If you have a question about buying or selling a home, mortgages, or anything to do with real estate, just ask us.
When to Start House Hunting
I would like to buy a home and close in June. When should I start house hunting?
Typical closing dates are usually between 30 and 60 days from the date of contract acceptance. This is due to several factors including the number of days the lender needs to process the loan and amount of time it takes for the title work to be completed. Considering that on average it takes someone about one month of serious house hunting to find a home, I would suggest that you begin your search in the middle of February and plan on writing an offer to purchase a home in April. That should give you plenty of time to find the perfect home and settle on it in June. Of course, some people have been known to find their dream home the first day out looking and should that happen to you, consider yourself among the fortunate! We can figure out a way to make a June settlement work for you.
Interest Rate Points and Buy-Downs What is a point with regard to interest rates and what is a buy-down?
A point is a fee paid to a lender in order to buy an interest rate. Each point is equal to 1% of the loan amount. The charge will vary according to the type of loan and interest rate charged. A buy-down is when the interest rate is reduced for a specified period of time by depositing a sum of money with the lender. The borrower’s mortgage payment during the “buy down” period is less than the payment that would be due under the terms of the mortgage. The lender offsets the deficit by drawing funds from the “buy down” fund in an amount equal to the difference between the borrower’s payment and the payment called for in the mortgage.
Surveys
What is the difference between a location survey and a boundary survey?
When you are buying a home, most lenders require a location survey to verify that everything evaluated by the appraiser is within the boundary lines of the property and that none of the improvements encroach on a neighbor’s property or easement areas, or violate building setback lines .Since marking or staking a property’s lines is not part of a location survey, you might want to get a boundary survey if you are thinking about installing a fence, or erecting something close to the boundary lines of your property.A boundary survey is much more expensive than a location survey since the boundary lines of the property are marked.
Buying Foreclosures and FHA
I want to get a good deal on a home and I am thinking about buying a foreclosure. Are there any restrictions if I have FHA financing?
I am so glad that you asked this question. If you have FHA financing, considering a foreclosure property is most likely not going to work for you. You see, the FHA appraiser/inspector must determine that the house adheres to the FHA guidelines and that the house is in liveable condition. Since the majority of foreclosed homes have suffered a good deal of abuse from their former owners, most of these homes will not pass the FHA inspection. One possibility for you, however, would be FHA 203K financing that provides a determined amount of funds that you could possibly borrow in order to fix the property. There are several FHA 203K products available and I would suggest that you contact a mortgage specialist if you are considering this option.
Making An Offer
If I make a really low offer on a house and it gets rejected, is it likely that the seller will reconsider it and come back to me in a few months if the house is still on the market?
Although you can never foresee what a seller will do in a tough market, it is very unlikely that he will approach you in a few months willing to accept the price/terms that he initially rejected. First of all, once the seller has rejected an offer, the offer is dead; however, if you want to try offering a better price or better terms, you can make a new offer. Secondly, consider the scenario you proposed. You made an offer. The seller rejected it. A few months later, the seller approaches you agreeing to accept the offer he previously rejected. What is a buyer's most likely response? The buyer will probably want a lower price now that more time has passed.
Earnest Money Deposit
What is an Earnest Money Deposit?
An earnest money deposit is a check from the buyer that accompanies an offer to purchase a property. This check is called the "earnest money deposit" and it is what makes a contract valid in Maryland. The reason for an earnest money deposit is to show the seller that the buyer "earnestly" intends to purchase the property. Once an offer is accepted and becomes a contract, the check is usually held by one of the real estate brokers in an escrow account and is credited back to the buyer at settlement. If the offer is not accepted, the check is handed back to the buyer. There is no standard amount for an earnest money deposit and the amount depends entirely on what is acceptable to the seller. An earnest money deposit could be jeopardized if the buyer fails to perform to the terms of the contract, but if buyer works in good faith to purchase the property, this is seldom an issue.
Settlement
Should I have an attorney do a settlement on a foreclosure rather than a settlement officer?
Although most title companies have an attorney on retainer that they can go to when legal problems arise prior to settlement, we suggest using a real estate attorney (instead of a settlement officer) for most closings and especially for settlements involving foreclosed properties. With foreclosures, there are a myriad of things that need to be checked before a property can be conveyed to a new owner free and clear of liens and judgments. For example, with a foreclosure the sale has to be ratified by the court and then is sent to the court auditor for review. Current underwriting standards mandate that the foreclosure file be reviewed by the title agent to ensure proper foreclosure procedures have been followed. A title binder cannot be issued to the new lender until the foreclosure file has been reviewed. Thus, having an attorney working directly with this kind of property transfer can help to insure that once you have bought the property, it is in fact yours without any previous issues affecting you or it.
PITI
What is PITI?
PITI stands for Principal, Interest, Taxes, and Insurance - the items that are factored into your monthly mortgage payment.
When to Buy a Home
I'm thinking about buying a home this year and keep hearing that now is a good time to buy. What exactly makes it a good time to buy a home?
There are several factors that make this market a good time to buy a home. For starters, home prices are very depressed right now making owning a home affordable to a large number of people. Also, mortgage interest rates are very low, so the combination of low home prices with low interest rates means that you will have a low monthly mortgage payment. There are still a lot of homes on the market compared to the number of buyers out there, so you have a lot of homes from which to choose making finding the home of your dreams much easier than when housing inventory is down. Additionally, the fact that the supply is greater than the demand gives a buyer in this market negotiating leverage when it comes to price, terms and conditions in an offer. Finally, the number of short sales and foreclosure properties available give buyers even more ways to find good deals. Bottom line - there may never be a better time to buy a house than right now.
Contingent Contracts
What does "Contingent / Kick Out" mean?
When a seller accepts an offer from a buyer, the contract status of a house can be shown in several ways. The contract status can simply be shown as "Contract" meaning that the seller is no longer showing the home since he accepted a buyer's offer. The status can also be shown as "Contract with Kick Out" meaning that the seller accepted an offer with a contingency (usually this contingency states that the buyer must sell his current home in order to purchase this one). In the case of a Contract with Kick Out, the seller can still show his home to prospective buyers and can choose to accept another offer if it does not have a contingency. If he chooses to accept the new offer, the first set of buyers are typically given 72 hours to remove their contingency and provide proof to the seller that they can move forward with purchasing this property without having to sell their existing home. If they cannot do this, then the seller can kick out their contract and accept the new one. When a home's status is shown as Contract without Kick Out, the sellers have chosen to accept an offer with a contingency, but they are not exercising the options of continuing to show the home and entertaining other offers.
Short Sales
What is a short sale?
A short sale is when the owner of a home has made an agreement or arrangement with his lender to sell his home for less than what he owes on his mortgage. Sometimes the seller will have to repay the lender for the difference and sometimes the difference is forgiven. A short sale is often the step before foreclosure and it benefits the seller because a short sale will not completely ruin a person's credit like a foreclosure will. Most times short sale properties are in good condition (unlike many foreclosure properties) because the owner has a vested interest in the sale. When a buyer decides to make an offer on a short sale, the seller will review and negotiate the offer with the buyer and then the offer will go to the seller's lender for review and approval. The important thing to understand is that short sales can take, days, weeks, or even months for a lender to review and approve or disapprove, so if you are on a schedule this kind of sale might not work for you.
Fixing Up a House to Sell It
My husband and I are thinking about moving out of state in a few years and want to make some improvements to our house in the meantime. We don't have the money to totally renovate a kitchen or bathroom, but we want to make repairs or improvements that will help us when we decide to sell. What kind of improvements would you suggest?
This is a difficult question to answer without seeing your home, but generally speaking, you want to make improvements or necessary repairs to the structure or systems in the home. Since most buyers are concerned about a basement or roof leaking, I'd make sure that those areas are in good condition. If the windows are old, you might consider spending some money to replace them with more energy efficient ones. How old are the systems in the house such as the furnace and air conditioner? Perhaps replacing these items or having them serviced would be in order. If all of the structural and mechanical items are in good condition, then you can focus on spending money on cosmetic aspects of the house.
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