FAQ

Victoria and Brian Vaillancourt 208.661.9238

Closing Costs explain in this video....just click on the link:

http://www.youtube.com/watch?v=fifp2mLGoWc&feature=related

Home Buyers Guide.

Buying your new home is a serious venture. It can be an absolute pleasure or a massive headache. Your house is not just your home, it is a serious investment in the dwelling, the area and your future.

When buying a home – you’re bound to have many questions. For example, ‘In what area can I find a home that suits my needs?”, “How much money will I need to afford the monthly payments?” and “How long will the home buying process take?”

We have put together some information that you might find useful in the home buying process.

Below is some general mortgage information along with a summary of several loan types and definitions of some common terms.

When should you call a mortgage Lender?

This should be your first step for many reasons:

If you have financing pre-arrange, you are less of a risk to the seller and can often negotiate a better deal. Many sellers won't accept an offer unless you are pre-qualified. Even if they do, you will usually be required to provide a Conditional Loan Approval within 5 days of contract signing. Ideally, you should get pre-approved, but at a minimum, you should be pre-qualified with a lender you trust before you begin shopping for a home.

You need to know what type of loan you can qualify for prior to finding a property. This is because some seller will not accept a contract if the buyer is going to use a VA or FHA loan. Other sellers will accept the contract but won't negotiate as much on price. This is because VA and FHA loans can require the seller to pay for certain items that could otherwise be paid by the buyer. In other words, a VA or FHA buyer will generally cost the seller more at closing.

Some lenders will not finance certain types of properties at all. Condominiums , for example, can present several obstacles. First, to use a VA or FHA approved loan, the complex must be a VA or FHA approved project. Some condominiums are even difficult to purchase with a conventional loan. Lender determine approval based on may factors such as the percentage of renters vs. owners in the complex. Also, if one individual owns over a certain percentage of the units in the complex, some lenders will not fund a loan for properties in that complex at all.

Some lenders will not finance manufactured homes at all. Most lenders today will not finance manufactured homes in parks on rented lots. Some will only loan on a manufactured home set as 'real property' when it is on it own land. Lending on manufactured homes that were made prior to 1979 or are not HUD approved homes are almost impossible to obtain traditional financing and most must be purchased with cash.

You don't want to look at houses you can't afford. Not only is this a waste of your time, but it's extremely difficult to find a 'Chevrolet' that you like after you have been test driving 'Cadillacs'. In other words, if you can only qualify for $160,000 loan and you've already been looking at $250,000 houses, those $150,000 house suddenly don't look so great in comparison.

How Much House Can You Afford?

Determining how much home you can afford, or what payment you feel comfortable with, can be a trying process. Calling lenders, looking at mortgage loan programs and interest rates can be confusing, to say the least. There is an easy way to get started, and give yourself an idea of where you stand.

The first step is to find out what mortgage interest rates are at the current time. You can typically do this with a couple of phone calls to lenders or some quick searching on the internet. Get your rates on conventional fixed rate loans.

To obtain a very clear picture of how much home you can actually qualify for, the best idea is to contact a reputable local lender and let them analyze your entire situation. The lender can calculate your income-to-debt ratio, do a quick credit score and give you the information you need. Typically, lenders like to see a ratio not exceeding about 28%. This does not take into consideration long term monthly debt. As an example, to qualify for a loan, lenders may require ratios of 28% or 36%. This means you can spend up to 28% of your gross monthly income on a mortgage payment, and no more than 36% of your gross monthly income on all forms of debt, mortgage included.

Closing Costs Explained

Here is an overview of the types of closing costs you may incur on your loan. Some are one-time fees, while others reoccur over the life of the loan. When you apply for your loan, you will receive a Good Faith Estimate of Settlement Charges, and a booklet that will explain these costs in detail.

Loan Origination Fee: This fee covers the lender's administrative costs in processing the loan. It is a one-time fee, often expressed as a percentage of the loan. The origination fee is typically 1% of the loan, but remember, you can obtain a loan with no origination fee and a slightly higher interest rate.

Loan Discount: Often called "points", a loan discount is a one-time charge used to adjust the yield on the loan to what market conditions demand. One point is equal to 1% of the loan amount. This fee is rare when interest rates are low.

Appraisal Fee: This is a one-time fee that pays for an appraisal, which is a statement of property value viewed by the lender. The appraisal is made by an independent fee appraiser and can cost a standard $400 to $550, or much more, depending on the home's size and location.

Credit Report Fee: This one-time fee covers the cost of the credit report that is run by an independent credit reporting agency.

Title Insurance Fee: There are two title policies: a lender's title policy (which protects the lender against loss due to defects on title) and a buyer's title policy (which protects you). These are both one-time charges.

Miscellaneous Title Charges: The title company may charge fees for a title search, title examination, document preparation, notary fees, recording fees, and a settlement or closing fee. These are all one-time charges.

Document Prep Fee: There may be a separate, one-time fee that covers preparation of the final legal papers, including the note and deed of trust.

Lender Fees: Other lender fees include an underwriting fee, a flood certification fee, an amortization schedule fee, and other miscellaneous fees that should be disclosed by your mortgage lender at loan application. These fees vary.

Prepaid Interest: Depending on the time of month your loan closes, this charge may vary from a full month's interest to just a few days' interest. If your loan closes at the beginning of the month, you will probably have to pay the maximum.

PMI (Private Mortgage Insurance) Premium: Depending on the amount of your down payment, you may have to pay an up-front fee for mortgage insurance (which protects the lender against loss due to foreclosure). You may also be required to put a certain amount into a special reserve account (an impound account) held by the lender for PMI.

Beginning of the Escrow Account: Your lender will typically have an account w here your property taxes and property insurance will be held. This account will be started with taxes approximately equal to two months in excess of the number of months that have elapsed this year. (If 6 months have passed, they will collect 8 months of taxes.) Your property insurance will be collected one year in advance, plus two months will be kept in your escrow account.

Earnest Money Deposit: It is important to have an understanding of the earnest money deposit, so you will not be placed in an uncomfortable position when you purchase a property. At the time a written offer is initiated, you will be required by the seller to include a personal check, cashier's check, or cash. The amount is normally deposited (cashed) into the designated Broker company's trust account upon the offer's acceptance, and will remain in escrow until the time of closing. This amount is credited to you as a partial down payment and represents your intent to purchase the property. If the offer is not accepted, this amount is returned to you promptly. Depending on the price of the property, you should anticipate a minimum of a $1,000 earnest money deposit. Also, in the event that you do not qualify with a lender for a new loan, the earnest money is refunded to you, provided the sellers are given written notice regarding the lender's disapproval, and provided you have supplied the lender with all documentation they have requested.

Title Insurance: When you purchase your home, both you and the lender need a preliminary title commitment that will indicate exactly what recorded liens, encumbrances and recorded easements are currently in effect on the property. The title commitment will also indicate the vested owner of record and any restrictions on the use of the property. Title insurance is, for all practical purposes, required on all property in most states and is normally a seller's expense. However, the buyer is required to furnish the lender with a lender's policy showing the lender as lien holder on that property. These charges will be incurred at the time of settlement as a part of your closing costs. When the purchase of the property is closed, and the title company has recorded the necessary documents, the title company will then issue a title insurance policy binder to you and the lender, showing clear title to the property.

Reminder: For the closing, you must bring a driver's license and a cashier's check for the remainder of your down payment, made out to the title company. At the closing, you may sign the cashier's check over to the title company. If the closing does not occur, you can deposit the cashier's check back into your own account. There's certainly a lot to know! Have additional questions?

Give us a call or text us at: 208 661 9238

Tips For Home Buyers

1. We can not emphasize this point enough....Be a Pre-Approved Buyer! A pre-approved buyer always has the advantage in an offer situation. Becoming pre-approved is very easy. You start by completing a loan application with your lender before you begin you home search process. Pre-approval means that you have actually been approved for the purchase by a lender. This gives you a greater edge in home purchase negotiating.

2. The search process can be fun. It can also be very trying at times. You will notice that some homes sell very fast and others sit on the market for quite some time. Homes that are price well with the current market sell faster that ones that are overpriced. Working with a professional full time Real Estate agent that knows the market and keeps updated on the best new listings will give you the edge over other buyer competition for the best new listings.

3. Become an expert on 'Home Values'. Your agent is a great asset here. Investigate the areas and price ranges for the kind of home you are looking for. You need to know and understand the price ranges homes sell for and also how many days they average on the market.

4. Writing the offer. The purchase of a home is often your single largest investment. It is important that you make sure that you get the best possible deal. Overpaying will make it harder to get your value back when it is time to sell. When you find the perfect home your emotions will run high making it often difficult to be cool and calculated with your decisions. Your agent plays a large roll here by assisting you in determining the correct offer price.

5. Structuring the offer. Keep your offer clean and simple. Avoid unnecessary contingencies, especially requests for repairs or included items not part of the listing data. Needed repairs will be addressed after the home inspection. Personal items can be negotiated outside of the offer. The cleaner the offer, the more interested the seller will become. A clean offer will help you purchase the property at the best possible price.

6. Presenting your offer. What you need most in today's complex real estate market is an experienced full time professional agent who represents you and your interests only. An agent well trained and experienced in negotiations is what you want in your corner at this time. Your agent will present your offer detailing the strengths you have as a buyer and why the offer is structured as it is. No matter how heated the competition or the the negotiations, a professional agent will keep you from paying too much.

7. What does an agent cost? You, as the home buyer, pay nothing for a professional agent. The agent's fee is paid by the seller. If you are looking for an full time, full service experienced professional agent team to represent you and your best interests we would be pleased to assist you in your home search. Call or text us at 208. 661 .9238. Find out how we can help you find the most home for the best possible price.

What questions should I ask my lender?

It is important that you ask your Loan Officer to explain anything and everything that you do not completely understand. You will hear many terms...VA, FHA, conventional, points, fixed rate, adjustable rates, balloon, etc. All of these can be confusing and you might be hesitant to ask questions because you do not want to appear unfamiliar with all the lending language. Don't be afraid to ask all the questions you need to clear up any confusion you might have. Buying a house is a huge, long-term investment. So remember how the old 'cliche' goes.. there are no dumb or stupid questions...the only dumb or stupid question is the one that is not asked. As a matter of fact, you should ask questions even if you DO know the answer. This is a good way to find out if you Loan Officer knows what they are talking about and if they are being straight with you. After all, it is your hard-earned money. Three very important questions you really should ask are:

1. Is the loan a fixed-rate or adjustable

2. Is there a pre-payment penalty

3. What is the annual Percentage Rate (APR) of my loan. This is not normally the same as the 'Interest Rate' you were quoted.

You ideally want to find the lowest interest rate with the lowest possible closing fees. The APR is the best way to compare loan programs because it reflects both the interest rate and other fees as one combined figure. I reflects the 'actual cost' of your loan. Some lenders will quote a low interest rate then tack on higher fees that will make your final loan more expensive than a program with a higher interest rate. The lower the APR, the lower the total loan cost is to you.

Lenders are required to provide you with a 'Good Faith Estimate of Closing Costs' Although this document is only an estimate, it shows you, in writing, the costs and fees you can expect to pay at closing. It may also include title company fees. If it does not your Real Estate Agent should be able to help you estimate those costs.

Your Real Estate Agent should also be able to provide you with information on different loan types and some other terms you should know. Obtaining a copy of this information from your Agent will assist you in more fully understand the entire loan process.

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Last modified: 01/25/12.