viewing, don’t just consider a property on its own – view it in the context of its location.

What is the area like?

Is the property adjacent to a train track or noisy intersection?

Is there a pub or bar close by that gets noisy at night?

How close are you to the things you might need, such as schools, public transit, a grocery store, or hospital?

All of these are legitimate questions to consider when viewing properties, as they can add or subtract from the overall enjoyment of your home.

Let your Realtor do their Job

Very importantly, don’t just go viewing on your own.

Apart from the fact that this is not safe, it also makes you vulnerable. A seller’s agent might think you’re unrepresented and try to take advantage of you.

Let your Realtor do their job. If you happen to come across a property that interests you, but your Realtor hasn’t told you about it, chances are it does not match your criteria.

If you like the look of it however, call your Realtor with the address and phone number on the board. That way, they can arrange a proper viewing for you without the owner being present.

The Condition of the Property

When viewing a home, there are some very important things to look out for, the primary one being the condition of the property.

Is the Home Structurally Sound?

Walk around checking the walls and ceilings for big cracks – hairline cracks are to be expected in some places. Make sure you check the exterior for cracks, as well. Cracks could be a sign that the property is not structurally sound. Points at which extensions join are good places to look, as cracks often occur there.

Also look for loose or broken tiles on the roof or broken guttering, evidence of damage to the drywall and weaknesses on the floors.

Any signs of a problem anywhere on the structure of the property should be queried – what caused it?

How long has it been like that?

Will it be fixed?

Furniture or accessories like rugs could be hiding wall cracks or problems with the floor, so again, don’t forget to look behind furniture or move them around if necessary.

You might love the house, but if you see major cracks or any of the walls look like they are bowing, you should have a structural engineer come in and take a look.

You should also have a survey done – not to be confused with a mortgage valuation – as this will uncover hidden issues with the house.

Watch out for Mold

Mold is a major problem that could cost you a lot to fix. Don’t just try to look for it, use your nose as well. Mold frequently gives off a musty smell, even when there are no visible signs.

Plaster that’s flaking, watermarks on walls or ceilings, even a fresh coat of paint in a particular section of a room could all be an indication of mold.

Don’t forget to examine the ceiling and around the skirting boards properly for evidence of leaks or water damage.

Heating, Air Conditioning and Electrics

Other aspects to consider when looking at the general condition of the property are the heating and air conditioning systems.

Have an expert assess that they are the appropriate models and capacity, and that they are working properly.

Check the fuse box; it shouldn’t be old or outdated, must be easily accessible, and in good working condition. Ensure wiring was done properly. You don’t want to spend a fortune rewiring the home to bring it up to a standard.

Consider if there are enough power points and if they are in good condition.

Basements and Attics

Also check the attic for water problems – look for water damage or leaks that may have affected the insulation, walls and ceiling of the attic.

And while you’re at it, make sure that the insulation is adequate for where the property is located.

In the basement, look for evidence of moisture problems in the home – is there water leaking onto the floor or water around the foundation? There should be no cracks in the basement walls and any wood such as those in exposed beams should be in good condition with no rot.

Pipes and Taps

Check that the plumbing is up to date. Run taps to ensure they work properly and the water pressure is strong enough.

Exposed pipes in unheated areas should be insulated, as frozen pipes will eventually cause water damage. It is particularly important from a health perspective to ascertain that the pipes are not lead. If they are, you will need to replace them.

Also, find out where the hot water tank is located. If it is on the roof you may need to replace it, as it is probably an old tank.

Exterior

Check for evidence of water around the foundation which may indicate drainage issues.

The ground should slope away from the foundation. If there is a porch, it should have a foundation and not simply sit on soil. Check that driveways or any walkways leading up to the house do not have cracks and are not crumbling.

Check that the siding of the home is in good repair. Take a look at the landscaping on the property as well. It shouldn’t be unkempt and unsightly, as that can indicate a lack of care.

The sprinkler system should be in proper working condition. If there is a deck, ensure there’s no decay or damage from termite or beetles.

Property History

Don’t just settle for the information contained in the customer copy of listings. Ask your agent for more detailed info.

How long has the property been on the market?

Was it previously listed, withdrawn and relisted for a lower price?

These kinds of questions can help you decide how much to offer.

You also need other detailed information on the property, most of which will be available from the public records.

Public records will show you the name of the owner, original age of the home, mortgage history, parcel number, previous sales of the property, property deeds and any judgments or liens filed against the seller. Information about how much the property taxes are and whether they are paid or in arrears will also be available in the records.

You will also be able to see if there were permits obtained to make improvements on the home. These permits could complicate the sale of the property.

Do not skip this search, because it reveals important information about the property you are interested in and could save you money.

You can get all of this information through your agent if you’re using one, since most agents subscribe to services that give them access to such data. If you are not using an agent, then you can obtain this information through a local title company or you can order them online for a small fee.

Making the Choice

Once you’ve done all of your homework, you need to decide whether or not to buy the house.

It is important that you step back and evaluate all the information available to you from viewing the house, inspecting its condition and obtaining public records.

Bear some things in mind:

  • You may need to compromise on some of your priorities. No home is completely perfect.
  • However good it may be, there will be one or two things you wish you could change – if only it was facing that lovely park you saw on the way there, or if only the house you prefer was in that other neighborhood, or if only this cost a little bit less.
  • At the end of the day, you will need to decide on which factors are most important to you. If you prefer the neighborhood over the house, you may decide to look for a different type of property within the same community. A condo for instance, instead of a town house.
  • If finances are the issue, you may want to discuss with your bank if they would be willing to increase your mortgage. This is only if you can afford it.

There is no point in getting into financial trouble just to get a particular property, when more affordable ones could do just as well.

  • Lower your expectations on the condition of the home. If your inspection revealed a few small problems, you could still buy the property and do the repairs yourself.
  • Use the problems as a bargaining chip to get a reduced price from the seller. If you go this route, please get a quote from a professional for the cost of repairs.
  • Don’t estimate based on your own judgment and don’t let the seller decide how much he thinks it will cost. Also, do not let the seller get the quote, as he will likely get a quote that is favorable to him.
  • If you allow the seller to decide the repair cost, you may find that the expense is much higher than was quoted.
  • Be prepared to walk away. Again, this goes to our earlier point about not getting emotionally attached until you have bought and moved in. If at the end of the day you find out the compromise required is more than one you’re prepared to make, walk away. Working with your Realtor, you will soon find something else that you love.

10 Things To Know If You Are Closing A Home Deal For The First Time

You have finished the exhausting search for a new home and finally found the house of your dreams.

The real estate agent has already helped you to prepare the best offer. It contains the list of contingencies (for example, that seller fully disclosed any problems with the house, points on the results and actions after the inspections, etc.) and it is finally accepted.

Anticipation of a purchase is rising. You are ready to sign the documents and move into your new family home, loft, condo, or a sea-view apartment as soon as possible.

Although, it is too early to pack your boxes yet. A long journey waits, and there are ten steps to take before you own your property.

#1. Open an Escrow

The first step to closing the deal and unlocking the front door of your own house is to open an escrow.

Escrow, on average, will last approximately one money. During that time, the third party is taking care of transactions on both the seller and buyer’s behalf. For example, if you are providing an inspection as a buyer, you deposit some funds to the escrow account.

Costs of this service are to be negotiated beforehand. Some escrow companies may charge unexpected “junk fees.” You might only become aware of these fees during payments, because they are usually hidden.

#2. Lock-In the Interest Rate

You need to lock your interest rate from the time a loan application begins approval until a couple days before the closing.

Exact day and time is up to you. Most of the buyers do not lock the interest rate when they apply for their mortgage.

They are afraid the rates will decrease during that window of time. Nevertheless, chances are that the interest rate may both increase or decrease during that period.

A lot of variables should be considered. Waiting till the last moment could get you a lower rate at the same time, if you get lucky. The decision is yours to make, just do it in time.

#3. Have a Home Inspection

Making sure that tiles won’t fall off on the first day in your new home is generally a reason to have a home inspection.

Specialists will check the conditioning system, plumbing, and electricity. Choose your inspectors wisely, and do not fall for the cheapest option. Cheap usually proves to be a bad choice in terms of quality, experience and technical knowledge.

Of course, even the most expensive professionals cannot foresee the future. But they may save you thousands of dollars uncovering existing issues.

Even new houses need to be checked duly and thoroughly. It does not matter that the house recently had all the municipal inspections by the builder. 

#4. Have a Pest Inspection

Ideally, the best choice is to hire a licensed pest inspection company. They will check if your future property is contaminated by flies, mosquitoes, cockroaches, fleas, rats, mice, bed bugs, termites, beetles, critters, carpenter bees, ants, and other types of pests.

They will also check mold growth and other possible environmental health threats caused by lead, fungus and asbestos.

There is no need to explain how much harm even a small amount of termites may bring. Not to mention the potential harm a growing mold population can cause, as they tend to cause major damage. These issues will lead to major fixing expenses and health issues.

Presence of any kind of contamination is a subject of renegotiation of terms, or a reason to rethink the deal completely.

#5. Fix all the Issues after the Inspections

If inspections revealed any problems, you may want to drop the price, or ask the seller to fix the problems that came up.

Some inspectors advise to look deeper into the issue. They say you should ask for a second opinion, or evaluate it further with a specialist.

It is highly recommended to discuss the estimates and fix the issues as soon as possible.

#6. Ask for Title Search and Insurance

Title insurance is needed to eliminate the third party ownership on the property that you are buying.

The officer will help you to make a title search and make sure that there are no legitimate claims from relatives, collectors, and the like. Such claims might end in questioning your right of possession, or invalidating it at all.

Title insurance will become a legal proof that everything is clear and you are good to go further with the closing.

#7. Conduct a Home Appraisal

A home appraisal determines the estimated market value of your soon-to-be property.

The appraiser evaluates it based on different factors. These include general condition, geographic location, proximity to objects of interest, value of the near-by houses, their recent sales, neighborhood growth and potential, etc.

Mortgage lenders usually need this information to make sure the amount you would like to borrow is worth the money.

Of course, there is always a risk of a low appraisal. This might not be bad for you as a buyer.

But imagine this scenario: you negotiated a deal with the buyer, and it is already lower than he initially wanted. This is due to the declining market and neighborhood constructions. This will cause the home appraiser to drop the value even more.

You cannot disagree that it may slow down the closing process. This is due to the seller’s doubts, if the appraisal is fair, or if he really wants to sell at a price that low.

At the same time, you as a buyer want to save, and you have a legitimate right to go for it. Same goes with high appraisals, which will stop you as a buyer and make you want to appeal.

And both of you will be right in standing your ground. Such a possibility may lead to a delay and require new negotiations.

Unfortunately, some appraisers are not qualified enough, or unfamiliar with all the specifics of the particular areas.

Before trusting the home appraiser with this responsibility, make sure he is from your county, has a residential appraiser certification and a professional designation.

#8. Set the Time and Date of the Closing

There are several moments to consider when scheduling the closing for your property.

One of them is to schedule at least half a day’s time for the occasion. An hour or two may not be enough if you face some unsolved issues or unexpected situations.

Closing can be held in any agreed location. For example, at the attorney’s office, or at your lender’s or title company’s offices.

The closing date should be close to the end of the month, but not the last day of the month.

It is better to settle between the 20th and 25th of the month.

In this case, you will have some time before the end of the month to resolve all the disputes.

Why not the last day? There are a few reasons. These include wanting to renegotiate new conditions, technical issues or something going wrong.

If you schedule a closing and fail to complete it on that day, there are consequences. You will be facing increased closing costs next month, in addition to the penalty for the delay.

#9. Be Present at a Walk-Through

A final walk-through is a last chance to see your future house before you buy it.

Usually it is scheduled twenty-four hours before the closure.

The property should be in the condition that is specified in your sales contract. You may inspect if any changes have been made after the home or pest inspections. Check if everything is in order and if any additional replacements are necessary.

If there is an issue, the closing day may be shifted. Or upon mutual agreement, the repair costs will be submitted to the escrow account. Do not skip it because missing the final walk-though is one of the reasons of closure delay.

#10. Get Ready for your Closing Day

Now you’ve run the escrow marathon and survived all the possible obstacles in your way. It is finally time to sign the papers and get the keys to your new home.

First of all, prepare all the paperwork that you have collected during the whole process. This includes the title search and insurance, inspection reports, bank statements, home appraisal, checks of down payment closing costs, prepaid interest, etc.

There will be quite a few people present with you at the closing: your attorney, a seller (and/or his representative), the seller’s attorney, real estate agents (both yours and your seller’s), a lender’s representative, a title company’s representative, the closing agent, and a public notary.

Exact number and function depends on the state and county.

Basically, the purpose of the meeting is to sign the following documents:

  • Closing Disclosure (CD). This document contains your final payments, costs and charges upon agreed terms and periods.
  • You are supposed to receive it three business days before the closing date and compare it with the conditions of the initial Loan Estimate.
  • Mortgage note.
  • Signing this document, you agree to your mortgage terms and conditions, as well as penalties, in case you are not able to pay duly and in time.
  • Deed of trust or mortgage.
  • It is a security for your lender that he will get his money, even if you are unable to obey the terms of the mortgage note.
  • Certificate of occupancy (for new houses only). Such document is needed to move into a house.

If your home buying team is competent enough, you will not be seeing those documents for the first time at the closing.

Do not sign anything that is unclear to you, different from what you agreed to, or seems wrong.

Make sure that you understand what you are signing and how your payments will be distributed over the time. Charges change differently depending on the mortgage type, and may also depend on your insurance or taxes.

Risks and Delays on a Closing Day

Even a well prepared closure may not go as planned. Some mistakes can be revealed during the signing of the documents.

There are a few examples of how this might happen. If you or your seller’s financial circumstances change or if one of you changed your last name during marriage. It is possible some of the repairs were not considered, or one of you simply backs out from the deal. Everything is possible, and you have to prepare for every option.

If either of you refuse to sign the deal because you changed your mind, or found a better option, the other party has right to collect the damage fees. This clause is usually obligatory in all the agreements.

Closing a deal is a big responsibility, stress and financial risk for all parties involved. It is important to understand that, especially if you are doing it for the first time.

You need to do your research and gather all necessary documents. You must also follow your attorney’s, inspectors’ and real estate agent’s advice. Not to mention, you have to be sure that you definitely want to close this deal.

Then calm down and take a deep breath. Now you can go through with it!

After you Sign the Papers

Take the keys and start moving into your new house. Now you are a legitimate owner and a responsible person for a mortgage loan.

Closing on a first new home is mind blowing – both in a good and a bad way.

Nothing can be compared to buying your first home. When you finally get through with it, you will be able to relax and enjoy your new property.

Hopefully, these basic steps will help the first time home buyers handle this incredible process with less stress and more energy.

Good luck!