An Obligation to Educate

An Obligation to Educate

Anyone who writes about real estate has an obligation to educate newbies in real-estate lingo, like closing costs and home inspections. When you enter the real estate market you might feel, justifiably, that you must jump in quickly.

What Are Closing Costs?

Investopedia defines closing costs as “…the expenses over and above the property’s price that buyers and sellers usually incur to complete a real estate transaction.”

Those costs may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed recording fees, and credit report charges.

Home Inspections

The home inspection is a limited, non-invasive examination of the condition of a home, often in connection with the sale of that home. Home inspections are usually conducted by a home inspector who has the training and certifications to perform such inspections.

An Obligation to Educate

According to NBC and MSN, “Your offer will likely be up against other buyers, so educate yourself with your agent on what terms like earnest (money) deposit, appraisal contingency, home inspection contingency, and appraisal gap mean before viewing homes,” Jessica Lautz, vice president of demographics and behavioral insights for the National Association of Realtors suggested.

Earnest money is the deposit you put down on the property you’d like to buy. It shows good faith, and the funds eventually go toward the down payment and closing costs. An appraisal contingency is a provision in your contract that allows you to back out if the appraisal price comes in lower than the sale price. That difference in the appraisal and sale prices is known as an appraisal gap.

Similarly, a home inspection contingency gives you an out if there are issues that arise during the home inspection. In both cases, you can also try to negotiate with the seller instead of pulling out of the sale.

Since competition is so fierce, many buyers have been waving contingencies in order to get a leg up.

Tackle Debt

Mortgage lenders will look at your debt-to-income ratio, which is the amount of debt relative to your income, when determining your loan. If you have debt, try to pay it down before you start house hunting, Lautz advises.

Consider using any bonus money or cash gifts to pay debt off. If you don’t have debt, woo hoo, put that cash into savings to help with your down payment.

Know Your Credit

Your credit score is also an important factor in getting a mortgage and the type of loan you’ll get. Your credit score also impacts the interest rate you’ll receive and potentially how much money you need for a down payment.

By checking your credit score ahead of time, you’ll know whether you’ll need to make any changes or adjustments to try to increase that number.

Also, get a copy of your credit report to check for any errors or unpaid bills, which may also affect your credit score. Consumers can get their credit report up to once a week for free from the nation’s three largest credit reporting firms — Equifax, Experian, and TransUnion — through April.

Talk to A Mortgage Lender

Reach out to a lender as soon as possible, at least to ask questions and find out what they need from you in order to preapprove a mortgage.

Your lender, using online calculators,  can help you figure out what you can afford and whether it makes sense to buy or rent. You’ll also want to know how much money you’ll need to bring to closing, since there are fees — known as closing costs — that are due in addition to your down payment.

You can also get preapproved for a mortgage before you start house hunting, since you’ll need it before you submit a contract for a house.

Have a Budget

Just because you are preapproved by a mortgage lender for a certain amount of money to spend doesn’t mean that is your budget.

Look at your monthly expenses to determine what you can afford to pay each month. Don’t forget about interest rates. If they continue to rise before you close on the home, they will increase your monthly mortgage payments.

Consider expanding your market, if possible, to find lower-priced options.

“This is the time to go to overlooked areas if there are any in your market,” Lautz said.

FREE information on How to sell your house fast

Styl Properties, Inc. is here to help homeowners out of any distressed situation.  

As investors, we are in business to make a modest profit on any deal. However, we can help homeowners out of just about any situation, no matter what!  There are no fees, upfront costs, commissions, or anything else.  We offer the simple truth about your home and how we can help you sell it fast.

Give us a ring. We would love to help you understand the process and to answer all of your questions. You can reach us at 402 999.0577

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