Real Estate Buyer FAQs

Homeownership is a common goal shared by many in the United States. Buying a home may be one of the biggest investments we make in life and is a rewarding accomplishment! Although many share the dream of owning a home, it's common for most people to be scared about following through the process. This is due to the homebuying process feeling intimidating or overwhelming, but it doesn't have to be! Working with the right real estate agent will make the process go smooth and easy. The expert agents at Choice Properties have answered your real estate buyer questions to help put your mind at ease.

Am I ready to be a homeowner?

The first step from taking the leap from being a renter to a homeowner is viewing your current financial status. Start by taking a financial inventory of your lifestyle, debts, and assets. Lenders look for those who hold a strong financial status and reliable job, as a mortgage loan must be paid on time. Another factor to consider is your credit score. Maintaining a good credit score will help you get the best loan and interest rate.

Is renting or buying a home better?

While renting and buying both have pros and cons, it simply comes down to what a person wants when buying a house. Many look at this opportunity as an investment and take pride in homeownership. This allows you to build equity with monthly payments, while also qualifying for tax incentives to help offset new homeowner expenses.

What do I look for in a new home?

When starting your home search, start by gathering your thoughts by creating lists. Identifying what you are seeking in a home, whether it's more space or a large backyard. This will help set expectations within your home search. Ask yourself if the home you are interested in is large enough to fit your needs now and in the future.

How do I get a mortgage loan?

Before setting up appointments to tour homes, it's best to shop for a mortgage rate to understand your budget. In the pre-qualification phase, you are given an estimate of what you can borrow based on your financial status. To be pre-approved for a mortgage loan means a lender has agreed to offer you a specific amount.

Choice Properties understands your needs and desires when it comes to the home search. We are here to help you define what you want, seek the best property and move forward feeling educated and able to make good decisions throughout the process. You can trust us to help you navigate it with the best real estate agents working for you. Call us to get started on your dream home search today.

What's the Difference Between a Fixed Rate and an Adjustable Mortgage Rate?

Taking on a new journey of buying a home is an exciting time, but also comes with creating a budget and researching loan options. You may be asking yourself, what's the difference between a fixed rate and an adjustable mortgage rate? While the marketplace offers a wide variety of loans within these two categories, the first step when researching mortgage options is determining which of the two main loan types fit your needs.

Fixed Mortgage Rate

A fixed rate mortgage is a well-known loan option, especially for those looking to buy their first home. During this loan option, the interest rate is set for a certain amount of time, ranging from 10, 15, or 30 years. During that time, the interest rate does not change giving homeowners a state of certainty.

Adjustable Mortgage Rate

The second loan option is an adjustable mortgage rate. Unlike a fixed rate, this option means your interest rate can change periodically meaning monthly payments could go up or down. Adjustable rates typically start with a low interest, but will rise as time goes on, also rising your house payments.

One of the most difficult decisions most homebuyers will deal with is choosing between a fixed loan or adjustable loan. At Choice Properties, we understand each buyer situation is different, motivating us to ensure your home needs and desires are met.

Choice Properties understands your needs and desires when it comes to the home search. We are here to help you define what you want, seek the best property and move forward feeling educated and able to make good decisions throughout the process. You can trust us to help you navigate it with the best real estate agents working for you. Call us to get started on your dream home search today.

5 Ways Homeowners can Avoid Foreclosure and Rebound

Owning a home comes with the responsibility of not only maintenance, but a financial obligation to pay a mortgage. As life happens, individuals may be presented with challenges and financial stress that can result in missing a payment. If several payments have been missed without contact with the homeowner's leasing company, a foreclosure might be presented by the lender. Although this is one possible outcome of falling behind on mortgage payments, there are several ways to avoid the foreclosure process even if a homeowner cannot afford the debt. The expert realtors at Choice Properties have listed 5 ways homeowners can avoid foreclosure, and rebound out of the rut.

Foreclosure Workout

During the time between the foreclosure announcement and the house auction, lenders are encouraging a compromise rather than proceeding with the auction. Lenders want to see homeowners stay on the right track, and are willing to negotiate a mortgage payment suitable for the current lifestyle.

Short Sale

Following the Notice of Default filed by the lender, but before the auction, there is a time where new potential buyers could make an offer on the house. If an offer is made on the house, lenders have the ability to consider accepting or declining the offer. If the homeowner presents a reasonable short sale offer, the lender may see this as saving them the time and effort of finding a qualified buyer in a soft market.

Bankruptcy

The only option to immediately stop foreclosure is to file for bankruptcy. Once bankruptcy has been filed, federal law prohibits any debt collectors from continuing collection activities, including foreclosure. This means the homeowner will face the creditors in court, buying the homeowner more time to recover financially. This law requires mortgage companies to work in-hand with homeowners, compromising to find the right solution.

Deed in Lieu

In this step of the foreclosure process, homeowners voluntarily sign the deed of the home over to the bank. Although this option sounds easy, it can significantly impact a homeowner's credit score. Lender's can be reluctant to sign over the home, as they fear homeowners are manipulating the system and being dishonest about their financial stress. This makes it difficult for lenders to agree to a deed in lieu.

Assumption/Lease-Option

Most loans in today's world are no longer assumable, meaning the average mortgage contains a clause where the borrower agrees to pay off the loan entirely. If a homeowner is facing foreclosure, they may have the advantage of persuading their lender to modify the loan. This allows another buyer to assume the loan, making it a win-win for all parties.

Consider taking action to avoid home foreclosure, rather than ignoring the situation. There are multiple ways homeowners can steer clear of a completed foreclosure, all of which are easy to navigate.

Choice Properties understands your needs and desires when it comes to the home search. We are here to help you define what you want, seek the best property and move forward feeling educated and able to make good decisions throughout the process. You can trust us to help you navigate it with the best real estate agents working for you. Call us to get started on your dream home search today.

Looking to purchase a new home or refinance requires an understanding of the basics of qualifying for a mortgage. It helps to know some basic steps can help prepare for what is ahead. Learn how to be in a position ahead of time to get the best deal available.

Credit

A credit report is required from three major credit bureaus to document payment histories for auto loans, personal loans, credit cards, debt collections or other negatives. Credit scores are considered a predictor of lending risk. The higher a score, the better it looks to a potential mortgage lender. The following factors may also play a role in credit scores:

• Debt payment history, including late payments can influence credit score

• Credit card balances of more than 30-50 percent of credit limit can have a negative impact on a credit score

• Collections can damage your credit score but can be negotiated with the agency

• Bankruptcies and foreclosures have a general waiting period of around 2-4 years following insolvency prior to qualifying for new mortgage financing

Capacity

A mortgage lender wants to know an individual has the financial ability to repay a home loan. W2 income (working for somebody) is considered the most stable source of income which varies little from month to month. Self-employed income is riskier in a lender's eyes as it can vary widely month to month in terms of generating revenue to pay a loan. Some helpful hints include:

• Document income with W2s, paystubs and tax returns to demonstrate financial stability

• Self-employed individuals will be required to document income on tax returns and should be prepared to show the documents to potential lenders

• Debt-to-income ratio is important as it shows what proportion of income goes to debt payoff and risk for lending. Typical DTI should be lower than 45%-50% going to debt.

Collateral

The property being purchased will serve as collateral for the mortgage. A lender will look at the value of the property as one of the most important factors. A full appraisal may be required to verify the value and condition of the property.

Getting Started

The following are some great next steps to take when looking to take out a mortgage for a property:

• Check credit and make sure any issues are cleared up ahead of time.

• Pay off outstanding debt before applying for a loan. The lower the DTI ratio, the easier it is to get desirable financing terms. This can save money in the long run.

• When refinancing, take care of necessary repairs before having an appraiser come out. This will help the home value.

Having a financial portfolio that looks solid, has low debt and high credit scores can greatly increase the chances for getting a mortgage with better financing terms. Understanding how lenders think and preparing the portfolio will help individuals prior to applying for a loan search for a great deal and support a smoother process overall.