02
Jul
By First Rate Financial Group
Real Estate

4 Tips To Ensure A Successful Closing

4 Tips To Ensure A Successful ClosingAs you come up to the date of your closing, there’s time to reflect on everything that led to this step. Your real estate agent, mortgage broker, title company and others all work hard to ensure a successful closing for you. They’re all in your corner, hoping for the same outcome as you. They’ve had to do a lot of work behind the scenes that you may not even be aware of. Their diligence and professionalism has already benefited you.

But did you know that it’s not all riding on your team of real estate professionals? There are things you can do to ensure a successful closing, too. 

1. Bring Your Checkbook

In other words, have extra funds available to cover unexpected costs. Anything could happen at the closing table. If there was an error in calculations, or the seller all of a sudden asks for some kind of additional compensation, you could all go home empty-handed. If you bring your checkbook, all those problems could go away and you end up with a successful closing. 

2. Don’t Forget Your ID

You probably don’t need to be reminded to bring your driver’s license with you when you drive. But did you know you’ll probably need to present your ID at the closing table? Funnily enough, people do forget, especially if you’re a woman and you’ve changed purses recently. Before you head to the closing table, double check that you have two forms of ID on you to be on the safe side.

3. Preview The Paperwork

Although everyone’s a professional, human error does occur. If possible, ask to preview the paperwork associated with the closing. Your real estate agent can help you with this step. Read through everything with a fine-toothed comb. Look for spelling errors, mistakes in addresses, and even transposed numbers. The earlier you can review paperwork, the longer the available time to get any errors corrected before the closing.

4. Bring Extra Documents With You

You don’t have to carry your filing cabinet to the closing. But it’s wise to bring relevant financial documents with you and leave them in your car. Lenders may ask for things last minute like old bank statements, a certain cancelled check or something else. 

With the help of your trusted real estate agent and home mortgage professional, your closing will likely go off without a hitch. But, just in case, keep these tips in mind.

 

 

 

13
Jun
By First Rate Financial Group
Real Estate

How To Buy A Bargain Home As A Short Sale

How To Buy A Bargain Home As A Short SaleA short sale is when the mortgage lender(s) agrees to sell the property for a lower amount than the loan-balance remaining.

During the worst moments of the 2006 to 2008 real estate crisis, homes sold as short sales for a fraction of their value. Lenders had so many properties with loans in default that they could not manage the ones that they had in foreclosure.

Foreclosure is an expensive legal process that causes a lender to lose more money on a property. This is one of the motivators that encourages lenders to accept a short sale because sometimes through a short sale the foreclosure process is avoided.

Are Short Sales Still Available?

The number of short sales peaked in 2012. The inventory of homes available for a short sale transaction is much lower than the massive numbers caused by the 2006 to 2008 real estate crisis; however, they still do exist.

Short sales are still worth exploring as long as a qualified buyer has enough cash on hand or is pre-qualified with home-purchase financing that is acceptable for a short sale transaction.

A short sale may be a bargain; however, the buyer must be careful because there are some pitfalls to avoid in short-sales transactions.

The Challenging Dynamics Of A Short Sale

There are three (or more) parties in a short-sale transaction. They are the seller, the buyer, and the lender(s). All must agree to the closing sales price of the home and the terms and conditions of the sale in order for the transaction to succeed. The lender(s) forgives part or all of the mortgage loan that is secured by a lien on the property and agrees to take a loss on the sale.

A short sale only occurs when the home cannot sell for the amount of the mortgage loan(s) on the property. The home is considered to be “underwater,” which is a colloquial term for a home, with a loan(s) that is more than the home is worth.

Short sales do not close quickly because the paperwork is complicated. If there is more than one lender on the property, the process is even slower. Buyers in short sale transactions need to be patient. They must be approved for financing and also approved by the existing lien-holder(s) on the property that is for sale by making a successful short-sale application.

A buyer may need to make a “good faith” security deposit to initiate the short sale application process. The deposit, which is refundable, may sit in a trust account for quite some time before the deal is approved.

Even with proper planning, a short sale deal can still fall apart. Buyers must also take on the risk that the property may need significant repairs and buy the property “as-is.” Homeowners who cannot pay their mortgages usually are not very diligent at taking care of their properties.

Summary

Short sales are an important strategy to consider when searching for a bargain property. Buyers must have cash or significant financial strength and be willing to complete the complex process for the transaction.

To reduce risk, a buyer needs to get careful inspections of the home and have a very clear idea of the costs to bring it up to a nicely-repaired condition, in order to profit from this strategy.

Be sure to get your financing pre-approved before starting any negotiations. Your trusted home mortgage professional is ready to assist with this process and discuss all available financing options. 

12
Jun
By First Rate Financial Group
Mortgage

What Is A Reverse Mortgage?

What Is A Reverse MortgageA reverse mortgage is a way to use the equity value that built up in a home to improve the quality of life for those who have appropriate circumstances when they reach the retirement age of 62 or older. With a reverse mortgage, a person continues to live in their own home and retains the title to it but does not have to make any monthly reverse mortgage payments.

A reverse mortgage may be helpful; however, not everyone qualifies for one. The benefits come with disadvantages as well. Here is a list of the advantages and the disadvantages for reverse mortgages.

Be sure to discuss this option with a qualified professional when thinking about a reverse mortgage before making any commitment.

Reverse Mortgage Advantages

  • Reverse mortgage funds may be used to pay off an existing home loan balance. The funds may be taken out in a lump sum or paid in monthly installments for a certain period.
  • The reverse mortgage creates a lien on the home but does not require any monthly loan principal or interest payments. This continues as long as the person lives in the home and takes care of it (paying the property taxes, home insurance, HOA fees, etc.)
  • Usually, a reverse mortgage has no effect on social security payments or Medicare benefits. It does not usually cause any tax consequences because it is a loan structure, not income.
  • If repayment of the loan happens at some point, any equity remaining is still available to the homeowner for any purpose, such as giving something to heirs.
  • It is a non-recourse obligation. There is no personal liability to repay the reverse mortgage loan if the equity value in the home is not sufficient to pay it off.

Reverse Mortgage Considerations

  • Since a reverse mortgage has no payments, the loan balance increases and the interest accumulates over time.
  • A reverse mortgage reduces the equity in the home that would otherwise be available to heirs. If the remaining equity exceeds the loan, the home can be sold off to repay the loan and the balance can then go to the heirs.
  • Medicaid eligibility or disability payments (SSI) may be affected.
  • A reverse mortgage loan becomes immediately due if certain things happen, such as the death of the homeowner, the homeowner vacates the house for six months or more for a non-medial reason and 12 months or more for a medical reason. It becomes due if the home is no longer the principal residence of the reverse mortgage borrower.
  • The loan is immediately due if the homeowner does not pay the property taxes, home insurance premiums, HOA fees, and other things necessary to maintain the home.

Summary

A reverse mortgage is a special financial tool that needs to be used only when appropriate. Typical rates for these loans may be higher than standard home equity lines of credit and other traditional home-refinancing options. Consider all the details very carefully before and as always, consult with your trusted home finance professional to get the best advice for your unique situation.