Owning a home - the Consumer Financial Protection Bureau.

Thinking about owning a home one of these days, even if it is not going to be very soon?

A good way to start is of course to talk to a Realtor® (not just a real estate agent).  A Realtor® is a member of the National Association of Realtors®; he adheres to a very strict code of ethics. Not all agents are Realtors®!

Some of us however like to do some research first, investigate and read about a subject, and be comfortable before making a move. 

A very good place to start, which is not very well known, is the Consumer Financial Protection Bureau which was created right after the 2008 financial meltdown.  Their “Owning a Home” page is really comprehensive, full of essential information about the whole process.  It touches on the financial aspect of the journey to owning a home (loan options, rates etc…) to the actual procedures of closing such a transaction.  By the way, these procedures include new documents and disclosures  that will be taking effect on August 1 of 2015.  The old closing documents and forms will be shelved.

In the financial part, you will see that no one can quote you a rate right off the bat, without knowing a good deal about your personal situation.  So, when you read about that fabulous rate in the paper or in an ad, you’d better be careful, - it is probably for the cleanest, richest, ideal top-credit-rating person   My advice is rather to choose a loan agent whom you know will look out for the best loan for you when the time comes (not necessarily the cheapest).  You will also see that depending on the type of loan, you can borrow more or less…
that walked on the surface of this earth.

As far as the details on the procedures, paperwork, customs and uses, and the most efficient ways to go about doing your search and purchase, I’d go back to your Realtor® of choice - the one whom you know will look out for your best interest.

Thanks for reading!

 

Francis
 

Silicon Valley real estate

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Buyers: the advantages of preapproval...

The advantages of preapproval.

The housing market is warming up in many areas, with multiple offers becoming more commonplace. Buyers who want an advantage in the bidding process will need more than a mortgage prequalification – they will need a preapproval.

The differences between mortgage prequalification and preapproval are significant. Prequalifying for a mortgage is based solely on what a borrower discloses to the loan officer or broker about his/her earnings, credit score, and total assets, including what is available for a down payment. By contrast, a preapproval requires a borrower to provide documentation of his/her income and assets and everything else.

The lender typically pulls the borrower’s credit report and score, while the borrower gathers together almost everything else needed for the actual mortgage underwriting: W-2 wage statements; 1099s; recent pay stubs; bank statements; and statements from Individual Retirement Accounts and 401(k)s; and other assets that could show the borrower has the resources to buy and maintain a home. 
-- An important note here: depending on your qualification, the loan will have a different cost !  Shopping for a loan is therefore often elusive: one would have to apply to different lenders to truly know to compare their rates, at the same given time (rates change several times a day, within the same organization).

A preapproval means that the file has gone through the underwriter of the bank/lender.  If approved, it is nearly certain that the loan will be granted to the buyer, subject to the specificities of the property itself, and a few other standard necessary conditions (like proof of insurance, and such...).

With so many homes receiving multiple offers, a preapproval is essential in today’s marketplace.

The preapproval letter should include the amount a borrower is qualified to borrow, as well as the loan officer’s contact information, and mention that the downpayment has been verified.

I personally advise buyers to obtain a preapproval letter for the maximum amount allowed, under the reasoning that the more qualified you are, the better you can negotiate.  If you borrow a lot less than you can, you advertise that there won't be any problem with you getting a loan.  Case in point: a cash offer is going to be always more attractive for the seller, right off the bat: there won't be any problem with obtaining financing....  What the seller wishes is the best assurance that the buyer he/she chooses is going to close the transaction.  Otherwise, the penalty is: wasting precious marketing time, at the beginning of the marketing period, which is the most important period in the property's listing cycle. 

You can see all the details in this article of the New York Times.

Thank you for reading, and if you have any particular experience in this domain, good or bad, I'd love to hear it ;-)

Francis

Silicon Valley Real Estate

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