A Real Estate Guide For Buyers And Sellers

A Real Estate Guide For Buyers And Sellers
If you have never bought or sold a home before or haven’t bought one in a while you may not be aware of all the steps that go into the home buying or selling process. The process does not just start the instant you decide to sell or buy a home but instead starts out well before and requires plenty of planning and coordination with a number of different professionals. This guide to buying or selling a home will take you through the steps a seller and buyer must go through in order to buy or sell a home.

Process of Buying a Home

Mortgage and Credit
When getting ready to buy a home the process should not start with getting online and searching for homes that look nice. Instead the first step should be contacting a couple of different mortgage lenders and exploring your financial options for buying a home. Borrowing to buy a home is a long term commitment and over spending on fees or the interest rate you pay means you will be paying more money than you have too. That money can be better spent on saving for retirement, paying for your children’s college, or on up keep of the home. There is no need to spend extra money when you don’t have to. So interview a number of different mortgage lenders and find out what they are offering and what are the costs associated with their mortgage options.

In addition to shopping around for mortgages you should also take a close look at your credit history. Do you have any credit report errors or negative items on your credit report? If you have errors you need to contact the credit reporting companies and ask that they remove the errors so it does not affect your borrowing ability. If there are negative items on your credit report you should discuss those items with a lender or a credit counselor to see how they affect your ability to borrow. One or two minor negative items on your report should not cause too many problems but they will reduce your credit score. Larger negative items like unpaid credit card bills, bankruptcies, collections notices and more are harder to recover from and your chances of getting a good mortgage will be more difficult. Often times minor negative items are easily dealt with by time, letting the minor negative items “age off of your credit report” by paying on time and paying all minimums and your credit score should recover. If you do have negative marks on your credit meet with a lender who has credit expertise or ask for a referral to a credit counselor so they can help guide you towards rebuilding your credit score. View Your Credit Score Here

Shopping for a mortgage and checking over your credit report should be done at least 3-4 months before you are ready to start looking for a home. In 3-4 months’ time minor negative credit items have less effect on your credit score and by going through the mortgage process ahead of time you know what price range of homes you can truly afford. It is not good practice to shop for homes that you cannot afford since your mortgage pre-approval is below those homes you looked at.

Searching For Homes
Now that you know what price of home best fits your budget through the mortgage pre-qualification process you can start the actual home search online. You can start your home search on your own without the assistance of a real estate agent, just check out one of the many local real estate listing websites in your city. Start choosing a home after you have been pre approved the use of a real estate agent but you would be advised to hire a real estate attorney to help you with the process so you don’t end up living in a new home you really don’t own. Where the homes you are interested are listed with a real estate agent it only makes sense to get an agent to help you in the process since the commissions used to pay for the buyer’s agents services will come out of the seller’s side of the transaction. By having your own real estate agent represent you, you have someone working in your best interests and not the interests of the sellers.

Making an Offer
Once you have settled on a home and want to make an offer you will need to follow up with the mortgage lender you chose and get a Mortgage Pre-Approval letter which basically states to the seller that you are able to borrow the amount of money stated in your offer to purchase their home. While not required a pre-approval letter is advisable since it shows the seller the seriousness of your offer and that you can afford to buy it. Most good mortgage lenders are able to get a pre-approval letter to you with a very short turnaround time.

Your offer will contain many of the terms and conditions that go along with the offer. The terms and conditions must be written in correctly, this is why it is a good idea to have a real estate agent to help prepare the offer or to have an attorney prepare the offer. Most real estate offers contain at least the minimum condition of the buyer being able to obtain an appropriate loan to the buy the house when borrowing is part of the offer. If you make an offer and it does not have the condition of being able to obtain a loan as part of buying the home you could still be on the hook contractually even if your loan falls through! While you may not be able to afford the home since you can’t borrow money to buy it, that does not mean the seller cannot turn around and sue you for damages. It is important to repeat, have a real estate agent or an attorney prepare the offer for you so you are not stuck being forced to buy a home or stuck having to pay the sellers damages due to incorrectly filling out the offer.

Additional requests made as part of the offer include a home inspection (including termites and radon depending on your location), lead paint inspection (depending on the age of the home), appraisal requirements, terms of occupancy, what stays with the house (i.e. fixtures, appliances, extra items…), who pays for closing costs, title work, home warranty and more. As you can see there is a lot to go wrong if the offer is not written correctly. Even if you have professionals looking over your written offer you should still read it over and make sure it has the terms you want it to have.

Other Things to Consider:1. Home Inspection Process
2. Appraisal
3. Mortgage
4. Home Warranty

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Tips for Improving Your Credit

Tips for Improving Your Credit

Here’s how to clean up your credit so you get the least-expensive home loan possible.
Getting the loan that suits your situation at the best possible price and terms makes home buying and rent to own easier and more affordable. Here are ways to boost your credit score so you can do just that.

Know your credit score
Credit scores range from 300 to 850, and the higher, the better. They’re based on whether you’ve paid personal loans, car loans, credit cards, and other debt in full and on time in the past. You’ll need a score of at least 580 to qualify for a home loan and 720 to get the best interest rates and terms.
You’re entitled to a free copy of your credit report annually from each of the major credit-reporting bureaus, Equifax, Experian, and TransUnion. Access all three versions of your credit report at FreeCreditScore. Review them to ensure the information is accurate.

Correct errors on your credit report
If you find mistakes on your credit report, write a letter to the credit-reporting agency explaining why you believe there’s an error. Send documents that support your case, and ask that the error be corrected or removed. Also write to the company, or debt collector, that reported the incorrect information to dispute the information, and ask to be copied on any materials sent to credit reporting agencies.

Pay every bill on time
You may be surprised at the damage even a few late payments will have on your credit score. The easiest way to make a big difference in your credit score without altering your spending habits is to diligently pay all your bills on time. You’ll also save money because you’ll keep the money you’ve been spending on late fees. Credit card or mortgage companies probably won’t report minor late payments, those less than 30 days overdue, but you’ll still have to pay late fees.

Use credit carefully
Another good way to boost your credit score is to pay your credit card bills in full every month. If you can’t do that, pay as much over your required minimum payment as possible to begin whittling away the debt. Stop using your credit cards to keep your balances from increasing, and transfer balances from high-interest credit cards to lower-interest cards.

Take care with the length of your credit
Credit rating agencies also consider the length of your credit history. If you’ve had a credit card for a long time and managed it responsibly, that works in your favor. However, opening several new credit cards at once can lower the average age of your accounts, which pushes down your score. Likewise, closing credit card accounts lowers your available credit, so keep credit cards open even if you’re not using them.

Don’t use all the credit you’re offered
Credit scores are also based on how much credit you use compared with how much you’re offered. Using $1,000 of available credit will give you a lower score than having $1,000 of available credit and using $100 of it. Occasionally opening new lines of credit can boost your available credit, which also affects your score positively.

Be patient
It can take time for your credit score to climb once you’ve begun working to improve it. Keep at it because the more distance you put between your spotty payment history and your current good payment record, the less damage you’ll do to your credit score.

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Rent To Own Home Ideas

Rent To Own Home Ideas

Rent-to-own deals have an unseemly image. But they can actually prove useful in today’s troubled housing market, allowing buyers and sellers to lock in deals until conditions improve.

Consider, for example, a buyer who has to move for a new job but can’t buy a new home until the old one sells, or the buyer who needs a little time to repair his credit or wait for his spouse to land a job. With a rent-to-own deal, also called a lease-purchase agreement, any of these buyers could nail down a dream home that’s available today. That can take the sting out of renting.

Sellers can benefit as well. Instead of leaving a home empty, the owner can bring in a tenant to cover expenses, something that can be hard to do if a home is up for sale. The owner thus doesn’t have to give in and sell while prices are down and buyers are scarce.

Still, a rent-to-own is not to be taken lightly. Both parties are gambling on future conditions such as home prices and mortgage rates, and their bets could backfire.
While all lease-purchase agreements are negotiable, they tend to follow a basic blueprint: Seller and buyer agree on a sale price for the property, with the buyer given a specific period to exercise the purchase option, typically one to three years.

For more tips on buying, selling or renting a home, check out Freedom Rent to Own Blog Page!

The Need for Rent to Own Homes

A Rent-to-Own option in real estate is also know as a purchase option. This option is allows the person renting or leasing a property to have the option to buy it at some point during or after the term in a lease agreement.

While there are a variety of ways to create a lease, lease to own programs are limited in many US housing markets. Many offer risks to future buyers. In an article by the Wall Street Journal, they say, "For investors, it is a chance to profit off the recovering housing market". "Consumers get a chance to lock in a home before they have the money together for a down payment".

In fact, every month over 180,000 Google searches happen around just 5 search term variations about lease to own homes. That’s over 2 million searches a year for this opportunity.

Many want to own again in the future, and find it frustrating to rent a home without any option to buy it. When they are ready to buy, they need to move again.

A Rent to Own Home could be a perfect opportunity for these borrowers.

Here’s A Few Awesome Ideas Real Estate Investors Should Consider:

#1 The Buy, Rehab, Rent to Own Home Model
Often, an investor will buy a property with intentions to rent it for a profit. They may fix up the property, but usually rehab at the bare minimum. Other times, they buy it and flip it. A buyer pays for the home with added value and the investor profits from the improvements and a lower purchase price.

There can be value when an investor buys a home, rehabs it similar to a buy and flip, and leases it to a future buyer. If you give a tenant the option to buy the home, they are more willing to do a better job with the upkeep of the property. You could even create some incentives for their upkeep and property maintenance.

#2 Offering a Shared Appreciation Incentive
A tenant renting a home with the option to buy it would love if an investor shared in their property's appreciation.

For example, the Relevium Project, a Benefit Corporation located in Maryland, created a model, which gives its future buyers up to 50% of the equity in the property. This allows the tenant to have an incentive to maintain the home, possibly get equity at their purchase, or get some closing help.

#3 Tenants Creating Some Sweat Equity
It’s common for to require the tenant to pay for some or all of the property repairs. If your tenant is preparing for homeownership, sweat equity could create fiscal responsibility. Sometimes, an investor could have a deductible before you need to pay for any repair costs.

If you are signing an agreement with some sort of sweat equity deal, review the terms and contact an attorney to make sure it’s on the up and up.

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