I found the house of my dreams, when can I move in?

I found the house of my dreams, when can I move in?

By Nathalia N. Edmonds

You got your mortgage pre-approval letter and know how much you can spend to buy your new home!  If you qualify, you attended the First Time Homeowner seminar.  You hired an agent and you know what type of home you are going to buy.  Now what?

Is there a limit of how many homes you can see?  No.  Should you see 100 houses versus 10 or 3?  You see as how many houses you want to see.  I tell my clients that the house you want to make yours is the house that made your heart fluttered when you entered.  Or like my mother, she heard bells and felt an overwhelming sense of peace.  A great way to take control of which houses to see is when your agent sends you daily automated emails which will alert you when a new home becomes available!  Those emails are up-to-date and with correct information.  Looking at properties in Zillow, Trulia or Redfin do not have accurate information.  In Maryland, agents pay the Metropolitan Regional Information Systems or MRIS to see all the accurate information of properties that are actively available, under contract, sold even those properties that are withdrawn.  Trust is a very important aspect of your relationship with your Agent.  Remember, if you feel your current agent is not a good fit, you may cancel your business relationship and hire someone else!  Make sure to read your agreement first.  In the state of Maryland it is mandatory to place a contract expiration date as well as instructions on how to cancel your contract with the agent and broker.

Now, you found your home but not just your new home, you found YOUR DREAM HOME!  With your approval, your agent will write an offer on your behalf.  A contract will be about 47 pages long.  It could be less or it could be more.  In this contract you will let the seller know how much you are willing to pay for their home.  How much deposit you will pay, where you will deposit that money, how you will pay for the home, if you are doing any inspections, what you want to keep from the house, acknowledge the settlement date, amongst other things.  Other things will be acknowledgement of age of the property and possibility of lead, and all kinds of disclosures depending on county and type of home you are buying, especially if the neighborhood has a Home Owner Association.  In your offer, you will have dates of when you are due to do the inspections, when to apply for your mortgage loan, when you are going to settlement!  With the offer you will need to submit your mortgage pre-approval letter and your earnest money deposit.

What is the earnest money deposit?  The EMD or escrow money, how some agents call it, is a “good faith payment” it shows the seller that you are serious about buying their home, soo serious you are willing to put money down.  This amount it is usually 1% of the sales price or 10% if you are buying the home in cash.  So if you are offering $100,000 to buy their home, you need to prove a check or money order in the amount of $1,000.00.  This EMD will only be deposited ONCE your offer is accepted by the seller.  This money will be applied towards what you need to pay to get your home, meaning, you will now have to pay $99,000 plus closing costs.

Once the seller receives the offer, he or she will evaluate the offer or several offers and make a decision.  Do not be alarmed if your agent calls you back with a new offer from the seller.  Your agent will have your best interest and inform you of what are the best choices.  But remember, you are the only person who will make the decision.  Agents are advisors and messengers.  A good agent will email you the instructions you gave them over the phone for both your records.

Immediately after your offer was accepted by the seller you MUST contact your loan officer and start your application process.  If you already got “pre-approved” why do you need to apply?  Well, the loan officer creates your file and starts getting you formally approved and get the house appraised.  They make sure you didn’t go nuts and buy a boat or got into more debt.  The underwriter also schedules the appraisal to make sure the home is good collateral for the loan.  This process could easily take about 30 to 40 days.  It is important that YOU are as responsible to close early.  If you delay giving your loan officer all the documents he/she asks, you will delay the process.  Once the appraiser returns their findings and the home is good collateral, you will get approved or denied for the loan.  BUT BE AWARE, the underwriter will check your credit the day before or the day of the settlement and approve the loan!  Buy furniture AFTER settlement NOT before!

Simultaneously, your agent will schedule all the inspections.  You should ALWAYS do a structural and mechanical inspection.  This inspection MUST be done by a Licensed Home Inspector.  You can go to https://goo.gl/x0Ic5h and search if that person is licensed!  Inspections could run you about $250 up to $500.  You can also do Lead, Mold, Termite, Radon, Chimney and others.  The buyer will ALWAYS be responsible to pay for the inspections!  And don’t forget to go to the inspections!!

Around that same time, you would have to pick a Title company to help you investigate if the property has any issues with the past ownerships or any debts due to unpaid taxes, water bills or any other liens or debts against the property.

After all these things are done, you should expect to close between 45 days or 60 days and this is only if you are asking for money!  If you are paying your future home in cash, closing will happen in about 45 days.  At settlement, you must make sure you bring the check you need to pay, if any.  If you are a first time homeowner you could get $5,000 towards closing cost and you could have ask the seller for 3% closing cost help, which in some cases, you don’t need to bring anything.  Bring your ID!  Your loan officer will have given the title company their bank information to wire the money to which the title company will pay the seller’s mortgage and give him or her the difference in a check.  The sellers will bring the keys to your future home.  After signing the new title, the receipt or HUD1, you get your keys and the seller gets their check and you go home to your new home!

If you would like to learn more about the process in buying your future home, please contact me or your preferred agent!  

Nathalia N. Cruz-Edmonds is a REALTOR with Berkshire Hathaway HomeService PenFed Realty.  To schedule a meeting call (410) 350-5848, at her office (410) 464-5500 or via email at nathaliaedmonds@gmail.com.  She is also the owner of Clearview Real Estate Management LLC a third party real estate management company in Maryland.

 

What are four types of different ownership and types of transactions in Real Estate?

Did you know that when buying a home there are four types of different ownership and types of transactions?  They are (1) Standard (2) Short Sale (3) REO/Foreclosure and (4) Auction.

When the ownership is “Standard” it means two things, (1) the person(s) on the title of the property own the property out-right meaning they paid their mortgage in full or have no mortgage; (2) the person(s) on the title are in good standing with their mortgage provider by paying their mortgage on time and the value of the property exceeds the loan amount.  

When dealing directly with the owner when buying a home it tends to be the easiest of all four transactions but like anything involving money, it can be stressful because you are dealing with the emotions of the seller.  The seller might be selling because they are moving to another state, or to live closer to family, might be downsizing or even because their current home is too small and need a bigger one.  They have an attachment because of either good or bad memories.  But it can also be financially beneficial to the buyer, because the seller can be in a position to assist the buyer with the cost of repairs and/or covering some or all closing cost.  These transaction can close between 45 to 60 days depending on what source of fund the buyer uses to buy the home.

A home that is labeled as a Potential Short Sale, the buyer will be dealing not only with the owner but with a Third Party, which is the bank who gave the first mortgage or even the two banks who gave the two mortgages.  There are times that a buyer can deal with THREE banks!  A short sale means the value of the property is lower than the amount of the existing loan.  A mortgage is when a bank lends you money to buy a home with the condition that the home you will be buying will be collateral or guarantee of repayment if you default from paying the loan.  The property is under your name BUT the bank owns the home until the loan is paid in full.  Catch-22 is that in order for the bank to re-sell the house to earn back what they lost, the property must have the same or better value of what the loan was originated for.  So, if your mortgage was for $100,000.00 but the value of the home is $75,000.00, if the bank approves the sale of the house, the house is a short sale, not a “standard” transaction because the bank did not recouped the value of the original loan.  

Short Sales usually happen predominantly because the homeowner can no longer afford the home or they have to relocate but they cannot sell the house at the price of the loan amount because the value of the property is lower.  A Short Sale is for someone that has time to move because it can take up to 60 days to close on the sale.

An REO means Real Estate Owned or also called Foreclosure.  These homes are owned by the bank that gave the mortgage but the owner stopped paying the mortgage and the bank assumed ownership.  Remember, when you get a mortgage on the house, the “real” owner is the bank, not you.  When the owner stopped paying the mortgage, the bank took back the house and the owners moved out.  

The REO/Foreclosed homes are interesting, because you have no idea what is inside unless you look.  These type of homes are sold “As-Is”,  meaning the owner, the bank, will not make any repairs.  For a first time home owner this is very difficult specially if they were approved to get a FHA loan.  In May’s edition we will explain the different types of loans available to buyers.  For this homes the owner must have a good amount of money saved in case there are hidden damages the buyer needs to fixed like a roof leak or structural issues.  A REO/Foreclosed transaction will settle in 30 days up to 45 days.

You can also buy your home through an Auction.  This houses are often sold site-unseen.  The owner will not make any repairs and the highest bidder is the one that gets the home.  These houses come available because the owner didn’t pay the county or city taxes, outstanding water bills and liens against the property.  

Buyers need to be very understanding of these types of ownership and transactions because just because a house is cheap doesn’t mean that you are getting a deal because of the extensive amount of repairs you will need to make in the end.  If you are not an investor with capital for the renovations, a first time homeowner should stay away from REO, Auctions and sometimes Short Sales.

For a detailed home buying presentation please contact Nathalia N. Cruz-Edmonds, REALTOR with the PS International Team of Berkshire Hathaway Homesale Realty by calling her directly at (410) 350-5848 or at the office (410) 583-0400 or via email at nathaliaedmonds@gmail.com.  Please visit our website at www.pitinastucky.com for a list of our current listings.  PS International Team speaks Spanish, English, French and Arabic.