Buyers, Sellers, & Renters
Information Regarding Buying, Selling, or Renting Property
We recommend obtaining a certificate of pre-qualification for a mortgage loan. It will help you focus on properties in an appropriate price range and will strengthen your bargaining position once you locate the home you wish to buy. When your offer to a seller includes a letter from your lender indicating that you are pre-qualified for a loan, the seller will take you more seriously, and the sale will proceed much more rapidly. Pre-qualifying for a loan makes you an appealing buyer in the eyes of the seller!
Selecting the best financing package available is as important as finding a property that meets your needs. There are three factors to consider in determining how much you can afford:
Down payment for conventional loans can be as low as 3% - 5% of the purchase price. FHA loans require 3% and VA loans require no down payment.
Ability to qualify for a mortgage
Most lenders require that your monthly mortgage payment, including principal, interest, taxes and insurance, should not exceed 28 percent of your gross monthly income. They also expect your total installment debt (regular scheduled payments of 6 months or longer debt-car loans, credit card balances, etc.), including the proposed monthly mortgage payment on your new loan, not to exceed 36 percent of your gross monthly income.
In addition to your gross monthly income, lenders review your employment history and potential for increasing your income. They also evaluate any additional income, such as bonuses, commissions and child support. They will request a credit report to verify your debt repayment, outstanding debt, and available credit. They will calculate your assets, including checking and savings account balances, CDs, stocks and bonds. If you have items on your credit report that could negatively influence your ability to secure a mortgage, be prepared to explain each situation in writing. You should also consider delaying major purchases until after you've moved into your new home.
Closing costs typically range between 2 and 5 percent of your loan amount. These fees are due in cash at the time of closing, or, in some cases, can be included in the loan.
Taking the time to pre-qualify for a mortgage before you begin your property search will put you in a much better negotiating position: your pre-qualification assures the seller that the transaction will not be delayed while you secure financing.
Getting a Loan
Here's a list of activities and an approximate timeline when you obtain a loan to purchase property:
- Buyer and Seller sign contract. Date signed by both parties becomes the effective date.
- Provide escrow check to title company - within 72 hours of effective date.
- Apply for loan -within 5 days of effective date.
- Loan commitment date - with 30 days of effective date.
- Home, termite, and wind inspections - due within 7-15 days after effective date (check your contract for exact number of days).
- Lender orders appraisal - must be completed at least 5 days prior to closing.
- Coral C's Realty will order a survey if desired - must be completed at least 5 days prior to closing.
- Get homeowner's insurance - must be paid at least 5 days prior to closing.
- Obtain final loan approval.
- Final walk-through of property on day of closing
A home inspection is an objective visual examination of the physical structure and systems of a home, from the roof to the foundation. Having a home inspected is like giving it a physical check-up. If problems or symptoms are found, the inspector may recommend further evaluation. The purchase of a home is probably the largest single investment you will ever make. You should learn as much as you can about the condition of the property and the need for any major repairs before you buy, so that you can minimize unpleasant surprises and difficulties afterwards.
A home inspector is typically contacted right after the contract or purchase agreement has been signed, and is usually available within a few days. Before you sign, you do need to be sure that there is an inspection clause in the contract, making your purchase obligation contingent upon the findings of a professional home inspection. This clause should specify the terms to which both the buyer and seller are obligated. The standard home inspection report will review the visual structure, condition of the home's heating system, central air conditioning system, interior plumbing, electrical systems, roof, attic, visible insulation (walls, ceilings, floors, windows and doors), and the foundation. There are specific inspections for termites that can additionally be performed and property surveys if needed.
If the inspector identifies problems, a seller may adjust the purchase price, or contract terms. A home inspection also points out the positive aspects of a home, as well as the maintenance that will be necessary to keep it in good shape. After the inspection, you will have a much clearer understanding of the property you are about to purchase.
Above all, most buyers find it very difficult to remain completely objective and unemotional about the house they really want, and this lack of objectivity may effect their judgment. In order to be sure you get the most accurate inspection information, it's best to obtain an impartial third-party opinion by a home inspection expert.
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