Jan
29
Here’s Why Now Might Be a Good Time to Be Looking Over the Real Estate Listings
Filed Under Mortgage | 2 Comments
Even though home prices have tanked and are still sliding downward, we’re starting to see signs that home values may be rebounding from their historic lows. Although the article cites a drop in home sales, it also cites a slight shrinking in the inventories of unsold homes, which could be the indicator in a slackening in the slide in home values that we’ve been seeing for the last six months.
But, if home values are rebounding at all, that means that it might be time to start perusing the real estate listings for bargains that can be snapped up as either rental properties or investment properties. Despite the problems in U.S. real estate markets, real estate will always hold at least some of its value because no matter what, people will always need somewhere to live. Just as people will always need utilities, food, water, clothing and medical care, people will always need a roof over their heads. What makes real estate hold its value is that it is a finite commodity. After all the livable land is used up, there’s really no practical way to make more.
Mar
26
The Benefits of a Good Faith Estimate and Pre-approval When Buying Real Estate
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Escapeso Austin Real Estate inquired:
Most real estate purchases are bought with loans so getting a good faith estimate and pre-approval letter from your lender helps the process start off on the right foot. The good faith estimate, or GFE for short, is required by law to be provided by lenders when you are seeking a loan. It lists out the estimated closing costs, monthly payments, and interest rates for the loan program you are looking at getting. The pre-approval letter is provided by lenders once they have run your credit and get your income / debt information. By getting the GFE and pre-approval letter, you can be confident that the loan will get processed with no surprises. There are also additional benefits to getting pre-approval and GFE before you even begin the property search. For one, by discussing your debt to income ratio with your lender and obtaining the GFE, you can determine your maximum price. It helps to know the maximum sales price when shopping around so that you do not waste time and energy looking a over-priced properties, and also vice verse, you do not waste time and energy looking at under-priced properties. You can find an area in your price range that fits your needs and narrow down your search. You also will determine your monthly payments with the GFE. The monthly payments should include the property taxes, insurance, principle, and interest plus any private mortgage insurance (PMI). If the monthly payments are higher than you wanted, then you can adjust your sales price to be lower. Another reason to get your pre-approval and GFE before starting your home search is that you may find out some issues with your credit or financial situation that you could clean up before moving forward with a purchase. For example, the first time I bought a house, I found out that I had a $50 charge on my credit report from 3 years ago, which brought my credit score down. And with a lower credit score, I would have gotten a worse interest rate on the loan. I say ‘would have’ because I was able to pay off this collection and clear up the ding on my credit before going into the loan underwriting process. Finally, by getting a pre-approval letter, you have proof for a seller that a lender has confidence in being able to fund the purchase on your behalf. This helps with presenting offers and negotiating. Many sellers will not even accept an offer unless it is accompanied by a lender’s letter. Furthermore, if you do not have a letter, the seller may counter higher given that he feels he is taking on more risk that you may not be qualified for the loan amount. Also, if you happen to get into a multiple offer situation, your offer will be much stronger with a pre-approval letter.