- What’s so great about owning a house? What are the advantages over renting?
- Who is Mortgage Center and what are the advantages of getting my mortgage through my credit union vs. any other lender?
- Can I get advice from a loan officer even if I’m not ready to apply just yet?
- I’m thinking about buying a foreclosed home. Are there any special items to consider?
- What can I expect when applying for a mortgage with Mortgage Center?
- What do I need to apply?
- What is private mortgage insurance (PMI) and how does it benefit me?
- How much will getting a mortgage cost?
- What is an escrow account? Why do I need one?
- How will my taxes be paid?
- Why is there an application fee? Will I get it back if I don’t qualify?
- Are there any programs for members with lower down payments?
- I’ve heard about getting a Pre-Approval, but what’s the advantage if I haven’t even started looking for a house yet?
- Do I need to find a home before I apply?
- How much of a mortgage can I qualify for?
- How do I know which program is right for me?
- How does my past credit history affect me?
- What does a lender look for when approving my loan?
- Home buying negotiation tips – How to avoid over paying
- What is a buyer’s agent / broker?
- Should I try to buy a house on my own or should I use an agent?
- Do I need an appraisal and an inspection?
- What does an appraisal do for me?
- The importance of a property inspection.
- Will my fixed rate mortgage payment fluctuate throughout the life of the loan?
- How long will it take to close my loan?
- Is now the time to buy?
1. What’s so great about owning a house? What are the advantages over renting
There are many advantages to homeownership:
- A sound investment – When you carefully choose a home you can afford, the payoff can be great. As a homeowner, instead of paying rent to a landlord, each month when you make your mortgage payment, you are building equity in a place of your own. The more mortgage payments you make, the more equity you’ll have. And unlike most things you buy, a home can actually appreciate in value as time passes, building more equity.
- Tax advantages – The mortgage interest and real estate taxes you pay are tax deductible which can reduce your tax bill.
- Real estate is marketable.
- You can make your own decisions about design and décor.
- You can invest in upgrades that will not only bring you pleasure but can also add to the value of the property over time.
- You have control over the piece of property. You are not answering to a landlord.
2. Who is Mortgage Center and what are the advantages of getting my mortgage through my credit union vs. any other lender?
We are a Credit Union Service Organization that is completely owned by Credit Unions for the benefit of Credit Union members. Because we are owned by credit unions our focus is a bit different from the average mortgage provider. We are truly looking out for the best interest of our credit unions’ members. It is Mortgage Center’s mission to provide exceptional service and products to our credit union’s members.
We were founded in 1991 and have since grown to serve the members of over seventy credit unions. Whether your are a first-time home buyer, building a new home, moving up, refinancing your existing home, or have less than perfect credit; we are working for your best interest. Our loan officers offer Pre-Home Buying Counseling free of charge, to help familiarize you with the process and answer any questions or concern that you may have.
The entire process is designed so that it can be accomplished efficiently and conveniently over the phone or online. Best of all, as a credit union member you’ll enjoy the discounted PMI rates, low closing costs, competitive interest rates and excellent service throughout the life of your loan. You even have the option to have your monthly payments deducted automatically from your existing credit union account.
Our friendly loan officers are available to answer any questions that you may have Monday, Tuesday and Wednesday 8:30 am to 6:30 pm and Thursday and Friday 8:30 am to 5:00 pm. Simply call (888) 562-6865 to begin enjoying the benefits of your Credit Union’s Mortgage Center.
3. Can I get advice from a loan officer even if I’m not ready to apply just yet?
Certainly! Put their years of experience to work for you! Our loan officers are here to answer any questions that you may have Monday, Tuesday and Wednesday 8:30 am to 6:30 pm and Thursday and Friday 8:30 am to 5:00 pm. Simply call (888) 562-6865 and enjoy the benefits of being a member.
4. I’m thinking about buying a foreclosed home. Are there any special items to consider?
Yes there are special items to consider, buying a foreclosed home is much different than the typical home purchase.
Here are some things to keep in mind.
- The utilities must be turned on and in working order prior to the lender issuing a mortgage approval.
- Unlike other home purchases, sellers of foreclosed properties are not required to provide you any disclosures in relation to the condition of the property.
- Because of the aforementioned lack of disclosures, it is in your best interest to hire a certified inspector who can provide you with a full inspection and notify you of any repairs that may be needed on the property. Without an inspection, you won’t be able to estimate the cost for repairs.
- If there are repairs needed, you can negotiate a sellers concession to allow for these items. Depending on their extent, these repairs may be approved for completion after closing.
- Another item to keep in mind is that some sellers will charge you a daily fee if you do not close by the expected settlement date.
- Make sure that your earnest money deposit is refundable if the purchase does not go through. (Property auctions typically require a non-refundable deposit.)
Please call one of our loan officers for additional consultation at (888) 562-6865.
5. What can I expect when applying for a mortgage with Mortgage Center?
Great Service! We’ve created the most convenient home loan service ever! The choice is yours. You can either apply online or call one of our friendly loan officers at (888) 562-6865 and have them take your application over the phone. Whichever is more convenient for you.
If you prefer to apply online…
The application will ask you questions about the home and your finances and takes less than 20 minutes to complete. Your application will then be submitted for an instant lending decision. After completing your application, a Loan Advisor will contact you to introduce himself or herself and to answer any questions you may have during our normal business hours. Your Loan Advisor is a mortgage expert and will provide help and guidance along the way. If your request wasn’t approved online, he or she will ask you for any information required to make a decision about your loan.
Once your Loan Advisor has discussed your application and provided you with the required disclosures, you will be asked to pay a deposit, to begin the processing of your mortgage loan. This deposit will be credited towards your closing fees and will mitigate the cost of your credit report and appraisal.
If you are purchasing a new home, the Loan Advisor will also contact the Real Estate Broker or the seller so that they’ll know whom to contact with questions.
Next, we’ll send you an application package and prepare your loan for closing.
The application package will be sent using a delivery service and will contain papers for you to sign. We will also provide a list of items required to complete the processing of your application.
We’ll order the appraisal from a licensed appraiser who is familiar with home values in your area. Depending on your finances and the loan amount requested, different types of appraisals are used. Sometimes the appraiser will need to view the home. Sometimes they are able to do their evaluation from the street.
Title insurance will be necessary. If you’re purchasing a home, we’ll work with the real estate broker or seller to ensure the title work is ordered as soon as possible. If you are refinancing we’ll take care of ordering the title work for you. We’ll use the title insurance to confirm the legal status of your property and to prepare the closing documents.
Then, we’ll contact you to coordinate your closing date.
After we received the application package back from you and the appraisal and title work have been reviewed and meet with our underwriting standards, we’ll inform the agent that we are ready to close. The listing agent will then schedule the closing with the selling real estate agent, the title company, the seller, Mortgage Center LC and you.
If you are purchasing a For Sale By Owner property, we can assist with coordinating the closing through our very own title company, Mortgage Center Title LLC. The professionals at Mortgage Center Title have guided members through smooth closings for years.
The closing will take place at the office of a title company or attorney in your area who will act as our agent. A few days before closing, your Loan Facilitator will contact you to walk through the final information so that there won’t be any surprises at closing. In most cases, the final closing figures will be available 24 hours prior to closing.
If you prefer to call one of our friendly loan officers and have them take your application over the phone…
Feel free to contact any one of our loan officers Monday, Tuesday and Wednesday 8:30 am to 6:30 pm or Thursday and Friday 8:30 am to 5:00 pm at (888) 562-6865. The loan officer will ask you several questions to try to assess your home financing needs and goals. During this counseling session, feel free to ask your loan officer any questions you may have and put their years of experience to work for you! A $400 deposit will be required if you are ready to apply. Our deposit includes the cost of your appraisal, which can vary at times depending on the property. This deposit will be credited towards your closing fees and can be applied directly to your credit card or you may submit a check by phone. Once your loan officer has obtained the necessary information to complete your application, they will review the application with you for accuracy and submit it for a lending decision. Because we take full advantage of an automated underwriting system, typically your loan officer will be able to let you know if you’ve been approved within minutes.
If you are approved, your loan officer will then send you an approval letter listing conditions along with your mortgage application and the appropriate disclosures. The application package will be sent using a delivery service and will contain papers for you to sign. We will also provide a list of items required to complete the processing of your application.
If you were not approved, your loan officer may ask for further documentation. We understand that some situations are complicated and further documentation may be required to fully understand them. Once your loan officer has received this documentation, your file will be reviewed and the application will be resubmitted for approval. If your loan is approved, your loan officer will contact you and we’ll continue to process your loan.
Your loan will be processed.
We’ll order the appraisal from a licensed appraiser who is familiar with home values in your area. Depending on your finances and the loan amount requested, different types of appraisals are used. Sometimes the appraiser will need to view the home. Sometimes they are able to do their evaluation from the street.
Title insurance will be necessary. If you’re purchasing a home, we’ll work with the real estate broker or seller to ensure the title work is ordered as soon as possible. If you are refinancing we’ll take care of ordering the title work for you. We’ll use the title insurance to confirm the legal status of your property and to prepare the closing documents.
Then, we’ll contact you to coordinate your closing date.
After we received the application package back from you and the appraisal and title work have been reviewed and meet with our underwriting standards, we’ll inform the agent that we are ready to close. The listing agent will then schedule the closing with the selling real estate agent, the title company, the seller, Mortgage Center LC and you.
If you are purchasing a For Sale By Owner property, we can assist with coordinating the closing through our very own title company, Mortgage Center Title LLC. The professionals at Mortgage Center Title have guided members through smooth closings for years. Feel free to contact them with any questions you may have.
The closing will take place at the office of a title company or attorney in your area who will act as our agent. The day before closing, your Loan Facilitator will contact you to walk through the final information so that there won’t be any surprises at closing. In most cases, the final closing figures will be available 24 hours prior to closing.
That’s all there is to it! You’re on your way to the most convenient home loan ever!
6. What do I need to apply?
We take full advantage of an automated underwriting system that allows us to request as little information as possible to verify the data you provided during your loan application. Gone are the days when it was necessary to verify every piece of data collected during the application. The automated underwriting system compares your financial situation with statistical data from millions of other homeowners and uses that comparison to determine the level of verification needed. In many cases, a single W-2 or pay stub can be used to verify your income or a single bank statement can be used to verify the assets needed to close your loan. Your loan processor will notify you if additional information will be needed for your specific situation.
7. What is private mortgage insurance (PMI) and how does it benefit me?
PMI or Private Mortgage Insurance is provided by a private company to protect the mortgage lender against losses that might be incurred if a loan defaults. It can make a big difference in how quickly your mortgage loan is approved and how much money you spend on a down payment. It is required if the loan amount is more than 80% of the home’s value.
This insurance benefits lenders and investor, but it also helps homebuyers too. Because Mortgage Center is protected by mortgage insurance, we can offer loans with low down payments. Without mortgage insurance, we would need to require a down payment of at least 20% of the loan amount. We understand that even if you have enough money for a large down payment, you may prefer to use it for other purposes. And if you don’t have a 20% down payment, it can take a long time to save it. While you’re saving, the price of your dream home is likely to rise – perhaps faster than you can save! Private Mortgage Insurance can be a big help if you’re like most borrowers in this type of situation. Contact a loan officer for more information at (888) 562-6865.
8. How much will getting a mortgage cost?
Total costs include the charges for your appraisal, tax service, survey (if necessary), deposit, closing fee, flood certificate, title commitment, and recording fees. Additional costs can also be involved in a purchase depending on the particular situation, including; points, down payment, inspection fees, pre-paid interest, taxes, insurance, and private mortgage insurance (PMI).
Typical closing costs average $1,550.00, depending on the loan amount. A home loan often involves many fees, such as the appraisal fee, title charges, closing fees, and state or local taxes. To assist you in evaluating our fees, we’ve grouped them as follows:
Third Party Fees
Fees that we consider third party fees include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing fees.
Third party fees are fees that we’ll collect and pass on to the person who actually performed the service. For example, an appraiser is paid the appraisal fee, a credit bureau is paid the credit report fee, and a title company or an attorney is paid the title insurance fees.
Taxes and other unavoidables
Fees that we consider to be taxes and other unavoidables include: State/Local Taxes and recording fees. These fees will most likely have to be paid regardless of the lender you choose. If some lenders don’t quote you fees that include taxes and other unavoidable fees, don’t assume that you won’t have to pay it. It probably means that the lender who doesn’t tell you about the fee hasn’t done the research necessary to provide accurate closing costs.
Lender Fees
Fees such as points, administration and escrow waiver fee (if an escrow waiver is requested and approved) are retained by the lender and are used to provide you with the lowest rates possible. This is the category of fees that you should compare very closely from lender to lender before making a decision.
Required Advances / Pre-Paids
You may be asked to prepay some items at closing that will actually be due in the future. These fees are sometimes referred to as prepaid items.
One of the more common required advances is called “per diem interest” or “interest due at closing.” All of our mortgages have payment due dates of the 1st of the month with the exception of the Bi-Weekly mortgage products which will be due every other Friday. If your loan is closed on any day other than the first of the month, you’ll pay interest, from the date of closing through the end of the month, at closing. For example, if the loan is closed on June 15, we’ll collect interest from June 15 to July 1 at closing. This also means that you won’t make your first mortgage payment until August 1. This type of charge should not vary from lender to lender, and does not need to be considered when comparing lenders. All lenders will charge you interest beginning on the day the loan funds are disbursed. It is simply a matter of when it will be collected.
If an escrow or impound account will be established, you will make an initial deposit into the escrow account at closing so that sufficient funds are available to pay the bills when they become due. This type of charge should not vary from lender to lender.
Whether or not you must purchase mortgage insurance depends on the size of the down payment you make. And as a credit union member, you are eligible to receive reduced mortgage insurance rates.
If your loan is a purchase, you’ll also need to pay for your first year’s homeowner’s insurance premium prior to closing. We consider this to be a required advance.
9. What is an escrow account? Why do I need one?
Mortgage Center will set up an escrow account to collect funds for the payment of your real estate taxes, homeowner’s insurance, and private mortgage insurance, if necessary. Each month a portion of your payment will be held in your escrow account to make sure the funds are available when these payments are due. At that time, funds are drawn from the escrow account. You may pay your own real estate taxes and insurance if you meet Mortgage Center’s Escrow Waiver Requirements.
10. How will my taxes be paid?
Unless you have signed Mortgage Center’s Escrow Waiver Agreement, real estate tax payments will be made by our servicing department on your behalf with funds drawn from your escrow account.
Please be aware that property taxes may go up considerably on purchase transactions from what the previous owner had paid. In the state of Michigan, the municipality where the property is located reassesses the taxable value of the property when it transfers ownership. As the property’s taxable value is no longer governed by the rate caps used when the property remains under the same owner, the required property taxes may increase considerably.
This Department of Treasury Property Tax Estimator can help you determine how your property taxes may adjust.
On new home purchases and construction properties, it is the responsibility of the borrower to submit the paperwork to the applicable municipality for Homestead Exemption. Michigan’s cutoff date for the year is May 1st. Your closing officer will review this with you at closing or you may contact a Mortgage Center representative for more information at (800) 353-4449.
11. Why is there a deposit? Will I get it back if I don’t qualify?
This deposit is charged for access and review of your credit and / or property in order to make a lending decision. Once the application process is started, under certain circumstance, some or all of the deposit may not be refundable. If, however, you are entitled to a refund, it may be issued in the form of a “Credit Certificate” that may be redeemed with the submission of a new first mortgage application. If Mortgage Center and your credit union determine that we are unable to provide you with a mortgage (and the appraiser has not performed an appraisal on the property) we will gladly issue you a refund.
12. Are there any programs for members with lower down payments?
Yes! Mortgage Center offers programs with lower down payment options. These products are designed to help borrowers overcome the two primary barriers to homeownership – lack of down payment funds and qualifying income. These programs have lower down payment, cash reserve, and income requirements than traditional conventional mortgages. Call one of our expert loan officers to see which program is best suited to your needs. Monday, Tuesday and Wednesday 8:30 am to 6:30 pm or Thursday and Friday 8:30 am to 5:00 pm at (888) 562-6865.
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13. I’ve heard about getting a Pre-Approval, but what’s the advantage if I haven’t even started looking for a house yet?
You wouldn’t go shopping for a new car without knowing how much you can afford. Why would buying a home be any different?
Pre-Approval Today = Less Stress House Shopping Tomorrow
Let’s face it. One of the most stressful things about buying a home is adjusting to your new mortgage payment. Knowing your family’s financial boundaries before shopping for your new home can make the process go much more smoothly.
Your Pre-Approval is an essential tool when house shopping, because it…
- Determines what homes are in your price range
- Assures real estate brokers and sellers that you are a qualified buyer
- Can be used to your advantage in future negotiations
Your Pre-Approval letter is good for 120 days, leaving you plenty of time to shop for the home of your dreams! One of our experienced loan officers can complete your Pre-Approval for you over the phone or you can apply online anytime. If you qualify, you can even print your Pre-Approval letter online instantly and start house shopping today!
14. Do I need to find a home before I apply?
No! Applying for a mortgage loan before you find a home may be the best thing you could do!
The way it works is, if you apply for your mortgage before you have a property to purchase, we’ll issue an approval subject to you finding the perfect home. We’ll issue a pre-approval letter online instantly and you can use the pre-approval letter to assure real estate brokers and sellers that you are a qualified buyer. Having a pre-approval for a mortgage will even give more weight to any offer to purchase that you make.
When you find the perfect home, you’ll simply call your Loan Facilitator to complete your application. You’ll then have an opportunity to lock in our great rates and fees and we’ll complete the processing of your loan.
15. How much of a mortgage can I qualify for?
The first step in buying a house is determining your budget. There’s an often-quoted rule of thumb that says that you can afford a house that costs up to two and one-half times your annual gross income. In reality, everyone’s individual situation differs and your maximum mortgage eligibility is determined by weighing your income, existing debts, the purchase price of the house, your down payment, the interest rate on the loan, and the cost of property taxes and insurance.
This calculator steps you through the process of finding out how much you can borrow. Simply enter in your information into the required fields to determine the maximum purchase price of the home for which you qualify.
16. How do I know which program is right for me?
The first step in deciding which program is right for you is to take a realistic look at your individual situation. How much do you have for a down payment? How long do you plan on staying in the home before selling? Are you willing to pay points up front for a lower interest rate? Do you expect your annual income to increase in the near future or will it stay the same throughout your career? Does your income vary from month to month? How is your credit history? Are you purchasing an existing home from a seller or do you plan on building a new home?
We offer a great variety of mortgage programs so you can be sure to find the program that best suits your needs.
You can choose between our fixed rate mortgages with the option of a 10, 15, 20, or 30 year term in which the interest rate holds throughout the life of the mortgage. Or choose an adjustable rate mortgage, in which the interest rate adjusts to match the current market rates anywhere from one to five years. If you are planning on building your dream home, our construction loan is specifically designed for you.
More information regarding specific loan programs can be found when you get a customized rate quote and click on the corresponding product name on the rate sheet. Simply enter your information into the required fields and get your customized rate quote on the products best suited for you. As always, our friendly loan officers are available to assess your current situation and guide you toward the product that’s right for you Monday, Tuesday and Wednesday 8:30 am to 6:30 pm and Thursday and Friday 8:30 am to 5:00pm at (888) 562-6865.
17. How does my past credit history affect me?
Your credit standing impacts many of the financial and life decisions that are made about you, including the ability to secure loans, obtain the best interest rates, and in some cases, even gain employment. Your credit score is used to predict how likely it is that you will repay a new loan.
The credit scoring system was developed based on experience with millions of consumers. In general, the computer model assigns points to information in a credit report. For example, making payments on time every month is positive for the score. Charging the maximum amount available on a credit card is negative. The computer adds the positive and negative points, and the resulting number is your credit score.
Sometimes people think they have good credit. Then, they apply for a loan and are surprised to learn that there are some problems with their credit. That’s why it’s critical that you get a copy of your credit report and credit score a few months before making such a major purchase. You can easily obtain your credit report through www.annualcreditreport.com. In addition to providing you with your credit report, they also offer a variety of credit management tools and educational resources.
Once you have obtained your credit report, check it thoroughly to make sure the information is accurate. It’s possible for incorrect, incomplete or outdated information to appear on your credit report. Keep in mind that you are the only one who’ll notice if anything is out of the ordinary and it is up to you to find any inaccuracies. Mistakes on your credit report can drastically lower your chances of qualifying for the mortgage and interest rate you deserve.
If you find an error, take the following steps to fix it as soon as possible. If you see evidence of fraud, contact the credit reporting agencies immediately. Explain the situation and ask that a fraud alert be placed in your file. Identity theft is the fastest growing white-collar crime in America and, in addition to being the leading fraud complaint last year, on average the rate of incidents has more than doubled each year since 2000.
It’s more important than ever to stay on top of your credit history and know what’s in your credit report.
For more information about how to understand and improve your credit score, visit the Federal Reserve’s Consumer’s Guide to Credit Reports and Credit Scores.
18. What does a lender look for when approving my loan?
There are “4 C’s” of a loan approval.
Capacity – Can you repay the debt? We will ask for employment information including your previous occupations, how long you have worked and how much you earn. Essentially we’re verifying that your current job situation and income levels are stable.
Credit History – Will you repay the debt? We’ll look at your past credit history to see how much you owe, how often you borrow, whether you pay bills on time and whether you have a history of living within your means.
Capital – Do you have enough cash to meet the down payment requirements associated with your pending mortgage, closing costs, taxes, and insurance? Do you need a gift from a relative? Will you have a cushion left after your home purchase or will your last penny on purchasing your home?
Collateral – Will we be fully protected if you fail to repay the loan? We must be sure the property you are buying is sufficient to back up the loan.
19. Home buying negotiation tips – How to avoid over paying
Know local sales prices – Ask your agent to check comparable home sales or do your own research to measure your offer against current price tags. The listing agent may have already put together a comparative market analysis (CMA) on the property. This written report reviews prices of comparable homes that are currently on the market, that are currently under contract, and that have sold in the past several months.
Know the condition of the house and neighborhood – Before making an offer, you should be fairly confident that you are aware of any major problem areas in the house. You should have inspected the house to the best of your ability and questioned the sales agent and the owner about the structural soundness and condition of the basic systems. (Both sellers and real estate sales professionals can be held liable if they fail to tell the buyer of any defects they know of in the house.) You should also have a clear idea of what it will cost to fix any major problems of which you are aware.
Circumstances surrounding the sale – In deciding how much to offer, try to determine how anxious the owners are to sell. For example, if the sellers already have a contract on another house that is dependent on the sale of this house, you may be in a good negotiating position. It will be to your advantage to know how long the house has been on the market and whether the asking price has already been reduced. Also, how much did the seller pay for the house, and, how long ago? And how much equity does the seller have in the property?
Know what you can afford – You should have obtained a Pre-Approval before you began house hunting and your Pre-Approval letter will indicate the maximum purchase price you are approved for. You should also take the time to estimate what your monthly housing costs would be should you get the house at the price you plan to offer. This requires knowing the annual cost of utilities, homeowner’s insurance, condominium fee (if applicable), and any special assessments. Make sure that the amount of your down payment is adequate and that you’ll have enough to cover the closing costs as well. Don’t be tempted to offer more than you are sure you can afford.
Financing terms – Remember that there are two aspects to an offer – the price and the financing terms. The terms may actually be more important to you than the price. For example, if the seller is willing to offer attractive financing terms, including paying for the title search, the home inspection, and other settlement costs, you may be more willing to accept the price.
The real estate sales professional will be glad to advise you as to how much you should offer. However, the decision is yours alone. (Remember, the agent typically acts on behalf of the seller.) Most prospective buyers do not offer the full asking price, at least initially. For example, you may want to offer less than the asking price if you feel that the condition of the house warrants a lower price.
Don’t get carried away in a multiple-offer situation – Stick to your market research and negotiate with a clear head. You may win the bid if you offer better terms, and still may get a lower price.
Control your emotions – No matter how much you want the house, you’ll probably feel worse knowing you overpaid.
Don’t be afraid to walk away – Unless it’s a unique property, you’ll probably find another house you like just as much.
20. What is a buyer’s agent / broker?
A real estate broker who exclusively represents the buyer’s interests in a transaction and whose commission is paid either by the buyer or through the seller or listing broker at closing.
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21. Should I try to buy on my own or should I use an agent?
As a first time homebuyer you may be wondering if you need a real estate agent to help you find and purchase a home or if you can do it on your own. There is no law that prevents you, as an individual, from buying property without professional Real Estate assistance. You can search for homes, arrange showings, and even negotiate on your own (although, in some localities, the actual contract for purchase will need to be drawn up by an Attorney). The real question may be “do you want to do it on your own?”
There is a misconception among many first time homebuyers that by using a Real Estate Agent they will be subject to paying a commission. In virtually all situations this is not the case. The commission for the sale of a home is paid for by the seller, not the buyer.
Sellers, too, sometimes decide not to use an Agent in the sale of their house. Maybe they think they can get more return by not paying a commission, or maybe they cannot find an Agent to list their home for the price they demanded. In fact, many real estate analysts have found that the selling prices of For Sale By Owner (FSBO) homes are equal to —or higher than— those listed by Agents. In that case a problem arises when, as a “do-it-yourself” homebuyer and without the benefit of a Comparative Market Analysis, you need to determine whether or not the house is worth the asking price. How do you decide? There is too much money potentially involved to make a “seat of the pants” decision. If you’re determined to go it alone, Mortgage Center can help you obtain an appraisal through one of our approved appraisers who we’ve trusted for years to give accurate determinations of property values. Our title company, Mortgage Center Title, also offers the For Sale By Owner Fact Sheet, which offers a wealth of information for both buyers and sellers in involved in an FSBO transaction. Please contact a representative for additional information and assistance. We are here to help.
When dealing with only FSBO home, you may find your choices are limited. If you are tempted to jump into the “listed” market by checking advertisements, calling Listing Agents directly or visiting Open Houses, keep in mind that there is not a dime to be saved by doing this. The seller is still going to pay a commission and you run the risk of ending up with no representation, since the Listing Agent is duty bound to represent the seller. If there aren’t enough choices for you in the FSBO market, it is in your best interest to secure a real estate agent as soon as possible to assist you in your search.
The graph below lists the advantages to finding a home on your own vs. with a real estate agent.
“On Your Own” |
With an Agent |
|---|---|
| You can try to find a “For Sale by Owner” who is willing to sell at a reduced price. | A much wider choice of properties—access to every home that is listed with any Real Estate Agency. |
| You are completely in control of the pace of the process. | If represented by a Buyer’s Agent, the availability of a Comparative Market Analysis to see how the price of the house compares with the current market. |
| For better or worse, you are your own representative. However, you can contact the experts at Mortgage Center for assistance at anytime. | Help from an experienced negotiator. |
| You can do your own research and search for your home at your convenience. Mortgage Center can assist you in obtaining an appraisal, providing guidance and information along the way, and coordinating your closing. | Can offer choices and suggestions in Home Inspectors, Closing Agents, etc. |
| The Agent can follow up in all of the details related to the Closing. | |
| With your Credit Union’s Mortgage Center and CU Realty Services, you’ll get unrestricted access to all the tips, tools and data you need to make informed decisions plus you’ll get a rebate* – 20% off realtor commissions – when you buy or sell using a CU Realty Approved Agent. |
If you decide to use an agent, you should know the difference between a real estate agent or broker and a Realtor®. A real estate agent or broker is a person licensed to negotiate the purchase and sale of real estate on behalf of buyers and sellers. A Realtor is a real estate broker or associate who is an active member of a local real estate board that is affiliated with the National Association of Realtors. In both cases, the Agent, unless specifically disclosed otherwise, represents the seller in any transaction for the sale of a home. It is that Agent’s fiduciary duty to protect the seller’s position at all times.
When you’re ready to get started, we can help you find a highly-qualified, experienced Realtor in your area through CU Realty Services, our comprehensive real estate program. CU Realty’s Exclusive Agent Network includes a host of local, top-rated Realtors who know your neighborhood best. They’ll provide full-service assistance to help you locate an ideal home or sell your current home. In addition, you’ll earn a cash rebate at closing worth 20% of the agent’s commission when you buy — or sell— a home using a CU Realty approved agent.*
To register click here or call CU Realty’s Member Service Team at 800-203-9014. Once you register for the program, you will have full access to CU Realty’s MLS database, home sales, neighborhood demographics, home selling tips, and much more.
*Must be registered with CU Realty Services before you begin searching for a home. Follow this link for details.
22. Do I need an appraisal and an inspection?
Both a home inspection and an appraisal are designed to protect you against potential issues with your new home. Although they have totally different purposes, it makes the most sense to rely on each to help confirm that you’ve found the perfect home.
The appraiser will make note of obvious construction problems such as termite damage, dry rot or leaking roofs or basements. Other obvious interior or exterior damage that could affect the salability of the property will also be reported.
Keep in mind, appraisers are not construction experts and won’t find or report items that are not obvious. They won’t turn on every light switch, run every faucet or inspect the attic or mechanicals. That’s where the home inspector comes in. They generally perform a detailed inspection and can educate you about possible concerns or defects with the home.
Accompany the inspector during the home inspection. This is your opportunity to gain knowledge of major systems, appliances and fixtures, learn maintenance schedules and tips, and to ask questions about the condition of the home.
23. What does an appraisal do for me?
To determine the value of the property you are purchasing or refinancing, an appraisal will be required. An appraisal report is a written description and estimate of the value of the property. National standards govern not only the format for the appraisal; they also specify the appraiser’s qualifications and credentials. In addition, most states now have licensing requirements for appraisers evaluating properties located within their states.
The appraiser will create a written report for us and you’ll be given a copy at your loan closing. If you’d like to review it earlier, your Loan Facilitator would be happy to provide it to you.
Usually the appraiser will inspect both the interior and exterior of the home. However, in some cases, only an exterior inspection will be necessary based on your financial strength and the location of the home. Exterior-only inspections usually save time.
After the appraiser inspects the property, they will compare the qualities of your home with other homes that have sold recently in the same neighborhood. These homes are called “comparables” and play a significant role in the appraisal process. Using industry guidelines, the appraiser will try to weigh the major components of these properties (i.e., design, square footage, number of rooms, lot size, age, etc.) to the components of your home to come up with an estimated value of your home. The appraiser adjusts the price of each comparable sale (up or down) depending on how it compares (better or worse) with your property.
As an additional check on the value of the property, the appraiser also estimates the replacement cost for the property. Replacement cost is determined by valuing an empty lot and estimating the cost to build a house of similar size and construction. Finally, the appraiser reduces this cost by an age factor to compensate for depreciation and deterioration.
Using these three different methods, an appraiser will frequently come up with slightly different values for the property. The appraiser uses judgment and experience to reconcile these differences and then assigns a final appraised value. The comparable sales approach is the most important valuation method in the appraisal because a property is worth only what a buyer is willing to pay and a seller is willing to accept.
It is not uncommon for the appraised value of a property to be exactly the same as the amount stated on your sales contract. This is not a coincidence, nor does it question the competence of the appraiser. Your purchase contract is the most valid sales transaction there is. It represents what a buyer is willing to offer for the property and what the seller is willing to accept. Only when the comparable sales differ greatly from your sales contract will the appraised value be very different.
24. The importance of a property inspection.
No homeowner wants to be unpleasantly surprised to discover is that their newly-purchased dream home has major problems. An objective property inspection is a “must” in the home buying process. This is especially true when non-owner occupied homes are being considered. In these cases where there has been a foreclosure, potential buyers don’t have the benefit of a seller’s disclosure. Even newly constructed buildings should be inspected to uncover any potential builder oversights.
Home warranties or protection plans are not a substitution for an inspection. Buyers should beware of sellers who try to pass them off as such.
A qualified home inspector will educate the buyer about the condition of the dwelling—whether a single-family home, condo or townhouse. The inspector may expose defects that will allow the potential buyer to make a more informed, and confident, decision.
The money spent on an inspection really pays for peace-of-mind. Buyers who skip the inspection process to save money could later discover that the home needs repairs costing a great deal more than the inspection would have.
The cost of an inspection will vary, depending on the size of the property. It should include the roof; attic and visible insulation; plumbing; electrical; heating and cooling systems; kitchen and bathrooms; walls, ceilings, floors, windows and doors; basement and foundation; and all structural components. If the inspector finds a particular defect, or an infestation, he may suggest a secondary inspection by a specialist.
All buyers who plan to invest in an inspection; and everyone should; need to make their offer contingent on the results of the inspection. A contingency provides an opportunity for price negotiations if defects are discovered.
What you don’t know can hurt you when it comes to your home but with the help of a qualified home inspector, it doesn’t have to. Look into the National Association of Home Inspectors www.nahi.org or the American Society of Home Inspectors www.ashi.org for a professional in your area.
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25. Will my fixed rate mortgage payment fluctuate throughout the life of the loan?
Even if you have a fixed rate mortgage the monthly payment amount may fluctuate during the life of the loan. A fixed rate loan offers a fixed term (for example, 15 or 30 years) as well as a fixed interest rate, so the monthly amount for the payment of principal and interest will not change during the term of the mortgage. However, your monthly mortgage payment may also include interest, taxes and insurance. While your principal and interest amounts will not change, the amount needed for taxes and insurance may.
Once a year, on the anniversary date of the mortgage, Mortgage Center will perform an escrow analysis to determine if current monthly deposits balances will provide sufficient funds to pay property taxes, hazard insurance and other bills when they come due. Please be aware that property taxes may go up considerably on purchase transactions from what the previous owner paid. The municipality where the property is located reassesses the taxable value of the property when it transfers ownership. As the property’s taxable value is no longer governed by the rate caps used when the property remains under the same owner, the required property taxes may increase considerably. If your payment amounts have fluctuated, Mortgage Center will have to adjust the amount needed in your escrow accounts to compensate for these changes.
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26. How long will it take to close my loan?
Our goal is to have your loan ready for closing as soon as possible! Generally the items that take the longest to receive are things such as the appraisal and the title work and the conditions that you need to provide us with. We’ll want to get the appraisal and title work ordered as soon as possible to avoid any delays. If you are purchasing a new home, we’ll do our best to meet the date you and the seller have agreed upon. In a best case scenario where all the paperwork is in order, we can close on your mortgage within two weeks.
27. Is now the time to buy?
When determining whether or not to buy a home, you’ll want to consider many factors: price, interest rates, location and your personal financial situation. In terms of price and location, now is definitely a good time to buy a home. Home prices are extremely affordable right now, and in Michigan, the trend is crossing over into all zip codes. So buyers may be able to afford a home in an area they once thought to be out-of-reach. In addition, interest rates continue to stay at record lows, and are unlikely to go lower. Waiting for them to drop further is risky.
Finally, you must ask yourself if YOU are ready to buy. You should have a stable job situation; plan on staying in a home for at least three to five years; and have enough money saved for a down payment, closing costs and any unexpected improvements. If those things aren’t in place, you may be better off waiting a bit longer.
Our professional Loan Officers can help you determine if now IS the right time for you, by helping you calculate just how much home you can afford and how much your closing costs will be, and get you started with a pre-approval. Contact them at 800-353-4449 or mortgageinquiry@mortgagecenter.com (note: please do not email personal information.)
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