02 Jul 2013
Real Estate

What the Listing Agent Won’t Tell You

Is it ok to use the listing agent when buying a house?  No!  More and more often we’re seeing first time home buyers contacting listing agents through sign calls, internet postings, etc, to view homes and write offers.  The listing agent has a fiduciary responsibility to the SELLER, and no matter how hard they may try there will always be a conflict of interest when practicing dual agency.

What’s dual agency?  Dual agency is when a real estate agent represents both sides of a transaction.  Many agents like to do this because they get paid twice, but it is not in the best interest of either client.  First time home buyers need an agent on their side that will represent them solely and fully.

How much does it cost to hire an agent?  In the state of Washington both listing and buyer side commissions are paid by the seller, so the buyer pays NOTHING for their representation.

So why would first time home buyers choose to NOT have their own agent?  There is no reason first time home buyers shouldn’t have their own agent representing their best interest.  Some people feel like real estate agents are just salesmen.  It is true that some agents are salesmen, but there are many out there that are educated professionals and advocate for their clients.  You may just have to interview a few to find the write one.

Don’t make the biggest financial decision of your life without getting educated!  If you would like to find out more about how to interview real estate agents, or the home buying process in general please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops.

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04 Jun 2013
Mortgage

Home Advantage Down Payment Assistance

          

How much Down Payment Assistance can I get with Home Advantage?  This depends on the price of the home and lending guidelines.  Home Advantage provides down payment assistance up to 4% of your loan amount.  So if your loan amount was $200,000, you would potentially be eligible for $8,000 in down payment assistance!

Do I have to pay the Down Payment Assistance back?  The money would have to be paid back eventually, but there is NO monthly payment and ZERO interest!  You would repay the down payment assistance when you either sell the home, rent it out, or pay off your 30 year mortgage.

What loan programs can be used with Home Advantage?  Almost any loan program can be paired with this down payment assistance program, including Conventional, FHA, USDA, and even VA loans.

Is Home Advantage any different than other Down Payment Assistance programs?  Yes.  The rates are much better than other programs that have been offered by Washington State in the past.  Also, for this down payment assistance program you DO NOT have to be a first time home buyer AND it can be paired with the MCC program!  This is unprecedented as in the past most programs have only been available to first time home buyers and could not be paired with the MCC.

Is Home Advantage right for everyone?  Everybody’s personal situation is different.  To find out more about Home Advantage guidelines, as well as other down payment assistance programs offered by the state, go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops.  Don’t make the biggest decision of your life without getting educated first!!!

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28 May 2013
Mortgage

What is the Mortgage Credit Certificate?

          

What is the Mortgage Credit Certificate?  The Mortgage Credit Certificate (MCC) is a dollar for dollar tax credit for first time home buyers.  The credit relates to the mortgage interest paid on a homeowner’s property over the life of their loan, as long as it remains owner occupied.

How does this differ from the standard interest deduction?  The first 20% of interest you pay on your mortgage will come back to you in a dollar for dollar tax credit.  The remaining 80% of interest paid will still be used to write down your income on your taxes as it normally does with owner occupied properties.

Can you give me an example?  Let’s pretend the Johnsons are first time home buyers and purchase their first home for $275,000.  We’ll also assume they will utilized FHA financing with a down payment of 3.5%, a fixed interest rate of 3.75%, and are in a 20% tax bracket.

Year #1…Total interest paid = $10,040.95
Annual property taxes = $2,750
Mortgage insurance paid = $3,375.24
Total paid in = $16,166.19
Annual tax savings = $3,233.24 or $269.44/mo

Annual refund with MCC = $5,819.83 or $484.99/mo

Does the MCC last for the life of my loan?  The MCC does last for the life of your loan as long as you’re occupying the property.  However, keep in mind that as time progresses, though your monthly mortgage payment may stay the same, more of your payment will go towards principle.  Therefore, your tax savings will slowly decrease because you are paying less and less interest every year.

The MCC sounds like a no brainer for first time home buyers!  The MCC is a fantastic program, but there are parameters you have to meet, as well as repercussions if you stop occupying the property.  Don’t make a decision without getting educated first!  If you’d like to learn more about the MCC go to our Calendar/Reservations page and sign up for our FREE First Time Home Buyer/Down Payment Assistance workshop.

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21 May 2013
Mortgage

Appraisal Timelines

          

What’s an appraisal?  An appraisal is a separate 3rd party valuation of the subject property.  It is required by all lenders and is generally paid for by the buyer.  It usually ranges from $500-700 depending on the situation.

What’s the timeline for an appraisal?  It can take a couple days to a couple weeks to complete.  It really depends on the appraiser that’s assigned to your file, so you’ll want to make sure you have plenty of time to complete the appraisal way before your closing date.  This is because the appraisal has to be included in your file before it is submitted to underwriting.

At what point in time is the appraisal ordered?  Some first time home buyers may want to wait until AFTER the inspection is complete to order the appraisal.  However, due to the aforementioned timeline, if you want to take this approach you will usually want to ask for a 45 day close from the seller.  But depending on your competition you may not be afforded that luxury.

What if I can’t get a 45 day close?  If this is the case, you will either have to order your appraisal immediately after getting under contract, or pay extra to have the appraisal rushed.  Or maybe even both, depending on how long you have to close.  Regardless of the situation, the most important thing is that your Realtor and lender are communicating and on the same page so that everyone has realistic expectations.  The last thing you want to do is miss your close date do to a miscommunication.

Don’t make the biggest decision of your life without getting educated!  If you would like more information on transaction timelines or the home buying process in general, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer/Down Payment Assistance workshops.

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14 May 2013
Mortgage

Am I Preapproved for a Purchase Price or a Payment?

          

Am I preapproved for a purchase price or a payment?  When purchasing a home, you should get preapproved for your loan with a qualified loan originator.  This loan originator will look at your documentable income and preapprove you for a PAYMENT based on underwriting guidelines.

So why does the preapproval letter always state a purchase price?  The lender ESTIMATES roughly what purchase price amount you might qualify for based on your allowable monthly mortgage payment.  They have to estimate this purchase price amount because property taxes and homeowners insurance premiums which both go into your monthly payment will vary on different properties.  Interest rates also fluctuate on a daily basis and the lender can’t lock in your rate until you’re under contract.

So if I’m approved for a payment, how does my Realtor know how much I can afford?  Your Realtor should be in close contact with your loan originator.  Before they write up an offer for you, they should give your loan originator the property taxes for the specific home you’re interested in so the loan originator can calculate a payment for you.

What happens if my Realtor doesn’t check with the lender before writing the offer?  You will most likely be able to retrieve your earnest money, however you will probably be out a lot of money for your inspection fee and appraisal fee.  It’s much better to make sure you’re using a Realtor and loan originator that are comfortable communicating with one another, and understand the importance of payment amount over purchase price.

Don’t make the biggest financial decision of your life without getting educated!  If you’d like to know more about the preapproval process or the home buying process in general, please go to our Calendar/Reservations page and register for one of our FREE First Time Home Buyer/Down Payment Assistance workshops.

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