Carol George's Blog
Homeowners can sometimes overlook things in the excitement to buy a property. When purchasing a property, there are a few red flags that you should be aware of:
1. Fresh paint on some walls
Some homeowners sometimes use a fresh paint job to hide problems with the house. If you find out some walls are freshly painted while others are not, ask the homeowner or the real estate agent some questions. Compare the answers of the seller with the agent to see if they match. Then compare the information with the seller's disclosure beforehand about any issues or past repairs with the property. If you suspect that the home contains some home renovations that you are not aware of underneath the fresh paint, then you should call an experienced general contractor to help you take a look.
2. Title issues
A home buyer or lender will carry out a title search while the home is in escrow. You should pay attention to the preliminary title report and check if there are liens, restrictions, encumbrances and anything else that could restrict how you can use the property. When doing due diligence during the escrow period, make sure you understand your rights as a buyer on the property and any third parties included in the title. As a rule of thumb, the longer a title report is, the more likely there's something there that you should know. A preliminary title report is an important document that you should go through. If you do not understand the terms on the title document, ask for help from your real estate agent or a lawyer.
3. Cheap flips
Today's real estate market is filled with people who are looking to make money from flipping homes cheaply. Be wary to avoid becoming a victim of a quick flip. Many houses are products of extensive renovations. Sometimes the contractors use substandard building materials that may have problems despite their shiny looks. As a buyer, you should check the kind of materials used in the home you want to buy. If you don’t know much about construction, hire a general contractor to help you inspect the home extensively.
Pay attention to the seller’s disclosures to identify any red flags that may be there and if they will cause you problems in the future. Consult with a real estate agent or lawyer to help you avoid issues with your home purchase.
You may have wanted to apply for a mortgage at some point but were put off by something negative someone said about this type of loan. Similarly, you may have been encouraged to apply for one based on some false information but met with a quick rejection. Some of the information that bred these misconceptions may not be false but has merely become outdated. Below are some of those misconceived ideas and the truth behind them:
1. You cannot get a loan with a bad credit score
While it is true that most traditional banks will consider you too risky if your score is below 620, other non-traditional lenders will listen to you. Those offering house loans backed by the Federal Housing Administration (FHA) can approve borrowers with a minimum score of 580. Remember, though, that lenders will cover the risk of lending to folks with a low credit score by fixing a higher interest rate. So you might want to clean up your debt before looking for a mortgage.
2. You have to raise 20% as a down payment
In the past, this was true. You had to stump up at least 20% of the value of the property before you approached a lender. Some would require up to 30%. These days you can find lenders who will only ask for 6% to get closing on your mortgage deal. FHA-backed loans will accept even 3.5%.
3. Being pre-approved and pre-qualified are the same thing
Being pre-approved is as almost as good as having the cash to buy a property. Before you get pre-approval, you have to have submitted all required documentation to the lender. Based on your financials, the lender will arrive at a maximum amount they can advance you for the purchase of the property. Your real estate agent can, therefore, use that pre-approval to go house hunting. Getting pre-qualified doesn’t carry this much weight- it only means you have engaged a lender and that you’re ready to begin the application process.
4. The interest rate quoted is what you’ll close with
The rate quoted is subject to change unless you lock it in. Interest rates fluctuate daily, changing severally even on the same day depending on how mortgage bonds trade. From the time you get the initial quote when beginning the pre-approval process to the time you settle on a property and want to close, the rate could have changed by a few points. You can only lock the rate once you've identified a home to which you want to commit.
Ask your mortgage officer all the questions you can think of before you close your deal.
69 Hayes Park, Exeter, NH 03833
69 Hayes Park, Exeter, NH 03833