Color is a Powerful Thing - Set the Right Tone



 

 

Like death and taxes, there is no escaping color. It is ubiquitous. Yet what does it all mean?

Why are people more relaxed in green rooms? Why do weightlifters do their best in blue gyms?


Blue

The color of the sky and the ocean, blue is one of the most popular colors. It causes the opposite reaction as red. Peaceful, tranquil blue causes the body to produce calming chemicals, so it is often used in bedrooms. Blue can also be cold and depressing. People are more productive in blue rooms. Blue is often the chosen color by conservative people. Blue is so soothing that is a good choice for pajamas. Dark blue is the color of truth and moderation.

Fashion consultants recommend wearing the midnight hues to job interviews because it symbolizes loyalty, while wearing the serene lighter shades soothes the person wearing it making the people around them feel at ease and party guests feeling comfortable in your presence. Studies even show weightlifters are able to handle heavier weights in blue gyms!


Red

The most emotionally intense color, red stimulates a faster heartbeat and breathing. It gets noticed but makes the wearer appear heavier. (Still my favorite color...who cares if it makes one appear heavier!) It is also the color of love. Since it is such an extreme color, red clothing might not help people in negotiations or confrontations. Red is the color most chosen by extroverts and one of the top picks of males. Men are attracted to women wearing the ruby hue. On the negative side red can mean temper or anger.

In decorating, red is usually used as an accent, but makes a great wall color as well...for those daring enough to do it...and do it right! Decorators say that red furniture should be perfect since it draws attention.

Purple

Purple is the color of good judgment. It is the color of people seeking spiritual fulfillment. It is said if you surround yourself with purple you will have peace of mind. Purple is a good color to use in meditation.

The color of royalty, creativity...a feeling of inspiration. Purple connotes luxury, wealth, and sophistication. It is also feminine and romantic. Because it is one of those colors people either love or hate, wearing it sends the message that you're a self-assured free thinker. However, because it is rare in nature, purple can appear artificial. Most children love the color purple. Purple is the color most favored by artists.



Black

Black is the most misunderstood color. It is the color of authority and power. It is also stylish and timeless. It's a color not often used on walls, but as accents. Black is not a color, strictly speaking. It is the absence of all color. When people speak of opposites, it is usually in terms of black and white.

Black also implies submission. Priests wear black to signify submission to God. Some fashion experts say a woman wearing black implies submission to men. To take the edge off, choose something with a bit of embellishment, like lace or ruffles. It is popular in fashion because it makes people appear thinner. Black outfits can also be overpowering, or make the wearer seem aloof or evil. A black tie dinner is very formal and elegant. Women can wear that "must have little black dress" to the black tie dinner.


Orange

Orange is fun! Orange is a power color. It is said to increase the craving for food. Orange means vitality with endurance. This exuberant shade isn't the best choice for a serious business meeting or jury duty. Because it is enthusiastic and inviting, you should wear it when you want to appear social, friendly, or approachable. People who like orange are usually thoughtful and sincere. If an orange outfit isn't at the top of your list, try a belt or a pair of shoes.

Curiosity is a driving characteristic of orange, and with it comes exploration of new things. If a change of any kind is needed in life, just burn an orange candle for 7 nights.


Green

Currently the most popular decorating color, green symbolizes nature, fertility, life. Grass green is the most restful color. It is the easiest color on the eye and can improve vision. It is a calming, refreshing color.
It instantly brings about feelings of peace, happiness, and contentment. Geen symbolizes self-respect and well being. Green is the color of balance. It also means learning, growth and harmony. Green is a safe color, if you don't know what color to use anywhere use green.

People waiting to appear on TV sit in "green rooms" to relax. Hospitals often use green because it relaxes patients.  Dark green is masculine, conservative, and implies wealth. Green contains the powerful energies of nature, growth, desire to expand or increase. Balance and a sense of order are found in the color green. Change and transformation is necessary for growth, and so this ability to sustain changes is also a part of the energy of green.


White

White means kindness. Brides wear white to symbolize innocence and purity. White reflects light and is considered a summer color. White is popular in decorating and in fashion because it is light, neutral, and goes with everything. However, white shows dirt and is therefore more difficult to keep clean than other colors.

Strictly speaking, white is not a color, but the manifestation of the presence of all color - the complete energy of light. It stands for wholeness and completion. In many cultures it represents openness and truth. White has a cold quality. It can provide clarity as its energy is complete.

Yellow

Cheerful sunny yellow is an attention getter. While it is considered an optimistic color, people lose their tempers more often in yellow rooms, and babies will cry more. It is the most difficult color for the eye to take in, so it can be overpowering if overused. Yellow enhances concentration, hence its use for legal pads. It also speeds metabolism.

Pure, bright and sunny yellow is the easiest color to see. People who are blind to other colors can usually see yellow. Yellow is full of creative and intellectual energy. Yellow symbolizes wisdom. Yellow means joy and happiness. People of high intellect favor yellow.


Brown

People who prefer brown are often conventional and orderly. The negative meaning of brown can be a repressed personality or a lazy person. Brown is the color of the earth and is associated with the material side of life.

Solid, reliable brown is the color of earth and is abundant in nature. Light brown implies genuineness while dark brown is similar to wood or leather. Brown can also be sad and wistful.

Men are more apt to say brown is one of their favorite colors. Brown is a warm neutral color that can stimulate the appetite. Brown represents wholesomeness and earthiness. While it might be considered a little on the dull side, it also represents steadfastness, simplicity, friendliness, dependability, and health.

When considering color, whether inside or outside your home, choose with meaning in mind. Your favorite color purple or pink is not the best choice for the exterior of your home, but done correctly inside a room, it can be powerful!

The Complete Home Buyers Handbook

Insider's Guide to Saving Money &
Eliminating Risks When Buying Your First Home!



Chapter 7 – Closing The Deal



Drawing up contracts, having the final walkthrough, and going to the closing are the last steps you will have to take when buying your first home. This is the time when having a real estate agent you can trust, and a little knowledge of home buying comes in handy.


But what about all of those other miscellaneous fees that will come up before and during the closing? You should be aware of additional fees when you apply for a loan and when you are closing on your new home.


Contracts


Your purchase offer was the first contract you will be involved in when you want to buy a home. You should refer to this contract during the closing period to make sure that your rights are covered and that you are getting everything you pay for.


By writing a solid purchase offer that outlines what you want from the homeowners, you will be protected in case of disagreements and other issues before closing. But a purchase offer is just one of many pieces of paper you will have to see and sign before you can move into your home. Other contracts include:


  • Contingencies
  • Builder contracts
  • Mortgage contracts, and
  • Closing agreements


These contracts may vary in length depending on the forms being used and the information that will have to be included.


Contingencies


Real estate contingencies can be added onto an existing contract or can be created as a separate contract depending on what you would like to include in the purchase offer. Contingencies can include a wide range of items, including:



  • Home inspections and pest inspections
  • Home appraisals
  • Financing
  • Septic system tests
  • Appliances that will stay in the home, and
  • Property surveys


Contingencies can make or break a sale, so you should be sure to use the correct forms when filing contingencies and to word them correctly.


You will need to include a resolution for repairs that may need to be done before you can move into the home. If it is agreed upon in writing that the homeowners will take care of all or some repairs that may be found during a home inspection, this will save time later on.


You should also include ways to get out of the deal that include loan denial, repairs that cannot be fixed, and lead, mold, or radon that is found in the home. Having a way out of the contract will save you money and time.


If you are buying a home that is for sale by owner, you should find an attorney or real estate agent that is willing to help you create a contingency list and edit it where necessary. Do not rely on the seller’s agent because they are after their client’s best interests and not yours.


Builder Contracts


If you are buying a new home from a builder, you will have to sign a builder’s contract that states you have the financial means to pay for a new home, that you have decided on a location for your new home, and that you are ready to build.


You should hire an attorney at this point to go over the contract to see if there are any problems that will have to be ironed out before you begin building the home.


Mortgage Contracts


In order to complete your home buying, you will have to be approved for a mortgage by a lender and you will have to sign a contract in which you agree to an interest rate, monthly payment schedule, rate plan, down payment, and other fees.


These contracts are standard loan contracts that will explain the consequences of not paying your mortgage. You should read this paperwork carefully before signing anything.


Closing Agreements


These are the final contracts you will have to sign before you get the keys to your new home. You should read this paperwork carefully and be prepared to pay any closing costs at this time.


Home Warranties


If you are buying an older home, you may want to purchase a home warranty that will cover repairs that will have to be made during your first year of ownership.



While a home inspection will catch any immediate repairs, no one can foresee an oven falling apart or a dryer burning out. Since you may not have a lot of extra money left over after paying for closing costs, down payment, and mortgage payments, having extra insurance will allow you to make the repairs you will need.


Most policies will cost between three-hundred and five-hundred dollars. Coverage will begin the day of your closing and will last for a year. You will have the option of renewing the policy if you would like at that time. If you need to have an appliance repaired, you may have to pay small co-pay at the time of the repair.


Not all policies are the same, so you should do your research to find the best deal. Compare the types of repairs that are covered under the policies and choose the one that fits your home.


Closing


When you finally arrive at the closing, you should expect to:


  • Sign contracts
  • Do a final walkthrough
  • Pay closing costs, and
  • Get your keys

 The closing can take an hour or two, but usually moves quickly because there is little left to do. At the closing you will probably meet the homeowners. This could be the first time you will meet them.  This is a good time to ask if there is anything about the home you will need to know.


Sign Contracts


When you sign the contracts, read them carefully to make sure that everything that has been discussed is in the contract. Ask questions that you may have at this time.


Final Walk Through


The final walkthrough of the home will take place before or during the closing. This is the final chance for you to see the home before it becomes yours. Make sure the items on your contingency are in place so that you can sign the contracts.


Paying Closing Costs


Typically, the buyer will have to pay the closing costs associated with buying a home. But in a buyer’s market, you may be able to add a contingency that states the seller will be responsible for all costs. This may appeal to sellers who want to sell their home quickly.


When deciding who should pay the closing costs, you should research laws that may be in place that dictate who pays for what. Many times, buyers and sellers will agree to split all costs including closing, home inspection, pest inspection, and home appraisal costs. You will have to negotiate with the sellers to see which you will be responsible for.


Get Your Keys


After signing the contracts, you will receive the keys to your new home. This is an exciting feeling and one that will be with you for a long time!



Congratulations! You now have The Complete Home Buyers Handbook!

Now you know what to expect in purchasing a home...
why not call a Realtor!



Call or Text: 405-820-1740

The Complete Home Buyers Handbook

Insider's Guide to Saving Money &
Eliminating Risks When Buying Your First Home!


Chapter 6: Making An Offer



By this point, you have found a real estate agent you trust, contacted a few lenders, and seen a few homes. If you haven't made up your mind on a home yet, you should take your time and keep looking. But keep in mind that if you wait too long, you may end up in a bidding war with another buyer.


Making an offer on a home is a huge step. You will be taking on the responsibility of a mortgage, repairs, lawn care, and other chores that homeowners sometimes gripe too much about.


While you should be cautious, you should also make an offer on a home that you really like within a week after seeing it. This will put your mind at ease so that you can think of all the other items you will have to get done before the closing.


What To Do Before Making An Offer


Before you make an offer on a home, you should do the following:


  • Attend open houses
  • Find out more about a property
  • Find out about taxes in the area, and
  • Have an appraisal done before making an offer

 These suggestions will help you make the most informed decision possible when it comes to buying your first home.


Attend Open Houses
 

Attend as many open houses as you can in homes that are in the area where you want to live. This will give you the opportunity to see what is out there, the going price of homes in the area, and also give you a basis of comparison when looking at other homes.


Open houses are fun because you will be able to look into every area of the home without having to worry about the homeowners and real estate agents following you around. Many times, you may even find your new home this way.


Almost every weekend in most neighborhoods, there will be an open house. Stop by and see for yourself what the homes in the area look like and what you can get for your budget.


Find Out More About A Property


If you find a home that you might want to buy, you should find out everything you can about the property first before making an offer. Visit the county clerk’s office or land records office to see how much the current homeowners paid for their land and the value of their property.


This will give you an idea of how much you should offer for the home. If the home is in an area that has seen better days, then you can make an offer that is less because when you sell the property some day, you may have to lower your price as well.


Find Out More About Taxes In The Area


As a homeowner, you will be paying yearly property taxes, local taxes, school taxes, community dues, and other taxes that could drive your household spending through the roof. Before you commit to living in a certain area, make sure you understand everything you will be paying each year.


Your real estate agent should have the neighborhood information that will help you decide where you want to move. You can also visit your local tax office and see how much the current homeowners paid in taxes last year.


Have An Appraisal Done Before Making An Offer


Most first time home buyers do not have an appraisal done until their lender asks them for one. But you are well within your rights to ask for a home appraisal before making an offer. You will not have to share the findings with anyone until your lender asks to see the appraisal. Typically appraisals are completed after the offer is accepted and the lender has reviewed it.


How To Write A Purchase Offer


This is the most important step when making an offer to buy your first home. The purchase offer should outline everything you expect from the homeowner and what they can expect from you. You should include the following in your offer:


  • price being offered
  • amount of deposit on the home
  • amount of money you will be putting down on the home
  • mortgage terms
  • Contingencies (such as appliances that will stay repairs that will need to be made, removal of items in the yard, etc.)
  • when closing will take place
  • specify who will pay which fees
  • any reports that will be needed, and

Each of these categories should be explained in its own paragraph. You should try to be as specific as possible when writing up a purchasing offer.


Each state has its own laws concerning contingency, amount of time a buyer has to respond to the offer, and fees that are to be paid. Be aware of these laws before sending your offer or you may end up with a counter offer or a rejection.


Have a lawyer or your real estate agent look over the purchase offer before sending it. They may have some advice or additional categories you should add depending on the age of the home, the neighborhood, and the laws that exist. If you make an offer that is reasonable, well written, and hard to break, then you will be on your way to buying a home.


Making An Offer


After completing your research, you will be ready to make an offer on your first home. You will have to visit your real estate agent to sign a formal agreement that will outline your offer and for how long you will be making this offer. Most agreements allow the sellers anywhere from 24 hours to three days to a week to consider the offer, depending on circumstances.


In this time, the offer may be accepted, rejected, or a counter offer will be made. You will have to decide what you will want to do next if the offer is rejected or another offer is made. If the offer is accepted, then you will have to contact your lender, a home inspector, and make arrangements for your move.


Most homes will go to closing within a month after an offer has been accepted. This may seem like a long time, but it is not. You will have plenty to do in the meantime.


Low Or High Offers


Hopefully, by researching the neighborhood, the property, and the value of the home, you will be able to come as close to the seller’s price as possible. Sometimes, though, this is not possible. There may be circumstances that may prohibit you from making an offer that is close to the selling price.


Making The Right Offer


The closer you can come to the asking price, the better off you will be. Once the home inspection is complete, the homeowners may have to come down in price anyway because of the repairs they will have to make.


Making the right decisions when buying a home are not always made quickly. You should play by the rules and just see what happens. If you get into a bidding war and cannot bid any higher, then it is best to let the home go and find another. You should not be a slave to your first home by buying one that is over your budget. There are many homes available if you keep looking.


How To Handle A Counter Offer And Offer Rejection


Sometimes, if you give homeowners an offer that is lower than their asking price, they may offer a counter offer. This is usually an offer that is more than your offer, but a little less than the asking price. 


Counter Offer
 

Depending on where you live, the laws pertaining to counter offers will vary. Typically, the number of counter offers is limitless, but no counter offer can be the same. While counter offers are usually concerning money, these offers may also contain the following:


  • Ownership of appliances
  • Repairs
  • Time frames for closing, and
  • Time frames for counter offers

Buyers and sellers may only have hours to accept, reject, or offer another counter offer after receiving one. This can be a very stressful process, especially if you are dealing with a seller that has other offers on the table. While most homeowners will reject an offer if it is too low or they have received another, some will try to get the most they can from the sale which can include the smallest items in the home.


If you are determined to buy a home, but still want a lower price after the seller has reacted with a counter offer, you can try to find a price that will suit everyone’s needs. If you are making a counter offer that does not make that much of a difference, you should weigh the odds that another offer has been made, the homeowner will reject your offer, and that time is ticking for everyone.

Try your best to accept the counter offer before making one of your own. Is it really worth losing your dream home over one or two thousand dollars?


Dealing With Rejection


The hardest part about an offer rejection is that the homeowner does not have to answer your offer. If you do not hear from the homeowner within a week, it is safe to assume they are not interested in your offer. While this can be frustrating, you will have to move on. Begin your house hunting again and try to stay positive.


If the homeowner gives you a response in the form of a rejection, they may site the reason why in the paperwork. If your offer was too low, they had another offer, decided not to sell, or want to wait for a higher offer, at least you can move on without wondering why your offer was rejected.


Considering Items In The Home

When you are writing your purchase offer, you should consider the items that you would like to keep and items you would like to have removed from the home. These items can include:


  • Certain appliances (such as the washer and dryer)
  • Lighting fixtures
  • Storage fixtures
  • Single air conditioning units that fit into windows
  • Hardware from windows and doors, or
  • Pools

You should put these items in writing so that you will get them with the home. Some homeowners may try taking certain items with them either because they didn’t know that you wanted them or because they were not supposed to be sold with the home to begin with. Be sure to obtain a list of items the homeowner is selling with the home so that you can compare it to your list.


This can also work in reverse. If there are items that you would like removed from the home or the property before you move in, you should specify these in the offer.


Understanding The Seller

One of the key elements of making a solid offer is having an understanding of the seller. Your real estate agent will be able to tell you a little about the seller that may help when trying to come up with a fair offer.


When deciding on an offer for the home, you should find out the following about the seller:

  • How eager are they to sell their home?
  • How long have they lived in the home?
  • How many offers have they received?
  • How many have they turned down?
  • Have they lowered their asking price?
  • Are they relocating to another area?
  • Do they need to sell their home quickly?
  • Are they waiting for their asking price?

These questions, although you may not know the answer to some of them, will help you make an offer that will be looked at by homeowners and taken seriously. Sometimes when a homeowner needs to leave the area in a certain amount of time they will lower their asking price. This could be an advantage for you, but if the homeowners have already lowered the price, they may not want to lower it any further.


Make a reasonable offer and see what happens. Depending on the circumstances, it may be accepted. 



What To Do In A Buyer’s Market


In a buyer’s market, you will have more choices when it comes to the types of homes you can purchase. Depending on how long the market favors the buyer, you will also have the luxury of taking your time because bidding wars are much less. When buying your first home, you should check out all your options. That home you couldn’t afford a few years ago may be in your price range today.


When looking for a home in a buyer’s market, you should do the following:

  • Stay current with the listings in your area
  • Sign up for free email listings and newsletters
  • Check out homes that have recently been reduced
  • When making an offer, ask for closing fees to be paid for by the seller
  • See if there are other offers, such as appliances that come with the home
  • Ask for certain allowances (carpeting, roofing, siding, ect.)
  • Do not be afraid to offer a lower price, and
  • Ask for a shorter response time

In a buyer’s market, homeowners may offer these options to you as incentive to buy their homes. They may also offer warranties on appliances that you should take advantage of.


There are dangers that you should consider when buying in a buyer’s market, however.

  • If you are not planning on living in the home for more than three years, you may want to wait until the market changes or plan to live in the home longer. Many times, market trends can last for a few years. If you need to move after a year or so, you may have difficulty finding a buyer and you may have to sell the home for less than what you paid for it.

  • While most homeowners stay in their homes for at least two years in order to save money in taxes, marketing trends have been known to last longer. You should be prepared for this when buying your first home.

  • Make sure a thorough home inspection has been completed before buying the home. If you decide you cannot live there after you have bought the property, you may have difficulty selling it and you will have to spend more money making repairs.

Even though you cannot predict how the market will change, you should consider a home that you can afford, that you will want to live in for a long time, and one that can be improved upon while you own it. 


What To Do In A Sellers Market


In a sellers market, you will have to play the game slightly different than you would in a buyer’s market. In this type of market, there are many buyers who will want to buy homes that are attractive and priced within their budget. Homeowners will have their pick of offers to choose from so your offer will have to stand out in more than just price.


When looking for a home in a seller’s market, you should:


  • Make an offer that is close to the asking price or slightly over
  • Send a pre-qualification letter from your lender with the offer
  • Choose a closing date that is sooner rather than later
  • Do not ask for too many contingencies
  • Send a personal letter
  • Promise more of a down payment, and
  • Use a real estate agent that gets things done quickly 

In a seller’s market, you may also want to think about the dangers of buying a home. If you make an offer that is too high and you find out later on that the mortgage payments will be a struggle, you may have to sell. Depending on changes in the market, this may be more difficult than when you were looking for a home.


Buying your first home during this time may also be difficult because you will not be able to put much down, you may only qualify for a certain amount of money which may not be enough to compete during a bidding war, and you may be out bid by those who have more experience than you do. 


When you decide to buy a home, you should be looking at your finance situation, the market, and the asking price for the homes you are interested in making an offer on.


If you can wait a few months to see where the market is headed, then maybe this is the best way to save more money and find a home that is affordable. This is a waiting game that no one wants to play, but may be necessary, especially if this is your first home purchase.


Seller’s markets and buyer’s markets have their advantages and disadvantages, but in the end, the offer that you make will determine whether your offer will be accepted.


Next:  Chapter 7 - Closing The Deal!


The Complete Home Buyers Handbook


Insider's Guide to Saving Money &
Eliminating Risks When Buying Your First Home!


Chapter 5 - Financing Options


Financing your first home can be the most frustrating part of the home buying process. This is the time when you figure out how to pay for the home. Most people have to take out a mortgage loan in order to afford the price. Which mortgage loans are right for you? How much of a down payment will be necessary? What is escrow?


You will have many questions about financing your first home. By knowing the facts, paying attention to interest rates, and looking into all of your mortgage options, you will be able to choose repayment terms that will fit your current income and allow you to safely make those monthly payments.


Types Of Home Loans


Deciding which home loan is the right one for you will depend on what you qualify for and what your lender is willing to give you. There are a few types of mortgage loans, including:


  • Fixed rate mortgage loans
  • Adjustable rate mortgage loans
  • Balloon mortgages, and
  • Jumbo loans

You should be familiar with these loans so that you will be able to make an informed decision when it comes to financing your new home.
 

Fixed Rate Mortgage Loans


For first time home buyers who are on a strict budget, choosing a fixed rate mortgage may be the loan for you. Your monthly payment will never change for the life of the loan because you will lock into the interest rate given at the time the loan was processed. You can take out loans that range from ten to thirty years.


There are many advantages to taking out mortgage loans that have fixed rates. You will be able to create a monthly budget for yourself, you will never be surprised by the amount you will have to pay each month, and you will be able to lock into a low interest rate.


The disadvantages may not mean much to you now, but as your family or your income grows, you may want to refinance and pay less each month so that you will be able to afford renovations, vacations, and other luxuries.


Since your mortgage is fixed, if interest rates drop, you will be trapped paying a higher rate. While you can refinance your mortgage, you will have to wait a certain amount of time, and even then there may be complications.


For those who have limited income, who have lower credit scores, or those who want the security of paying the same amount each month, then a fixed rate mortgage is the loan for you.


Adjustable Rate Mortgage Loans


If you expect to make more money in the next few years, and want to buy a bigger home, you may be interested in an adjustable rate mortgage. The major difference between an adjustable rate mortgage and a fixed rate mortgage is that the interest rate will vary year to year in an adjustable rate mortgage.


While the interest will be capped, you will still be paying more for each year that you own the home unless interest rates drop over an extended period of time. Most adjustable rate mortgages cannot be raised more than 2 interest points per year, and up to 7 points for the life of the loan.


These loans are good for those who want a larger home and who expect to increase their earning each year to afford the increase. If you are in a position to take out an adjustable rate mortgage, you will be able to lock into a fixed rate that may be lower than your original rate.


This is the main advantage of these loans. Most lenders will only give you two years to lock into a rate or the loan will remain adjustable for the life of the loan.


Balloons Mortgages


If you are only planning on living in your first home for a few years (usually five to seven), you should look into a balloon mortgage. These mortgages require that you pay them off in five to seven years. They have a lower interest rate that is fixed.


If after the term of the mortgage has passed and you want to remain in the home, you will have to refinance and choose a fixed rate or adjustable mortgage to pay off the existing mortgage, as balloon mortgages cannot be renewed.


Only consider this mortgage if you are planning on moving after a certain amount of time or if you think you can pay the mortgage off in that amount of time.


Jumbo Loans


Most first time home buyers will not need to take out a jumbo loan unless they are buying a very large home. These loans are valued over $275,000 and are used to purchase land and a home. More collateral will be needed in order to qualify for one of these loans. The interest rates are comparable to fixed and adjustable rate mortgages, and have the same payment terms.


Now that you know about the types of mortgages that are available, you should be thinking about which lender to use. With so many lenders out there, it may be difficult to sort through all of them and find the right one. Doing a little homework will help you get the lowest interest rate possible.


Where To Find A Lender


These days there are many places to find a mortgage lender, such as:
 

  • Newspaper advertisements
  • Television advertisements
  • Family or friends
  • Your Current lender
  • Your Current bank, or
  • Online
  • YOUR TRUSTED REALTOR!


As you can see, finding a lender should not be too difficult. You may have to contact several lenders before you find a lender that will give you a loan that meets your needs. When you apply for a home mortgage loan, the lender will check the following:


  • Your credit score
  • Your credit history
  • Your current income
  • Income of co-signer
  • References (professional and personal)
  • Current interest rates based on the amount you are asking for
  • Status of other loans you may have
  • Number of years you have been eligible to work, and
  • Number of years you have had credit


There are many factors that will go into your approval or denial of a home loan. You will have to be patient. You should contact a few lenders to see which ones will give you the best deal. Once the offers have been received, you will have to make some important decisions.


You should feel free to contact your lender at any time during the home buying process with questions and concerns you may have. Other important information the lender will need before granting you a loan include:


  • The home inspection report
  • The termite inspection report, and
  • The home appraisal

These reports are very important to a lender because they will tell the lender how much the home is actually worth and the types of damage that have lowered the overall value of the property.


Lenders expect homeowners to remain in the home for at least five years. This will allow them to make a profit on the money they have loaned you. It is not worth it to them if you have to sell the home shortly after buying it because there is too much damage and you can no longer live there.


Applying For A Home Loan


When applying for a home loan, you will have to bring the information listed above to the lenders office, or if applying online, supply copies that are faxed to the lender. You will be asked additional questions that will help lenders determine if you are able to pay the loan back on time. These questions include:


  • Number of years renting a home or apartment
  • Late payments on credit cards and other loans
  • Active loans (such as student loans or car loans)
  • Number of years at your current job
  • Additional income
  • Amount of the loan and number of years to pay it back
  • Number of years living in an area
  • Dependants that are living at your home
  • Tax returns and bank statements

Applying for a loan can take a week or more. This is because background checks, credit checks, and references must be checked first before the loan will be processed.


In the meantime, you should be concentrating on gathering your paperwork, calling friends and family that you want to use as references, and sorting through your papers in case you cannot find everything the lender requests.


If you don't have your back tax returns, you can contact the IRS and request them by year. Many times, lenders will need to see returns from at least three years ago. Bank statements and bill statements from the past year should be enough to secure a loan.
 

If you are turned down for a home loan, you will be notified as to the reasons why. This can be devastating, but you should find other lenders and try to apply again. If you have poor credit, you may need to go through a lender that specializes in granting loans to those with poor credit. You may have to pay a higher interest rate, but at least you will be granted a loan.


Reasons for possible denial include:


  • Poor credit or not enough credit
  • Length of time at your job is too short
  • Income level for the amount of loan requested
  • Loan default
  • Failure to pay rent or other bills, or
  • Too much credit

Applying for a home loan can be stressful, but if you have good credit, steady employment, and enough income, you should have little trouble qualifying for a loan.


What Not To Do When Applying For A Home Loan


There are a few things you should not do after applying for a home loan:


  • Buy a new car
  • Begin a new job
  • Buy new furniture and other large items using your credit cards
  • Apply for a credit card, or
  • Default on student loans or other loans

All of these actions will cause your credit score to change which will give lenders an inaccurate view of your spending habits and your overall credit score. If you take a job that pays less than you noted on your home loan application, your lender may not agree to grant you the loan.


If possible, do not begin a new job until you have moved into your home. Try not to spend money on credit cards. Buy furniture and other items using cash, or wait until you have signed the final contract and are a homeowner.

Increase Your Chances For Approval


There are a few ways to increase your chances for loan approval that will also help you determine what you will be able to afford each month:

  • Pre-approval

Many experts agree that applying for a loan before you find a home and being pre-approved will help you create a budget, buy a home that is in your price range, and help lenders make their decisions faster.
 

  • Ask for only the amount you will need

One way to increase your chances for a home loan is to not ask for more than you will qualify for. This means you will have to look at your income level, the amount of debt you have, and the expected monthly mortgage payment. You should also factor in cost of living expenses, because your lender will. Apply for the amount you will need and nothing more.


  • Pay off credit cards

If you are thinking about buying a home in the next few years, you should prepare by paying off those credit cards and only using them for emergencies. Do not cancel your existing cards since this may actually lower your credit score. By showing you have a zero balance on your credit cards, you will be showing lenders that you know how to use credit wisely and you have been paying your cards off on time.


  • Always pay bills on time

This includes your electric bill, rent, student loans, and other bills that you may have to pay each month. By creating a track record that can be traced, you will be showing lenders that you are a responsible person who deserves to have a home loan.


How Home Appraisals Can Affect Your Home Loan


Unfortunately, a home appraisal can affect the status of your loan. If the home appraisal comes under the selling price of the home, most lenders will not grant the loan. This can be heartbreaking, but there are a few solutions that may work depending on the rules of the lender. The following options are available:

The Homeowner Reduces The Selling Price


Depending on the appraised value in comparison to the asking price, some homeowners will be willing to lower the price of the home if they need to sell quickly.


You should not count on this happening since many homeowners want to receive the price they are asking for. You may have no choice but to find another home.

A Higher Down Payment

Some lenders will grant you the loan if you agree to pay a larger down payment on the home and assume the financial risk. This is only an option if you can afford to pay a larger down payment. Do not risk your financial security in these cases; it is just not worth it.


Dispute The Appraisal


You can send a letter to your lender disputing the appraisal or have another appraiser determine the value of the home. You will have to pay for this second appraisal, which may or may not yield the same results. There is no guarantee that your lender will accept the second appraisal.


Find Another Lender


This is a last resort move because it will postpone the closing for another month or so and there no guarantee that the lender will accept the appraisal.

Since home appraisals are required by most lenders, you should find out during the loan application process the policies that the lender has when dealing with appraisals. If your lender will not accept a lower selling price, you putting a larger down payment, or other solutions to a low appraisal, you should consider finding another lender just in case there are any problems down the road.


Home appraisals are based on the current value of homes in the neighborhood, homes that are comparable in size, the housing market, and the age of the home. While you can expect to hear different numbers from different appraisers, you will see that these numbers will usually not be too far off.


The only real benefit of a low home appraisal is that it will tell the homeowners to list the home for less money so that they will be able to sell it. In the meantime, you will have to find another home.


How Home Inspections Can Affect Your Home Loan


While a poor home inspection will usually not deter a lender from granting a home loan, you should be aware that some lenders will not grant a loan if there is termite damage or structural damage to the home due to water or age.


This will also lower the overall appraisal of the home, which could be another issue that lenders may have when deciding to approve a home loan.


If the home inspection is not favorable, ask your lender what will need to be done in order to rectify the problem. Many times removing the termites and correcting the water damage is all that will be needed. Many times homeowners will foot the bill for these types of repairs.


Additional Fees For Home Loans


You may notice that you will have to pay small fees throughout your home buying experience. It seems that every piece of paper you sign, file, or request will cost you some money. Here is a list of fees that you may be charged:

  • Credit report fee
  • Loan discount fee
  • Lender’s inspection fee
  • Appraisal fee
  • Loan origination fee
  • Mortgage insurance application fee
  • Assumption fee
  • Hazard insurance
  • Title search, and
  • Title insurance

These fees can add up, so you will want to be prepared and have a little extra in savings for when these fees come up. Some of these fees can be put off until the closing, but you should be planning for them in advance.


Escrow And Other Loans Terms


As you are going through the home loan process, you will run across a few terms that you will not understand. You should ask your lender to explain these terms so that you will fully understand the type of loan you are applying for, the lenders policies, and other information that will be important throughout the life of the loan. Here are some common terms you may encounter:


  • Escrow

While this term can mean different things in different situations, you will see it often when closing on a home. If you place a down payment on a home, it will be in escrow until all the paperwork has been signed. The money is held by a neutral third party, such as another bank or escrow service, and will be distributed once the deal is over. You can ask your real estate agent about escrow services in your area.


  • Mortgage

Even though you have heard of a mortgage before, you probably thought of it as the home loan you will be paying once you move into your new home. Technically, a mortgage is a lien on your home created by your lender. If you cannot make payments on your home, the lender will have the right to sell the property in order to gain the money that they have lost.


  • Foreclosure
This is a term that refers to homes whose owners could not make payments each month. Once a lender has decided to sell the home, it will be in foreclosure. You should find out ways to work with your lender in case you miss a mortgage payment at any time. Having this knowledge in advance will make financial emergencies easier to deal with.

  • Mortgage Broker

A mortgage broker is a person who does not work for a bank, but rather works on commission to match homebuyers with many lenders that may not be in your area. If you have poor credit, you may want to secure a home loan through a mortgage broker because you will have a better chance than going through a bank that only has one lender to choose from – themselves.


  • Points  

This refers to the interest rate on your loan. If you choose an adjustable rate loan, for example, your points may be capped each year so that they cannot exceed a certain number.


  • Down Payment

A down payment is helpful in several ways. It will lower the amount of money you will need for a home loan, it will allow lenders to see that you are responsible for paying off a mortgage, and it will move the home buying process faster. Most first time homeowners will put down no more than 20% for a down payment.


You do not want to overextend yourself by putting a huge down payment on a home because you may not have enough money to pay your mortgage, afford new furniture, or make home repairs.


  • Debt to Income Ratio

This is one way that lenders will sue to determine if you can afford your monthly mortgage payments on your current income. The lender will subtract all your reoccurring debt to determine how much is left for a mortgage payment.


This is why not buying a car or spending money on your credit cards is so important when buying a home. The less debt you have will mean more available money for your mortgage payment.


  • Private Mortgage Insurance

If you cannot afford to put down more than 5% on a home, you may not be approved for a loan. But if you purchase private mortgage insurance, your lender may agree to give you the loan. This extra insurance will protect the lender in case you default on the loan by paying them at least 15% of the total loan value. This will cost you a little extra each month, but it may be worth it.


  • Credit Report

Before you apply for a home loan, you should obtain copies of your credit report so that you can check for errors; see how much money you owe on credit cards and loans, and to see what your credit score is. This is another way that lenders will determine if you will receive a loan.


There are three credit reports that you should obtain, because you will not know which one the lender will base their decisions on.
  
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