5 Terms First-Time Homebuyers Need to Know

If you’re a first-time homebuyer, you need to know these five terms before you begin the process.

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We’re back again for another episode of “Keeping in Tune With the Market.” Today we’re going to discuss the five terms that first-time homebuyers need to know before going to look at their first house to make sure they are fully prepared: 1. Pre-approval. What’s the difference between a pre-approval and a pre-qualification? A pre-qualification is pretty informal and can be done over the phone. It’s more of a first-step type of thing. A pre-approval, on the other hand, will get you pretty close to the finish line as far as your loan is concerned. It’s more of a concrete step that takes all of your financial information into account and lets you know exactly how much you can afford. 2. FHA mortgage. FHA stands for the Federal Housing Authority. This is a federally backed loan that only requires buyers to put down 3.5% for their down payment. With a conventional mortgage, you need 10% to 20% down. If you don’t have a lot of money or a lot of credit, it still allows you to lock in an interest rate and buy a home.

These are five good terms to start with.

3. Down payment. A down payment is the earnest money that a seller gets from a buyer when they sign the contract. There’s quite a range on how large a down payment can be. It could be as little as a few thousand dollars, or it could go up to 20% of the purchase price, depending on the type of mortgage you get. This money cannot be removed by the buyer or seller arbitrarily until the sale is closed.

4. Appraisal. Many people don’t really know what an appraisal actually is. An appraisal happens when an authorized appraiser from a third-party source comes out to value the property. They are doing this on the buyer’s behalf to make sure that their lender is taking a good risk for a bad risk. The value they come up with is determined by other comparable sales in the neighborhood as well as the condition and location of the home. 5. Closing costs. We’re almost at the finish line when these come into play. Closing costs can vary greatly, and they might be higher than you’re expecting. However, you can benefit from these closing costs in the long run. They usually come out to be anywhere from 2% to 5% of the total purchase price of the house, but you should have your lender give you a good faith estimate so you know exactly what those costs will be. Although there are a lot more terms you’ll need to know as a first-time homebuyer, these five are good ones to start with. If you have any questions for us in the meantime, don’t hesitate to give us a call or send us an email. We look forward to hearing from you soon.

The Role of Attorneys in Our Real Estate Market

What's the role of an attorney in a real estate transaction? It's more significant than you might think.

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In today's episode of the "Keeping in Tune With the Market," I wanted to answer a question about your attorney's role when buying and selling real estate. In New York, attorneys generally prepare and are legally responsible for both the contract of sale and the closing documents. That said, your Realtor will generally be involved before the attorney because in New York, you want to complete your home inspections before they prepare the contracts. This is important for both the buyer and the seller to know because once the inspection is done, the agent generally gets involved by helping the buyer and seller negotiate any repairs that need to be done or any credits that need to be made for anything that wasn't working at the time of the inspection. At that point, the attorney gets all the information they need from the seller, then they prepare the contracts, which go out to the buyer and the buyer's attorney. They'll review them, and this process usually goes back and forth a few times over the phone or email over the course of a few days. Then, the buyer will sign the contract and bring their good faith deposit, which is generally held in an escrow account.

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The sooner you have a title search performed, the better.

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After that, the attorney will begin to submit all the documents to the title company where a title search is done. The title company will then decide whether there are any legal issues or if there are any outstanding certificates of occupancy. 

This is exactly why we always recommend that your attorney gets a title search done sooner rather than later so that you can find out if any problems need to be rectified before closing. 

Then, the Realtor gets involved again to meet with the appraiser and make sure the home appraises properly. They'll also help the buyer and seller with a final walkthrough and prepare for the closing. 

If you have any questions about this process, don't hesitate to give me a call or send me an email. I'll be sending a $10 Panera gift to Jan for having her questions answered. If you ask a question that I answer in future videos, you'll win a gift card too.

Until then, make it a great day!

Keeping in Tune With the Market: How to Get Your Offer Accepted Without Breaking the Bank

If you’re a homebuyer competing against other offers on the same home, here are three strategies you can use to make your offer stand out.

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Today I’m answering a question from Amanda Fabian, who asks, “How do I get my offer accepted when there are four other competing offers on a home?” First of all, congratulations to Amanda, who will receive a $10 Panera gift card for her question being chosen. To get your offer accepted when there are other competing offers on the same home, I have three strategies you can use: 1. Make your offer as competitive as you can without going over your budget. If you’re going with a higher financing amount, you must be competitive against someone who might be putting more cash into the deal. Also, make sure you have your pre-approval letter and that you submit it at the same time you put your offer in. Your offer must be as strong as possible.

2. Find out from the other agent or owner what their hot buttons are. In other words, does the owner want a quick closing or do they need extra time? When you structure your offer, make sure to add that in. Does the owner have a special appliance they want to take with them? Stress that the appliance can go with the owner and you don’t insist on having it stay.

3. Write a personal note from the heart. This one is my secret weapon. When you do this, find out a little bit about the owner and share with them some information about your family and how you will love the home as much as they did. If you have a cute little kid or puppy, include pictures of them in the note.

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Your offer must be as strong as possible.

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If you have a real estate question that’s on your mind, don’t hesitate to email it to me. If I answer it in a future video, you’ll receive a $10 gift card. Until next time, make it a great day! 

Avoid Major Mortgage Mistakes When Buying on Long Island

I recently had a buyer whose lease was up. This buyer had been in the army and felt that he “hadn’t had a place to call home since.” He was about to close on the property when the lender sent an email requesting more paperwork, pushing the closing back another month.

The buyer had sent in his application on time and paid for inspections and appraisals. Unfortunately, the lender never sent the application to underwriting. When the buyer asked why everything took so long, the lender cited staffing issues. Because of this, the buyer didn’t have a home to move into when his lease was up. As the buyer said, this finance company failed.

When you buy a home, there are certain things you can do to avoid major mortgage heartbreak like this. First of all, make sure you work with a local, reputable lender. Get recommendations from friends and colleagues. Hire someone who has done many transactions. 

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Work with a local, reputable lender.

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Please, don’t search online for lenders and hire one from a different state. They won’t know any appraisers in our area, and that can only lead to headaches.

You should also make sure that you have money in the bank to close. That means you should have enough for your down payments and closing costs. Don’t run up any additional debts by purchasing something like a car or furniture between contract and closing; doing so will also cause trouble with your mortgage.

Finally, make sure that you call your lender with any questions. Make sure you are pre-approved, not just pre-qualified.

If you have any questions, give us a call or send us an email. We would be happy to help you!