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BUYER’S GUIDE TO SHORT SALE OR BANK OWNED PURCHASES
Many prospective buyers are hearing about great “deals” to be had by purchasing a “Short Sale” or Bank-Owned property. While purchasing a property under these conditions may provide a unique buying opportunity, there are also certain challenges with these types of transactions. As your real estate advisor, I want you to be the most informed buyer in the marketplace and knowledgeable about these potential challenges before you start looking for your next home.
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Closing Costs: What To Expect
Closing Costs Explained
Securing the Best Mortgage
In today’s credit market, getting the best mortgage for your needs seems like a daunting process. But there are steps you can take now to make your search for the right mortgage easier.
The first step is to answer a few of questions. How long will you be in this house? Is it a starter home or some kind of transitional residence? Or is this a home you plan to stay in for a long time?
You also need to determine what type of payment you can afford, factoring in all of the costs associated with owning a home: insurance, property taxes, maintenance costs, etc. Be realistic about what you’d do if something needed repair, i.e. can you afford a new roof if necessary?
Gather all the necessary paperwork: social security card; paystubs and W2s; bank, investment, and retirement statements; credit card account information; vehicle make and resale value, and any outstanding auto loans; and current mortgage and home equity information.
Know your credit history. Visit http://www.annualcreditreport.com/ to review your credit report. This information will help you report and fix any errors and work to improve your overall score. It’s a myth that you must have perfect credit to secure a loan in today’s market, but it is an integral part of determining if you qualify and what the terms of the loan will be.
Work with a mortgage professional to get prequalified. This will help you not only decide how much home you can afford, but it can speed things along when you do find the home of your dreams.
I’d be happy to connect you to my mortgage consultant if you would like more information about securing the best mortgage.
FHA inspections vs. home inspections
There is an enormous difference between a home inspection and an appraisal — even an FHA appraisal — and homebuyers need to be aware of this.
Many homebuyers have made the mistake of equating a home inspection with an FHA inspection. They rely on the findings of an FHA appraisal report and forego the services of a home inspector. Then they move into the home, discover undisclosed defects, and wonder what went wrong. The intent of my article was to prevent that kind of disappointment.
The primary purpose of an appraisal is to measure the fair market value of real property. FHA appraisals go a step further by reviewing the general condition and operability of various building components and fixtures. But compared with a thorough home inspection, an FHA inspection is a general overview at best.
Some FHA appraisers will disagree with this opinion, but we are discussing two entirely different kinds of inspection, with divergent standards for evaluating property conditions.
If you disagree, then compare the following job description with an FHA inspection:
- Home inspectors walk on roofs, climb through attics, and crawl through foundation subareas.
- They inspect the innards of fireplaces and chimneys, evaluate spark arrestors and chimney caps, remove the covers from circuit breaker panels, and test outlets for grounding, polarity and GFCI compliance.
- They inspect water heaters for function, safety, and proper installation (including gas connections, exhaust venting, fire clearances, operability, and more).
- They inspect garage firewalls, evaluate site drainage, operate and test built-in appliances, and evaluate heating and air conditioning systems (including burners, gas connections, exhaust venting, fire clearances, condensate drainage systems, and so on).
- They test the operational condition of sinks, showers, tubs, and toilets (including the insides of tanks).
- They verify proper room ventilation, fire escape compliance for bedrooms, smoke alarm compliance, garage door safety compliance, pool fence compliance, water pressure compliance, and various conditions involving fire-safety for wood stoves and gas-burning fixtures.
- They check for fogging between dual pane windows and for signs of past or current building leakage (whether due to faulty plumbing, defective roofing or groundwater issues).
- They evaluate physical damage, deterioration, improper construction, noncomplying installations, evidence of building settlement, and much, much more.
FHA inspectors do not spend three or more hours on site to conduct this kind of in-depth visual examination of a home. They inspect according to Federal Housing Administration standards, which are far less exacting. Home inspectors do something that is entirely different, utilizing different procedures, based upon different standards of practice. To equate one type of inspection with the other can be a costly mistake for homebuyers.