- Buyer’s agents represent you during the buying process. Even though the seller is paying for the buyer’s agent’s commission, they still solely represent your interests.
- Designated agency is when a brokerage represents both sides of a transaction, though not necessarily with one agent to both sides.
- Dual agency is when an agent represents both a seller and a buyer in a given transaction. Additional documents in this situation would need to be signed by all parties so that everyone knows up front that the agent is operating on both sides.
Your Realtor should always act with your best interest at heart, no matter what type of agency you have with them.
The first and most important step a homebuyer should take is to consult with a mortgage lender and secure a pre-approval letter from a financial institution.Obtaining a pre-approval allows the buyer to know how much home they can afford as well as the type of financing programs they qualify for so that they have the ability to present a strong offer at a moment’s notice when they do find the perfect home.
Knowing how much home you can afford has many benefits. This information helps your real estate agent find homes that meet your needs while staying in your price range. Why spend time looking at homes that you can't qualify to purchase? This is ineffective use of your time and your realtor's time. You don’t want to end up falling in love with a home only to find out that you are not qualified to submit an offer. I have seen buyers get emotionally attached to a home that is not obtainable and are devastated when they learn they can't afford it.
There are a variety of different financing programs available to home buyers. Some financing programs that you may have heard of are Conventional, FHA (Federal Housing Authority), VA (Veteran's Administration) and USDA (United States Department of Agriculture.) These different programs all have their own guidelines. The home must satisfy the rules and regulations of the particular program or you cannot obtain financing for the property. For example, to obtain an FHA loan the property must go through an inspection that meets HUD guidelines. A few things that an FHA appraiser looks for is peeling or chipping paint, GFI electrical outlets near water sources, remaining economic life of the roof (at least 2 years), and cracked windows. If you plan to use FHA financing, you may not want to look at a distressed home because you will not be able to obtain the financing for it unless you want to go through the process of obtaining an FHA 203K renovation loan. Sometimes you can negotiate with the seller to have them make the necessary repairs however this may not be an option in some cases, i.e. bank owned properties. Knowing this information upfront will save you time and aggravation.
Obtaining a pre-approval letter from a mortgage lender can take a few hours to a day or two (if you are self-employed). They check your credit score/report, bank statements, work history, current salary and many other items to determine your eligibility. Having this process completed upfront gives you the ability to submit a strong offer when you do find your dream home. You can submit an offer without a pre-approval letter but the offer will have no substance behind it. The seller will not know if you are qualified to purchase the home and it would not be in the sellers’ best interest to take the property off the market and potentially miss other opportunities. Submitting an offer contingent upon obtaining a pre-approval letter is, in effect, putting the cart before the horse. This leaves the property open for another buyer, who is pre-approved, to buy your dream home because you are not pre-approved. It also may be embarrassing for you to submit a contingent offer only to find out that you are not qualified to purchase.
Most importantly, you want to make sure you are working with a qualified local loan officer who is established in the local marketplace."Dave from Des Moines" who works for an internet outfit is not as vested in getting your loan closed as is a loan officer who works in the community and has his or her reputation on the line. Don't be afraid to "interview" the loan officer and find out how long they have been a loan officer, employment background, and any special designations or education they may have. A home purchase is the largest financial transaction most people make in their lifetime. Working with a knowledgeable mortgage professional, that you feel comfortable with, is the key to getting to the settlement table. No mortgage/money = no house.
If you are serious about buying a home and want the process to move forward as smoothly as possible, talk to a mortgage loan officer and get pre-approved. Consulting with a mortgage lender and securing a pre-approval letter from a financial institution is the first and most important step a home buyer should take if they plan to finance their home purchase.
If you are considering purchasing a home, you are likely doing some research online. You may come across some terminology that you are unfamiliar with. The home purchase process involves multiple parties: realtors, attorneys, appraisers, lenders, and home inspectors. While navigating this process and interacting with all parties there is some terminology that will be important to understand. Here is a small crash course of the basics.
Credit Rating. Your credit report is a main tool that lenders use while determining if you can get a mortgage and how much you qualify for. There are many factors that influence a credit score, but in general keeping payments current and credit card balances low will help keep a healthy credit score.
Note and Mortgage. A note is quite simply a promise to repay a lender. A mortgage is the legal form that secures your home to the loan. This is what allows the bank to use the home as collateral for the money that they have lent, and to take the home back if payments are not made. These loans are extended by banks, credit unions, or other lenders. Some loans, like FHA (Federal Housing Administration) and VA (Veterans Affairs) are backed by the government.
Pre-Approval. It’s a good idea to be pre-approved for a mortgage when you start your search for a new home. Pre-approval involves running your finances and credit through the mortgage application process to determine the type and amount of mortgage you can expect. By getting a pre-approval realtors and sellers know you are a serious buyer, and that you truly have the ability to buy the homes you are looking at.
Appraisal. Performed by a professional, an appraisal is an assessment of the value of the property you wish to purchase.
Title. The title is a legal document verifying ownership of a property and is important for proving that there are no liens against it at the time of sale.
Down Payment. A down payment is the amount of cash paid up front to finance a new home. The rest of the home purchase is paid by a mortgage loan. While loan options vary, there are some financing options that allow 0% down.
Earnest Money. This is the money included along with an offer letter to show a seller that a buyer is serious, or “earnest,” about the purchase or good faith deposit.
Amortization. This is the schedule to pay off a mortgage loan over a certain amount of time (often 15 or 30 years) via monthly installments.
Closing Costs. These fees, due at closing, are one-time costs associated with a home purchase. They can include payment for inspections and appraisals, attorney’s and recording fees, and title service costs. They might also include taxes and pre-paid homeowner’s insurance. Closing costs may be paid by the buyer or the seller or be divided between both parties.
With an understanding of the information in this article, hopefully your home buying process will be less confusing. Don’t be afraid to ask your realtor questions, or to contact me with any concern or needs.
submitted by Matt McCormac
Mortgage Loan Office
2525 Eastern Blvd, York PA 17402
“This real estate agent tried to force me to sign a contract before I was even in the door, what a scum bag!!” Does this sound familiar? Has a real estate agent ever tried to pressure you into signing an unknown document? I recently attended a real estate ethics class required by my local realtors association. The real estate association referenced a time when a consumer called in to complain about an agent who tried to force them to sign papers before doing any work or proving their worth. Upon further investigation, it turns out that the document that was “forced down the throat” of the consumer was called the “Consumer Notice”
The Consumer Notice is NOT a binding contract; it is a form that Pennsylvania law requires real estate agents to present to consumers before they can utter a word of real estate advice. If an agent does not present this document to the consumer, they are leaving themselves open to liability according to PA State law. The second line of the Consumer Notice literally states “this is not a contract”. The first paragraph clearly states, “This notice most be provided to the consumer at the first contact” The third paragraph further states, “The licensee is NOT REPRESENTING YOU.” If you find an agent that is forcing you to sign this form at first contact, don’t run for the trenches, embrace this real estate agent and buy them a drink because he is following the LAW!
The Consumer Notice describes the basic duties of the real estate agent and what the realtor would be doing if they were to represent you in a real estate transaction. The notice also educates the consumer on the different ways the real estate agent can represent them. The difference types of representation or “agencies” are Selling Agents, Buyers Agents, Dual Agents and Designated Agents.
A Selling Agent is another name for a listing agent. The Selling Agent represents the seller, lists their property for sale and negotiates on the behalf of the seller. The Buyer’s Agent represents buyers. The Buyer’s Agent will show properties for the buyer and negotiate on the buyers behalf. Keep in mind that the seller always pays the realtor commission, NOT the buyer, so there is no cost to the buyer to have their own realtor (buyer’s agent) looking-out for their best interests. Dual Agency is when the buyer and seller are represented by the same real estate agent. Designated agency is when the same broker represents both the buyer and seller. (For example, if a Prudential agent would represent the buyer and a different Prudential agent would represent the seller)
So why hasn’t a real estate agent ever presented this document to me? Real estate agents know that the customer may be defensive when first meeting with them at a showing or an open house. The last thing the agent wants to do is scare the consumer away by presenting them with paperwork at first impression. Many times the agent would rather not present this agreement and earn the consumer’s trust first.
The next time you are on that first showing in York with the mystery agent and they present you with a consumer notice, just smile and sign. This agent is following PA State law and is likely a very trustworthy, knowledgeable agent to work with. Click here to download a copy of the consumer notice
submitted by Philip Accardo, Realtor
I just finished reading Larry Winget’s newest book, Grow a Pair, How to Stop Being a Victim and Take Back Your Life, Your Business and Your Sanity. Mr. Winget explains, in the Preface of the book, what he means by “growing a pair”….”Growing a pair is a state of mind, an attitude, and a way of thinking. It’s about giving up being a victim and taking control of your life at every level. It is the willingness to do the right thing even when everyone else is doing the wrong thing. It has its roots in personal responsibility, accountability, confidence, and integrity. It’s about establishing a standard by which you will live your life. It’s about drawing lines in the sand. It’s about knowing yourself, knowing your values, and becoming uncompromising in your willingness to do whatever it takes to stand up for them.” [pages xii-xiii].
I’ve been a mortgage loan officer for almost nine (9) years and lived through the mortgage meltdown in July/August 2008. I’ll be the first one to admit that life has a way of happening and bad things do happen to good people, through no fault of their own. What I don’t understand is the passive nature of people when it comes to knowing what is actually on their credit report. This is your report card of how you pay your bills. I want you to put yourself in the shoes of a mortgage underwriter, the person who is putting their name and license number, on your final mortgage approval. [As an aside, all loan officers and underwriters have a unique license number that follows all loan files so if there is a default, the investors can trace who originated the loan and who ultimately approved it.] Now, imagine you are asking for a $200,000 mortgage. Knowing what is in your credit report, would you give yourself a mortgage? Do you even know what is in your credit report?
At the risk of being politically incorrect, I’m not going to sugar-coat it, but rather put it out there, straight-up, not to be offensive but to encourage you think about this from a different perspective. If your Fingerhut account (or your Columbia House DVD account or your Hamilton Collection account for the commemorative plates) is in collection status, you might want to re-think the home purchase. If you have depository banks or a credit union, showing up as a collection account on your credit report, that means that you overdrew your checking account (which is really simple, elementary arithmetic, adding and subtracting, not rocket science) and never deposited the funds sufficient to clear the shortfall. Again, it is not my intent to offend anyone but rather encourage you to take a good long look at your personal credit report.
If you are more than thirty (30) days late on a $25 minimum credit card payment for an account that has a credit limit of $300 and an outstanding balance of $298, would you, as an underwriter, be a little concerned? Let’s face it, we’ve all forgotten, for one reason or another to pay a credit card bill on the exact date it’s due. We all also know that after a few days, that collection department is calling you, reminding you that you haven’t made your payment and they call and call and call, each and every day, until you do make your payment. Being delinquent on a small credit card payment for more than 30 days, in the recent past, is not a good indication of your ability to handle a large mortgage payment. With the technology available today, there is absolutely no excuse to be late on any payments, barring an illness, job loss or death. You can set-up payment alerts that are sent by text to your cell phone or schedule e-mail reminders. You can also set-up automatic bill payments through your on-line banking bill payment center which every bank has available. There are apps for your smartphone.
Would you have cause for concern if you saw a judgment on a credit report for several thousand dollars from a real estate management company? That means that you didn’t pay your rent (your monthly housing expense!!!), your landlord sued you, won and got a judgment filed in the courthouse obligating you to pay the debt. You can’t purchase a home with an open judgment. It baffles me how someone can claim they are not aware that there is a judgment filed against them? Really??
If you plan to purchase a home, or plan to use your credit for any reason (car purchase, etc), find out what is on your credit report and get it fixed if there are errors or work intelligently to improve it. I’m not suggesting that you retain a credit repair company and pay them hundreds of dollars each and every month to simply dispute accounts/tradelines in the off-chance that a creditor will not respond within the allotted 30 day timeframe so that the derogatory remarks will get removed from your report. If you were late, you were late. If you didn’t pay an account and it went into default or charge-off status, then you didn’t pay it. Own it and take responsibility for it. It’s not Bush’s fault and the government ain’t gonna fix it. Manipulating a credit report to remove legitimate derogatory information is mortgage fraud. My suggestion….own your mess, be proactive and, most importantly, take positive steps to clean-up your “financial house”!!
Now I ask you again, knowing what you know now, would you still give yourself a mortgage?
submitted by Tammy Zambito
The postings and opinions, stated herein, are my own and do not represent Freedmont Mortgage ® Funding’s, positions, strategies or opinions.
Tammy Zambito (NMLS #68880) is a Certified Mortgage Planning Specialist® and Sr. Mortgage Advisor with Freedmont Mortgage ® Funding, 2930 Carol Rd, Ste. 2, York, PA 17402,(717) 855-2833. Tammy can be reached at email@example.com, on her cell phone at (717) 968-1224, or visit her website at www.freedmont.com/tamarazambito