Want a smooth loan application and approval? Read on . . .

Be thorough and up front.  Have all of your financial information, assets and liabilities, documented with account numbers and balances.  Checking account, savings accounts, certificates of deposit amount and maturity dates, IRA/ SEP, 401K, brokerage accounts, etc. will be verified.  Be prepared to explain large deposits within the past few months. Was that money borrowed or a gift? If it was, say so. Are you borrowing from your retirement account?

When it comes to recurring debt, this is where most applicants miss the mark.  You MUST disclose all your debts.  Do you have a second home that you will be renting out? Have you co-signed on a loan of ANY KIND?  Do you have student loan obligations?

You will need to provide a current pay stub, w-2 and tax returns for the past couple of years. If you are self-employed, you will include your Schedule C (P&L).  As an employee, do you have reimbursed expenses?

You will need all of the above – and perhaps more. Keep your documentation on hand because everything will be verified again just before closing.  Lastly, and most importantly, do no incur any new debt.  Wait until title transfer before making any major purchases.

"Sales volume could probably be an additional 10 to 15 percent higher . . ." Jed Smith, NAR

Are low appraisals holding back prices and slowing the recovery? Some people think so --

http://realtormag.realtor.org/daily-news/2012/10/16/appraisals-remain-big-hurdle-agents-say

Is buying a bank owned home difficult?

The process of buying a bank owned (REO, Real Estate Owned) property is pretty straight-forward.  The properties are listed with a brokerage firm and appear in the multiple listing. Your buyer agent can show the property and negotiate the purchase for you as they would in a traditional transaction. You must have a mortgage pre-approval letter or proof of cash.

Caveat emptor (buyer beware) applies to any real estate purchase, especially so with an REO.  Since the property is exempt from OH Property Disclosure documentation, you must be diligent with thorough private inspections.  Some homes have been vacant for a long time and with no heat. You also need to investigate water, sewer and utility payments, any pending special assessments, zoning and use restrictions, point-of-sale inspection repairs, occupancy permits, etc.

The bank wants to remove the home from its inventory, but is not going to give the house away.  They have investors and shareholders they must answer to and are obligated to get the best price possible. Expect to negotiate. You may be in a multiple offer situation, as asset managers often hold out for the best deal. 

Avoid Home Equity & Refinancing Scams

Here is a great post from my association, the Cleveland Area Board of REALTORS:
http://www.cabor.com/2012/08/30/avoid-home-equity-refinancing-scams/

What are you asking me to sign? I just want to see the house.

Most likely the agent is asking you to acknowledge receipt of their Company Policy regarding agency.

If you are a prospective buyer or renter, OH License Law requires that the agent inform you who it is they represent with regard to that particular property and any future properties they my show you. This is done before the property is shown.  The agent is required to give you a copy of the company policy as outlined in their “Consumer Guide to Agency Relationships.”  It details Buyer Agency, Seller Agency, Disclosed Dual Agency and Fair Housing.  Once the agent explains the information contained in the brochure, you will be asked to sign, acknowledging receipt of the Guide. This in no way obligates you to work exclusively with this showing agent or their company when viewing other homes.

The only exception to receiving the Guide beforehand is if you are attending an open house.  In that case, the agent will provide you that information if you show a sincere interest in purchasing the property. However, you should always feel free to ask an Open House agent whom it is they are representing.

What is "stigmatized" property?

When referring to residential real estate, a stigmatized property can best be described as a property with a notorious background.  Something profoundly negative or grave has occurred in the home sometime in the past, thus it carries a “stigma.” When this is the situation, it becomes a disclosure.  While it is “caveat emptor” – buyer beware – when purchasing a home, many court decisions have ruled on the side of the buyer’s right to know when there has been a grey area.

Examples of a stigmatized property would be a home where a murder or tragic incident has taken place, such as a family succumbed to carbon monoxide. It may also include properties that were homes of infamous people, criminals or debtors. Then there are those homes that have had paranormal activity.  Yes, there are people who are drawn to such homes and want to own them, but the majority of buyers do not.

3.8% Tax on Real Estate Sales

Rumors regarding a 3.8% tax on real estate transactions have been flying ever since the health care act was passed.  Here is a summary from the National Association of REALTORS (via CABOR) that attempts to shed some light on the topic.
http://www.cabor.com/2012/08/13/top-10-things-you-need-to-know-about-the-3-8-tax/

25 Quick, Cheap and Easy Home Sale Tips

25 Quick, Cheap and Easy Home Sale Tips

There are plenty of great ideas contained in this article.

What are the advantages of living in an “over 55” community?

A great deal of thought and planning goes into the creation of an over 55 community.  This is one place where it’s truly all about the consumer. Developers carefully select the location based on proximity of shopping, houses of worship, golf and recreational as well as health care facilities.  The development is designed to encourage neighborhood interaction.  A clubhouse, planned outside activities and social gatherings are an integral part of community living.

Residents want the advantage of low to no-maintenance homes without having to worry about snow removal, landscaping and lawn care.  Many find it easier to live part of the year here and winter in warmer places. The homes are designed for the over 55 lifestyle and are generally one-floor living.  Many of these communities are newer with energy conscious construction – which translates to lower utility costs. 

If you are in this age group, be sure to research several communities before you decide. Like everything else, cost and amenities vary greatly from community to community.

Buying or Selling, What is the Right Price?

You have made the decision to buy or sell.  How do you go about setting the correct asking price?  How do you know how much to offer for a property for sale?  This is where the expertise and guidance of an experienced REALTOR (c) is invaluable.

As a seller, keep in mind that your home will draw the most interest when it first hits the market. If you are competitively priced from the get-to, you will attract genuine qualified buyers. Overprice and the knowledgeable buyer will wait until the price comes down - if they haven't purchased a competing, properly price home in the meantime! Yes, your overpricing just help to sell your neighbor's home!

Your REALTOR© will show you homes currently on the market, those recently sold and pending, and those that did not sell, referred to as "expired listings." From the data you should be able to glean where you fit into the picture. Examine list price vs. sales price, number of days on the market, type of financing and/or seller concession, etc. What are the numbers telling you?

As a buyer, you too will be using this data to determine what to offer. Your agent will be able to provide you with the "market history" of the individual property. How long has the home been on the market? Have there been price reductions? If so when and how by how much? What is the seller's reason for selling? If it's priced right and has what you're looking for, don't hesitate. Even homes that have been on the market for extended periods of time can suddenly become hot commodities when priced right. You could even end up in a multiple offer situation and run the risk of losing the home of your dreams.

While we all know that buying and selling real estate can be packed with emotion, it will be a win-win for both buyer and seller if everyone does their homework.

"Win-Win" Negotiating Tips

When you are ready to negotiate a home purchase agreement, it’s important to remember that a successful negotiation does not necessarily mean everyone gets what they want.  In a real-life “win-win” situation, a few compromises are inevitable.  The secret to negotiating a satisfactory purchase agreement is to expect to make some concessions at the bargaining table.

           

Try to listen and stay sensitive to the other’s point of view.  Be clear about your priorities, but don’t expect to prevail on every point. The more you remain flexible, the better your chance for a fair compromise. Stay focused on what you feel is truly important.  Too often negotiations break down because people become fixated on issues of lesser consequence.  When you become stuck on a point of contention such as an inspection report repair, be willing to split the difference.  Above all, trust your real estate agent, who has the expertise to bring the proceedings to a happy resolution.

Why am I always hearing about issues with last minute lender delays just before the sales is about to close? How do you avoid that situation?

You can blame most of the delays on regulations. All mortgage lenders are being closely scrutinized.  The result has been microscopic examination of the borrower’s finances, regardless of how financially stable and credit worthy they may be.  

Be prepared from the start. Be sure that your credit report is correct. Clear up and/or consolidate as much recurring debt as you can before the process begins. If you are cashing in brokerage accounts, be sure you understand the timing for withdrawing the money and verify the money trail. If part of your funding is a gift, those funds will need to be traced.

The lender will have a laundry list of requirements up front, including credit report, tax returns, verification of funds and employment, etc. They will verify again just before closing, looking at your accounts for large deposits/ withdrawals, new loans.  Do NOT take on any new debt, i.e. buy or lease a vehicle, purchase furniture and appliances, etc. – until AFTER your loan has closed.

It’s hard to think of every possible scenario. Many delays can be attributed to poor communication. Stay in constant touch with your loan officer, especially as closing day draws near.

Pre-Approval vs Pre-Qualification for a Home Loan

I am starting to look for a home.  What is the difference between being pre-qualified and pre-approved for a mortgage?

 

Pre-qualification is an informal way to see how much you may be able to borrow. You can be pre-qualified over the phone with no paperwork by telling a lender your income, your long-term debts, and how large a down payment you can afford.  Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house.

Pre-approval carries it a step further. It is a lender’s actual commitment to lend to you.  It involves verifying your employment and financial records and reviewing your credit history.  You will need recent pay stubs, W-2’s and tax returns, recent bank statements, long-term debt details and proof of down payment and/or gift funds.  Once you have a purchase agreement, the only thing left to do is the property appraisal.

A bona fide pre-approval carries more weight when presenting the offer to the seller and should make for a quicker and smoother closing.