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How Do I Make an Offer When I Buy a House?

It’s exciting when you make an offer on a house. You’ve spoken with your lender, understand how much you’re qualified to purchase and have now decided on a home you love.

You’re ready to take the next step, but don’t take this part of the process lightly – it’s very important. And if your offer is accepted, you will be legally bound to the contract.document-428338_1280

Here’s how ensure your offer makes good sense.

  1. Low offers don’t always win

In a market where inventory is low, there usually are multiple offers and making a low offer will not get you the home.The first thing you need to know is that you don’t HAVE to make an offer below asking price on any house. Rely on your real estate agent to guide you into the proper price and know if the home will have multiple offers. If you love the house, and it’s priced right already, you could be taking a risk by making a low offer.

The best deals on the market still sell quickly, with much demand, and houses that are bargain priced don’t last long. It’s just that the “bargain prices” are much lower now than they used to be. So, if you find a house that you absolutely love, and it’s already priced right—think carefully before you make a low offer. Someone else may snatch it up first.

  1. Determine the Value

The first step in making an offer on a house is to determine the value of the home. Your real estate agent can do a lot of the legwork for this part. Gather a list of “comp’s” (or comparables) in the neighborhood. These are similar properties that have sold recently. Focus on the sold houses, and the current listings that are available in your area. The fewer homes on the market, the higher the demand.

Make adjustments in price for differences in the homes, such as:

  • Living area square footage
  • Number of bedrooms
  • Number of bathrooms
  • Lot size & location
  • Extras, such as a pool or fireplace
  • Condition

Rely on your agent to know the price you should offer as they talk to other agents, know what price other similar properties sold for,  how many other offers will be on that property, and can tell you whether they feel your offer price will actually be competitive enough to potentially get the home into contract.

  1. Contract Contingencies

After you’ve decided on an offer price, have your real estate agent write it up. There will usually be appropriate contingencies to the offer, for appraisal, financing, etc. A contingency is a condition that must be met before the contract becomes fully valid. Some people, in order to have a more competitive offer, write without a contingency. If you are financing the new home, you will need a contingency “unless” you have a full approval from your lender before you offer. Many lenders offer full credit approvals, where you can go into an offer w/o the financing contingency, and just need to ensure the property appraises and has no other issues. No financing contingency helps out tremendously when you are competing with “all cash offers”.

Another contingency is for home inspections. You’ll usually want a general home inspection to ensure that the house is actually in the condition you expect. Often sellers already have the inspections for you to review before making an offer so check with your agent as this will save time and money.

It’s an exciting experience to buy a house in the Bay Area. But before you do, make sure that you make a smart offer on the home. You want your offer to allow you to get the right price on the home, plus you want to make sure that you’re protected in the process.

In buying a home, work closely with your real estate agent, and your loan agent, and you will save yourself a world of trouble down the road. The path to homeownership is exciting, when you work on it correctly. To learn more about purchasing a home in the Bay Area, contact me today. I would love to help you through each step of the loan approval process.

Contact me today at 408-506-0542, or email to kcimera@goloanstar.com.

www.karencimera.com

Loan Star Lending NMLS# 181709 – CA# 603K799

6 Types of Mortgage Loans for Homebuyers

If you are in the market for a new home, it’s important that you know what types of loans are available to you.

Whether you have perfect credit, a few financial blemishes or are just starting out in life and want to own a home, understanding your options will prove to be invaluable during your house-hunting excursion.medium_11705392445

Fixed Rate Mortgage

A fixed rate mortgage is one of the most popular home loans and is commonly available as a 15 or 30-year term.

Because it offers the borrower an assurance that both the principal and interest will remain the same throughout the term of the loan, a fixed rate mortgage is ideal for many.

Adjustable Rate Mortgage (ARM)

An adjustable rate mortgage, also referred to as an ARM loan, is one in which the interest rates adjust according to the current market.

This means that interest rates can either increase or decrease at regular intervals, based on established market indexes.

Short-Term Fixed/ARM Options

These are 30-year mortgages that are fixed for the initial period of 3, 5, 7 or 10 years.

They give you lower starting rates, and payments, and are meant for buyers who may not live in their home longer that that initial fixed period; or for people who might look to refinance in a few years, as rates can be as much as 1% lower than a straight fixed option.

FHA/VA Loan

An FHA and/or VA loan are mortgages that are guaranteed by the government.

An FHA loan is easier to qualify for than a conventional mortgage, requires a lower down payment, lower credit scores, and will allow higher “debt to income ratios in qualifying”…..these loans are guaranteed by the Federal Housing Authority. A VA loan, which is for veterans only, is guaranteed by the Veteran’s Administration.

Construction Loan

Construction loans are available for borrowers who are purchasing or building a newly constructed home. These loans, which are offered at adjustable rates only, require more paperwork, down payment, and inspections than a conventional mortgage.

They are short term financing vehicles, that are only in place while you build your home. When the home is completed you will have to get a new loan, called a “take out mortgage” which will be a standard fixed, or adjustable rate loan to pay off the construction financing.

Owner Financing

Many homebuyers, especially those with limited or poor credit history, may prefer to seek owner financing when purchasing a new home. Because the approval requirements are typically less, , buyers may not be judged for past credit problems. Finding a home where the seller is able to carry the financing for you is often a challenge as they usually need your new financing to pay off their debt. You would need to look for a seller who has a large equity position to handle this.

To learn more about what you should do before you buy your first home in the Bay Area, contact me today. I would love to help you through each step of the loan approval process.

Contact me today at408-506-0542, or email to kcimera@goloanstar.com.

www.karencimera.com

Loan Star Lending NMLS# 181709 – CA# 603K799

 

 

Want To Buy A Fixer-Upper? Be Sure To Read This First

A lot of people prefer to purchase a house that needs a bit of work in order to save a few bucks on the purchase price. However, what many of them fail to understand is that the price is likely to be lowered for a reason, and the investment that you might have to put in to get it fixed is sometimes going to be significantly more than the difference in the price. 4664757985_8e20a72f89

Of course, purchasing a fixer-upper can also be the sweetest deal that you’ve made, but there are things that have to be considered.

Will the House Stand Up?

In order to buy a fixer-upper that’s worth your time and money, you have to make sure that the structure is intact.

If there are structural problems with the house, you are better off without it. They are incredibly expensive to fix, and in a lot of situations, you’d need to tear it apart and bring it back up, which is likely to turn out to be quite costly.

Consider the “Membrane” of the House

The membrane of the house is the cladding and its roof. These are also among the things that you might want to check before buying a “fixer” home.

If you buy a fixer-upper with a leaking roof, and need to replace it, that is one of the costliest repair items in a home, and would need to be budgeted for.

A good home inspection, prior to making the decision to buy, will show you anything that will potentially be “an issue”.  Home inspectors will go through the entire home, from top to bottom and tell you everything you may potentially have issue with.

Buying a fixer-upper can be a great way to save a considerable amount of money, and turn the home into just what “you want”, but you need to ensure that the house is in overall good condition.

The best case scenario would be for you to only need to “freshen up” the place with cosmetic reconstructions. These include items such as new carpet and paint, which will provide an updated look and feel, without the large price-tag. Bathrooms and kitchens can be quite expensive to redo.

Pay attention to the details when looking to buy, and know your options. Call me today to review financing options.

Karen Cimera  

Top Three Housing Concerns of Millennials

The millennial generation is the largest one in US history, even larger than the baby boomer generation. You are considered a millennial if you were born between 1980 and 2000. This age of the population, has very different world views because they have grown up in a world filled with fast-paced technological changes, along with some great economic disruption. Millennials haven’t been eager to leave their parents home and many have found buying conditions difficult. 26843056822_74210651b1

As Jed Kolko, Senior Fellow at the Terner Center for Housing Innovation, writes:

The share of young adults living with their parents increased in 2015…. One contributing factor is that 25-34 year-olds are decreasingly likely to be married or cohabitating with a partner, and – unsurprisingly – married or cohabitating young adults rarely live with their parents (just 2% do) compared with 31% of those who aren’t living with a spouse or partner. The decline in marriage among young adults is a long-term trend, pre-dating the recession.

But now is the time to buy!

Below are the top 3 housing concerns faced by many millennials. My hope is to help you see (if you are a Millennial) that these fears aren’t great enough to keep you from taking the plunge into homeownership.

The “Trust Crushing” Housing Crash

Many millennials have lived through a major economic disaster with the collapsing economy, their parents losing jobs which forced many of them to leave their comfortable homes for parts “unknown”. The psychological affect this has had on them has created trust issues, and that may be one reason that Millennials are in “no hurry” to buy a home.

The great news is that times have changed. The economy, especially here in the Greater San Francisco Bay Area, has rebounded nicely. This makes now an excellent time to consider homeownership.

Many Parents Can’t Afford College

While many parents suffered from an economic downturn, to make “ends meet” they blew through any college savings that had been set aside, just trying to stay afloat.  This meant that many Millennials had to finance their own college education. They wanted a college education to be able to meet technological demands in their world, but mom and dad could often no longer provide that to them. So what then?

After graduation, these Millennials, who were just entering into the work force, ended up doing so with a “mortgage-sized” student loan having to figure out how to pay that back.

While financing another large purchase might be a scary step to take, it’s far more affordable to buy than to rent in many situations. Taking the time to understand the long-term benefits is something every Millennial needs to see in detail.

Economic Trend Fear

Millennials wonder where the world will be in 5, 10, and even 30 years, because so far, the trends they remember have not been economically positive. With the housing market crash, why would they want to invest in a thirty-year loan when it could crumble at their feet at any moment?

Helping Millennials understand the stability within today’s marketplace is the key to moving them from their parents’ home and into a home of their own.

Millennials have a completely different view of the world around them than their parents. They are slow to marry and move out, but that doesn’t mean they don’t deserve the American dream.

There is plenty to be optimistic about within today’s housing market, so take the time to find out why “now” might be the perfect time to actually “buy a home”. Contact me today!

 

 

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