Buying a New Home


Buyers are now experiencing one of the best times to buy. Interest rates are below 4% for many buyers. Home prices are going up in many areas but the West Valley including Surprise, Waddell, Litchfield Park, Glendale, Peoria, Avondale and Buckeye are seeing moderate increases.

One of the big factors is lack of homes to buy or what we call inventory. In the valley, total inventory is pretty flat for the year. In other words the same amount of homes come on the market that are sold. That's why you as a buyer are seeing so much competition for homes in these areas. The latest statistics indicate we only have 2.98 months of inventory, or that is to say if no new homes were added we would not have any homes to sell at the end of that time. This would typically indicate a sellers market where buyers would be paying a premium. In the west valley the price increases are moderated due to conservative appraisals, buyers financial situation and prospective buyers sitting tight as they watch the ecomonic picture.

It is frustrating, but there is a solution. First you have to be on top of what is happening, and that means you need to be prepared to respond quickly to a home that is just on the market or has just been placed back on the market. Ready to buy means you not only know what is avaialbe but you are pre-qualified for a loan and ready to submit a contract. You need to know as soon as a home becomes available, check it out quickly and be ready to put an offer in at market pricing to have an above average chance of becoming the primary offer.

Now how do you get to the solution. First call me and let me know what you are interested in and I will set you up with the results of a search via email (see the search page) which will alert you on the day a property becomes available. This gives you direct access to all the listings on the MLS. Once you find a house you like, I can setup a time for you to go look at and then help you write an offer that gives you the best chance of becoming the primary buyer. Out of town? I will investigate the property, take additional pictures and then you can decide if you would want to travel to look at the property or if you would want to write the offer right away and then use the inspection period to make your keep or drop decision.

Part of getting your new home for yourself or as an investment is writing a smart offer. As a listing agent, I get offers from investors and homeowners that are 20% or more below market price. That might have worked in 2009, but now sellers will hold rather than sell. They don't need a lowball offer, there are too many buyers willing to pay close to or at market price.  Writing offers using yesterdays thinking simply means you will probably be walking away wondering why your offer was not selected as the primary offer. I work with buyers to make offers that gets sellers to accept their offer over others.

As a listing agent with a sizeable inventory I work with different offers and have gained a lot of experience to bring solutions and give my buyers the best opportunity to successfully buy their home. Give me a call at 623-606-8861 or email info@surprisehomesales.com with your requirements.

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Loan Pre-qualification


Getting Prequalified for a loan is a critical element in keeping your stress level down when buying and in general protecting your valuable time. A pre-qual lets you see what you can afford and gives you time to consider all of the finance options available to you. When you are ready to buy, you will have the information tools to decide how best to finance your home.

From the sellers side it shows you are a committed buyer who is ready to negotiate. But don't forget the time savings for your self. Nothing is more frustration for everyone involved then to find out one of the homes you have been seriously considering will create a monthly payment that is just not bearable. How frustrating  is that! Your bank or mortgage broker can provide you with that all important document needed for starting the buying process.

As a buyer or seller, make sure you understand the financing part of your purchase contract. There are time lines for reporting on the progress you are making and when you have to have a loan approval without underwriter conditions. Your lender has to understand them also. If they don't meet this time lines during your loan application you can be in breach of the contract. As a buyer you could loose your earnest money and money spent on inspections and appraisals. Remember that you need to make sure your lender is paying attention to the contract dates. As your agent I can help with that process.

As the seller, you want to make sure the buyer is staying on track with their loan application and the process to get approval. After all, you are going to have your home effectively off the market while you are waiting on the buyer. As your listing agent I will be looking for the buyers agent to supply the information to meet contract requirements and when needed I will talk to the lender directly.

Buyers or Sellers Beware: Financing time lines should not be ignored or if the lender says they can't do them either get the contract changed with an addendum or change lenders. Don't risk your purchase or your sale.

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What is needed for loan pre-qualification?


You will need your personal financial information to be pre-qualified for a loan. Have this information ready when you talk to your professional mortgage consular to quickly get a pre-approval before you sign the offer for your home. 

  • Personal information
    • Name, address, social security number for each person applying for a loan
    • Name, address, and phone number for current landlord or mortgage company
  • Assets
    • Source of funds for down payment and closing costs
    • Bank name and estimated balance checking and savings accounts
    • Net value of stocks, bonds, mutual funds or other assets
    • Business owner needs to supply the net worth of the business
  • Income
    • Gross month income (list salary, commission and bonus separately)
    • Employment information with company name, address phone number and dates of employment for the last 2 years
    • Other income including child support, alimony, social security, retirement and investment
  • Liabilities
    • Credit card and installment loans
    • Information about other owned properties, rentals, 2nd homes and investment properties
    • Alimony and/or child support

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Can I get the Seller to pay closing costs?


Buyers often ask the question "Can I get the seller to help pay some of my closing costs?". The answer is dependent on several elements of the sale. First, is the seller willing to provide those funds from their net proceeds. That of course depends on their financial needs, your lender requiements may have guidelines for you as the buyer to follow and sometimes it is the sellers  emotional issues. This list can change so check with your lender and ask if they have changed.

Seller Concessions Based on Loan Type:

Conventional: Fannie Mae/Freddie Mac “Owner Occupied”

  • less than 25% down and up to 10% down payment = 6% allowed seller contribution
  • less than 10% down payment = 3% allowed seller contribution

Conventional: “Second Home”

  • less than 25% down and up to 10% down payment = 6% allowed seller contribution

Conventional: “Non-Owner Occupied/Investment” (including Fannie Mae Homepath)

  • 2% maximum seller contribution

Homepath:

  •  less than 25% down = 6% allowed contributions
  • 25% down or more = 9% allowed contributions

FHA:

  • 6% maximum seller contribution.  Seller contributions CAN include the upfront mortgage insurance premium. 

VA:

4% closing cost contribution and an additional possible 4% sales concession (i.e. paying off debts)

USDA:

  • No limit to how much sellers can contribute. However, when a home appraises higher than the sales price, closing costs can be financed up to the difference between the sales price and appraised value.

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10 Things To Consider When Buying A Home


  1. A real estate professional who’s takes the time to understand your needs. Home buying is not only a big financial commitment, but also an emotional one. It’s critical you choose a Realtor who is both skilled and a good fit.
  2. Remember, there’s no “right” time to buy, any more than there’s a right time to sell. If you find a home now, don’t try to second-guess the interest rates or the housing market by waiting. It won’t be much difference in price, and a good home won’t stay on the market long.Don’t ask for too many opinions.
  3. It’s natural to want reassurance for such a big decision, use a priority list of features to help you keep on track.
  4. Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.
  5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the process, but trying to “win” by getting an extra-low price may lose you the home you have been dreaming about.
  6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself—room size, kitchen—that you forget such issues as amenities, noise level, etc., that have a big impact on what it’s like to live in it.
  7. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage. Presenting an offer contingent on unresolved issues will make your bid much less attractive to sellers.
  8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be some costs.
  9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment.
  10. Choose a home first because you love it; then think about appreciation. A home’s most important role is as a comfortable, safe place to live.  

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Can you BUY after a Short Sale? Maybe!


You have two options. Frist, you may qualify to buy a home on an FHA mortgage after you Short Sale. There are certain conditions. In general you must not have any late payments and you must have had a hardship (i.e., no strategic defaults). Read the article and call your lender for more information.  

The second option is through a a bank that will loan you the money and will keep it in house. There are several banks in the Valley that will get you a mortgage ususally for 3 to 7 years, an interest rate that will be on the high end and with around 30% down. This type of loan bridges the time that you would normally have to wait to get a loan after a short sale until you can get a mortgage at more competitive interest rates. This is just the ticket if you need a home now. Call me and I will get you in touch with the mortgage banker who can give you information specific to you.

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More Information For Home Buyers



Congratulations!  You have decided to purchase a home, or you are thinking about buying one.  You'll be joining the ranks of hundreds of families in the Phoenix Valley who realize that home ownership offers a number of benefits including building equity, saving for the future, and creating an environment for your family. 

The following reports will provide you with the information you need to make a wise buying decision.  We'll take you through the planning process step-by-step , to help you determine which home is right for you.  You'll find a host of informative articles on mortgages, viewing homes, the offer, closing cost details and moving.

Please contact me if you have any questions about buying a home in Phoenix, Surprise or elsewhere in Arizona. Use the Buyers Check List to help you home in on your dream home!

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Below, select desired reports and complete the form provided to receive your copy.

 

The Right Home at the Right Price
This article helps you become a savvy buyer, by pointing out some of the pitfalls inherent in the home-buying process.
Buyers Check List
Use the buyer checklist for firming up ideas about what you want in your new home. When you have completed it, use this as a reference to compare homes. A new home buy is strongly influenced by your emotions about the home. A check list helps compare them feature-to-feature and make your buying decision easier. Use this when talking to your realtor to narrow in on the homes you really want to see.
Buying Your First Home
Many renters are starting to think about purchasing a home of their own. This article highlights several factors that should be considered when purchasing a home.
Avoid Common Buyer Errors
Some buyers, however, caught up in the excitement of buying a new home tend to overlook some items. When you have a systematic plan before you shop, you’ll be sure to avoid these costly errors. Here are some tips on making the most of your home purchase.
But Do You Need It
Buying a home can be an emotional, time-consuming, and complex process. There are a few things that you can do to help make the process go as smooth as possible.
So Your Home Has A Septic System
Information about On-site Septic System and how to take care of your system and save you repair costs
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Do you need title insurance?


Title insurance is based on a title search that begins when the United States Government first claimed the land and begin distribution of the land in the years that followed. Because recording deed transfers and plotting land parcels are done  by many different people and using different methods, a lot can go wrong. Records today are mostly stored on computers and often maintained at local courthouses or the Clerk of Registrars.

The land is divided into standard pieces, starting with the largest pieces known as Townships. Each Township has 36 sections that are 6 miles by 6 miles. So each section is 1 mile square and contains 640 acres.  A half section is 320 acres while a 1/4 section is 80 acres. A 1/4 section of a 1/4 section is 20 acres. Each acre is 43,650 sq feet. This is the basis for all ownership.

The title search starts with the most recent deed and the search looks for the grantee (the person now holding the title) backwards in time, until the deed with the grantee acquired the property is located. This process continues backwards in time to find each time when the grantor acquired title as a grantee. The process continues and shows each holder of title as the property title involves larger and larger parcels of land all the way back to the original US Patient.

So what does title insurance policy cover in a typical basic owners title policy:

  • clear title to the policy
  • incorrect signatures on documents and possible forgery or fraud
  • defective recordination
  • restrictive covenants
  • encumberances or judgements

Basic lenders title policy coverage:

  • Mechanics liens and unrecorded liens
  • unrecorded easements and access rights
  • defects and other unrecorded documents

Extended owners coverage

  • building permit violations from previous owners
  • subdivision maps
  • covenant violations from previous owners
  • living trusts
  • structure damage from mineral extractions
  • enroachments and forgeries after title insurance is issued

A title policy is only bought once and protects you forever. Title insurance is your best buy in the purchase of your home. Talk to your title company for more information, costs and for additional clarification.

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Why Do I Need Proof Of Funds?


When a Seller considers an offer to sell their home, they want to make sure that the buyer is committed and has the resources to purchase the home. Thats where a proof of funds (POF) from a home buyer can be very important. Some times we associate producing POF with only a Cash buyer, but it can also be important to the seller when considering a buyer who is obtaining a mortgage. A Seller may want to see evidence that the buyer actually has a down payment and / or closing cost before agreeing to sell to that buyer. A preapproval letter isn't always enough.

Proof of funds from a buyer is always demanded from a cash buyer. That's because a listing agent has most likely advised the seller to not accept a purchase offer and keep the home on the market until a proof of funds from the buyer is delivered.

 

Why not trust the buyer who has cash or who is going to use a large downpayment? 

An all cash buyer is a person or entity who has cash on hand to close. It's in a financial institution that you as the seller can verify and it is liquid. There is no loan involved, no mortgage. But what if the buyer considers themselves to be a cash buyer or have the downpayment but there is another transaction that has to take place to get to the cash.  These are buyers who are:

  • In the process of selling stocks or mutual funds
  • Holding a certificate of deposit that has not yet matured
  • Borrowing money from a relative
  • Refinancing a personal residence to raise the cash
  • Waiting for a probate court to distribute assets
  • Borrowing against securities
  • Liquidating funds from a retirement account
  • Obtaining a mortgage secured to the property they are buying

 

In other words, if the money is not liquid and readily available, then the buyer is not a cash buyer. The buyer is a person making an offer that is contingent on another set of circumstances happening. For a Seller considering the offer and comparing against other offers this may make a significant difference in choosing an offer to purchase their home.

 

Evidence of Proof of Funds

Whether the verification of funds is to prove the buyer has a down payment or all of the cash necessary to avoid getting a mortgage, the process is basically the same. The buyer will need to produce a document and more often than not, the seller and the seller's agent will want to see the actual document. Here are a few sample types of documentation:

  • Original bank statement
  • Online banking statement
  • Open equity line of credit
  • Copy of money market account balance
  •  Certified financial statement

 

From the view point of the Buyer, Proof of Funds helps to show commitement and to ease the throught that this buyer may not be everything they claim. As a Seller, having proof of funds for a cash purchase or large mortgage downpayments provides confidence that this buyer is sincere and financially able to purchase their home. 

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Why buy a Home Warranty?


When you buy your home worrying about something that could possibly break or malfunction is just not any fun. Your home has a multitude of items and systems and for peace of mind, it's a good idea to get a home protection plan. It's especially a good idea to obtain a home warranty if you're not experienced in maintaining a home.

Is it expensive? They are reasonable for most homes and are typically $400 to $500, depending on coverage. The policies are prepaid for a year in advance, at which time they expire or can be renewed.

 Do I have to pay for it? The options are you as the buyer, the seller or maybe your agent that can pay for the home protection plan and home warranty coverage. It depends on the market and local customs. If you are buying a distressed home, most lien holders of the property will not authorize the purchase of a Home Warranty as a part of their closing cost. A distressed home owner may purchase it for the buyer, but that would be rare (they are in a financial bind.) In these cases it really becomes the buyer or the buyers agent. In a home purchase for a regular sale, who buys the home warranty is often a part of the offer negotiations. The seller may pay for it because it is an advantage since it may attract more home buyers. Many real estate agents will also give buyers a home warranty as a gift at closing.

What is the process?

  • If a home system or appliance breaks or stops working, the home owner calls the home warranty company.
  • The home warranty company calls a provider with which it has a business arrangement.
  • The specific provider calls the home owner to make an appointment.
  • The provider fixes the problem. If an appliance is malfunctioning and cannot be repaired, depending on contract coverage, the home warranty company will pay to replace and install the appliance. You can even buy an option now that will provide an energy efficient replacement.
  • The home owner pays a small trade service fee typically in the range of $55 to $95 per incident.

Does it cover everything? Coverage is usually everything that is contained inside of your basic home and garage foundation.

  • Items typically not covered in a standard plan are
    • Outdoor items such as sprinklers
    • Faucet repairs are not covered under all plans
    • Refrigerators, washers & dryers or garage door openers
    • Spa or pools, unless specific coverage requested
    • Permit fees
    • Haul aways
  • Premium plans and individual options can significantly increase your covered items

This video link is from one of the home warranty companies I reference with out clients. Take a look to get a good idea of what is covered and the process. Call me with any questions and I will try and get your answers.

 

 www.hwahomewarranty.com/owners/video

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What are Closing Costs?


Closing cost as falling into four types:

1.
non-recurring closing costs
2.
points
3.
recurring closing costs
4.
fees associated only with purchase transactions
1) Non-recurring closing costs
Lenders Title Insurance - whether you are purchasing or refinancing your existing loan the lender will require a policy of title insurance. This gives them a guarantee (by the title insurance company) as to what liens are associated with the property the day the loan funds. If they miss something, it's their problem.
Escrow (or attorney's) fee - an escrow company performs, essentially, two functions: getting the paperwork together for you to sign and managing the escrow funds. They get all the money from everyone who has to put money in and they dispense it to whomever needs to be paid.
Appraisal Fee - this goes to the appraiser. Often it is paid at the time of inspection. Otherwise it is collected at escrow.
Appraisal Review Fee - If the appraiser is not on the list of approved appraisers for the lender or if the value seems, shall we say, a bit creative, or if it is a large loan the lender will request that another appraiser "review" the appraisal. This may be a desk review (just going over the paperwork and the databases) or a field review (going out and taking a look at the property).
Brokers origination fee - this is a number that varies widely. In some state a common practice is for the broker to charge a 1% "origination fee". Some brokers require an "up front" non-refundable deposit.
Lender's Fees - these vary over a wide range and are sometimes divided into 2 or 3 pieces. This is what the lender is charging to underwrite your file, print the documents and fund the loan. This varies from a low of $300 to as high as $850.
Flood Certification - every little bit of the old USA is divided into FEMA flood zones. This specifies how susceptible the lot is to flooding. If it is in a flood zone you need flood insurance. The Flood Certification is an assurance to the lender as to what the flood zone classification is. The Flood Certification is not flood insurance, it is a guarantee (in most cases) that flood insurance is not needed.
Tax Service Fee - this goes to a data processing entity which assumes the responsibility of informing your lender if you become delinquent in your property taxes.
Credit Report - this is what the broker and/or lender pay to get your credit report. The credit reports used in the mortgage industry are called RMCR's and cost about $50.
Statement Fee - If this is a refinance, your old lender may charge as much as $60 for providing the payoff information to the escrow agent. For the work done, this little fee is the biggest "burn" in the whole industry.
Reconveyance Fee - charged by your old lender in the case of a refinancing. This is the cost of generating and recording the Deed of Reconveyance, a public record that your old loan is paid off.
Notary and Recording Fees - someone is going to charge you to notarize certain of the loan documents and the Country Recorder is going to charge the escrow company for recording them.
Other Stuff - this is not too elegant but always allow another $150 estimate for things such as courier fees, Overnight Delivery and wire transfer of the loan funds.

2) Points
This is a one-time fee that you can spend to bring your interest rate down over the life of the loan. This is a "you pay me now or you pay me later proposition". I suggest that you calculate the "recovery time" for the extra expense and decide if it is worth it. For relocation situations, your employer may be paying this.
3) Recurring closing costs
This is the stuff that you have to pay anyway but will pay early because of the timing of your loan. This is one area that you must pay attention to when refinancing because 1) people's quotes may not be consistent and 2) if you do not make allowances you may not have enough money to close.
Recurring closing costs consist of:
a ) prepaid interest. Take a time out and remember this: mortgage interest is paid in arrears. That is, when you are making your December payment, it is for the use of the money for November. If your loan is funding on December 15 and the first payment date is February 1, then you must pay interest on the new loan from December 15 to December 31. Thus, the expression "prepaid interest". If you are refinancing you must pay interest on the old loan until the day that the old lender receives the funds. This usually has the effect of creating an "overlap" of at least 2 days during which you are paying interest to both lenders. The mitigate this we, as a practice, avoid funding loans on Friday's. Otherwise, you must pay at least 4 days "overlapping interest".
An exception to this is VA loans. Here, one must pay interest for the entire month in which the loan funds.
b) Property Taxes - this is a matter of timing. In Arizona one's property taxes are due in 2 installments. The 1st is delinquent on December 1. If you are refinancing in October and the first payment date on your loan is not until December than you can be delinquent on your taxes before your first payment is due. Bottom line is this: if you have not made your 1st installment and the 1st payment date is in December or later that you must pay your first installment at escrow. If it is getting close to that date, your loan officer and the escrow company must coordinate to make sure that the payment is made and made only once. Every year there is at least one borrower who says: "Well, I put my check in the mail to the tax collector". This is not going to work. The escrow officer must be able to verify that the tax collector has received and posted the payment.
c) Insurance - when you loan is funding your lender may require that 6 months or one year of "fire" insurance be in place. This is important in the case of refinancing when you have, say, 3 months left on your policy. You will have to plan on paying another half year at least.
This must be coordinated between the escrow officer and your insurance agent or broker.
If your property is a condo and insurance is paid thru the homeowners association then this is not relevant.
d) Impounds - Private Mortgage Insurance may require these. If you are refinancing near the time when your tax payment is due (the discussion above) this is another pain in the neck. Your old lender may have all or most of your tax payment impounded but will be unwilling to part with it before they are paid off. Thus, you have to pay for one installment of your taxes and will be refunded the impound amount from your old lender.
Apart from this detail, impounds consist of a certain number of months of PMI, taxes and insurance.
4) Fees associated with purchase transactions
These include: a) an owner’s title insurance policy. This you will keep as long as you own the property. If you refinance, you will not need a new owner's policy but you will need a new lender's policy. This is often paid by the seller.
b) Inspections - termite, roof, septic (for rural property), surveys and heaven knows what else.
c) Transfer Fees - these are charged by the county and municipalities, vary greatly and are most often paid by the seller.
d) Prorations - the seller may have prepaid part of the property tax for the period during which you own the home and will be entitled to a reimbursement from you.