F.A.Qs

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Can a home depreciate in value?

Generally, real property never depreciates in value, or more so, it is not very common for property to depreciate. This is why it's a great investment. Make sure you carefully consider location and community when choosing a home, it can effect the homes future value greatly. If you are in a newly developed area, do some research on the construction of the surrounding areas being developed to determine if they may effect your homes value.

Is an older home as good a value as a new home?

This is really just a matter of preference, but both newer and older homes offer distinct advantages, depending upon your unique taste and lifestyle. Older homes can generally cost less than new homes, however, there are many cases where new homes can also cost less then older homes. Most new homes will not have any backyard landscaping and some don''t include any front landscaping either. With an older home, the landscaping is normally already completed and could have 10''s of thousands of dollars in landscaping done, which is included in the purchase price. Taxes on some older homes may also be lower. Some people are charmed by the elegance of an older home but shy away because they''re concerned about potential maintenance costs. Consider a home warranty to get the peace of mind you deserve. A good Home Warranty plan protects you against unexpected repairs on many home systems and appliances for a full year or more after you move in. In a new house, you can pick your own color schemes, flooring, kitchen cabinets, appliances, custom wiring for TV''s, electrical, computers, phones and speakers, etc., as well as have more upgrade options. Modern features like media rooms, extra-large closets and extra-large bathrooms and tubs are also more attainable in ground-up construction. In a used home, you rely largely on the previous resident''s tastes and technological whims, unless you plan to farm thousands into a remodeling and rewiring. New-home designers can use new building materials such as glazed Energy Star windows, thicker insulation and other technology that will lower future energy costs for the owner. Most states now have minimum energy-efficiency requirements for new construction. Kitchens and laundry areas in new homes are designed to house more efficient energy-saving appliances. Older homes, unless they have undergone an energy retrofit, usually cost much more per square foot to air-condition and heat. Builders have to follow very strict guidelines in new-homes and additions, especially in the West and Northwest, where earthquake safety standards must be observed. In general, new homes are usually more fire-safe and better accommodating of new security and garage-door systems. Older homes can be better judged for their quality and timeless beauty. New homes that now possess a smooth veneer might reveal the use of substandard building materials or shoddy workmanship over time. As you can see there are advantages and dis-advantages to each, but it really comes down to what fits you and what you are looking for in a home.

What are closing costs?

Closing costs are expenses incurred by buyers and sellers in transferring ownership of a property.

What does FSBO mean?

FSBO stands for For Sale By Owner. A for sale by owner property usually indicates that the property is being sold without a real estate agent.

What is a “One-Time Show” listing?

With this type of listing the homeowner signs an agreement with the agent. What this agreement declares is the homeowner will provide the agent with a commission for selling the property. This agreement also states the homeowner cannot negotiate with the buyer at a later time to avoid paying a commission. This type of listing is most often used by agent showing FSBO (for sale by owner).

What is a broker?

An agent who is authorized to open and run his/her own agency. All real estate offices have one principal broker.

What is a contingency?

A contingency is a provision included in a sales contract stating that certain events must occur or certain conditions must be met before the contract is valid.

What is a debt-to-income ratio?

A debt-to-income ratio is the percentage of a person's monthly earnings used to pay off all debt obligations.

What is a Multiple Listing Service (MLS)?

A multiple listing service is a computerized listing of the homes for sale in an area listed with a realtor. Agents are granted access to the MLS and can use it to find a house in a particular price range or area.

What is a REALTOR®?

A REALTOR® is an agent or agency that belongs to the local or state board of REALTORS and is affiliated with the "National Association of REALTORS" (NAR).��They follow a strict code of ethics beyond state license laws and also sponsor the Multiple Listing System (MLS), which is used to list houses for sale. REALTOR is a trademark of the National Association of Realtors.

What is an escrow officer?

An escrow officer is the person that walks you through the closing process. They are usually employed by the title company that you are working with. They are a neutral third-party, responsible for overseeing the escrow process. They typically perform the title searches, prepare final paperwork, witness the document signings as well as ensure that the transaction is executed properly and legally.

What is homeowners association (HOA)?

Homeowners association is a nonprofit association that manages the common areas of a condominium or "planned unit development" (PUD). Unit owners pay a fee to the association in order to maintain areas such as a pool or playground that are owned jointly.

What is the difference between being prequalified and preapproved for a loan?

If you're prequalified it means that you POTENTIALLY could get a loan for the amount stated to you, assuming that all of the information you provide to the bank is accurate and true. This is not as strong as a preapproval. If you're preapproved, it means that you have undergone the extensive financial background check, which includes looking at your credit history, previous tax returns and verifying your employment - and the lender is willing to give you a loan, basically meaning you're approved! You will usually be provided an accurate figure which shows the maximum amount that you are approved for. Most sellers prefer buyers that have been preapproved because they know that there will not be any problems with the purchase of their home.

What is title insurance?

Title insurance is insurance that protects the lender and buyer against any losses incurred from disputes over the title of a property.

What’s the Difference between a “Listing Agent” and “Selling Agent”?

Listing Agents usually deal with sellers, and are the ones who will list a property for sale on the Multiple Listing Service. Selling Agents (also Buyers Agents) mostly deal with the homebuyers, usually only listing just a few homes for sale. They will sell the homes (which have been placed in the MLS) via the listing agents. The majority of agents will focus on one or the other. Some agents will also divide their time between sellers and buyers and are usually regarded as the best ones since they are dealing with both sides of the coin. If you phone an agent from a magazine or newspaper ad, you are usually contacting the listing agent. These agents will place ads to show the seller that they are making an effort to sell their home. Also their advertising efforts can draw others who may decide to sell their homes.

Why should I use a real estate agent?

A real estate agent is more than just a sales person. A real estate agent may act on your behalf, providing you with advice and guidance when buying or selling a home. Due to the constant changing of the market, the information available on listings is not always 100% accurate. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with a real estate agent. If you are in the market to buy, it would be advisable to use a Buyer's Agent. They can make recommendations on what terms and prices to offer as well as negotiating a deal with your best interest in mind.

Mortgage

Are lenders limited in the amount of escrow funds they can collect from borrowers?

The Real Estate Settlement Procedures Act (RESPA) sets standards for the calculation of the amount mortgage lenders require borrowers to deposit into the escrow account. RESPA limits the initial deposit into an escrow account to an amount equal to the sum sufficient to pay taxes, insurance premiums, and other charges on the mortgaged property for the first payment period, plus a cushion. An escrow cushion is an amount of money held in the escrow account to prevent the account from being overdrawn when increases in disbursements occur. On a monthly basis, mortgage lenders may not require borrowers to pay more than one-twelfth of the total amount of the estimated annual taxes, insurance premiums, and other charges, plus an amount necessary to maintain the allowable cushion.

Can I pay my own taxes and insurance?

When a loan is originated, the mortgage documents specify the escrow conditions. This has become a standard practice for all mortgages, including FHA, VA and conventional mortgages. Occasionally on conventional loans, FRFCU waives the collection of escrow requirement at closing if the member has a minimum 20% equity position in the property.

How can I avoid private mortgage insurance?

The easiest way to avoid PMI is by putting 20% down payment; however, PMI can also be avoided if you only have 5% or 10% for the down payment. The way to accomplish this is via a first and second mortgage combination commonly referred to as 80/10/10^s or 80/15/5^s. These two methods combine a first mortgage lien for 80% of the home price with a second mortgage lien for either 10% or 15% of the home price leaving the remaining 5% or 10% as the down payment. Because the first lien is at the magical 80% loan=to-value, there is no PMI required, even though a second mortgage is being |piggybacked| onto the financing thus allowing for the lessor down payment. While the second lien terms are not as attractive as first lien rates, the second mortgage is still home mortgage interest and thus deductible as such on your federal tax return where PMI is insurance and offers no deduction.

Sellers

Can I back out of my contract with one buyer and accept a new, higher offer from a second buyer?

It would be very unwise to try to back out of the contract because a purchase offer that's accepted is a legal contract that the buyer can seek legal remedies to enforce.

Do I have to sell to the person with the highest offer?

No. If you prefer a lower-priced offer, perhaps with a better-qualified buyer and/or more attractive terms, you can accept that offer instead. Or you can give counteroffers to one or more of the buyers. Beware, however, that if you turn down a full-priced offer, you may owe your agent a full commission even if you decide not to sell your home.

How should I price my home?

You must take into account the prevailing state of the real estate market and especially local market conditions. The real estate market continually changes, and market fluctuations affect property values. So it is critical to determine your listing price based on the most recent comparable sales in your neighborhood. It would be a good idea to get a Home Value Request, or CMA, also known as Comparable Market Analysis.