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FINANCING OPTIONS: WHAT LOAN IS BEST FOR ME?

Figuring out what needs to be done to purchase a home can be intimidating. The main thing that worries people is the state of their credit and if they will qualify for a home loan. There are so many different loan options to choose from, and honestly -- the only way to know what’s best for you is to speak to a mortgage professional. However, it doesn’t hurt to research what’s out there to have an idea of what you may be discussing when the time comes.

Conventional Loans

A conventional loan is a private loan that does not involve the government. Lending institutions offering conventional loans set their own standards and, as a result, offer more variety and flexibility with their mortgage plans. It can be more difficult to qualify for a conventional mortgage than it would be to qualify for a government funded loan.

For the most part, a conventional loan will require a 20% down payment. When this isn’t true, though, the lending institution will require the borrower to pay PMI (Private Mortgage Insurance). PMI protects the lender in case the home is lost in foreclosure when the borrower pays less than a 20% down payment. [PMI can be dropped when equity reaches 20% at the borrower’s request.]

FHA Loans

An FHA loan is a loan that is insured by the Federal Housing Administration. FHA loans are more attractive to borrowers since they require a lower down payment than conventional loans and they allow the seller to assume some of the closing costs (seller concession). They also allow money being placed toward the down payment and/or closing costs to be given as a gift to the buyer.

FHA mortgages require the borrower to pay a MIP or Mortgage Insurance Premium. It is similar to PMI in that it also protects the lender in case the borrower defaults on the loan. Unlike PMI, though, you cannot drop MIP once a certain amount of equity is reached. The only way to get out of paying MIP is to refinance or pay the loan off.

VA Loans

Some veterans and qualified personnel may be eligible for a VA-Guaranteed loan. These are loans offered by lenders where the Department of Veterans Affairs guarantees the top 25% of the loan, so no down payment is required. Although this is the case, depending on the market climate, it still may be smart to offer a down payment to keep your competitive edge. In order to qualify for a VA loan, the veteran must have a discharge that is “other than dishonorable” in addition to the required length of service during wartime or peacetime.

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In no way does this break down every loan option, but it does provide an idea of what you may be looking for depending on your circumstance or financial situation. Feel free to reach out to me if you have sany questions about any of the options mentioned above, or anything else Real Estate related!

Check out this free resource for those of you looking for more information on this subject -- Click for Your Home Loan Toolkit: A Step-by-Step Guide (created by the Consumer Financial Protection Bureau.

https://files.consumerfinance.gov/f/201503_cfpb_your-home-loan-toolkit-web.pdf

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What you can expect from your Real Estate Agent

There are many misconceptions surrounding the role of the Real Estate Agent when one is buying or selling their home. People either don’t take advantage of all their Realtor has to offer or expect the Realtor to provide services that simply are not their area of expertise. It is easy to get frustrated if you are unsure where to go for certain information or if you are questioning certain information that’s provided to you. Here, I provide some insight on what you can expect from you Realtor, on the buying and selling side. One thing that is certain – every Real Estate Agent has a fiduciary duty to their client. This means that no matter what, your Realtor should ALWAYS look out for your best interest.

 BUYER’S AGENT

The Buyer’s Agent is the Real Estate Agent who assists the client who is in the process of purchasing a property. This is the agent who takes you on showings, submits your offer to the seller’s agent, and walks you through the process until you get to the closing table. During this experience, the Buyer’s Agent should:

1.       Show you homes that are in your price point that you are interested in without pre- judgement. Once you provide your criteria to your agent, they should then present all options that fall within those criteria. It is not the Realtor’s place to filter homes based on personal opinion. They are after all, working for you.

2.       Make you aware of information regarding the property. Your Realtor should be able to tell you whether a house has a sewer or septic system, forced air or radiant heat, and well water or public water. This information is typically provided by the seller in the form of a Seller’s Disclosure. It is best practice to provide this document upfront, so the buyer is aware of any defects in the property that the seller is aware of.

3.       Submit your offer to the Seller’s Agent. Although your Realtor can advise you of the climate of the market, they cannot tell you what to offer on a property. This is your decision. Based on your pre-approval from your mortgage lender, you should know what is practical for you. This information, along with the market condition, should provide enough insight in order for you to put your best foot forward when making an offer.

4.       Explain the process and negotiate. There is a lot that happens between an offer being accepted and closing day. The appraisal and inspection are the two main concerns of the buyer at this point in time. Your Realtor should provide you with names of companies or refer you directly to trusted industry professionals to get these appointments scheduled as soon as possible (It is best practice for your Realtor to attend the inspection). Also, if there are any negotiations taking place, your Realtor is your liaison between you and the seller side. All communication should go through your Realtor (or Attorney, if you choose to use one), if there are any concerns regarding the contract etc. Lastly, there are so many disclosures, acknowledgements and other forms that need to be signed prior to closing. It is your Realtor’s job to explain each form to you if you do not understand and answer any questions you may have regarding the same.

5.       Attend final walkthrough and closing.

SELLER’S AGENT

The Seller’s Agent is the Real Estate Agent who assists the client in the process of selling their property. This is the agent who puts your house on the market, coordinates showings and open houses, provides information on offers received and communicates with the Buyer’s side on behalf of the seller. During this experience, the Seller’s Agent should:

1.       Tour your home. It is important for your Realtor to get acquainted with the home they are selling. They should see the home in person and document any special features that might be marketable to a potential buyer. They should also research the area with regard to shopping, schools, transportation etc. This is information buyers want to know.

2.       Advise you on preparing your home for market. There are several steps to take prior to putting your home on the market. First, your Realtor will advise you on where to price your home according to the market climate. Again, this is YOUR DECISION, but it is the job of your Realtor to provide you with all the necessary information for you to make a sound and sensible one. You want your house priced to sell, but you also don’t want to leave any money on the table. Talk to your Realtor in depth about this so you don’t price your home too high or too low. Next, you must prepare the property for professional pictures and showings. Your Realtor should advise you on neutral paint colors, staging options, and landscaping actions to take to increase curb appeal.

3.       Put your home on the market and MARKET your home. Realtors must place listings on a platform called a Multiple Listing Service. Depending on the geographical location of your property, it will be placed in a certain MLS system, where other Realtors can find it and potentially share it with their buyer clients. In addition to this, your Realtor should market your property in other ways. Marketing options are endless – the internet alone offers many ways to get your property in front of the eyes of buyers. It is up to your Realtor to be creative where this is concerned.

4.       Present offers to you. Your Realtor should present ANY and ALL offers on the property to you in order for you to make a decision on which one to accept. Again – your Realtor should NOT filter offers based on personal opinion.

5.       Explain the process and negotiate. As aforementioned, your Realtor is a wealth of information. If you have any questions regarding the contract, or have any issues with the contract, your Realtor is the one to explain and negotiate on your behalf in order to bring the transaction to an amicable closing.

This list does not encompass everything a Realtor does by far, but it provides an idea of what you can expect from your Real Estate professional on either side of the deal. If you have any questions on any of the information here, or any real estate question generally, feel free to reach out to me!

Disclaimer: The term Realtor® refers to a real estate professional who is a member of the National Association of Realtors®. A Real Estate Agent is anyone who is licensed to help people buy and sell commercial or residential property. Not all Real Estate Agents are Realtors®.

#RealEstateAgent #BuyersAgent #SellersAgent #BuyersSide #SellersSide #contract #negotiate #Realtor #buyingahome #sellingahome #whattoexpectfromyourrealestateagent #whattoexpect #RealEstateBlog #NewJerseyRealEstate #BurlingtonCountyRealEstate #Willingboro #Westampton #Eastampton #MountHolly #BurlingtonTownship

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FIRST TIME HOME BUYER DOs AND DON’Ts

Do: Seek out a Real Estate Agent who you know, like and trust.

In this process, you will need someone you aren’t afraid to communicate with, ask questions etc. This person should be knowledgeable about the area you want to live in, but also, personable and a great fit for you as the consumer. Just any agent won’t do!

Do: Monitor your spending and save money in a savings account.

Make sure you have money saved for any out-of-pocket costs you will incur in this process. This does not include “mattress money.” Any money saved and income will need to be on paper (in a savings account, an on-paper job – no “under the table” income. Also, don’t assume you need to save tens of thousands of dollars to get the process started – more on that later.

Do: Talk to a mortgage consultant to understand your buying power.

A mortgage consultant will collect information from you in order to analyze your buying power. They will let you know how much house you can afford (mortgage payments, taxes, etc.) so you are not wasting your time looking at houses out of your price range. They may also provide pieces of advice to get you where you need to be with regard to your credit.

Do: Make a list of whats vs. whys for your new home – i.e. What do you need? “3 BR” Why do you need 3 BR? “I need two bedrooms and an office space.” – You will buy your “whys.” This makes a difference when your Realtor is showing you homes!

Don’t: Quit your job, take out a loan, open a new credit account, make a major purchase.

These actions pose liabilities to your mortgage lender. There is no security in providing a mortgage loan to someone with bad financial habits. A lender wants to know that they’re making a sound decision in providing a loan to you. You will not get pre-approved (or you will get pre-approved for much less than anticipated) if you do any of these things.

Don’t: Start searching without doing your research! i.e. What community do you want to live in? “What factors to you need to consider – schools, proximity to highways for work commute etc.

Don’t: Assume you need 20% down payment.

There are loans out there that may require as little as 3.5% down. There are also down payment assistance programs. There are so many loan options – your mortgage consultant will be able to let you know what options you have for your individual financial picture.

Don’t: Depend on finding the “unicorn.” (20, 80 rule)

The 20/80 rule – You will never find a home that meets 100% of your criteria—unless you build it yourself. There is no such thing as a unicorn – it is a mythical creature. Don’t pass up outstanding options by limiting your home search in hopes that something better will come along. This is why your “whats and whys” list is so important! If you are insistent upon finding the “perfect” home, this may lead to overspending and/or lengthening the process. Keep an open mind!

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My “Why”

I am fairly new to the real- estate business. When I say new, I mean, I’ve been in the business for about a year now, take a few months. I have not closed any deals yet and I am trying to figure out how to work my business into my life.

Coming into real-estate, I had many big aspirations. I have always wanted to do real-estate. Not only because of the money it can yield, but mainly because my Mom did it. She wasn’t a big-time realtor or anything. In fact, I don’t think she sold a house in my lifetime (I could be wrong). But she always encouraged it and it seemed like an acceptable career in her eyes.

Once I grew up a little and gave it a bit of thought (after realizing what I definitely did NOT want to do/ failing at some things I thought I wanted to do), I actually formulated a more solid reason for enrolling in real-estate school. Although pleasing my mother is something I try to do with every passing day, I need to be able to please myself as well (if not more).

I have found that true purpose comes with helping others. Everyone on this Earth needs help in some capacity, at some point in their lives. You would be remiss if you thought otherwise. There isn’t a soul who was able to achieve all they set out to do with little or no help. It’s just impossible. You can’t do everything; just like you can’t know everything. There is always something more to learn and there is always help that is needed in some way. I am not any different. If ever I have a goal in mind, I know I will need to make connections with certain people to help me reach it.

One goal that I’ve had all my life (and I’m sure many of you have had it too), was to become a homeowner. Growing up in an apartment, I used to be awe inspired when going to hang out with my friends who lived in houses. Five-year-old me didn’t know that “homeownership” could apply to apartment style homes/condominiums, co-ops or townhouses, nor that simply residing in a house didn’t necessarily mean you owned it, she just loved the idea of living in a stand-alone house.

When I grew up and actually set a goal of homeownership, after much procrastination and self -doubt --which only stemmed from not knowing, my husband and I reached out to someone who knew. My realtor (now my mentor) gave us the information and resources we needed to start the process of purchasing our first home.

I want to be that person for someone else. I felt so enlightened and relieved that homeownership was actually in my grasp! I was really excited to learn that you don’t need perfect credit or tens of thousands of dollars to purchase a home. With a lot of guidance from her and a mortgage consultant, we were able to close within five months of starting the process. However unbelievable it sounds, it’s true. Having the HELP we needed when we needed it --- it made all the difference in the world.

I’m not saying that everyone should go out and buy a house now. People go through different stages in life and homeownership may not be the stage you’re in. It might not even be something you’re aspiring to do. I’m just saying that when/if you are, it is attainable. People tend to have negative thoughts that minimize their ability to do whatever it is they want to do. The voice in their head isn’t encouraging, but belittling, and disheartening. These limiting beliefs are what hold us back every day. I’m sure that with a little education and a lot of help, people can overcome these self-deprecating obstacles.

So.. I say all that to say, the feeling that I felt on closing day is a feeling that I would absolutely love to help others achieve. The pride and that feeling of accomplishment is like no other.

It was then (actually a few months later, after settling in) that I enrolled in real-estate school. I found my “why” and I decided that I would try my best to primarily focus on new home buyers – providing them with as much information as I can to help them reach their goal of homeownership.

I may not have closed a deal yet, but that’s not what the process is all about. I’m willing to give what knowledge I have to help people obtain the understanding of what it takes to purchase a home.

Please comment and/or ask me any questions you may have! I am more than happy to help! 😊

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Just me brunchin’ with friends.