HOME BUYING FOR BEGINNERS AND REPEAT SHOPPERS by Maitee Isabel Realtor

HOME BUYING FOR BEGINNERS AND REPEAT SHOPPERS Experience, Service, Results!

This SlideShow will allow you to review important information with buying a home in today's ever-changing market, STARTING by the Realtor you hire. Maitee Tapanes Realtor ® Since 2015 Buyers Agent & Foreclosed Properties Sales, Luxury Property Agent, New Construction Sales, Commercial Real Estate FIU Alumni of ‘20, MBA - Business Marketing

PartnershipRealtyPro.com PrimeLuxuryAgent.com PrimeRealestateServices.miami

Introduction The key to purchasing property in the CURRENT Real Estate market is: Financing. Therefore, we will go over ﬁnancing ﬁrst and then the buying process. In this presentation we will go over: ● ● ● ●

The Financing Situation The Buying Process The Costs Involved The Closing Process

Financing The GOOD news: Interest rates are at record lows. This has the biggest impact on your monthly payment. Here is an example: Loan Amount: $400,000 with an Interest Rate at 6% instead of 7%. Interest rate lowered by 1 % can lower your payment over $300 per month and by $100,000 over the term of the loan. Consider that although we are in a turbulent market, locking in a lower interest rate should make buying now a smart business decision.

The BAD news: The Financing Market in this country has completely changed over the past couple of years. There are a lot of products that are NO longer available. In today's ﬁnancing environment, buyers will need to have a larger down-payment if they do not have good credit, good credit and strong employment history facilitate lower down payments and easier approvals.

You must have your ﬁnancing in place before you are able to put an offer on a property.

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They don't work for any particular Bank and are able to go to different institutions to see who has the best product to match your needs. Typically a mortgage broker will have charges that a lender will not however, they may be able to get you a better deal.

How do I get my ﬁnancing In place? Either a Mortgage Broker or Lender can prepare your ﬁnancing.

Mortgage Brokers:

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Lenders: These are typically Banks, Credit Unions and other lending institutions who have a handful of loan products that may or may not ﬁt your needs.

Pre-Qualification vs·:Pre-Approval A pre-qualification letter states what the buyer is qualified to spend.

Getting your loan pre-approval allows you to close very quickly when you do ﬁnd a property.

A pre-approval involves verifying your credit, down payment, employment history, etc. Your loan application is submitted to an underwriter and a decision is made regarding your loan application. If your loan is pre-approved, when you ﬁnd a property that appraises, you are then issued a commitment letter.

A pre-approval can help you negotiate a better price with the seller, since being pre-approved is very close to having cash in the bank to pay for the property!

A mortgage pre-approval letter is more in-depth ﬁnancing qualiﬁcation.

The Loan Process HOW MUCH CAN YOU AFFORD? DOWN PAYMENT REQUIREMENTS. CLOSING COSTS. QUALIFYING FOR THE MORTGAGE.

HOW MUCH CAN YOU AFFORD? There are three key factors to consider --→

1. The down payment 2. Your ability to qualify for a mortgage 3. The closing costs associated with your transaction

DOWN PAYMENT REQUIREMENTS: Most loans today require a minimum down payment of 3.5% for an FHA Loan, and 5%-10% for conventional loans, depending on the type and terms of the loan. If you are able to come up with a 20-25% down payment, you may be eligible to take advantage of special fast-track programs and possibly eliminate mortgage insurance. Foreign nationals are required to put a minimum of 30% down payment.

CLOSING COSTS: You will be required to pay most fees for loan processing and other closing costs at closing. Fees that are paid out of pocket prior to closing, include, inspections and appraisal. Typically, total closing costs will range between 3-6% of your purchase price and paid at the end. The smaller the purchase price, the higher the percentage, due to the ﬁxed costs associated with the loan.

QUALIFYING FOR THE MORTGAGE: Most lenders require that your monthly payment range between 25-28% of your gross monthly income. Your mortgage payment to the lender includes the following items:

1. The principal on the loan (P) 3. Property taxes (T),

2. The interest on the loan (I)

4. The homeowner's insurance (I).

Your total monthly PITI and all debts (from installments to revolving charge accounts) should range between 33-38% of your gross monthly income. These percentages do change from lender to lender and the key factors will affect these numbers as well. Credit report, assets, income, and property value are the key factors determining your ability to secure a loan.

• At least 70 percent of the units in new condos must be pre-sold. • No more than 10 percent of units can be owned by a single entity. • No more than 15 percent of units in condominium can be more than 30 days past due on association fees. • No more than 20 percent of a condo can be devoted to commercial use. • All condos, new and old, must have fidelity insurance, which protects association funds from fraud. • The seller is not allowed to help with down payments or offer other perks, like deductions of association fees, unless they are disclosed. • Condos must have hazard, liability insurance, and flood insurance if property is located in a flood hazard area. • When investors buy in established projects, at least 51 percent of units must be owner-occupied.

New Guidelines for Fannie Mae Loans Fannie Mae has issued new guidelines that Florida condos must meet before it will fund loans. All these points are veriﬁed by the lender through a condo questionnaire sent to the condominium association. Fannie Mae also has a list that states the names of all already approved condos. Because a condo is not on the list, it doesn't mean that the condo will not be approved after the lender reviews the Questionnaire.

The 10 Commandments of Applying For a Loan When Applying for a Real Estate Loan...

Thou Shall not change jobs, become self-employed or quit your job.

Thou shall not buy furniture, or any other item unless extremely necessary.

Thou shall not buy a car, truck or van (or you may be living in it)!

Thou shall not originate any inquiries into your credit.

Thou shall not use charge cards excessively or let your accounts fall behind.

Thou shall not spend money you have set aside for closing.

Thou shall not omit debts or liabilities from your loan application.

Thou shall not make large deposits without ﬁrst checking with your loan oﬃcer.

Thou shall not change bank accounts.

Thou shall not co-sign a loan for anyone.

Reo and Short Sale Guidelines REO property = Real Estate Owned, also known as Bank Owned Foreclosure. It is the asset management department in the institution that handles their real estate assets and liquidates the same. A short sale is when the lender agrees to accept less than the debt owed against a property. In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or ﬁnancial hardship on the part of the borrower. This negotiation is all done through communication with a bank's Loss mitigation department. In such instances, the lender would have the right to approve or disapprove of a proposed sale. This process doesn't affect the buyer in any way, except in the time that he/she must wait for the lender's response on the contract.

Although guidelines vary from bank to bank, below are some basic conditions that must be met in order to submit an offer on a foreclosed property.

4 MUST HAVES list to BUY distressed property: ● ● ● ●

Pre-approval letter for Financing or Proof of funds if buying cash; Pre-Approval letter must state amount approved for and loan type Cleared Deposit Check; Fully refundable under terms of contract Fully Executed Contract signed by all parties No ﬁnancing contingency (cash offer) are considered the best (strongest) offers

Cash Buyers

In this market, Cash is King!

If you plan to buy and forego the loan process by paying in cash, you must provide at the time you submit your offer, proof of Funds. The acceptable form of proof would be a bank statement(s) indicating the funds available. In paying "cash" you do not have a ﬁnancing contingency and this makes your offer much more attractive and give you a stronger position to negotiate price and terms. Few contingencies on contract. Escrow deposit to be a minimum of $5,000 or 10% of purchase price, whichever is greater.

FAQ about REO & Short Sales

What if I don't like the property or change my mind?

Can I use my own title company?

You typically have 7 Days to review the property, perform any inspections necessary and decide if you like the property Your deposit is fully refundable within the review period.

Typically, the bank will require you to use their title company to do the closing when buying a REO. When buying a short sale, a lot of times the seller will select the title company, as long as they pay for the title insurance.

What if my lender can not close on time?

You may be charged late fees for any extensions. This is why it is imperative that you are pre-approved for ﬁnancing.

How did the Bank arrive at the asking price and is it a good deal?

The Bank will consult with their real estate agent & set the price below current market value for quick sale.

If there are multiple offers, how can our offer stand out?

Choose the right agent:

What If the property needs work?

Can't I see the property before making an offer?

Have the best price and/or terms Sometimes it will be in your interest to bid over the list price if the property is a really great deal. To strengthen your terms consider a larger deposit, waiving the inspection contingency, closing quickly, and showing proof of funds.

Make sure that the Realtor you choose to work with is experienced with REO & Short Sale purchases. They should be an excellent negotiator, able to structure deals to protect you, and represents you as a single agent.

The Bank WILL NOT make any repairs. They sell the property AS-IS. For this reason you have a short inspection period to make sure the property is suitable. Some are perfect conditions, some are terrible conditions.

It is recommended that you make the offer ﬁrst in order to see if you even have a chance of getting the deal. If the Bank responds and states that they will not sell at your price, then there is no point seeing it.

By making the offer ﬁrst, … you will save countless hours of driving around looking at properties that you do not have a chance of getting for a bargain. If the Bank accepts your offer, then you know that it is worth seeing, and you still have time to cancel for any reason if you feel it needs too much work or is not suitable.

The Buying Process

There are a lot of details to be handled when buying a home. It is my job to streamline the home purchase process for you, ensuring everything is completed as quickly and efficiently as possible.

Find a Realtor You Can Trust

Obtain Financial Pre-Approval / Proof of Cash Funds

View Properties

Analyze Your Needs In a Consultation

Select Properties

Write an offer to Purchase ★

Secure Underwriting

Acceptance of the Contract

Deposit Earnest Deposit

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Get Inspections Remove Contingencies

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Conditions 10

Negotiation and Counteroffer

Complete the Mortgage Application• ★ ★ ★

Credit Report Appraisal Veriﬁcations

Contact Title Company

Obtain Loan Approval

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Take possession of your New Home

Title Exam & Title Insurance

Schedule Termite & Survey

Close on the Property

FAQ about The The Money Up-Front

Money Up-Front

Description

1st Deposit

When you are ready to look for a home and make an offer, most sellers require at least S3000 deposit to consider your offer and must be deposited into the escrow account of a local Title Agent or Attorney's Escrow Account within 24-72 hours of acceptance of your offer.

Credit Report & Appraisal Fee

Typically the lender you choose will charge between $400 and S600 as the application fee. This charge is non-refundable and covers the cost for an appraisal and credit report

2nd Deposit

Typically after your home inspection period (5 to 7 days), an additional is deposited equal to a 3% to 5% of the price is required by most sellers. This is to give sellers conﬁdence that you will proceed with the closing.

Inspection Fee

Home Inspection It is highly recommended that you obtain a professional home inspection to ensure that you are purchasing a property free of major defects for warranted Items. It has been our experience that most homes have at least $2500 of deﬁcient items. The cost of an inspection ranges from S300 to $450 for a condo and S500 to S1500 for a single family home.

Condo Assoc App Fee

If there is an interview required by an association, they typically charge a non-refundable screening fee of S100-$200 to perform a background check.

Condo Questionnaire

Banks are requiring that associations ﬁll out a questionnaire to determine the disposition of the ﬁnancial state of the building. This usually cost about $125.

How much are typical closing costs? Paying Cash Condominium House

Your loan

oﬃcer will

Less than 1 % of the purchase price.

4-5% of purchase price.

5-6% of purchase price. (insurance paid at closing)

Provide a Good Faith Estimate which will itemize all your closing costs within 3 days of Application.”

What if I ﬁnd a For Sale By Owner?

What are my Property Taxes?

Typically For-Sale By Owners want to avoid paying two commissions (one for the listing agent and one for the buyer's agent), that Is why they are For Sale By Owners. Let them know that your agent will contact them to make a formal offer.

When you purchase property, your property taxes are the same as the current owner's during the year of purchase. The county will re assess the property value on a yearly basis based on the new owner's exceptions, if any.

By having us negotiate your purchase, a FSBO will only have to pay one agent and thus still save money. While receiving professIonal assistance to make the transaction go smoother.

Property taxes are approximately 1.75% to 2.00% of the property value, depending on the City where the property is located. The only difference is how they get raised or lowered after you own. Homestead property tax raises are capped at 3% per year, while there are no caps for second homes and investment properties.

Can I own In Corporation Name? Purchasing in Corporation Name is common. It is very easy to set up a Corporation in Florida, and it only takes a few days. You can do it yourself, or pay an attorney to do it for you. There are tax consequences, please consult a qualiﬁed tax advisor.

How is my real estate agent compensated? The agent and brokerage ﬁrm are only paid once you close on your purchase by the seller.

COMMON TERMS

INSPECTION

We recommend being present at the inspection, if possible!

The inspection will include the following:

ESCROW DEPOSIT 1st and 2nd Deposit, credited to your purchase price

APPRAISAL

• Appliances

Required for ﬁnancing, optional for cash purchases

• Plumbing • Electrical • Air conditioning and heating ventilation

TITLE INSURANCE 2 types: 1- Coverage that protects the lender for the amount of the mortgage 2- Coverage that protects the value of the property. Title insurance is required when ﬁnancing the purchase of a home and optional if paying cash.

2 types: 1- Coverage that INSPECTION protects the lender for the PERIOD amount of the mortgage 25-10 Days that to inspect thethe Coverage protects property andproperty. renegotiate value of the cancel contract or move forward. The inspection is not designed to criticize every minor problem or defect in the home.

• Roof and Attic • Foundation • General Structure

In-House Lenders and Title

MORTGAGE LENDERS DOING LOANS ANYWHERE IN FLORIDA Any inquiries? We are here for you, 07 am to 10 pm, Everyday, to help you and reply within the hour.