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What Is A Good Faith Estimate And How Does It Help Me?

 

You’ll see some pictures in this video to help you remember later, but a good faith estimate lists all fees paid before closing all closing costs, and any escrow costs you will encounter when purchasing a home.

The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan.

What Is Mortgage Insurance?

 

Like the video shows, mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages. Like home or auto insurance, mortgage insurance requires payment of a premium, is for protection against loss, and is used in the event of an emergency.

If a borrower can’t repay an insured mortgage loan as agreed, the lender may foreclose on the property and file a claim with the mortgage insurer for some or most of the total losses.

You generally need mortgage insurance only if you plan to make a down payment of less than 20% of the purchase price of the home. The FHA offers several loan programs that may meet your needs.

What Is A Counter-Offer?

 

The video puts this in more visual terms, but basically, a seller can respond to a buyer’s offer with changes – a “counter” – that improves the terms.

You need to put yourself in their shoes and construct a modified offer that you think they might take that meets more of your needs. Then it’s their turn – accept, reject, or construct yet another counter.

It’s an efficient market process, but beware: clauses and costs matter. Your broker should be closely involved in constructing a counter. Successful bargaining is best done with a win/win approach where each side is meeting their biggest needs and compromising others to reach an agreement.

Remember that outside conditions like interest rates, and supply and demand, will keep evolving so you’ll need to be patient but decisive to craft an counter-offer that works for both sides.

How Do I Evaluate An Offer?

 

Well, as this story shows, there’s more to an offer than the price tag. Factors you should consider:

  • Is this offer at, near or above my asking price?
  • Are there clauses and additions in their offer that change the terms and final price substantially?
  • How long since I had another offer, or expect another offer? Can I wait?

Remember every month you’re probably still paying mortgage, taxes and insurance. If you have several offers… remember that an offer isn’t a completed sale.

Compare the risk and likelihood of a completed sale for each buyer including things like “contingencies”, where your sale depends on their sale. and whether they’re pre-approved for the offer they’re making.

Remember you have three options for an offer – accept it reject it or prepare a counter-offer that improves the terms for you in some way.

What Details Can I Ask Brokers In Advance?

 

This video tells you what any real estate professional would tell you. Ask them:

  • How long do homes in my neighborhood currently stay on the market?
  • How would you price my home?
  • What data did you use to arrive at that price?
  • How would you market my home?
  • What activities would you expect of me to market my home?
  • How will you handle representation if one of your buyers is interested in my home?
  • May I speak with sellers you’ve recently represented?
  • How long a period would you want on a listing agreement for my house?

It’s best to ask these questions, and be comfortable with your choices before signing a listing agreement.

Why Use A REALTOR®

 

A state license is required to sell real estate. But roughly half of those licensed take the additional step of becoming a REALTOR®.

As we show you in this video, only members of the National Association of Realtors – NAR – are entitled to use that registered trademark and call themselves a REALTOR®.

As members, they adhere to a strict Code of Ethics and have access to classes, seminars and certification. Their aim is to be experts in their community aware of real estate trends and local and neighborhood issues. They apply that expertise to help buyers and sellers succeed.

You can find a certified REALTOR® by looking in local sources asking around or searching here.

How Can I Improve My Home’s Value?

 

Buyers generally seek the least expensive home in the best neighborhood they can handle. Like the guy in the video says, you want to present a home that fits in the neighborhood but doesn’t stand out too much.

For example if neighbors are all 4 bedrooms, 3 baths and 3000 square feet additions that make your home 5, 4, and 4000 will make yours harder to sell.

Improvements should make it show well and fit well in the neighborhood. Last-minute capital investments in large structural changes aren’t likely to pay off.

But cosmetic upgrades like paint and landscaping help a home “show” better and often do pay off.

Of course, all systems and appliances should work to get a top price. To make your home competitive and attract buyers and bids work with a professional real estate agent and start early.

What Types Of Closing Costs Are Associated With FHA-Insured Loans?

 

While this video simplifies things to help you remember, except for the addition of an FHA mortgage insurance premium, FHA closing costs are similar to those of a conventional loan.

As of 2013, the FHA requires a single, upfront mortgage insurance premium equal to 2.25% of the mortgage to be paid at closing (or 1.75% if you complete the HELP program).

This initial premium may be partially refunded if the loan is paid in full during the first seven years of the loan term.

After closing, you will then be responsible for an annual premium – paid monthly – if your mortgage is over 15 years or if you have a 15-year loan with an LTV greater than 90%.

How Can The FHA Assist Me In Buying A Home?

 

Remember these points from the video:the FHA works to make homeownership a possibility for more Americans. With the FHA, you don’t need perfect credit or a high-paying job to qualify for a loan. The FHA also makes loans more accessible by requiring smaller down payments than conventional loans.
In fact, an FHA down payment could be as little as a few months rent. And your monthly payments may not be much more than rent.

What Can I Expect To Happen On Closing Day?

 

While this video simplifies things to help you remember: you’ll present your paid homeowner’s insurance policy or a binder and receipt showing that the premium has been paid. The closing agent will then list the money you owe the seller remainder of down payment, prepaid taxes, and so on. and then the money the seller owes you unpaid taxes and prepaid rent, if applicable.

The seller will provide proofs of any inspection, warranties, and so on. Once you’re sure you understand all the documentation you’ll sign the mortgage, agreeing that if you don’t make payments the lender is entitled to sell your property and apply the sale price against the amount you owe plus expenses.

You’ll also sign a mortgage note, promising to repay the loan. The seller will give you the title to the house in the form of a signed deed. You’ll pay the lender’s agent all closing costs and, in turn, he or she will provide you with a settlement statement of all the items for which you have paid.

The deed and mortgage will then be recorded in the state Registry of Deeds and you will be a homeowner.

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