2nd Step to Take When Choosing a Home Loan

Pick out the TERMS of the loan you want BEFORE you compare rates.

There are many different terms of home loans. The first is the length of the loan – 30 Year, 40 Year, even 50 Year – and sometimes Interest Only! An Interest Only loan is a loan that you never have to pay off – you only have to make the monthly interest payments. The second is the length of the rate – you can have a guaranteed rate for 30 years, or any period from 1 to 7 years. Loans with a guaranteed rate for 1-7 years are called Adjustable Rate Mortgages (ARMs) because the rate will adjust up or down with the market after the guaranteed rate period is over. The safest loan is a 30-year fixed rate mortgage. You should also be aware of a pre-payment penalty – this is a pretty substantial penalty should you decide to refinance the loan or sell the house within a certain period of time. One to two year pre-payment penalties are common, and sometimes the loan will have a longer pre-payment penalty.

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Top 7 Steps to Take When Choosing a Home Loan

Your home loan is almost as important as the home you choose. Small changes on paper – ½% here, ½% there – can mean BIG changes to your monthly payment, and thousands of dollars over the lifetime of your loan. Today, it seems as though there are thousands of mortgage brokers & lenders in every market – and there are! Unless your brother, sister, Dad, or best friend are a mortgage broker (and sometimes even when they are) your lender might not always be the most competent, or have your best interests in mind. Here are 7 easy steps to take when looking for a home loan.
It Pays to Shop!

There are thousands of mortgage brokers in any market, and hundreds of loan programs that each broker will usually have access to. Each loan program fills a niche – a special financial situation that you may or may not belong to. High credit score with no verifiable income, mediocre credit score with verifiable income, high credit score without rental history, etc… The list goes on and on! You need to make sure that you find a mortgage broker who knows their loan programs, and can find you the best program that matches your unique financial situation. The more brokers that you talk to, the more loan programs that you will expose yourself to – and the better chance that you’ll find the perfect fit, and rate.

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7th Tip on How to Find Your Home with the Least Amount of Stress

Review your list & choose!

After identifying what you want in a home and where you would like to live, it’s very normal to fall in love with a home when you walk into it. However, if this doesn’t happen to you – don’t worry! You’ve carefully identified your likes & dislikes, you’ve identified the most appealing locations, and you’ve taken good notes! Simply review your list, weigh the pro’s & con’s of each, and make a sound decision. You have exercised “due diligence” & you can feel confident in your choice.

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6th Tip on How to Find Your Home with the Least Amount of Stress

View Every Available Home That Matches Your Criteria – And Take Notes.

After you have identified your “must haves,” “wants,” & neighborhood(s), you have one fun step left in the process: Touring every home that matches your criteria! Your Realtor will run a search for every home that matches your search criteria, and you simply choose which homes you would like to tour. Your search results will hopefully return a good number of properties, so make sure and take notes while viewing. Write down what you like & dislike about each home – it will help you with the decision making process.

5th Tip on How to Find Your Home with the Least Amount of Stress

Choose your favorite neighborhood(s).

“Location, location, location” is the cardinal rule when shopping for your home. The reasoning is simple – you can always upgrade your home, but once you’ve closed, you have no control over location. Think about how close you would like to live to work, what school districts you think are favorable, & how near you want to be to recreational activities. Look at your “zone” & identify the neighborhoods that are within your price range. Of these, choose your favorites – and you’re halfway to choosing your new home!

4th Tip on How to Find Your Home with the Least Amount of Stress

Make a list of your “Wants.”

After you’ve identified what you “must have” in your new home, it’s time to make a list of what you want. Your “wants” are what you would like to have – but could possibly live without. These can include paint color, type of appliances, exterior façade, etc... While it would be nice to find a home with all of your “wants,” you will be happy as long as the home has a good number of these attributes.

3rd Tip on How to Find Your Home with the Least Amount of Stress

Make a list of your “Must Haves.”

Many buyers claim that they “will know” when they “walk into the one.” If you begin looking at houses without “doing your homework” this will not be the case. Start your search by making a list of your “must haves,” or qualities that are a “deal killer” if the home doesn’t fit. These are typically price, neighborhood, size, 1 or 2 stories, etc… Sometimes, you will have very strong opinions about seemingly minor details – but these aren’t minor to you, if they’re on your “must have” list.

2nd Tip on How to Find Your Home with the Least Amount of Stress

Use a Realtor!

Most people buy 3-5 homes in their lifetime. A good Realtor will have helped many people into their homes throughout their career – and will have been through the process many, many times. There are not many home buying situations that your Realtor won’t have seen - and if you run into one, your Realtor can refer to his office, and a wealth of knowledge. Additionally, your Realtor will have access to the MLS, which gives him a database of 99% of the homes for sale in your given area. Good Realtors don’t sell, they simply listen to their buyers, and present the options that they feel most suit their needs.

Top 7 Steps to Find Your Home With the Least Amount of Stress

Purchasing your new home is very exciting, but can also be a bit intimidating. If you make a decision hastily, you run the risk of buyer’s remorse. However, if you don’t organize your search well, it can drag on much too long – which can cause just as much stress. A systematic approach will ensure that you are able to make a sound decision in a reasonable amount of time. Follow these steps, and you will find a great home, with confidence & ease!

1. Get Pre-Qualified & Choose Your Top Monthly Payment.

Pre-qualification is one of the most important steps in the home buying process. It still amazes me how many buyers want to skip this process and immediately begin looking at houses – and how many Realtors are willing to work this way! Pre-qualification is what gives you buying power and allows you to make an offer on your dream home when you’ve found it. More importantly, pre-qualification will let you know how much that home will REALLY cost you – in monthly payments. A $150,000 or $300,000 home doesn’t mean a lot to most buyers – but $1200 per month and $2500 per month are tangibles that everyone can understand. After your lender pre-qualifies you, ask them for a “payment table” that shows you a rough estimate of TOTAL monthly payments based on purchase price. Pick your payment, and you know how much you can spend on your home!

7th Tip on what to look for when buying a HUD Home....

Act Quickly & Decisively

Because HUD places very strict time constraints on bidding, and due to the bidding process, you must act quickly & decisively. You will typically have 1-2 weeks from the date HUD places the property on the market until the bidding period begins-and more often than not, the property will be purchased on the first day of bidding. Make sure & exercise your due diligence, and make your decision quickly-you often won't get a second chance.

HUD homes can be fantastic opportunities for a buyer or investor to get a great deal on a property. However, because the purchase process is quite different, make sure & do your research before attempting to find your first buy. Follow these tips, & you will be on your way to a successful transaction!

6th Tip on what to look for when buying a HUD Home....

Make Sure Your Realtor & Lender Know the Process

After your bid is accepted, the paperwork begins! In Texas , HUD requires that you submit original signed (in blue ink) paperwork to the HUD agent's office within 48 hours of the bid's acceptance. If the paperwork is incorrect, you are allowed one revision-which must be received within 48 hours. They are just as strict with a lender's closing documents-so make sure both your Realtor & lender are very familiar with the HUD process. Oftentimes, the HUD agent's office will be located in a different city-and often, the escrow agent will be located in yet another city-this can put a very interesting twist on the process, and time constraints.

5th Tip on what to look for when buying a HUD Home....

Continuously Monitor the Inventory

As foreclosure rates rise and fall, so does HUD's inventory. The laws of supply & demand definitely apply here-when the inventory is high, your chances of getting a great deal are higher than when they are low. Follow the asking price & sales price of HUD homes-if they are selling far over asking, it might not be the time to buy.

4th Tip on what to look for when buying a HUD Home....

Anticipate Repairs

You are allowed the opportunity a third party inspection before closing, but buyers cannot negotiate repairs based on the results. Backing out of HUD deals & retaining your earnest money is trickier than conventional purchases, too, so you may run the risk of losing your earnest money. Make sure and go through the home thoroughly before bidding on it.

3rd Tip on what to look for when buying a HUD Home....

Know the Difference Between "Owner-Occupant" & "Investor"

One of HUD's goals is to increase the number of US citizens who own homes. Because of this, they give preferential treatment to owner-occupants over investors. Owner-occupants have the first 10 days to bid on any home before it is released to investors. A buyer may bid as an owner-occupant once every two years. Make sure and bid honestly-otherwise it is illegal, and can result in hefty fines.

2nd Tip on what to look for when buying a HUD Home ...

2. Understand the Bidding Process

HUD purchases are very different than conventional deals because they follow a "blind" bidding process. The bidding date is released by HUD, and each buyer submits their best offer-without the knowledge of any other bids. As long as HUD finds the highest offer acceptable, that offer is accepted. HUD retains the right to refuse all offers.

HUD homes offer many buyers the chance to purchase their home with built in equity, and allows investors some fantastic deals, as well.

When the foreclosure rate is particularly high, as it is in 2007, HUD's inventory swells, and there are deals to be made. HUD deals are very different from traditional purchases, however, so make sure and follow sound advice before purchasing your first HUD home. Follow these tips, and you will be on your way.

1. All HUD Homes Aren't Great Deals

Many buyers mistakenly assume that, if the US Department of HUD is selling, it must be a great deal. This couldn't be further from the truth! Many Realtors relentlessly market HUD homes to drum up business, and this can create a glut of HUD buyers. When the HUD inventory is particularly low, oftentimes buyers will bid the property up to, or above the fair market value. Look at every HUD deal on its own merit, and make your decision based on that.

The Eight and final question to ask while interviewing a Real Estate agent is...

8. Is this your full-time job?

It always surprises me how many people are willing to let their office mate down the hall handle the purchase or sale of their home. You need someone who handles real estate transactions full-time, day in and day out, to make sure that your best interests are taken care of.

There are plenty of fantastic Real Estate Agents working today. Unfortunately, the incompetent Agents really stand out. (Did you hear about the Agent who contracted the wrong house?) Make sure that you find your Agent through a trusted source, and ask any Agent these important questions

The Seventh question to ask while interviewing a Real Estate agent is...

7. How many sales did you complete last year?

A good agent will complete at least 25 sales per calendar year. You want to make sure that the agent helping you through the largest purchase or sale of your life is a GOOD agent.

The Sixth question to ask while interviewing a Real Estate agent is...

6. Who is your Broker? Can I call him/her?

Real Estate Agencies are moving towards the "mega-brokerage" mentality which means that many Agents today have never met their Broker. If an agent doesn't have their Broker's cell phone number, find out who they will call if they run into questions.

The Fifth question to ask while interviewing a Real Estate agent is...

5. Can I have a list of past customers?

Take the time to call a few of an Agent's past customers. Ask for their strengths and weaknesses (and make sure they don't share the Agent's last name.)

The Fourth question to ask while interviewing a Real Estate agent is...


4. What is your specialty?

Real Estate Agents typically categorize themselves as either "commercial" or "residential" which are vastly different. Even among Residential Real Estate Agents, though, agents will specialize in Buyers, Sellers, or Renters. Some Residential Agents successfully handle Buyers & Sellers, but make sure they come with plenty of satisfied customers. Agents typically cut their teeth working with renters.

The Third question to ask while interviewing a Real Estate agent is...

3. What certifications do you hold?

There is an "alphabet soup" of advanced certifications that Real Estate Agents can earn. While it doesn't automatically mean that they are a good Agent, it does mean they are serious about their job. Keep an eye out for GRI - this is the most time consuming certification to obtain.

The second question to ask while interviewing a Real Esate Agent is

2. Are you a Realtor?

Not all Real Estate Agents are Realtors. Members of the National Association of Realtors have to adhere to a strict code of ethics, or otherwise face having their membership revoked. Also, you must be a member of the National Association of Realtors to have access to the MLS (Multiple Listing Service) which is what gives Realtors access to almost every home for sale in their market area.

Everywhere you look, there are advertisements for Real Estate, and for Real Estate Agents. We're everywhere!

The reason is pretty simple: It's not extremely difficult to get your real estate license, a college degree is not required, and the income potential is pretty high.

Unfortunately, this means that there are a lot of BAD Real Estate Agents out there. The BEST way to find a good professional - in any industry - is to ask for a referral from a trusted friend or colleague. This does not, however, mean that any person referred to you is a quality professional - everyone has a brother, sister, aunt, uncle, or cousin who is in the business, after all - but it will increase your odds. Over the next few days I will give you questions that you should ask all Real Estate Agents that you interview

1. How long have you been in the business?

Pretty much any average person could decide they want to get their license today, and have that license in their mailbox a month later. Because of this, your Real Estate Agent's experience is VERY important. A new Agent will learn a LOT their first year, and will continue to learn more with every transaction. Don't automatically choose against a newer Agent - they typically bring a lot of energy to the transaction, and they will have LOTS of time for you. However, if you do decide to use a newer Agent, make sure they have a great support system behind them.