Tag: lender

Appraising a Home

An appraisal on a property intends to determine the fair market value. It’s one of the final steps in the home-buying process that happens once the seller has accepted your offer and you have started the work with a lender. A financial institution will not lend money without an appraisal. The appraisal value of a home can make or break a sale, leaving this part of the real estate process a critical step.

The home appraisal is different from the home inspection even though both an appraiser and an inspector will walk inside, outside, and around the property to check everything with a fine toothcomb. The appraiser is finding the value of the home and the inspector is looking for problems or defects with it.

During an appraisal of a home, the appraiser will look at the state of repair, the features, the square footage, as well as the number of bedrooms and bathrooms. Give a list of repairs and improvements made such as a new roof, water heater, air conditioning, etc. The owner of the home should bring forward anything and everything that will help the appraiser decide the general market value.

The appraiser will research all the comparables (“comps”) in the area with features similar to the home. Also provided should be whether the values of homes are on the rise, decreasing, or stable. If there are any concerns that he feels will harm the property’s value, it will be noted. Additionally, he will flag any bigger problems he may see in the foundation, the roof, or any noticeable water leaks in ceilings or floors.

Again, an appraisal can make or break a sale of the home so it’s a stressful time. If the appraisal comes back higher or lower than the sale price, there will need to be more negotiating. If the seller isn’t happy with the outcome, a good realtor will discuss with the appraiser why certain decisions were made. With the help of a realtor, the seller can put together a valid argument as to why the appraisal is not correct.

Appraisals are valid for six months unless the home is in certain markets where homes are selling fast and prices continually change. At this point, lenders usually like an appraisal every three months. The real estate market changes from year to year and even month to month.

The Bottom Line: The process of home appraisal and final valuation might seem beyond your control. But, you can take charge by making some improvements to your home to up the appraisal outcome. Ask your realtor to help you understand what the appraiser will look for so that you can update and make sure your home is ready for show!

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Finding the Best Mortgage Loan

Finding the best mortgage loan is about more than just securing the lowest interest rate. It’s also important to make sure you’re comfortable with the company that’s originating the loan.

As you consider available funding options there are some basics to keep in mind. Among other things, the best choice will depend on the length of time you plan to own the property, how much you can afford to borrow, the condition of the housing market in the area you want to buy, and how quickly the purchase needs to be funded. Even if you could be an “all cash” buyer, for some it could make economic sense to finance a new property with a mortgage.

Mortgage loans are offered by different types of lenders. The most common are big banks, local banks, mortgage lenders, and credit unions. You can also get a loan through a mortgage broker.

Big banks have comprehensive networks of branches, financial accounts, and services. Some global banks lend municipalities and international governments large sums of money for massive infrastructure investments. It can be reassuring to work with an easily recognized brand and since many have in-house underwriters and large teams to process loans, they may be an efficient option. 

Regional banks are in your community, so they know the area. This can be especially important in a competitive real estate market since it reassures the seller and their agent that the lender is aware of any local anomalies as well as the relative value of atypical properties. They also may have personal connections with local appraisers and underwriters, helping to facilitate an anxiety-free transaction. 

Mortgage lenders are financial institutions, similar to banks, that originate and fund loans in their own name. Unlike banks, mortgage lenders exist for the sole purpose of making loans against real estate. Mortgage lenders get their money from banks and other investors. Most mortgage lenders do not service their loans and instead may sell the debt to banks or servicing companies who will take on the job of collecting payments.

Credit unions are financial institutions that use a nonprofit, cooperative business model. As a credit union member, you are also a partner (a cooperative owner) of the credit union. You usually have to meet an eligibility requirement to become a member and they may charge a modest membership fee. Since they are not-for-profit, rates and fees may be lower and there may be more flexibility in unique lending situations.

Mortgage brokers are intermediaries between the borrower and the source of funds; they are able to offer loan products from a variety of lenders. In exchange for this service, the lender pays the broker a commission called a “yield spread premium.” It’s logical to assume that the extra layer between lender and borrower would drive costs up. However, that’s not necessarily the case. Mortgage brokers reduce the bank’s cost of doing business. In return, the bank gives the broker access to rates and fees that are similar to those a consumer would get from a bank. 

There are many types of mortgages, but the primary options will usually be between those with a fixed interest rate and an adjustable rate (ARM). Besides the interest rate, the final cost of a mortgage will depend on the type of loan, the term (such as 30 years), and any lender fees. Mortgage rates can vary widely depending on the type of product and the qualifications of the applicant.

As you are considering what lender to use, it makes sense to compare your options. Here are a  few general questions to ask:

How long does it take to get a pre-approval? This is the best way to learn how much you can realistically borrow. Your pre-approval letter will show sellers that you’re financially able to complete the home purchase.

How often do customers’ closing dates need to change due to issues with the loan? Make sure you know what to expect from your lender around closing times and what they’ll do if something doesn’t go as expected.

What is the turnaround time for appraisals? In a busy market, appraisers get busy too! Be sure your lender can facilitate a quick appraisal turnaround time.

Do they fully underwrite their loans? If the lender is working with an outside underwriter, the time it takes to collect or verify documentation may also slow the process.

The Bottom Line: Before you begin your home search in earnest, it’s ideal if you know how you will fund your purchase. While it’s not the most exciting part of the home buying process, it’s most essential. This is one of the biggest investments you will make in your life, so you need to make sure that you are working with the right lender. The right lender will make sure that you have the right loan for your situation and guide you down the right path.

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Title Insurance Protection

Having title insurance from Title First Agency will protect you from the possibility of a claim to ownership of your home by someone. It’s hard to believe this can happen, but it is more common than people think. It’s not usually a plot to steal your home but a confusion with the deed. The laws regarding property ownership are complex and when liens come into play, someone may believe they still own a house that was technically taken over by a bank.

Title problems appear when parties want to be repaid loans and bills outstanding by the same property. There is a lender that made the first mortgage; the lender that opened the home equity line of credit; contractors whose unpaid bills resulted in liens on the property; taxing districts; and even homeowners’ associations all lining up to be repaid from the proceeds of the house, it’s easy to see how they might not agree on who gets paid what, and when.

Without a title search, the buyer buys all those problems along with the house. The problems don’t go away just because there is a new owner. There have been examples of homeowners having to sell the house just to pay the bills.

Title searches are required by all lenders to be sure that title problems are cleared up before a home is bought. It’s not for you. It’s for them. If the lender makes a mortgage with another that already has claims against it, that lender is going to lose that money.

The Bottom Line: The title is proof that a piece of property is legally owned. It’s an extremely important document. Without a clear title, you are taking a tremendous gamble in purchasing a house or other property. The experts at Title First Agency oversee and perform thousands of closings each year. When using Title First, you can sign confidently on the dotted line knowing that all the details of your title transfer and closing are in proper order. We are here to answer any questions you may have about buying or selling a home, and our team will guide you through the entire process.

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Quick Advice For Home Buyers

Do you have plans to buy a home soon? Be sure you are armed with the best Realtor in your area. If you aren’t paying cash for your new home and will be getting a mortgage, you will want to follow some quick advice.

Don’t damage your debt to income ratio by making a major purchase before closing. If for some reason you can not wait to by a new car, you might have to wait on owning a home. The bank could easily determine that car payment would hinder your ability to pay your mortgage. Wait until after you get the house to do some spending.

Don’t change jobs.  The lenders like to see consistency versus constant job hopping. From their perspective, your employment and income are paramount to your ability to make your payments.  Generally, there are three different characteristics of your employment and income that are considered – the amount, the history and the stability. Many lenders will do a final check to verify that your employment and income hasn’t changed since your final loan approval was issued. Further, some lenders will require 30 days of paycheck stubs for new employment. If you can’t provide these stubs, it could delay your mortgage approval. Worse, it could result in your mortgage application being declined.

As a home buyer, never surrender your earnest money to a For Sale by Owner Seller. There isn’t anything stopping the sellers from spending the money before the transaction goes through. If the deal should fall through you’ll have to fight to get the deposit back. It should be put into a trust account. Find an attorney willing to hold the deposit for you until the transaction is finalized. Your contract needs to state what will happen to the deposit in the event that the transaction falls through.

Stay practical and realistic during the home buying process. Don’t let your emotions get in the way.  Occasionally, sellers are willing to fix some of the problems with the home and others may not be as willing. Don’t let that refusal close the door on your dream home. Conversely, you shouldn’t let your loyalty to the home blind you to costly repairs down the road. You certainly don’t want to be in a money pit.

Talk to your insurance company right away.  Failing to line up the insurance will lead to delays in closing.  Your lender will more than likely require that you purchase at least some homeowners insurance before settling on your mortgage. In most cases, you’ll be asked to provide proof that you’ve prepaid one year’s worth of coverage before the lender will consider closing.

If the appraisal comes in too low, don’t panic. There are several solutions to this dilemma.  Your emotions may be running high and making a good decision can be difficult. A skilled Realtor will be an invaluable asset at this point and be able to guide you through.  It’s their job to keep up with the details, daily, of your deal and if the seller won’t come down in price, as painful as it may be, you may have to prepare yourself for the worst-case scenario – walking away.

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Title Search for Buyers and Sellers

Buying or selling a home has become a complex transaction and you need a trusted title search company to guide you through the process. The experts at Title First oversee and perform thousands of closings each year. When using Title First, you can sign confidently on the dotted line knowing that all details of your title transfer and closing are in proper order. We are here to answer any questions you may have about buying or selling a home, and our team will guide you through the entire process.

Title First will be responsible for ensuring that all the documents related to the ownership of a property are in order before the real estate transaction is performed. We will also provide an agent to oversee the entire closing process. Insurance will be furnished that protects the buyer and the lender if legal issues arise after the closing.

Once a home is bought, the buyer takes possession of the title for the property. Titles are at the local courthouses and the buyer does not own the property until his name appears on the title. There have been times when titles are not properly taken care of when a home changes hands, which means that if there are any liens on the property still have a claim on it. When this happens, the owner who did not sign off on the deed exchange still has a claim on the title.

Title First will perform searches on behalf of the property owner and the lender. We will review court records to guarantee that any liens on the property have been satisfied and that there are no outstanding claims. We also make sure that the seller that holds the title has the right to sell the property, and that it is has a clear title to close.

Title First will supervise over the loan closings and any other real estate transactions. We are then responsible for recording the title, mortgage and any other document related to the transaction at the local courthouse.

Title First will offer a title insurance policy that will provide coverage for property owners and buyers in the event of legal disputes related to the ownership of the property. However, these issues should not arise as all of the searches are done before the closing. But, there is always the occasion that something was overlooked that can threaten the interest of the owner or lender.

If you have a question or would like more information, please contact our title experts.  614-503-7434

 

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Cyber Threats in Real Estate

Buying, selling & refinancing a home requires submission of personal information to the lender which includes social security numbers, bank account numbers and credit/loan account numbers.  Sadly, there are hackers out there looking for this personal information to steal.

Never trust wiring instructions sent by email, especially if there is a claim made that submitting a payment has changed and a new account is provided.  The hackers are sending out sophisticated and convincing emails that look like they are coming from your Realtor. They often contain signatures, fonts, and logos that are an exact match to the original. Always confirm in person or by telephone to a verified and trusted phone number. Never wire money without double checking that the wiring instructions are correct.

How to avoid getting into this situation:

  • Never send wire transfer information, or any type of sensitive information, via email. This includes all types of financial information, not just wire instructions.
  • Never conduct business over unsecured WiFi
  • Make sure you learn your Realtor/Lenders email and communication practices. For instance, do they expect to be sending you sensitive information through email?
  • If wiring funds, first contact the recipient using a verified phone number to confirm that the wiring information is accurate. The phone number should be obtained from a reliable source.
  • If email is the only method available for sending information about a transaction, make sure it is encrypted.
  • Delete old emails regularly, as they may reveal information that hackers can use.
  • Change usernames and passwords on a regular basis, and make sure that they’re difficult to guess.
  • Make sure anti-virus technology is up to date, and that firewalls are installed and working.
  • Never open suspicious emails. If the email has already been opened, never click on any links in the email, open any attachments or reply to the email.

Cyber threats in real estate are too incredibly common. We all need to be vigilant and have security practices in place.  One mistake acted on by a fraudulent request, could result in the loss of hundreds of thousands of dollars or personal data loss.

 

 

 

 

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