Buyer - Realtor Josey

Buyers & Investors

Getting a Loan

1. If you want to finance the houses, pay attention to your credit scores.

Key Factors of Your FICO® Score
Payment History (35%)Outstanding Debt (30%)Credit history length (15%)Pursuit of New Credit (10%)Credit Mix (10%)

Down payment: Your down payment requirement will depend on the type of mortgage you choose and the lender. Some conventional loans aimed at first-time home buyers with excellent credit require as little as 3% down.
Closing costs: These are the fees and expenses you pay to finalize your mortgage, and they typically range from 2% to 6% of the loan amount.
Move-in expenses: Remember to budget for moving costs, which typically run up to $2,500 for most local moves.

2. Decide how much home you can afford.

Figure out how much you can safely spend on a house before starting to shop. Talk to your loan broker who can help you find out.

3. Explore mortgage options

A variety of mortgages are available with varying down payment and eligibility requirements. Here are the main categories:

Conventional mortgages are the most common type of home loan and are not guaranteed by the government. Some conventional loans targeted at first-time buyers require as little as 3% down.
FHA loans are insured by the Federal Housing Administration and allow down payments as low as 3.5%.
USDA loans are guaranteed by the U.S. Department of Agriculture. They are for suburban and rural home buyers and usually require no down payment.
VA loans are guaranteed by the Department of Veterans Affairs. They are for current military service members and veterans and usually require no down payment. You also have options when it comes to the mortgage term. Most home buyers opt for a 30-year fixed-rate mortgage, which is paid off in 30 years and has an interest rate that stays the same. A 15-year loan typically has a lower interest rate than a 30-year mortgage, but the monthly payments are larger.
If you plan to stay in the home for only a few years, you might consider an adjustable-rate mortgage, or ARM. ARMs often start with a lower fixed-interest introductory rate, enabling you to buy a more expensive home for the same monthly payment, but they can also increase (or decrease) over time.

4. Gather your loan paperwork

Before you’re approved for a mortgage, your lender will ask you for financial records to verify your income, assets and debt, including:

Proof of income and employment, such as tax returns, W-2s and 1099s.
Statements for bank, retirement and brokerage accounts.
Records of debt payments, such as student loans, auto loans or any real estate debt.
Documentation of other events that impact your finances, such as divorce, bankruptcy or foreclosure.
Pull these documents ahead of time to stay organized throughout the process — you’ll need them for a mortgage preapproval as well as when you apply for the loan.

5. Get a preapproval letter

A mortgage preapproval is a lender’s offer to loan you a certain amount under specific terms. Having a preapproval letter shows home sellers and real estate agents that you’re a serious buyer and can give you an edge over home shoppers who haven’t taken this step yet.
Apply for preapproval when you’re ready to start home shopping. A lender will pull your credit and review the documents you organized in the previous step. Applying for preapproval from more than one lender to shop rates shouldn’t hurt your credit score as long as you apply for them within a limited time frame, such as 30 days. *** To make an offer, it is better to present the (1) Pre-Approval Letter (2) Written Offer (3) Proof of downpayment fund all together to the listing agent to get better change to be considered. *** All cash offer, it is required to present proof of funds together with the written offer.

6. Stick to your budget

To avoid financial stress down the road, set a price range based on your budget — and then stick to it. Even a lender may approve a loan more than you have expected. Or, you may get excited to a house which is ‘totally ideal, but a little bit over the budget’ .
Or you are so desperate to win the bidding war which is the situation of multiple offers.

7. Want to be a landlord

In Californian, 1- 4 units dwelling property is in Residential Category & Residential Mortgage. Over 4 units property is in Commercial Category. The rules of Residential and Commercial Residence are slightly different. It is better to talk to your real estate agent and loana broker before you decide to make an offer. Also, in California, lots of people don’t want to deal with the regulations of rental units. It is recommended to hire a property management company or agent to take care of your rental property.

Finding an Ideal House

(1) Choose a real estate agent

A good real estate agent will scour the market for homes that meet your needs and guide you through the negotiation and closing processes. Don’t try to get through the transaction yourself, a licensed agent can help you avoid lots of headaches.

(2) Narrow down your ideal type of house and neighborhood

An existing home generally costs less than a new construction home. Buta brand-new home offers more options to customize.
A condominium or townhome may be more affordable than a single-family home, but shared walls with neighbors will mean less privacy. Don’t forget to budget for homeowners association fees when shopping for condos and townhomes, or houses in planned or gated communities. Ask what the HOA fees cover, public areas and roof?
A manufactured home or also called a mobile home, can be an affordable option if you have a tight budget. There two locations of mobile home: (1) in mobile home park, make sure to check the space rent fee, utility bills. (2) on a land and affix to a permanent foundation which becomes real estate and can be financed with a traditional mortgage. Many manufactured homes are financed through chattel loans, which have higher interest rates.
Fixer-uppers, or single-family homes in need of updates or repairs. It usually need a lot of money and skilled labor work. Homeowner can consider about Renovation mortgages which covers both the home price and the cost of improvements.

(3) Go Open Houses & Feel the Houses In-Person

As technology improves, it is very easy to watch online marketing presentation, but they don’t supply all the information as in-person visits do — such as smells, actual feelings, noise, wear & tear, etc. And online presentations are skillfully angled by photographers. Some listing agents refuse to sell a house to a buyer who has never toured the house inside / outside in person. They consider it is high-risk to sell a house to a person who only sees it online.

(4) Don’t skip the home inspections & investigation

1) Inspections

Many sellers provide the home inspection and Pest & Fungus Inspection Reports when they put the houses on the market; although it is not required. Sellers want buyers to understand the conditions of the houses before they make offers.
However, there are some things to keep in mind:

Standard inspections don’t test for things like radon, mold or pests. Understand what’s included in the inspection and ask your agent what other inspections you might need.
Make sure the inspectors get to every part of the house, such as the roof and any crawl spaces. Review the reports carefully.
The buyer doesn’t have to attend the inspection, but by following the inspectors around buyer can get a better understanding of the condition and ask questions on the spot.

2) Investigation

Zoning, especially old homes might be re-zoned
With or without permits, especially the garage converted into living space. Or newly renovated house.
Water source, if it is located in rural area.
Boundary lines, especially big acreage properties. After a few transactions, no one knows exactly where are the boundary lines.
Rules of Home Owner Association.
Road easement, and others

3) Negotiate with the seller

Your negotiating power will depend on the local market.

In buyer’s market, you may be able to request the seller to do the repairs before the closing or lower the price to cover the cost of repairs you’ll have to make later. You may ask the seller to pay some of the closing costs. But keep in mind that lenders usually limit the percentage of closing costs the seller can pay.
In seller’s market, when there are more buyers than homes for sale or when the interest rate is very low. Sellers may get way over asking price, sometimes, as high as 30% or 40%, and close it as-is. Work with your real estate agent to understand the local market and strategize accordingly.

4) Acquire home insurance

Your lender will require you to buy homeowners insurance before closing the deal. Even it is a all-cash deal, buy the home insurance. Because who knows when / how the natural disaster will hit your home. Home insurance covers the cost to repair / replace your home and belongings; it also provides liability insurance if you’re held responsible for an injury or accident. Buy enough home insurance to cover the cost of rebuilding the home if it’s destroyed. Many home owners are under-insured, no way they can re-build their homes when they receive the money from insurance companies. It may be worth buying an umbrella policy if you need to cover your home, cars and other assets. Talk to your insurance agent.